by Michael Casaus

Visit almost any corner of the so-called “developing world” today, and you can find your tax and investment money at work: indigenous people flooded out of their homes by massive hydroelectric dams, with no compensation; water taps running dry in poor neighborhoods; parents pulling their children out of school because they cannot afford the new fees; and large-scale, systematic embezzlement of public funds. Who is doing all this in the name of helping the poor? The World Bank.

The World Bank is an international financial institution that loans money to “developing” countries, ostensibly to help them fight poverty. It is largely funded by public money, but also raises cash by selling bonds. With 11,000 staff, $22 billion in annual lending, and projects in over 100 countries, the World Bank claims to be the world’s premier development agency. Its true agenda, however, as measured by 60 years of failed development, has been to impoverish those it claims to help while reaping benefits for wealthy investors.

Fighting this juggernaut may seem quixotic, but for those subject to its devastation, there is no alternative. They are fighting for their lands, their livelihoods, their cultures and often their lives. Needing allies, they reached out to Americans, asking us to target the World Bank’s Achilles heel: its finances. Like any bank, the World Bank hurts most when hit in its pocketbook—in this case, the bonds it sells to raise its operating monies. By boycotting these bonds, ordinary Americans are putting pressure on the World Bank to undergo fundamental transformation—or close shop.

In Chad, the Bank pushed through an ambitious oil pipeline in a repressive dictatorship, which led to violent government suppression of villagers who protested their forced eviction from their land. In Indonesia, the Bank was unable to account for $100 million in loans, but still demands repayment for the lost money. In South Africa, privatization of municipal water supplies has resulted in water prices too high for ordinary people to afford, so they use polluted water, resulting in massive cholera outbreaks. In Yemen, where 42% of the population lives in poverty, the Bank forced the government to double the price of gas, resulting in rioting which left 13 dead. In Peru, World Bank-funded gold mines have dumped tons of cyanide and mercury into rivers which supply drinking and irrigation water.

The World Bank claims that its dream is to end poverty, but 60% of all its disbursements go straight to multinational corporations. It lends money for large-scale projects (dams, highways, factories) and for “structural adjustment.” Structural adjustment means the government is required to make drastic changes to their social and economic policies. These policy changes include the privatization of basic services such as water, health care and education, putting them out of reach for the people who need it most; “liberalizing” trade, which forces local businesses to compete with transnational corporations; weakening labor and environmental protections; and reducing social spending, including fuel subsidies. These “reforms” have resulted in greater impoverishment, unsustainable debt, human rights abuses, and environmental destruction.

As if that were not bad enough, the World Bank has now been spotlighted as a major source of corruption. According to an investigative report published in US News & World Report (4/3/06), upwards of $4 billion annually, or 20% of all World Bank loans, are associated with corrupt practices. Put another way, billions of dollars have been stolen from the world’s poor. Billions of taxpayer dollars. Billions of your tax dollars. Stolen. Lost. Misplaced.
Reports on corruption at the World Bank—including how “kickbacks, payoffs, bribery, embezzlement, and collusive bidding plague Bank-funded projects around the world”–confirm what many civil society organizations around the world have been saying for decades: the World Bank is a burden on the world’s poor, not their friend. After spending 60 years and $545 billion on poverty alleviation, the world has more poor people than ever. The World Bank must either undergo radical transformation or simply shut down. Indeed, the Bank needs to be held accountable. And that is exactly what grassroots activists are doing–challenging World Bank corruption and misguided policies by demanding fundamental reforms.

This past February, the Tides Foundation, one of the nation’s largest charitable foundations, joined over 120 municipalities and institutional investors in the US in boycotting World Bank Bonds. Members of the Boycott include the cities of San Francisco, Milwaukee, Boulder and Cambridge; international labor unions such as the 1.4 million-member International Brotherhood of Teamsters, the 1.2 million-member Service Employees International Union and the Farm Labor Organizing Committee; the University of New Mexico; and dozens of churches and religious communities, such as the Conference of Major Superiors of Men, a network of more than 250 Catholic orders of priests and brothers. All have taken concrete steps to hold the Bank accountable: They have adopted a policy against investment in the World Bank.

Specifically, institutions that have joined the Boycott are demanding an end to the World Bank’s harmful “structural adjustment” policies and related policies of privatization and austerity; 100% debt cancellation; and an end to environmentally destructive projects, especially for oil, gas, mining, and dams. Boycott members pledge to withhold funds until the Bank undergoes these reforms. With its market and reputation diminishing, the World Bank will find it harder to raise funds to carry out these destructive programs.

