In July, on the eve of the 75th anniversary of the Universal Declaration of Human Rights (see Observer Summer 2023, Spring 2023), the UN Secretary General, António Guterres, released a report titled A New Agenda for Peace (NAP) calling for immediate actions to address growing threats to peace and stability. The report argues that challenges to peace and the multilateral order are rooted in questions of trust, cooperation and solidarity among and within nations, and go beyond the dynamics in individual situations of fragility, conflict and violence (FCV). The NAP is an important addition to calls for a ‘new multilateralism’, as it stresses the implications for peace and security of the current unjust international system, of which the Bretton Woods Institutions (BWIs) – the World Bank and IMF – are key components. The report gives important prominence to longstanding civil society calls for the establishment of a more just and environmentally sustainable economic order that enhances the social contract (see Observer Summer 2022).

Many trees, not a forest in sight: BWI’s myopic view ignores austerity and privatisation’s impacts on fragility

The IMF and the World Bank have long been concerned with the negative consequences of FCV. In March 2022, the IMF released its Strategy for Fragile and Conflict-Affected States (see Observer Autumn 2022), which followed the 2019 launch of the World Bank’s Strategy for Fragility, Conflict, and Violence 2020 – 2025 (see Observer Autumn 2019). The strategies are welcome adaptations to the approaches of both institutions in fragile and conflict-affected situations (FCS). They rightly detail the negative impacts of FCV on poverty, food insecurity and the attainment of the Sustainable Development Goals (SDGs), recognise their damaging spill-over effects, and note that weak governance and administrative capacity, lack of trust in institutions and weak human resource development contribute to FCV.

However, both strategies are limited to interventions in FCS and treat them as if they existed in a political and historical vacuum, disregarding the relationship between the position of FCS in an unequal global economy and the local drivers of FCV. They fail to consider the extent to which the BWIs have contributed to what the World Bank acknowledges is a ‘crisis of development’ and what the Fund recognises is a rise in social unrest (see Observer Winter 2022) through, inter alia, their support of austerity, privatisation of social services, and cuts in public sector wage bills, including for the provision of health and education (see Observer Spring 2022, Autumn 2019). These policies act as drivers of FCV by contributing to the erosion of the social contract and distrust of public institutions locally and globally.

Redressing the pervasive historical imbalances that characterize the international system ... must be a priority.António Guterres, UN Secretary General

Failure of governance and policy reforms at Bank and Fund threatens peace and stability

In contrast to the narrow scope of the Bank and Fund’s approach to FCV, the NAP identifies reforms to the global order as essential to peace and security. It asserts that, “redressing the pervasive historical imbalances that characterize the international system – from the legacies of colonialism and slavery to the deeply unjust global financial architecture and anachronistic peace and security structures of today – must be a priority.” The document makes a clear link between the unequal distribution of gains from the current system and increasing distrust in institutions, domestically and globally.

Challenging the financing gap narrative of key Bank and Fund shareholders and management, the NAP highlights that adequately financing the SDGs is not charity, but “eminently fair to redress past and current injustices, in particular those in international trade and the global financial system.” It notes the impact of debt on states’ capacity to finance development needs, the high cost of capital for developing states and unequal distribution of IMF Special Drawing Rights (SDRs; see Briefing, Reconceptualising Special Drawing Rights as a tool for development finance) and the unequal global tax system. The report stresses, “It is in the interest of all developed and developing countries to reform the international financial architecture in order to rebuild trust in the system and prevent a further drifting apart and eventual fragmentation of inter-national financial and economic relations.”

Alas, recent developments at the BWIs are inauspicious. The failure to agree a long-delayed quota realignment in the IMF’s 16th quota review, coupled with the unwillingness to act on the UN Secretary General’s call for a SDR-based SDGs stimulus and continued use of its counter-productive and unnecessary surcharges policy (see Observer Spring 2023), point to an unwillingness of the IMF’s key shareholders to grasp the nature of the threats outlined in the NAP.

Similarly, the Bank’s resistance to use the Evolution Roadmap process to evaluate its contribution to the ‘crisis of development’ it rightly identifies is highly problematic, particularly given concerns about the negative impact of its private sector-led approach on inequality, the equitable delivery of essential social services (see Observer Winter 2023), erosion of labour rights, and fiscal impacts of public-private partnerships (see Observer Spring 2023).

To a significant degree, the effectiveness of the New Agenda for Peace rests on the willingness of BWIs’ management and key shareholders to broaden their understanding of fragility, and to actively support the NAP’s recommendations to reform their outdated and unjust governance structures and counter-productive policies. As Professor Erin McCandless of the University of Witswatersrand stresses, “this will require acknowledging the varying root causes of fragility – some of which arise in the making and execution of Bretton Woods policy approaches. Transformative measures towards greater peace in the world will need to start here, and are unlikely to take root with business as usual reforms.”