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“The Archbishop versus the World Bank on Fiji Poverty” (ed. in FT 23/2/2019)

23/02/2019

The Archbishop versus the WB on Fiji poverty (FT 23 Feb. 2019)

 Last week (Fiji Times 17 Feb. 2019), Catholic Archbishop Peter Loy Chong mounted an astonishing broad-ranging critique of the powerful international organizations, World Bank (WB) and the International Monetary Fund (IMF), alleging that their policy advice to the Bainimarama Government (and developing countries) was “anti-poor”.

Apparently, the Ministry of Education (PS Burchell) had used WB advice as part of their justification for using the Open Merit Recruiting Selection (OMRS) to appoint principals of privately owned schools.

Archbishop Chong, however, not only criticized the Bainimarama Government’s plans to privatize schools and hospitals, but with the sermons of the Catholic Pope John Paul II to guide him, saw these WB and IMF strategies to push globalization and privatization on the Third World, as being primarily in the interests of the developed corporate West, while harming the poor in developing countries.

Just as surprising, despite the serious criticisms made by this  reputable and responsible Head of the Catholic Church in Fiji, there has been no public response from the Ministry of Education and the Bainimarama Government, nor from the academics of the three universities in Fiji, and none from the WB either, not surprising given their total lack of accountability to the public whose welfare they “advise” on.

Nevertheless, I would suggest that readers and in particular economics students should carefully and critically read the arguments made by Archbishop Chong, simply because the WB and IMF have such great influence over economic and social policies of Third World countries like Fiji, profoundly affecting the lives of our poor. Are Chong’s arguments all correct or should some be qualified (as I suggest below)?

Archbishop Chong’s criticisms are even more pertinent in the light of the most recent  IMF Article 4 recommendations to the Bainimarama Government (Fiji Times, 20 February 2019) but that deserves a separate article.

To help students see more clearly, I summarize Archbishop Chong’s arguments into four sets of inter-related important development topics:

(a) the WB/IMF and their Structural  Adjustment Programs (SAPs)

(b) the impact of globalization on the world’s poor

(c) the impact of the Bainimarama Government’ privatization program on Fiji’s poor, and

(d) whether WB, IMF and the Bainimarama Government are following the principles of  genuine democracy in their decision-making.

I add any disagreements I may have or qualifications in italics.

The WB, IMF and the SAP

Archbishop Chong asserted that when Third World Countries cannot repay their loans from WB and IMF (and I suggest sometimes even when the capacity to repay debts is not an issue) these institutions instruct our countries to carry out Structural Adjustment Programs which include reduced government spending on essential services (like health, education, welfare), reduce taxes of high income earners, implement other market oriented policies such as privatization  and globalization, and the ORMS (I doubt if this was important to the WB or IMF),  all making the rich richer, and the poor poorer (I argue below, not always), thereby widening the gap between the rich and the poor (not always, I suggest).

In the process, the poor are rendered powerless, worsened by the lack of effective protection by workers’ associations.

Archbishop Chong argues that the central objective of the WB and IMF is not to alleviate poverty in the developing countries, but to advance the agenda and economic interests of the West. (I suggest below that the west” is not an accurate category any more, given all the new Super Powers that benefit from globalization, like Japan, China and India. I also elaborate below on the “unaccountable” nature of WB and IMF).

Globalization and the poor

Archbishop Chong argues that while globalization promises that development will trickle down to the poor, that trickle down has not happened historically (I suggest below that Chong is not completely accurate); the rich have become richer and the poor have become poorer, with the gap between the rich and poor widening. Globalization is like a ship with no map headed for shipwreck (it is also not clear that this is so.)

[In some countries, the poor have become much better off even if the rich have become richer. For instance, development economists have still not caught with up the most incredible economic miracle over the last two hundred years of China using globalization and increased access to global markets to lift more than 400 million people out of poverty. Sure, the rich have got richer (there are more Chinese and Indian millionaires in the world than that from most developed countries), but their poor have also become much better off. This is so not just in China but also in places like Korea, Brazil, Malaysia and now slowly even in India, still massively plagued by abject poverty.

     Of course, the gap between the rich and the poor might have increased, but it is not correct to generalize that globalization has universally “made the poor poorer” just because the gap has grown wider or the rich have got richer.