The World Bank Bonds Boycott is a powerful tool through which to “think globally, act locally.” The Boycott provides a rare vehicle for ordinary people—taxpayers, working people, immigrants, students, people of faith, and others—to directly impact one of the most powerful proponents of corporate globalization. It can also increase their power in their own community or institution. The Boycott provides an opportunity for US movement-building, mobilizing citizens to demand accountability over how their monies are invested, and to demand greater democracy and transparency in economic policy-making. With its unique strategy, the Boycott makes the policies and projects of the World Bank a local issue.
Launched in April 2000 by organizations from 35 global South countries and the US, the campaign links social movements in the global South that are challenging harmful World Bank policies with progressive activists in the North who are working to cut off the World Bank’s major revenue source: its bonds.

The Bank raises approximately 70% of its funds on private capital markets through the sale of bonds to institutional investors including municipalities, charitable foundations, universities, churches, and labor unions. As a result, an individual’s own funds might be implicated, through pension plans, taxes, union dues, or college tuition. The Boycott works with citizens and other stakeholders to get their institutions or municipalities to boycott the purchase of bonds issued by the World Bank, thus creating political and financial pressure on the World Bank to reform.

The Boycott follows in the spirit of the anti-Apartheid divestment movement. It is a vital and strategic complement to the growing movement for global justice and for a more environmentally sustainable and just international economy. The Boycott also draws on the lessons of more contemporary corporate accountability campaigns which seek to weaken investor confidence in World Bank bonds and strike at the “reputational capital” of the World Bank, further pressuring the Bank to reform. The campaign offers the growing global justice movement an effective organizing handle. It brings the issues home to people in a way that makes sense, creating local ways to mobilize around the largest structural problems of the global economy.

It is increasingly evident that the World Bank is concerned about the Boycott’s power. When the campaign was first launched, then-World Bank President James Wolfensohn described the effort as unlikely to have any impact on the Bank. Since then, the tide has changed. The World Bank has tried to prevent boycott resolutions from passing in at least three cities. City councilors in the small town of Boulder, Colorado received a 15-page memo from the World Bank to try to dissuade them from passing the boycott. The boycott passed 5-0 despite the Bank’s pressure.

Most recently, in February 2005, the World Bank’s sister organization, the InterAmerican Development Bank (IDB), released its Blue Ribbon Panel Report, which stated that, “The IDB (along with other Development Banks) is also faced with calls to boycott its bonds based on environmental and social performance. The impacts of these campaigns are, at present, minimal but will increase with time and require significant senior staff attention.” And they are right, the campaign is growing. And it will only grow stronger, as we implement a new campaign strategy in 2006 — linking the Bank’s lending to global warming—that is sure to concern the Bank’s senior staff.
The World Bank is one of the globe’s largest financiers of the fossil-fuel projects that drive global warming. Even though a Bank panel of experts found that such projects did nothing to alleviate poverty, and that more than 80% of the energy is exported to wealthy countries where greenhouse gas emissions are eventually released, the Bank continues to pour money into oil, natural gas and coal, despite internal recommendations which urged the Bank to divest itself of all oil and coal investments by 2008. Since 1992, when it was asked to coordinate a global strategy for developing clean energy, the World Bank has invested $28 billion in dirty energy— 17 times what they invested in renewable energy.

Building a strong base of US supporters in favor of reforming the Bank is essential because of the pivotal role the US plays at the Bank. Students are critical to this issue; they bring energy, commitment, and, like the anti-sweatshop movement that swept across campuses, have the power to make a difference.

In that vein, the Boycott is embarking on a new strategy which aims to build a national student movement against global warming and its roots in economic globalization, raising awareness and urging accountability at the university level: the Spank the Bank Student Climate Justice Campaign. For college students concerned about their future (and the globe’s) in a warming world, the Center for Economic Justice (coordinator of the Boycott) and the Institute for Policy Studies’ Sustainable Energy and Economy Network (SEEN) are launching this national collaborative campaign. It will add an important focus to campaigns that challenge university funds which subsidize dirty energy.

The strategy is for students to pressure their universities to invest their endowments responsibly. They should shift investments from fossil fuels to clean energy, and stop investing in the World Bank. The Spank the Bank Campaign provides students with the means to influence investment decisions. Ultimately, this creates financial pressure on the Bank to change their energy policies, while simultaneously helping to finance clean alternatives. The campaign also aims to educate students about the environmental and social impacts that World Bank policies have in low-income countries, and the ricochet effects of globalization in the US.
Non-students can also join with the World Bank Boycott campaign. Belong to a church? It can join the Boycott. Belong to a labor union? Get it to endorse the Boycott. Invest your money in a mutual fund? Make sure it does not include World Bank bonds. Pay municipal taxes? Get you city council to join the Boycott. The power of the World Bank Bonds Boycott lies in the ability of people—through their pension funds, labor unions, churches, municipalities, and universities—to exert pressure that will ultimately reform the World Bank.

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Michael Casaus is Coordinator of the World Bank Bonds Boycott and the National Organizer at Center for Economic Justice. CEJ is a former Resist grantee. For more information, contact CEJ, 2132 Gold Avenue SE, Albuquerque, NM 87106; www.worldbankboycott.org.