You cannot afford not to understand it.  It reaches indigenous and campesino communities, municipalities, and departments.  It has been a cause of division between sectors of civil society and has indebted and impoverished peoples and their governments even further.  Recently it has seen hundreds of protesters at its offices in Washington, Guatemala, and Honduras.  Soon it will see them for the first time in Mexico.  The Zapatista Army of National Liberation (EZLN) also resists it.  It is on your table and in what you eat; and it is a cause of changes to laws in the country and even of rising taxes.  From it come the subsidies that the government gives to campesinos and indigenous people with programs to “fight poverty,” like Mexico´s Procampo and Oportunidades (which was Progresa before), and credit for coffee-growing organizations.

Many NGOs also receive their funds from it, either directly or indirectly through governments.  It makes all kinds of payments, from micro-credits distributed by the government to micro-businesses to subsidies for large corporations.  It designs, supports, and participates in the regional plans to integrate the economies and markets of various countries and the megaprojects of transnational corporations (TNCs).  It is also responsible for the destruction of forests and the displacement of rural populations in order to permit dam construction.

Although few Zapatistas may know it, the rejection of financial assistance from the government by their support bases is a resistance and a struggle against the Inter-American Development Bank (IDB) and the World Bank (WB), which finance that assistance.  The formation and consolidation of the Caracoles and the Councils of Good Government is a fight and resistance against policies that promote the balkanization of states and municipalities, in order to appropriate their government structures and policies and control their resources, laws, norms, infrastructures, and lands.  The interests that these institutions represent will not be protected from the popular will, expressed in a government that defends the people’s interests, unless they have legal and juridical security, ownership of the land, and control over public security through the use of police or military force.

Recently, thousands of people from hundreds of organizations from the entire hemisphere launched a campaign against the IDB in July of 2003, during the Day of Resistance in Honduras.  We will see why the IDB, like the World Bank, has provoked so much reaction and controversy.  We  will take an X-ray of the IDB, which was founded in December of 1959, supposedly “with the purpose of contributing to economic and social progress in Latin America and the Caribbean.”  It is the oldest and largest multilateral bank on the American Continent.   The governments of the region have declared it the artery through which the funds for the Plan Puebla Panama (PPP) and the Free Trade Area of the Americas (FTAA) will flow. 

THE IDB IN THE NEOLIBERAL CIRCUIT: The IDB (www.iadb.org) is one of various elements that form the neoliberal circuit.  One element are the world’s largest and most powerful TNCs.  These include corporations from the automotive, electricity, oil, pharmaceutical, agribusiness, computing, and other industries.  These mega-corporations are forming enormous oligopolies capable of determining the rules of free trade agreements (FTAs), and the prices of their products.  They also receive copious economic assistance in various kinds of subsidies from the governments of their respective countries.  This is not an ideological point of view—these are established facts.

The interests of these large TNCs are defended by their governments.  The majority of them are found in the richest and most industrialized countries in the world.  The Group of Seven (G7) was created in 1975 with the intention to “coordinate economic, financial, and trade policies” (Guia del Mundo 1997/98, Third World Institute, p. 75).  The G7, along with the World Bank and the IMF, the policies of structural adjustment (SA) in that decade.  Its members are the United States, Japan, Germany, France, Britain, Canada, and Italy, the countries which provide the most funds to the important multilateral institutions and which therefore determine their policies. 

The external debt with multilateral banks was precisely the lever used to open countries up to neoliberal policies: increased taxes, privatization of state assets, the elimination of subsidies and tariffs, the opening of borders to First World markets, labor reforms, etc.  This also is not an ideological point—these are facts that have entailed increased poverty, unemployment, and migration, among other effects.

Actors, alliances, media, instruments and institutions enter this circuit, which cannot be closed without the geopolitical space in which to implement its interests.  This circuit operates on various levels.  While the richest elites of the world and their respective countries´ ministers of economy and finance meet annually at the World Economic Forum in Davos, Switzerland, the World Trade Organization (WTO) is the main stage for the economic agenda.   Each economic block is seeking to fortify its trenches.  Europe creates and strengthens the European Union with a common currency; the so-called “Tiger economies” of Asia develop under the leadership of Japan and China.  Meanwhile, the United States seeks to solidify its commercial and political hegemony with the FTAA.  Therefore, the circuit today’s economic model is composed of: ET+G7+SA+WB+IMF+EXTERNAL DEBT+FTA+PPP+FTAA+WTO.

