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   Newsletter of the Indian Progressive Study Group, Los Angeles

                             August 1996

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Global Domination of the World Bank
STRUCTURAL ADJUSTMENT PROGRAMS IN INDIA
by Anibel Comelo

The noose around India's neck is being tightened by the practices and 
policies emanating from the temple of global capitalism, the World Bank. 
And India is not alone. Since its establishment at Bretton Woods, New 
Hampshire in 1944 for reconstructing war-torn economies, the World Bank's 
lending has risen to over $25 billion per year to governments of the so- 
called Third World countries. It lends India alone about $350 million a 
year. This makes the Bank the largest supplier of development capital to 
the public sector, thus yielding extremely high control in India and 
other countries.

The increase in poverty, environmental devastation, violations of human 
rights around the world testify to the egregious effects of the Bank's 
projects. Nonetheless, criticism from non-governmental organizations, 
which work closely with the populations most affected by the Bank's 
multi-million dollar projects, has resulted in mere rhetorical changes 
during the past decade. The ostensible goal of "development," as defined 
by the wealthier nations, legitimizes the rapacious intervention of the 
World Bank in the national socio-economic and political agendas of the 
developing countries. In fact, the very raison d'Ítre of the World Bank 
is to serve the interests of the capitalist elite in the G-7 nations that 
control the Bank. One of the most powerful mechanisms through which the 
Bank systematically exerts its control is through the implementation of 
Structural Adjustment Programs (SAPs).

SAPing the Poor

Structural Adjustment Programs are a package of conditions the World Bank 
and the International Monetary Fund (IMF) attach to loans to debtor 
countries with the objective of helping these countries pay off earlier 
loans by restructuring national economies. To qualify for the loans, 
countries have to submit to the economic recipe prescribed by the WB and 
IMF. Typically the components of SAPs are promotion or introduction of 
free-market policies, reductions in import restrictions, advancement of 
exports, privatization of public industries, relaxation of State 
controls, credit restrictions, wage controls, cutbacks to the public 
sector - particularly health care and education. Other than funds 
earmarked for specific large-scale projects, SAP loans make up all 
program lending of the Bank. In 1990, nearly one third of the World 
Bank's $22 billion budget went to SAPs which were begun in the early 
1980s. Even though they are most often implemented without the consent of 
the general populations or any public debate, they directly affect the 
lives of 4 billion people around the world and therefore, need to 
examined. In India, SAPs are central to the New Economic Policy adopted 
by the government in 1991 to stabilize and restructure its economy. 
Indian government had already been implementing austerity measures as 
prescribed by SAPs in the 1980s to recover from a severe debt repayment 
crisis which was primarily the result of lifting trade restrictions 
leading to the waste of foreign exchange on massive imports of luxury 
consumer goods. So ironically, the solution to the crisis was the cause 
of the crisis in the first place. In addition, due to the Bank's 
assessment of overpopulation as the cause of underdevelopment in India, 
population control, sometimes through dubious methods, is also a 
condition of the made-for-India SAP, thereby threatening women's 
reproductive rights.

SAP realities - Systematic Assault Prevails

Today, contrary to the claims that SAPs would generate economic growth, 
promote investment, create jobs, and alleviate poverty, people's lives 
tell a different story. Literally thousands of examples of the disastrous 
results that SAPs have had in the last decade have been documented. 
Almost all countries which implemented one or more SAPs have experienced: 
declines in real wages, increased income inequality, imports, rises in 
infant and maternal mortality, and increase in malnutrition. Furthermore, 
high prices for imported resources makes medicines, medical equipment and 
other life-saving items inaccessible to those who need them most. User 
fees often attached to basic social services make them unaffordable to 
the majority of the population in developing countries. As in other 
countries, massive conversion of prime agricultural lands into export-
processing zones in India has decreased food production for domestic 
populations, displaced farmers, many of whom are women with families, and 
destroyed the environment. For example, the establishment of Cargill's 
salt plants in Gujarat, in the name of trade liberalization, resulted in 
the displacement of over 2,000 women from their source of livelihood. 
Similarly, the Export Promotion Zones which reportedly provide job 
opportunities for young women, whose average age is 20 years, in practice 
lead to their dependence on companies which have no use for them once 
they are married or pregnant.

