WASHINGTON (IPS)–Despite launching their semi-annual get together by asserting that they are not political, it is clear the International Monetary Fund (IMF) and World Bank are prone to manipulation by their richest members, a characteristic that could sideline pressing development issues.

“We are not a political institution, and our articles of agreement prevent us from interfering in the political or domestic affairs of a country,” Jean-Louis Sarbib, vice president of the Bank’s Middle East and North Africa regions, declared to a recent gathering of some of the world’s top economic officials and development activists.

Yet, within two days, Washington managed to place the reconstruction of Iraq on the meeting’s list of priorities and succeeded in getting both initially reluctant institutions to pledge to act as soon as possible.


An originally non-committal Bank President James Wolfensohn, who first said he needed UN approval before his U.S.-dominated organization could intervene in Iraq, said at the meetings’ final press conference that the Bank is now poised to do its bit in rebuilding Iraq and studying what to do with its debt.

No UN approval is needed, he added.

The institutions’ officials told reporters that it is certain now that they will both send fact-finding missions to the war-devastated Arab country to assess the cost of reconstruction, debt relief and how to get the nation working once security is returned.

While that is good news for a country that labored under economic sanctions for more than a dozen years before the U.S.-led invasion, development, poverty, education, public health, debt and AIDS took a distant backseat during the meeting.

The Bank’s chief economist, Nicolas Stern, half-heartedly repeated warnings, heard so many times in the past two years, that the UN’s so-called Millennium Development Goals to improve the living standards of the world’s poorest people will not be achieved without additional aid and freer trade, which means that poor nations must drop their anemic tariff barriers even further.

The Bank has been accused by Washington of not employing its aid to achieve progress on the ground. The institution’s stock answer is that aid is working but more is needed to produce even better results.

Free trade is a sticking point among development activists, since the Bank admits that while poor nations have liberalized their trade, much remains to be done by rich nations, which subsidize and support much of their economies and show no signs of stopping. This could alienate powerful sectors like agriculture and the steel industry.

The development committee, the senior decision-making body of the Bank and IMF, was also short on results during the meeting. It reiterated a commitment to meet another serious challenge–financing the first group of countries in its Education Fast Track Initiative, an ambitious plan to put some 120 million children back in primary schools.

But no new money was offered and no clear time frame for expanding the program was released, complained Oxfam, a leading development group.

“Rich countries are firing blanks in the war against poverty. They couldn’t find $430 million to kick-start the Fast Track initiative to get every child into school in seven countries,” said Phil Twyford, advocacy director.

The speed with which political will and resources were mobilized to invade, bomb and possibly reconstruct Iraq stands in stark contrast to the willingness of the rich countries to tackle poverty in developing countries, he added.

Mr. Twyford said that while some $80 billion, approved by the U.S. Congress for the war on Iraq, can be found for military action “in a second,” there was no sign of the $50 billion needed to reach the Millennium Goal of halving poverty by 2015.

“It’s a clear case of money for the war, but nothing for the poor,” he said.

Hopes among some developing nations and civil society groups, which in many ways function as watchdogs over the two now controversial institutions, that poor nations would receive more authority within the Bank and IMF, were also dashed.

The best that Manuel Trevor, South Africa’s finance minister who heads the development committee, could report was that the issue remains on the agenda for upcoming meetings.