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LGD 2005 (1) - Editorial

Editorial

Abdul Paliwala
Project Director,
Law, Social Justice and Global Development Journal,
and
Professor of Law,
School of Law,
University of Warwick, UK.
A.Paliwala@warwick.ac.uk


This Editorial was published on 5 October 2005.

Citation: Paliwala, A, 'Editorial', 2005 (1) Law, Social Justice and Global Development. <http://go.warwick.ac.uk/elj/lgd/2005_1/editorial>


This issue goes to press shortly after Paul Wolfowitz’s press release of 27 September 2005 announcing the joint World Bank and IMF endorsement of the G-8 Debt relief proposal:

The high point of the meetings is the historic endorsement provided by both the Development Committee and the IMFC of the G-8 proposal to cancel 100 percent of the debts of some of the world's poorest countries. And, as Trevor Manuel just said, it has gone from being a G-8 agreement to being a ‘G-184’ agreement.

The path to complete debt relief is now being cleared--has been cleared. Across Africa and around the world, leaders in 38 countries will no longer have to choose between spending to benefit their people and repaying impossible debts, often the legacy of governments past.

From concert stadiums to high-profile summits, people from rich and poor countries alike have been moved by the suffering we see in so many parts of the world. They have demanded action, and with this debt relief agreement, they have it.

The statement and those issued by the G-8 leaders form part of a new grand anti-poverty rhetoric. Yet NGOs, such as the Jubilee 2000 Campaign to end debt, appear remarkably pusillanimous in their response to such large claims and of the World Development Report for 2006 (World Bank 2006):

The World Bank’s annual flagship publication, The World Development Report (WDR) generally contains little more than a recycling of some part of the Bank’s usual ideologically-driven agenda, providing developing countries with helpful ‘advice’ on what they should do on issues such as services, institutions or the investment climate.

This year, it is slightly different. At first sight, its presentation of the problems appears to be very largely a straight-faced recycling of arguments NGOs and others have been making to the Bank for decades (albeit with a few inevitable Bank-like twists) – all revealed with a flourish, as though the Bank had just discovered them. It is very encouraging to find that the Bank at last seems to be getting part of the message – even if it still cannot bring itself to acknowledge the fundamental changes this implies for what it does and how it does it.

But the WDR’s emphasis is still very firmly on what happens (or should happen) within developing countries. While there are very strong parallels at the global level, the single page of text devoted to “Global Inequalities in Power” in the 273-page report makes it clear that the Bank still has a long way to go in working out how the arguments presented in the WDR apply in this context (Jubilee 2000 (2005).

There are two reasons for this attitude. Firstly, there is an analysis that the apparent generosity in debt relief, trade improvement and aid is not as large as suggested by G-10 and World Bank (Jubilee 2000 (2005a). The second is that organisations such as the World Bank need deep restructuring themselves in order to be serious agents of change. Jubilee 2000 in an article on the World Development Report for 2006 suggests – ‘Physician Heal Thyself’. That all the following World Development Report prescriptions for what is wrong with developing country governance applies as much to the governance of IFIs:

  • Economic and political inequality tend to lead to economic institutions that systematically favour the interests of those with more influence
  • There is unequal capacity to influence the policy agenda: the interests of the disenfranchised may never be voiced or represented
  • Economic, political and social inequalities tend to reproduce themselves over time and across generations.
  • When policies challenge privileges, powerful groups may seek to block reforms
  • When developing countries have little or no voice in global governance, the rules can be inappropriate and costly to poorer countries.
  • Overlapping political, social, cultural and economic inequalities... are perpetuated by the elite
  • These patterns of domination persist because economic and social differences are reinforced by the overt and covert use of power... [including] aggressive manipulation or the explicit use of violence.
  • Political, social, cultural and economic inequalities... are... often internalized by the marginalized or oppressed groups, making it difficult for the poor to find their way out of poverty.
  • The inequality of opportunity that arises is wasteful and inimical to sustainable development and poverty reduction.
  • Equitable policies are more likely to be successful when leveling the economic playing field is accompanied by similar efforts to level the domestic political playing field and introduce greater fairness in global governance.

