From The 50 Years Mailing List: Venezuela to quit IMF, World Bank
Ruth at 50years.org wrote:Dear Friends,
The Bretton Woods Institutions suffered yet another blow this week, as Venezuela formally announced that it is pulling out of the International Monetary Fund and World Bank. President Hugo Chavez explained his decision, by pointing to the institutions' current crisis.
The 50 Years Is Enough Network has long argued the that the Bank and Fund's legitimacy, role and solvency is in decline. At the end of last year, a report published by the first big external audit of World Bank research concluded that the Bank used "questionable evidence to proselytise on behalf of its development policies, without taking a balanced view of the evidence." This year a report published by CEPR raised doubts over the IMF's analysis of projected growth rates in Argentina and Venezuela, pointing to political bias for repeated errors. The institutions are scrambling for a new role.
Meanwhile the IMF is facing a very bleak financial situation. By 2010 the IMF is expected to have an estimated shortfall of $900 million. At the end of January a panel of experts which included Alan Greenspan among others, suggested the IMF sell $6.6 billion worth of gold to pay among other things, staff salaries. At the same time, alternative funding sources are emerging for countries in the Global South-- examples include the Bank of the South, and China. Pablo Davalos provides useful insights to this changing financial architecture in his recent article "Southern Bank: A road towards a new financial architecture."
President Chavez's announcement highlights the opportunity we have to reduce the power of the IMF, and the Bretton Woods Institutions more broadly. As one of the founders of the "IMF: Shrink It or Sink It Campaign," 50 Years Is Enough is seizing this opportunity. We have compiled a list of relevant articles, for further reading: http://50years.org/updates/.
Enjoy the article.
Peace and solidarity,
Ruth
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Venezuela to quit IMF, World Bank
Reuters. Mon Apr 30, 2007 11:05PM EDT
By Saul Hudson
CARACAS (Reuters) - Venezuela will withdraw from the Washington-based lending organizations, the IMF and World Bank, in a symbolic move that distances leftist President Hugo Chavez from much of the international economic community.
Chavez, who plans to create an alternative lending bank run by South American nations and funded in part with his OPEC nation's high oil revenue, said on Monday Venezuela no longer needed the institutions dominated by U.S. "imperialism."
Leaving the International Monetary Fund and the World Bank would severs ties between the fifth largest oil supplier to the United States and the world's leading lenders to emerging nations.
"We don't need to be going up to Washington ... We are going to get out," Chavez, who calls Cuban leader Fidel Castro his mentor, said at an event to celebrate May Day workers' rights.
"I want to formalize our exit from the World Bank and the International Monetary Fund," he said.
Chavez blames the organizations' decades-old economic recipes of tight budget control, privatizations and open markets for continued poverty across Latin America.
He wants to build a socialist state based on policies rejected by the institutions in Washington, such as those he announced on Monday -- a 20 percent minimum wage hike and a gradual reduction in the working day to six hours.
The move to quit the multilaterals is politically symbolic but should have little immediate financial impact.
Since Chavez first took office in 1999, Venezuela has gradually reduced its cooperation with the organizations and, after years of strong oil prices, said it paid off its last debts to the World Bank this month.
Venezuela is one of several countries, particularly in Latin America, that have in the last few years reduced their dependence on the multilateral agencies and so tempered the lenders' global clout.
Some leftist Latin leaders hosted by Chavez at the weekend proposed quitting a World Bank body that arbitrates between foreign investors and states as they seek greater freedom to dictate the terms of foreign investment in their nations.
Chavez is nationalizing huge swathes of the economy this year and on Tuesday will lead a massive rally to take over the operations of multi-billion dollar oil projects run by some of the world's largest companies.
He said it marked the end of an era of Washington-dictated policies and returned Venezuelan resources under the state's control.
"The wheel has turned full circle," he said.
(Additional reporting by Patricia Rondon)
Labels: VENEZUELA, World Bank
posted by MrK @ 6:40 PM
6 Comments:
Why is it all the revolutionlists seem to come from South and latin America.
Couldn't we borrow a few ideas from these guys and infuse them into some young Zambian.
Just a thought on my part.
But Venezuela never had any proper engagement with the World Bank.
I don't advocate Zambia to abandon these institutions. The IMF and World Bank have actually helped us reduce debt to $600m from $7bn. Debt which our leaders spent on expensive safari suits.
Zambia lost control over all it's mines. Estimated value: $47 billion US. Debt cancellation: $7 billion US. Tell me that this is a good deal.
All this, while debt cancellation was never a debt for mine swap. The IMF has so much money it doesn't know what to do with it.
