At the 60th commemoration of the Asian African Conference in Jakarta, Indonesia last month a number of leaders agreed that, to succeed, there is a need for a new bank, totally separate from the World Bank and the International Monetary Fund (IMF) because the two can no longer be trusted to fully fund development infrastructure projects.
Indonesian President Joko Widodo, the conference host, said those who still insisted that global economic problems could only be solved through the World Bank, International Monetary Fund and Asian Development Bank were clinging to “obsolete ideas”.
In his opening statement, Widodo said that African and Asian countries felt a global injustice because the developed world is reluctant to change the status quo:
“The view that the world economic problems can only be solved by the World Bank and the International Monetary Fund is an outdated view. I am of the view that the management of the global economy cannot be left only to these international financial institutions. We must build a new global economic order that is open to new emerging economic powers.
“When rich nations, which comprise a mere 20 percent of the world’s population, consume 70 percent of the world resources, then global injustice becomes real.
“When hundreds of people in the northern hemisphere enjoy the lives of the super-rich, while more than 1.2-billion people in the southern hemisphere struggle with less than 2 dollars per day, then global injustice becomes more visible before the eyes.
“When a group of rich countries think that they could change the world by use of force, the global inequality clearly brings about misery, of which the United Nations looks helpless.”
You can read the full text of Widodo’s speech here.
Speaking in his capacity as the African Union leader and the Southern African Development Community chairperson, Zimbabwean President Robert Mugabe echoed these sentiments, arguing that Asian and African countries “should no longer be consigned to the role of exporters of primary goods and importers of finished goods” in a “role that has historically been assigned to us by the colonial powers and starting from the days of colonialism”.
He argued that policies fostered by the IMF and the World Bank had led to deindustrialisation and declining income in sub-Saharan Africa and that both institutions should be criticised for “failing to deliver solutions” to alleviate poverty, distribute wealth and close the inequality gap in developing countries.
He said the two Bretton Woods institutions were based on “Western doctrine and exploitation” and that developing countries needed to look for alternatives to secure their place in global affairs: “We see this by the decision taken by Brics [Brazil, Russia, India, China and South Africa] countries in establishing a development bank and the establishing of Asia Infrastructure Investment Bank championed by China. This is how we must forge ahead if the voice of the South is going to matter in international affairs.”
Mugabe said the development of these banks would usher in a new world economic order that would focus on South-South co-operation and make developing countries self-sufficient. (Source – Mail & Guardian)
Reactions to this will be mixed – controversial Zimbabwean President Robert Mugabe is one of those leading the charge for a new bank; Indonesia has many of it’s own problems, and turnout at the conference was low (21 leaders attended of 109 invited). However, I believe it’s really important that these conversations are being had, and that there is a growing dissatisfaction with the current world economic order, its inequalities and it’s unfairness towards the global south. Widodo himself said the group may be meeting in a changed world but still needed to stand together against the domination of “a certain group of countries” to avoid unfairness and global imbalances – and this was a sentiment shared by other leaders at the conference.
I completely agree that it’s time for a ‘new world order’, or a ‘new world civilization based on social justice, equality, harmony, and prosperity’ as President Widodo put it – let’s just hope that these leaders recognise that they need to lead by example.
It’s not going to be easy, and I have numerous concerns about the fine detail; including the task being handed over to China, or the China-backed Asian Infrastructure Investment Bank (AIIB). The AIIB is seen by many as a competitor to the Western-dominated World Bank and Asian Development Bank and a ‘threat’ to U.S efforts to extend its influence in the Asia-Pacific region and balance China’s growing financial clout. I think that it’s important to challenge US influence, but I do worry that this will just herald more of the same problems that accompany a global dominant hegemony – unchecked power, global inequality and debt, but with China at the helm.
I look forward to seeing where this one is headed and hope it is authentically, passionately, fairly, compassionately fruitful!
Let me know what you think – a good idea or a bad one? How might this work? Is it possible with/without China leading the way?
This article was originally posted here.