Moreover, economic policies promoted by SAPs at the macro level have in 
fact extended and intensified poverty at the micro level for millions of 
individuals by undermining food production and local industries. 
Throughout Africa, where 40 countries underwent at least one adjustment 
program between 1980 and 1991, average incomes fell by 20%, unemployment 
quadrupled to 100 million and investments fell to levels lower than in 
the 70's.examples from other countries prove the disasters that SAPs 
spell. 

For instance: 

* In Zambia, currency devaluations and other economic measures taken 
under the country's adjustment program caused the price of a loaf of 
bread to increase from 12 kwacha in 1990 to 350 kwacha in 1993.

* In Tanzania, over 90 percent of the country's textile mills, which 
employed mostly women, have closed since 1984, when the country adopted 
SAPs and opened its doors to imports.

* In Zimbabwe, a SAP resulted in cutbacks in government spending on 
social services such as healthcare and education. Following the 
introduction of Bank-mandated user fees, maternal mortality rose from 90 
per 100,000 live births in 1990 to 168 per 100,000 in 1993.

* In Santiago, Chile, the percentage of poor households rose from 28.5% 
in 1969 to 41.2% in 1989. After a decade of SAPs, unemployment rose from 
3.1% in 1972 to 41.2% in 1989. Funding for health care was cut from being 
3% to 0.9% of the national budget and resulted in a deterioration of 
infant and maternal health.

Even modest economic growth achieved in some countries has more to do 
with women's unpaid and low-paid labor, including that of migrant 
workers, such that women are actually providing a subsidy to their 
economies, than any economic solutions. For example, in order to gather 
revenues to pay interest on multilateral debt, the Philippines has kept 
domestic wages low and encouraged women to go abroad to work officially 
as maids but in practice, often as sex slaves. Moreover, 54% of the 
population continues to live in absolute poverty and debt service 
payments eat up nearly 50% of the national budget.

The most important point to be noted after more than a decade of SAPs is 
their failure to accomplish the original intention - debt repayment. 
"Third World" countries, as a group, started the 1990s with a debt 61% 
higher than what it had been in the 1980s. India's debt has risen from 
Rs. 163,311 crores in 1991 to Rs. 282,904 crores in 1993, which spells 
out to over Rs. 3,000 per Indian owed.



Challenging the Economic Dictatorship

On the other hand, multinational corporations are profiting from the red 
carpet treatment they often receive in countries like India where there 
is an abundance of cheap labor, few or no governmental restrictions, and 
a large middle-class ripe for foreign consumption. On May 22, 1996, US 
Treasury Secretary Robert Rubin asked Congress to approve $1.48 billion 
in current and overdue funding for international financial institutions 
such as the World Bank. According to Rubin, these institutions "are 
crucial in shaping a world of growth and prosperity from which all 
Americans can benefit." The idea that the World Bank and IMF are good for 
the "Third World" and indirectly for Americans has been steadfastly 
upheld by those in power but it is time to say, "Enough!"

In 1994, fed up with the scandalous practices of these financial bodies, 
many social justice and environmental groups came together under the 
banner of "Fifty Years in Enough" to transform the Bretton Wood 
institutions. Among many other recommendations, the campaign calls for 
the discontinuation of SAPs as currently constituted in order to protect 
and increase real per capita spending on necessary social services such 
as health care and basic education. More significantly, pressure has to 
be brought upon the Bank to simply write off loans for projects which 
failed economically or caused severe adverse impacts on local populations 
or the environment.

However, tinkering with the system is not enough. We need to arm 
ourselves with a clearer understanding of who holds the reins and 
benefits from the policies of these economic giants to identify and fight 
against the onslaught of globalization and market forces - signs of the 
New World Order.

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