Introduction: A 'Critical Engagement' Approach to Multilateral Institutions

In 1944, as the Second World War neared its end, a conference was convened by the victorious countries in Bretton Woods, in the United States. It was here that the World Bank and the International Monetary Fund were born – in the hope that they would provide the foundations of a peaceful and prosperous future for the world. Fifty years later, these two multilateral institutions occupy a dominant position in the global political economy, but they are the target of powerful attack – both in the streets and in the media. And in the course of these 50 years, they have been joined by a whole range of other multilateral institutions. In the late 1950s and early 1960s, three important regional development banks were established in Latin America, Asia and Africa. In 1965, the United Nations Development Programme was created, supplementing a number of United Nations (UN) specialised agencies some of which had already existed for decades. And in 1995, the World Trade Organisation (WTO) replaced the General Agreement on Tariffs and Trade (GATT), which had been the major framework for global trade negotiations since 1948. This constituted the last of the four pillars of the international system: the International Monetary Fund (IMF), the World Bank, the UN and the WTO – which had originally been conceived at Bretton Woods.

In the course of this period, a great deal had changed. The anniversary of the World Bank and IMF was met with a 'Fifty years is enough' campaign. And the meeting of the WTO in Seattle led to violent clashes in the street, to be followed by the formation of a loosely knit confederation of non-governmental organisations (NGOs) and activists who demonstrated against 'globalisation' in general, and its institutional manifestation (the World Bank, the IMF and the WTO) in particular. While some people see these institutions, and the multilateralism they promote, as playing an important role in the elimination of world poverty, others see them not as the solution, but as part of the problem. There has thus, in recent years, been greatly increased public attention and criticism of the multilateral institutions. Their annual meetings, formerly of little interest to the general public, are now events that hit the headlines of major newspapers all over the world. Many civil society activists view these institutions as part of an undesirable strengthening of market-led globalisation. Mass protest has been organised around World Bank, IMF and WTO meetings, often ending in violent clashes between protesters and huge police forces called out to prevent demonstrators from disturbing the proceedings. The importance of these annual meetings as rallying points for an emerging global anti-globalisation movement, represented by civil society movements such as Association pour une Taxation des Transactions Financièrs pour L'aide aux Citoyens (ATTAC), should not be underestimated.

Entering the new millennium, therefore, the future direction of the multilateral system is one of the most important subjects of public debate. Regrettably, however, this debate is often ill-informed. The views of those who support these institutions and those who argue for their substantial reform or closure are often not based on a well-grounded understanding of the multilateral institutions: how they are financed and organised, and how they interact with client countries, donor countries and each other. This contributes to the failure of effective dialogue between the differing camps. This book is a modest attempt to improve the situation.

This book thus offers students, practitioners and activists a critical introduction to the major institutions that constitute the multilateral development system. The mandate of these institutions defines them as technical and functional organisations. However, we regard them as political organisations whose projects, programmes and policies have a significant impact on domestic policies in the many countries in which they are involved. We will here describe the major institutions that make up the multilateral development financing system: how they operate with respect to financing and lending, and how they are organised. We will assess the various roles that they play, and related changes in their policy concerns, such as structural adjustment, sustainable development, and – more recently – governance. This discussion will be linked to the dominant role played by economics, and how the favoured approach changed over time from a Keynesian one to a neoliberal one. The major multilateral development banks (MDBs) – the World Bank, the three largest regional development banks, the African Development Bank (AfDB), the Asian Development Bank (ADB) and the Inter-American Development Bank (IDB), and the United Nations Development Programme (UNDP) – will be our main concerns, but we will also discuss the role of the IMF and the WTO vis-à-vis these institutions, and the processes and debates around them. These institutions constitute our main reference points, but we do not devote the same attention to each of them. Our main purpose is to facilitate understanding of politics and processes. For instance, in Chapter 4 when we write about the ADB, it is not only because the ADB is important (it is), but also because the political processes in this institution highlight issues of concern also for the larger universe of multilateral institutions.

Another feature of this book which may surprise some readers is the emphasis on NGOs and environmental issues. The reason for this is, however, clear. Over the two last decades NGO interaction with multilateral institutions (both directly and through member states) has been perhaps the single most important cause of reform. This NGO activity is clearly related to environmental issues. Or to phrase our argument in a different manner: it was environmental issues that first offered NGOs and civil society organisations a possibility to access and influence decision-making processes in multilateral institutions. The environment was the first rallying point for NGO activity in the World Bank and later in the regional development banks, the WTO and other multilateral institutions. This is the reason why we devote substantial attention to this particular issue-area of politics in multilateral institutions.

Our emphasis is therefore on politics within and between multilateral institutions. We argue that it is not fruitful to treat multilateral institutions as unitary actors. Just as it is widely recognised in contemporary debate that it is a gross simplification to define the nation-state as a unitary actor, the same...