The next level

"The attempt to redefine the World Bank's role as an anti-poverty fighter is also problematic. As a pre-condition for financing, the World Bank requires a poverty reduction strategy paper. Too often these papers appear to be little more than a repackaging of the market liberalization strategies of the past. Venezuela has directly financed ambitious programs of adult literacy, primary education expansion, health clinics manned by Cuban doctors and nurses in poor communities, obviating the need for long journeys to hospitals designed for the middle and upper classes. (In Bolivia, similar initiatives are financed by Venezuela.)

In Brazil, Mexico, and Chile, governments have designed and implemented a "bolsa familiar" subsidy program for poor families with the condition that they keep their children in school and are properly vaccinated. None of these programs have poverty reduction strategy papers required by the World Bank. Whether these initiatives could survive a downturn in the international economy and a consequent fall in commodity prices remains to be seen. And in the case of Venezuela, whether Chavez would accept an unfavorable outcome of an electoral contest has yet to be tested. What is certain is that priorities have changed from those set forth in the Washington Consensus. Equity is of far more concern. There is more than one source for development financing. The challenge for the IFIs is how they adapt to these changed circumstances.

It is not too much to say that both in the case of the WTO and IFIs there is a genuine crisis of identity. These two pillars of the American strategy of the previous decades are in disarray. We are going to see a much more diverse world of economic policies and development strategies. The true failure of Paul Wolfowitz as president of the World Bank not only was the scandal surrounding his personal life; it was his failure to articulate a convincing rationale for the future of the IFIs. That intellectual vacuum continues to this day. The one thing that is certain is that these institutions are no longer capable of implementing the Baker strategy of economic reform along American free-market lines."