Terschelling discussion groups

25 June 1999 | Reports

Days two and three of the Terschelling meeting were conducted as small breakout groups, interspersed by short plenary discussions. The idea was to allow people to discuss the issues in more depth and if possible devise some common strategies and shared agendas. There were few agreements in plenary on concrete strategies that all or most participants would pursue. However, the fact that small working groups continued beyond 11 o’clock each night showed people’s eagerness to exchange information and ideas. Below is a very abbreviated summary of some of the main points which emerged.

The World Bank’s new national sustainability indicators

Problems with the Bank’s new measures

The World Bank’s adoption of the “four capitals” (produced, human, natural and social) is a step forward. “Genuine savings”, the calculation of the rate of change of the above capitals, is likely to become one of the Bank’s lead indicators. It has a good public relations ring to it but GNP is still the determining factor, though disguised, and the thinking behind it is too economistic. It gives no sense that the economy is bound by ecological constraints.

The Bank’s figures are based only on government statistics and are therefore unreliable.

These are complex issues and a single indicator will never be good enough to express them. The Bank, however, likes single indicators so it can make easy comparisons between countries.

Market prices are too frequently used to assess the value of environmental goods and services. Where they cannot be obtained, “willingness to pay” methodologies are used. This is a doubtful approach as the answers to how much people say they would be “willing to pay” can differ wildly depending on what questions you ask to whom.

The indicators assume that other forms of capital can substitute for “natural capital” rather than that critical levels of natural resources must remain to provide raw materials such as minerals and clean water to allow economies and societies to function.

Capital flight is not properly accounted for in the savings figures.

Education spending does not allow assessment of who has benefited.

The Bank’s treatment of “social capital” is too instrumental (giving value mainly to those social interactions which may foster increased economic production). The UNDP‘s Human Development Index and Human Poverty Indexes are far better as they aim to express human potential by combining income figures with figures for literacy and life expectancy.

Important issues missed by the Bank’s indicators

When compared with other indicators being used for alternative national accounting, such as the Genuine Progress Indicator and the Index of Sustainable Economic Welfare, the World Bank’s approach appears limited by its failure to capture:

  • inputs and outcomes rather than processes and relationships (ie between the North and South; women and men; urban and rural areas);
  • informal sector economic activity;
  • peoples’ self-declared happiness;
  • cultural and religious activity;
  • frequency and quality of participation in decision-making;
  • reliability of public services;
  • access to water, land, natural resources;
  • women’s poverty and status (not just income, but working conditions, health, education etc);
  • inequality;
  • resource/material flows (ie, the water or sulphur cycle).

Strategic Options

Some groups want to criticise the Bank’s new “four capitals” approach for being too economistic and missing out key issues. Or people can try to clarify what the Bank is trying to achieve with it and press for additional indicators. At the least published genuine savings statistics should be accompanied by a clear explanation and methodology so that they do not confuse readers into thinking that they represent a holistic assessment of countries’ sustainability. The Bretton Woods Project committed to produce a short briefing on genuine savings to describe and critique the measure.

Challenging the growth model – developing strategies

A multifaceted approach was suggested, with the World Bank and IMF as two targets within a broader strategy which also includes the G7. If work is only done on the Bank and the IMF, then the traditional perspective on growth will only seep back into them through the powerful governments who set their agendas. The World Bank and the IMF reflect a deeper structure of which they are instrumentalities, but not the most important part. Changing the culture of the World Bank and IMF must be done both directly and by changing the broader global policy debate. But, while keeping the broader set of actors and debates in mind, it is important to challenge the Bank and IMF as central components of the world economic and inter-governmental system. It is important to recognise that Southern elites also promote the growth model.

Strategies need to be developed to challenge the consensus about the wisdom of trade and finance liberalisation. Capital controls need to be promoted to help stabilise the world financial system. Pension funds investment choices were also highlighted as an important aspect of the Northern financial system affecting Southern development. Concerned groups should raise awareness among those investing in and running pension funds and press for more ethical policies.

For Southern countries, economic literacy is a key tool to raise awareness of issues relating to the International Financial Institutions. To this end, more alliances are required between those directly affected by Bank and IMF policies, and Northern NGOs campaigning in these areas.

At the international level, pressure is needed to counter the Millennium Round of the World Trade Agreement (WTO). Groups should also consider how they can strengthen the UN System (UNCTAD, UNDP, UNEP) as a counterweight to the World Bank and IMF. For instance the UNDP‘s Human Development Index and Human Poverty Index are very useful tools, whose research results can usefully be promoted. This can boost the reputation of the Human Development Report compared to those of the World Bank and IMF and reveal the effects of World Bank/IMF policies not only on income but also on literacy and life expectancy.