     Ask the poor “would you rather stay poor while the rich remain the same” or “would you prefer to become richer, even if the rich become richer still”?  Or ask poorly paid garment workers in Fiji “Would you like a poorly paid job, or no job at all”?

     Whatever leftist (usually well-off) activists might recommend, we know what the poor themselves would answer to both questions.

Bainimarama Government’s Privatization Plans and the poor

Archbishop Chong argues that the Bainimarama Government’s plans to privatize the Lautoka and Ba hospitals and schools will hand over these essential services to the private sector who will put profit before service and worsen service to the poor. He correctly sees that it would be totally unfair given that taxpayers are already paying taxes precisely for these essential services for which they will pay again from private providers, without their taxes being correspondingly reduced. Chong argues that this implies that that the Bainimarama Government and politicians would be serving the WB and IMF, not the Fiji people (not necessarily so).

[It has been my experience that over the decades since Independence, succeeding Fiji governments (including the Bainimarama Government) have referred to the WB and IMF only when it has suited the government. There has been much WB/IMF advice which has been simply ignored by Fiji governments.]

Catholic teaching on genuine democracy

Chong notes that Catholic social teaching emphasizes that the human person ought to be the center of all policies not the World Bank or IMF policies.

The people must participate in the decision making, knowing full well what the decisions mean for their own welfare and to themselves as people.

All citizens must practice genuine equal relationships and genuine (not just token) solidarity with the community, for the good of the community and the planet (environment). Policies, like the ORMS, must not be imposed on the community by any government or outside agencies like the World Bank and IMF.

These arguments by Archbishop Chong go to the heart of the invidious role played by World Bank and IMF staff in developing countries like Fiji.

In the sections below, I elaborate but also qualify and disagree with some of the ideas presented by Archbishop Chong.

The Unaccountable World Bank (and IMF) Staff

Do Fiji people ever wonder where WB and IMF Teams come from, who they serve and who they are accountable to, for the advice that they give, often with grave consequences for the poor among us?

     Of course, these WB and IMF persons, based in Washington or wherever are extremely intelligent and qualified professionals in their own fields. They are drawn mostly from the developed countries but increasingly from the large developing countries like India and Bangladesh. They are paid phenomenally high tax-free salaries which are many times that of the Prime Ministers or Permanent Secretaries in the countries they advise.

     Most importantly, these anonymous god-like “advisers” are not accountable to the developing country people but only to their superiors in Washington, whose ideas and priorities they must propagate, if they are to look after their careers. The local people’s interests and views are not their priority.

     They work on priority areas, workplans, and projects decided by their superiors in HQ, and at the times decided by their superiors. One of the tragedies for us is that these work plan priorities change over time without any correspondence to the needs of the countries to whom they deliver their “advice”.

 My personal experience of WB

 In the nineteen nineties I myself worked for eighteen months, as USP’s contribution to a two person team (with Australian consultant and later WB staff member Ian P. Morris),  on a six Pacific country World Bank project in the field of secondary and post-secondary education, whose massive reports are in the USP Library. Morris and I had to work hard to change the WB pre-conceived idea, based on narrow rate of return analysis,  that the focus of government should be on lower level basic education and not tertiary.   Morris and I had argued that the Pacific countries needed graduates at all levels, and especially at the tertiary levels given the huge backlogs in training during the colonial era. Thankfully, they had agreed. At that time, the WB was far more concerned about wider development issues than the IMF.

     But then the WB priorities changed and they disappeared from the education scene, I suspect leaving it in some uncoordinated fashion to ADB and Forum Secretariat for both whom I also personally did some consultancy work on basic education and technical training in the Pacific (those reports are also in the USP Library)).

     Then, some five years ago, WB staff (different lot of course) reappeared in Fiji working on Fiji Bureau of Statistics household survey data, producing a technical report on poverty in Fiji. They essentially replicated the work I had been doing (with some additional “small area” estimates based on census data), but at probably fifty times the cost of my services to the FBS. Their results were pretty much the same as mine, except they were grossly wrong on the lack of changes in poverty in rural areas (I suspect because of errors in their methodology). These WB advisers never explained the discrepancies with our results and disappeared without creating any capacity in the FBS to continue the work they had been doing. The WB have never cared much about developing local capacity and sustainability of research capacity at the local universities. Why should they? There would be no need for their services if they did! 

