Put aside ‘economic rationalism’ to save lives, not just banks

It took the IMF and the World Bank more than a decade, and substantial pressure from civil society groups and the public, to take concerted action to address the unsustainable debts of developing countries. Twelve years of “debt relief” initiatives have generated only slightly more than US$100 million in debt cancellation for the world’s poorest countries, and even this has come at a severe cost to the “beneficiaries” who have had to implement further free-market economic policies as a precondition.

No wonder social movements in developing countries are adamant that long-term, viable solutions should not be forged behind closed doors by the very people who caused the problem in the first place.

At the recent emergency G20 summit in Washington, instead of being held to account for the manner in which they have operated over the past decades and the folly of putting free-market principles at the centre of human development, the IMF and World Bank used the financial crisis to rebuild creditability, gain new resources, and preserve increased lending as a valid framework for action in financing development. The IMF with its new lending arm (the Short Term Liquidity Facility) - with authority to lend up to five times a borrowing country’s quota; and the World Bank with its “program of action” - US$50 billion, all of which will be delivered in the form of fully reimbursable interest-bearing loans.

Countries facing unsustainable debt burdens need new and fresh ideas, not new loans. Citizens groups concerned with development, human rights and the environment should support the people’s movements of the South in their rejection of the power of the IMF and World Bank, and their call for alternatives that place the needs and rights of people first.

As a first step, we must call for debt cancellation. If over US$4 trillion can be mobilised in a matter of weeks to save the banks and institutions whose reckless behaviour is at the root of the financial crisis, then resources can be mobilised to immediately and unconditionally cancel debts of developing countries. If economic rationalism can be set aside to save banks, can’t the same be done to save lives?