Areas for future work on the World Bank and the IMF were suggested:

Doing more to expose the gap between World Bank’s rhetoric and the realities of implementing their policies on the ground;

Pressing the IMF to stick to its original mandate (to ensure global financial stability), whilst questioning it about the social and environmental consequences of imposing this mandate.

The role of both institutions as sources of expertise should be challenged. More should be done to critique their main reports and to press them to recognise alternative economic activities and yardsticks.

Local communities and the growth model

The discussion recognised that communities in the North are also impacted and that many people do benefit from the growth approach, at least in the short term. It is clear that communities are not homogeneous and that different parts experience development in different ways. But local communities may be negatively affected by the growth model in a number of key ways:

  • the destruction of the local economy;
  • increasing inequalities within communities;
  • the denigration of local cultural life and traditional ways of living and working;
  • the loss of political rights and local institutions;
  • the creation of poles of development and underdevelopment, ie rural/urban, people who receive safety net support and people who do not, and;
  • reducing informed debates about development choices to a false dichotomy of either maintaining the natural habitat or obtaining jobs through a ‘development’ scheme.

Some positive proposals were discussed. It was agreed that local communities needed to be helped to act as watchdogs to guard against agencies implementing damaging projects or policies. This would require effective communication with outside groups including national and international NGOs, trade unions, parliamentarians and researchers. Also needed are ways to ensure that all members of a community can express both within their community and to outsiders their views on projects that might affect them.

Addressing conflicts and contradictions among NGOs

There will always be some tensions between the priorities of different NGOs. Some divide roughly on a North-South axis, but there are many others, depending on peoples’ worldviews. For instance, there might be tensions between concerns for local resource exploitation and introducing environmental protection controls. The idea of imposing environmental conditionality on aid might be favoured by a Northern NGO keen to help a Southern country whilst also promoting sustainability; yet Southern groups may see this as another infringement on their countries’ sovereignty.

Different NGOs have confused and contradictory views on economic growth. Groups’ varying membership gives issues different emphases. Particularly for the larger Northern NGOs which are dependent on members as a funding base and a source of advocacy support.

In terms of tactics, different conceptions of power are very important. For some groups power might be conceived in a way that encourages people to reveal the truth to powerful agencies. Where understandings of power are more confrontational, groups may engage in ‘strategic lying’, or at least putting a spin on information to embarrass agencies and apply pressure for change. The divergence between those working to reform the World Bank and IMF, and those calling for their abolition partly reflects this tactical split. Approaches depend partly on whether groups are working on specific projects or on general institutional issues. For the latter, it is important to respond to the “Wolfensohn effect” with general scepticism and caution, whilst pouncing on hits rhetorical points and using them for our own purposes.

Trying too hard to work out a middle-ground of consensus to operate on would disable a lot of possible activities and make NGOs too risk-averse and gradualist. It is better to create space to discuss groups’ agreements and disagreements, working together wherever possible, and diverging in policy lines and approaches when necessary. Tensions and contradictions should be seen as means to sharpen our work not distract from it.

The lack of contact between activist groups and policy advocacy groups remains a problem in some cases. More interaction between these two levels is desirable, as feedback helps create realistic goals, and complementary activities are the best way to generate pressure for change.

It was suggested that new thinking on development and on economics should become like a contagious disease, spreading throughout the current systems of governance and development understanding. Joint work can be done on specific topics without groups needing an overall common plan. Conferences can act as maps, creating networks of interests and information chains which will facilitate specific projects in the knowledge that groups share certain important aspects of their world-views.

Some people suggested setting up a small group to take some of the results of this meeting to a wider audience, to see what feedback was obtained. A number of people suggested creating a reference guide on the World-Wide Web where people could see different resources with information about the Bank and Fund and critical articles about their programmes. The Bretton Woods Project web-site contains some such material, and links to many other sites.

Approaching the Media

There was a discussion of the balance between using NGOs’ own resources and media tools to ensure that issues are presented precisely as the groups involved see them versus trying to insert these issues and debates into the mainstream media. ‘Self -reliance’ could lead to ghettoisation and preaching only to the converted, while broader work risks dilution or even ridicule of the main messages. But a clear, more controlled exposition, perhaps to a local audience, does not exclude further media work with the national/international media.