     The WB never organized any national workshops of the kind that I assisted the Fiji Bureau of Statistics to conduct (with the great support of the Government Statistician then (the late) Timoci Bainimarama) or later (Epeli Waqavonovono) not just in Suva but also Labasa and Nadi, with Fiji Government departments and NGOs. They were facilitated by USP (Dean of FBE Professor Biman Prasad) and Fiji National University (Dean Dr. Mahendra Reddy and VC Dr. Ganesh Chand). These workshops truly democratized knowledge among the local communities- never a concern of WB or IMF.  Sadly, such workshops are no longer conducted by the FBS.

     But essentially, WB “advisers” come and go from countries like Fiji, depending on WB priorities, not ours. What is horrifying is that after giving their advice (good or bad), they never return to be accountable to the local people as are local professors of economics, or the Catholic Archbishop of Fiji, or the Bainimarama Government currently (we leave out their totally unaccountable period from the 2006 coup to the 2014 elections), or Opposition Members of Parliament.

     Neither is there any genuine collective democratic participation of the local community in the decision making as Archbishop Chong called for in his Fiji Times article. Simply holding elections is not “democracy”.

 WB Not Serving the “West” anymore.

 In the early decades after WWII, those controlling the WB and IMF were indeed the Super Powers from the “West” as Archbishop Chong alleges, but they also included Japan from the East.

     In recent decades, however, China and India have become far more important in world trade and globalization. Indeed, any economic forecasts for the economies of developed countries nowadays begin with economic projections for China and India, just as they used to thirty years ago begin with forecasts of US, Europe and Japan.  So the benefits of globalization are not any more just the monopoly of developed countries of the “West” as used to be the rhetoric twenty years ago, but must also now include new countries in Asia (China, India, Korea, Malaysia, Indonesia) and South America (Brazil).

     Unfortunately, not discussed much at all in our media (which is sadly mired in moronic discussions about rugby sevens), is that new Super Powers like China, India and Brazil, are facing an uphill battle behind the scenes to try and gain their proper voting rights on the bodies that control World Bank, IMF and World Trade Organization (WTO) which is an even more influential international body for globalization.

It will be interesting to see whether these organizations change in any way when China and WB do obtain greater say on their boards. I suspect that as Trump has done with UN organizations, they will simply withdraw their contributions and apply pressure elsewhere.

 Who needs the Structural Adjustment Programs?

 Note also that while most Western countries have long protected their domestic goods and services from the cheaper goods and services being produced by the newly emerging countries, the pressures from globalization as implemented by WTO, mean that many non-competitive domestic industries in the developed countries are collapsing, giving rise to the Trump and Brexit phenomena.  Even in Australia, after decades of sucking up billions of dollars of taxpayers’ subsidies, the essentially uncompetitive car manufacturing industries have closed down, causing great angst amongst the redundant workers, unions, and political parties.

     It is not hard to understand that high wage industries in Australia and US (like car or shoe manufacturing), cannot compete with the same products produced by the same companies, using the same technologies, in developing countries like Brazil or China or India, where the wages are one fifth of that in the developed countries, where workers work much harder, for longer hours, and without all the expensive health and safety regulations and environment protections, and often without the unions that prevail in the developed countries.

     All these developed countries and their governments (as here in Australia) face the conundrum of stagnant real wages in industries which are subject to the harsh discipline of free markets and globalization.

     These Western countries (including US, Japan and Australia) need Structural Adjustment Programs and lower wages or restrained wage growth, but the WB and IMF are rarely to be seen or heard giving stern advice and SAPs to their governments in the same way they do to weak Third World countries like Fiji. In any case, the developed countries could not care less about WB or IMF, unless they are totally mired in debt and need loans to bail them out, as do bankrupt countries like Greece. Fiji is not there, yet.

     The Fiji Government and the Fiji public need to heed the advice of responsible and reputable clerics like Archbishop Chong (with their vows of personal poverty), who have no political agenda or vested material interest to gain in giving that advice. Unlike the grossly over-paid WB and IMF Teams, Archbishop Chong is not going anywhere soon and can be held to account by Fiji people.

 

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