Each region has its own bank: the Asian Development Bank (ADB); the Caribbean Development Bank (CDB); the Islamic Development Bank (ISDB); the African Development Bank (AfDB); the Central American Bank for Economic Integration (BCIE); the Arab Bank for Economic Development in Africa, etc.  And for the American Continent, the IDB.

THE OBJECTIVES OF THE IDB: The IDB defines its three principal objectives as: reducing poverty, increasing social equality and stimulating environmentally sustainable economic growth.  They resemble the phrase that is flaunted at the seat of the World Bank: “Our dream is a world free from poverty.”  But the IDB functions just like any private bank.  It receives its income from the interest it charges on loans and from other deposits.  With its income, it not only makes loans but also pays the salaries of thousands of its workers and pays for offices and administrative costs all over the Continent.  It is a bank that is growing richer all the time, that can loan more and charge more interest year by year.

The IDB confirms that, “Although it is not an institution that has the objective of maximizing its profits, the Bank operates according to financial principles similar to those of private banks.  It receives income from the interest on loans and from the investments of funds that are not immediately required for making payments.”  Operating in this way, the bank has torn up whole economies and has enriched itself at the expense of the people.  In Mexico, over 85% of the country’s financial system is in the hands of foreign banks.  This is also not an ideological discussion.  Its objective has been to maximize its profits—or it would not be a bank.

In the IDB’s own words: “The Bank supports economic integration as a way of expanding trade and increasing competitiveness.  Trade liberalization, tariff reduction, and regional and subregional trade agreements are supported by IDB-financed projects, with the goal of attracting productive investment and improving access to international markets.  The Bank also supports four economic alliances—Mercosur, the Central American Common Market, the Caribbean Community, and the Andean Group—as well as the Institute for the Integration of Latin America and Caribbean.  The role of the Bank in regional integration also involves its decisive support for the creation of a Free Trade Area of the Americas.” 

Every bank, whether private or multilateral, has the objective of maximizing its profits.  And all the banks use the same marketing slogans: “because we are with you,” “because our commitment is to you,” “because we are concerned for your welfare,” “one bank, for you.”  Nevertheless, some people still think that the World Bank, the IDB, and other multilateral banks are truly interested in helping people out of poverty, in helping to strengthen them commercially to make them competitive in the global market, in strengthening the sovereignty of governments and helping them out of their poverty, etc. 

This explains why the number of Mexicans living in poverty grew 8.2% in 2001.  According to the World Bank’s study “Poverty in Latin America: Trends and Determinants,” extreme poverty in Latin America rose 38% in the last decade.  This means that in 1998, 36% of the population of the  American Continent, 179 million people, will live in poverty.  However, thanks to privatization and other policies, the rich grew richer in Latin America.  The telecommunications magnate Carlos Slim now owns as much wealth as over half of all Mexicans combined, the equivalent of almost all of the inhabitants of Central America.  [Translator’s note: According to Forbes magazine’s 2005 list of the world’s richest people, Mr. Slim, the owner of Telmex and the main beneficiary of the  privatization of that formerly state company, increased his net work by about $10 billion in 2004, bringing him to a total net worth of $23.8 billion (http://www.forbes.com/static/billionaires).]

WHO THE IDB COORDINATES WITH: The IDB coordinates with the IMF “to strengthen macroeconomic stability in Latin America and the Caribbean.”  Also with the WB to “co-finance reforms, programs, and projects and to cooperate in various technical areas.”  The IDB also coordinates with the Organization of American States (OAS) and the UN’s Economic Commission for Latin America and the Caribbean (CEPAL).

So, like the IMF and the WB and in combination with them, the IDB designs and imposes economic policies in the Continent and contributes to increasing the external debt of its poor and developing countries.  Since its inception, the IDB has provided funding for oil and gas pipelines, hydroelectric plants, and privatization schemes.  It has supported the interests of the richest countries and their multinational corporations by backing the Plan Puebla Panama and the FTAA.  Because of this, you cannot neglect understanding it. 

Multilateral banks, also called International Financial Institutions (IFIs), claim to combat poverty in the world and support popular grassroots development.  However, they have backed policies and projects that have harmed the environment, the rural economy, indigenous groups, and especially women.

The IDB develops the “Country Strategies” and “Economic Situation and Perspective” documents in coordination with the WB and the IMF.  In its own words, “A team of Bank professionals prepares the Country Strategies—which serve as a framework all Bank-financed activities—at the request of a country’s government, usually every two to three years.  The Bank also develops an Economic Situation and Perspective document annually.”  This document lays out a summary of the country’s economic situation, the “development strategy” that the country should follow, sector by sector, and a list of the investments and commitments that the country’s government should make.