Pictorial evidence contrasting the promises of Bank projects and their actual results complements written work in getting messages across. Simple messages, such as linking consumer products with their source in rainforests, are vital, but the commercialisation of much media means that dominant corporate interests are able to portray issues in ways which favour them.

NGOs should realise that the media is often far better at “networking” than are NGOs. NGOs should invite journalists and editors to their strategy meetings. They should also consider arranging visits to projects and other events. The PANOS Institute will be producing a document on issues related to the conference, mainly aimed at journalists in the South, but also useful for NGO people.

World Bank press briefings can be packed with informed critics who can circulate briefings and ask critical questions. Journalists often make good use of this, since they normally only hear the Bank perspectives at such meetings.

It would be helpful if people can agree on three core public messages to emphasise , for example:

1) that the Bank/Fund growth models do not work, and that there is solid evidence to prove this;

2) that their models disguise political preferences towards a technocratic society; and

3) there are many examples of successful alternative strategies.

Research/Economic Literacy

We need to challenge the World Bank’s role as a presumed source of expertise. It is all a matter of show, as illustrated by Gerald Barney’s presentation about the RMSM-X Bank model for country economic assessments. Speeches by Stiglitz had completely failed to predict economic crashes or other events, and Gerald Barney had shown that the Bank’s models could just as easily produce results opposite to the ones they presented as the results of in-depth research. It was questioned whether there really is a World Bank/IMF growth model, or is it just a framework used to justify the Institutions doing whatever they want.

The World Bank’s recent Assessing Aid report shows both the undue influence attached to dubious World Bank research, and the Bank’s continuing emphasis on economic growth. The study urges development agencies to provide finance only for countries with what it describes as “good policies and institutions”. It assumes that most aid aims to generate GNP growth and operates on only two variables – fiscal policy and the quality of institutions – but without ascribing weighting factors to either.

The Campagna per la Riforma della Banca Mondiale, Focus on the Global South, Bank Information Center BothENDS and the Bretton Woods Project have all done work to analyse and critique this, but further work is needed among the NGO and researcher communities to counter the report.

Promoting economic literacy and debate more broadly in the North and in the South will allow people to make informed critiques of the World Bank and IMF approaches, to better understand globalisation, and make proactive proposals in response. More in-depth studies of the dynamics and impacts of individual World Bank and IMF projects and adjustment loans will help bring to life the growth paradigm issues. Developing visual aids or other media will broaden understanding. The Bank Information Center has a fairly extensive database of individual project studies, and has 5 new ones underway at the moment. Womens’ Eyes on the World Bank are studying 10 sectoral reform projects at the moment. World Resources Institute is examining the Bank’s role in applying policy conditionality to forestry policy sectors.

Current opportunities for engagement and debate

The World Bank and IMF‘s approaches can be challenged whenever structural adjustment programmes, privatisations, Country Assistance Strategies or Policy Framework Papers are being developed. In some of these instances groups can explore ways to play the World Bank and IMF off against each other; exploiting contradictions in their different policies and approaches. In some countries contact with the Bank on these matters can also help open opportunities for groups to negotiate with their own government officials.

Small groups of meeting participants also discussed the ‘Post-Washington Consensus’ and the Threshold 21 computer model. The ‘Post-Washington Consensus’ is the term used by the World Bank’s Chief Economist, Joe Stiglitz, in a series of speeches in which he has sought to distance the Bank from its controversial policies such as liberalisation and privatisation. Meeting participants varied in their views on the new variants of economics that Stiglitz represents (‘new institutional economics’, ‘information-theoretic economics’). Some felt that they provide significant tactical openings for groups trying to achieve specific changes. Others, however, were concerned that these new approaches are still too technical, stripping out political and historical factors and trying to view most issues through a market lens. Researchers at the School of Oriental and African Studies in London and the Forum du Tiers Monde have produced papers on this, and the Bretton Woods Project has commissioned another contribution to the debate.

There was also a presentation of the Threshold 21 computer model which the Millennium Institute has been developing over the last decade. This is a national sustainable development computer simulation model, integrating economic, finance, population, social and environmental factors. Unlike the World Bank’s RMSM-X model, It has the advantage that its assumptions can be clearly viewed and altered by non-specialist operators. It has been used for development analysis in Bangladesh, Cambodia, China, Italy, Malawi the United States and Tunisia. Many meeting participants discussed the model’s workings, and difficulties such as how you obtain data and how the different sectors and aspects are integrated with one another. More fundamental questions were raised about whether using such an integrated computer model is strategically sensible, or whether it may boost a technocratic discussion of development options and strategies.