DEVELOPMENT: IDB Falls Short of Its Name, Say Activists

By Mario Osava Reprint | | Print |

Mario Osava

MEDELLÍN, Colombia, Mar 28 2009 (IPS) - The 50th annual meeting of the Inter-American Development Bank (IDB) has drawn harsh criticism from a parallel civil society counter-assembly in this Colombian city.

The Peoples’ Assembly for Development Alternatives was held by the “IDB 50 Years Financing Inequality” campaign, waged by a coalition of 42 social organisations.

The IDB’s performance has been unsatisfactory because it has failed to live up to its mandate to promote social equality, said Vincent McElhinny, Latin America director for the Washington-based non-governmental Bank Information Centre (BIC), which lobbies international financial institutions (IFIs) to promote social and economic justice.

He also said the IDB’s goal of enlarging its fund with subsidised public contributions is illegitimate, because it operates on a commercial footing.

The three-day Peoples’ Assembly, which drew more than 500 participants, underscored the fact that one-third of the population of Latin America – some 184 million people – is still poor, including 64 million people living in extreme poverty, while the gap between rich and poor has widened.

IDB loans to Colombia, which have totalled more than 14 billion dollars, have failed to reduce the extremely high rates of poverty or inequality, and the regional lending institution has provided “no explanation” for this failure, McElhinny told IPS.

IDB financing does not encourage change, such as tax reforms to redistribute income, “an untouchable issue,” he said. Everything indicates that the same thing will happen now, with the emergency loans to provide countries with liquidity in the face of the global financial crisis, the U.S. economist said.

The Initiative for Integration of Regional Infrastructure in South America (IIRSA), led by the IDB, has been under way for eight years already, and according to the World Economic Forum (WEF), the region lags far behind Asia, he pointed out.

There is a lack of transparency and willingness to seriously engage society in debate, complained representatives of the coalition behind the “IDB 50 Years Financing Inequality” campaign, when they met Thursday with IDB president Luis Alberto Moreno, a Colombian economist.

That day, around 2,000 activists marched through downtown Medellín, the northwestern Colombian city where the IDB assembly and the civil society counter-assembly are taking place, to protest the Bank’s policies.

The financing of megaprojects also drew fire from the Peoples’ Assembly Forum on Migration and Internal Displacement Friday.

These projects, like major hydroelectric dams, displace hundreds of families at a time, frequently without providing the promised “flourishing of the local economy, attraction of heavy investment and bridges to external markets,” said Oscar Chacón, executive director of the Chicago-based National Alliance of Latin American and Caribbean Communities (NALACC).

“Mega infrastructure works are part of the political and economic model that the IDB promotes and finances,” Chacón told IPS, while wondering why the Bank persists in following that logic, when the global crisis makes it clear that a new approach is needed.

According to the Salvadoran activist who lives in the United States and has been an advocate for the rights of immigrants for two decades, the failure of the current model and the need for changes must be recognised, in order to bring about a shift in the policies of the IFIs.

One alternative would be to return to policies of human and social development that are not limited to poverty reduction, but put a priority on greater access by the poor to education, health care and decent housing, he said.

Another option, said Chacón, is to “reconsider local and regional markets,” instead of the obsession with foreign investment and exporting raw materials, based on cheap labour. These new policies would also bring about growth of local markets and a strengthening of cultural values, agriculture and food sovereignty, he added.

“One paradox” of international migration flows is that the IDB itself recognises that remittances sent home by immigrants are “a factor in economic development,” while emigration is fuelled precisely by “a lack of development” in the migrants’ home countries, the activist said.

Migrants have become “the most generous investors in terms of poverty reduction in Latin America,” he said, citing IDB statistics: in 2008 Latin American migrants sent 69 billion dollars in remittances to their home countries, seven times more than the loans granted by the Bank.

The activists at the Peoples’ Assembly complained that the Bank has restricted the public disclosure of documents by the civil society representatives, in order to avoid casting a slur on the IDB’s 50th anniversary celebrations, which are continuing until Mar. 31.

The IDB has accumulated a great deal of knowledge and has even financed “good practices,” but it does not publicise or replicate them, McElhinny lamented.

The activist also said some IDB experts have pointed out good routes to take, but he maintained that “there is a wall separating research and operations” within the Bank, which effectively cancels out the efforts made by intellectuals in the institution.

IDB President Moreno himself launched an interesting initiative in 2006, called Opportunities for the Majority, aimed at benefiting low-income populations, but in practice few funds have been earmarked for the programme, said McElhinny.