The articles in this issue provide a number of research insights into the governance of the global economic system, especially IFIs such as the World Bank. Katarina Tomasevski’s analysis points out a seeming contradiction in policies on primary education in IFI promoted Poverty Reduction Strategies in 40 Heavily indebted Poor Countries (HIPCs):

Current global strategies prioritize poverty reduction but do no include a commitment to free primary education. Thus, those unable to pay the charges (‘user fees’) levied in public primary education, which should be but is not free, are excluded from education.

She argues for a rights based approach to education as an aspect of mainstreaming of human rights in development strategies.

Nils Rosemann adopts a similar human rights based approach to the provision of water during a major period of a global crisis in water supply. He questions whether IFI supported strategies of privatisation of water, public-private partnership in water delivery services and foreign direct investment in the water sector can deliver solutions to the crisis. For the author, ‘a purely economic perspective on this issue runs the risk that water becomes commercialised in a way which makes it a luxury product, affordable just to those who can pay for an adequate water and sanitation services’.

Mathews’ analysis of the Indian Ecodevelopment Project funded by the Global Environment Fund, the World Bank and the Indian Government at the Nagarhole National Park suggests a persistence of a ‘Garden of Eden’ approach to environment protection and ecodevelopment in which local peoples (in this case Adivasi communities) are seen as a problem and not an integral part of the solution.

Tan perceptively explores the conceptual changes in IFI approaches to financing of development. She suggests a contradiction between the new architecture of finance premised upon local ownership, participatory politics and the reduction of poverty. New conceptual frameworks include Poverty Reduction Strategy Papers (PRSPs), Sector Wide Approaches (SWAPS) and Community Driven Development (CDD) and Output-Based Aid (OBA) all intended to promote grounded initiatives. Yet she argues that a simple focus on operational technicalities will not redress the fundamental problems of resource gaps and poverty traps. Unequal power relations leave developing countries disempowered and subsumed in relationships of conditionality.

Finally, Raffer considers the other side of the debt coin, the potential of sovereign insolvency. He suggests that the Adam Smith supported idea of sovereign insolvency is now imminent. In this context he suggests a procedure such as the US Chapter 9, Title 11 USC may be an appropriate approach. Obviously in a sovereign insolvency of developing countries, the International Financial Institutions (IFIs) will have a key role as major creditors. However, in his view, no special allowances need be made for IFIs as preferred creditors. Among other things, treating all creditors as equal as under the USC Chapter 9 would keep the IFIs honest in their approach to development finance.

To conclude, the articles promote a framework of analysis which encourage IFIs to further address their policies on debt and development finance. There is an underlying questioning as to whether new conceptual frameworks such as poverty relief will work without institutional change in commitment. Conceptually, there is a suggestion for a rights-based approach to issues as varied as ecodevelopment, water rights and education. It is also suggested that IFIs should not have special priority as creditors in time of sovereign bankruptcy. This would in fact improve the quality of service to developing countries. The underlying perception is that the anti-poverty stance may either not do much or is subordinate to the overall agenda of economic liberalisation in the interest of global corporations.

Finally, we would like to thank Professor Danny Bradlow for his assistance as a Guest Editor for this Special Isue. We are also grateful to our referees for their labour, to the authors for their insightful contributions to and Celine Tan for her editorial assistance.

References

Jubilee 2000 (2005) ‘Physician, Heal Thyself! The World Bank’s World Development Report, 2006: Equity and Development, 27 September 2005 http://www.jubilee2000uk.org/

Jubilee 2000 (2005) ‘The G8 2005 - What Are the Lessons?’, 11th July 2005 http://www.jubilee2000uk.org/

Wolfowitz Paul (2005) ‘World Bank Press Release Transcript’, 27 September 2005 http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:20660264~pagePK:64257043~piPK:
437376~theSitePK:4607,00.html

World Bank (2006) World Development Report 2006: Equity and Development (Washington DC: World Bank).