What is more, the IMF has never suggested a course of action that could in any way, shape or form be construed as a good economic policy. Their prescriptions are based on what worked for Singapore in the 1950s.
But the IMF did not force us to sell the mines. If we had come up with a better framework for managing the mines (e.g. arms length management), the IMF would have accepted that. Also as we have been discussing, we didn't have to sell the mines. We could have simply leased them for a period.
We got into debt because our leaders where greedy. We need to face up to the fact that bad leaders are responsible for our poverty not outsiders. Until we start having a responsible Government we will never develop even if we owned our mines. Its poor leadership that is responsible for our problems.
Cho, officially we had a choice but beneath the surface or rather behind closed door meetings there was pressure on our leaders to give up the mines for the FDI's - Rememeber the kafue consortiums task to buy the mines as one and then later sell it's components for profit. small wonder anglo stayed for 2years and out they went.
This is no blame game but mere reality, our leaders lacking the capacity in many fields beieved the IMF/WB song as a hit.
This is from back in 2006, during the parliamentary questions asked about how or why the mines were sold.
Nawakwi had no choice over mines tax incentives - Magande
http://www.postzambia.com/post-read_article.php?articleId=7705
Nawakwi had no choice over mines tax incentives - Magande
By Bivan Saluseki: Sunday March 19, 2006
FINANCE minister Ng'andu Magande says Edith Nawakwi had no choice when she gave tax incentives to the mines when she was finance minister.
And Nawakwi on Friday took on Magande in Parliament for claiming to be a successful Minister of Finance when the previous government did most of the projects coming to fruition. Nawakwi said Magande was claiming success but success makes a fool even look wiser. During a heated debate on the mines and minerals amendment Bill which is aimed at specifying the due date for the submission of monthly loyalty returns and to provide for the date by which mineral loyalty must be paid, an emotional Magande said the World Bank had in fact said it was the end of Zambia since the copper prices were very low. He said he was a consultant then and he knew what he was talking about. "Zambia was not only on its knees, we were on our backs," he said. Magande said most investors did not want to buy the mines because of the low copper prices and Nawakwi and others had to offer them the tax incentives and the 0.6 mineral loyalty tax. "I thought they were magnanimous enough to make this country not sink down," he said. Magande said now that government was trying to make things right, Nawakwi was saying it was success of a fool. He said government was alive to the tax exemption problems and Nawakwi had no choice when she was signing.
During her debate, Nawakwi said the current government should not claim credit without appreciating the efforts of former finance minister late Gibson Chigaga, late Ronald Penza, herself, Emmanuel Kasonde and Katele Kalumba. But Magande said he should also be remembered when he is alive and not when he is dead. Nawakwi said countries such as Singapore only had ministers who had a minimum of masters degree to understand government policy hence the growth in that country's economy. But Magande said he also had a masters degree and was working with mines minister Dr Kalombo Mwansa who was doctor and therefore as competent as ministers in Singapore. Nawakwi said the bill wanted to tax the very few poor small-scale miners leaving the big ones with tax incentives. However, Magande said the bill wanted to capture new companies in the tax band.
Magande said the bill wanted to include in the definition of base metal, other minerals apart from the current definition, which only means Copper and Cobalt. Nawakwi said Zambia was faced at the time with a copper industry, which was in the trough.
"The conditions were near to blackmail. Mining houses demanded blood out of the Zambian people," she said. Nawakwi said the price of copper was depressed and on August 4, 1998, Anglo American Corporation went to her office and told her they wanted to place ZCCM under receivership because it could not make money. She said the lessons learnt from AAC's pull out of Zambia were that foreigners could not develop Zambia. Nawakwi said she would have been pleased if government was sharing with mines the huge turn over. She said mines were getting millions of dollars while Zambians were watching and getting nothing. Nawakwi said price participation flows should be involved so that mines pay at least two per cent instead of the current 0.6 per cent loyalties. "We are at a peak in prices but soon we will be in a trough and they will pack and face Chile," she said. Nawakwi said it was wrong to tax the poor to make the rich richer. "Taxation must invoke some feeling of social justice. We need to balance the level playing field," she said. Nawakwi said Konkola Copper Mines should have been sold at a better price than US$ 25 million. Nawakwi said if a mistake was made in the last negotiations, the current government should correct it. Magande said government was alive to the to tax incentive problems. And Nawakwi said she was disappointed that the visiting IMF managing director Rodrigo De Rato could not be taken to UNZA, Kalikiliki, Police Camp and UTH to see the squalor.
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