After the IDB defined in 2001 the economic policies that Mexico should follow, President Vicente Fox was left no choice but to act as if they had been his idea.  He said that the IDB’s suggestions “are very much in line with what we ourselves are contemplating.”  For Fox, they are strategies “which the country must follow in order to truly begin a process of sustainable development.”  Mr. Fox praised the IFIs which design the economic direction of millions of people: “The World Bank has been transforming itself into a highly professional bank which now pays careful, expert attention to the economic policies to follow for a country ... its opinion, its vision, is always very qualified, is always worth listening to and observing ... the strategies are coming to fruition and we are beginning to see the results.  The Mexican economy is going to take off powerfully.  That is precisely because we have exercised self-control and carried out these indispensable tasks. ...”  (La Jornada, May 24^th, 2001). 

THE IDB’S MEMBER COUNTRIES: The IDB was formed in 1959 by 19 Latin American and Caribbean countries and the United States.  Later, eight more countries from the continent joined it, including Canada.  In 1974, in the context of the formation of the G7 and the imposition of the structural adjustment (SA) policies that initiated the neoliberal economic model, many industrialized countries joined the IDB with the Madrid Declaration.  Between 1976 and 1993, 18 countries from other continents joined, seeking to expand their markets during the period when national governments were selling all of their assets and resources.

Today, the IDB has 47 member states: Argentina, Austria, the Bahamas, Barbados, Belgium, Belize, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Croatia, Denmark, the Dominican Republic, Ecuador, El Salvador, Finland, France, Germany, Guatemala, Guyana, Haiti, Honduras, Israel, Italy, Jamaica, Japan, Mexico, Nicaragua, Norway, Panama, Paraguay, Peru, Portugal, Slovenia, South Korea, Spain, Surinam, Sweden, Switzerland, Trinidad and Tobago, Uruguay, the United States, the United Kingdom, and Venezuela. 

WHERE THE IDB HAS ITS OFFICES: The headquarters of the IDB is in Washington, D.C.  It also has offices in 26 countries of Latin America and the Caribbean.  These countries are Argentina, the Bahamas, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Surinam, Trinidad and Tobago, Uruguay, and Venezuela.  It also maintains offices in Paris, France and Tokyo, Japan.  (The Tokyo office was opened in 1995, as Japan tried to escape its economic crisis, provoked by IMF policies, by seeking new investments and markets.)

By the way, the headquarters of the World Bank, the IDB, and the IMF are all found in Washington, a few blocks away from the White House.

THE STRUCTURE OF THE IDB: is antidemocratic.  Its highest authority is the Board of Governors, which meets once a year to continue the Bank’s policies and activities.  The Board is composed of the President, currently Enrique Iglesias, and a governor from each member country.  The governors are usually economy ministers, presidents of central banks or holders of similar offices.  The Board delegates many of its responsibilities to the Board of Executive Directors, which manages the operations of the Bank and rotates every three years (http://www.iadb.org/aboutus/iv/organizational.cfm). 

The governors elect the president of the IDB for a five-year term.  In general, the president is from a Latin American country, although the rich countries control him by only permitting him a vote in the Board of Executive Directors in case of a tie.  This Board defines the Bank’s policies, approves the projects that member countries propose, sets interests rates, authorizes loans, and approves the administrative budget.  The Board of Executive Directors is composed of 14 members, who each appoints an alternate.

Only the United States and Canada have members on the Board that exclusively represent their countries, a situation which makes members´ representation unequal and gives more decision-making power to those two countries.  Between them, they hold 14.3% of the Board’s voting power.  The other 44 member countries are represented by the remaining 12 Board members.  Peru also represents Colombia; Venezuela represents Panama; Uruguay represents Bolivia and Paraguay; Argentina represents Haiti; Nicaragua represents Belize, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua; Brazil represents Surinam; Mexico represents the Dominican Republic; Chile represents Ecuador; Jamaica was chosen by the Bahamas, Barbados, Guyana, and Trinidad and Tobago as their representative.  Italy represents Germany, Belgium, Israel, Holland, and Switzerland; Japan represents Croatia, Slovenia, Portugal, and the UK.  And Spain was chosen by Austria, Denmark, Finland, France, Norway, and Sweden to represent them. 

WHERE THE IDB’S MONEY COMES FROM: part of its resources come from your taxes.  With your taxes, you also pay the debts that your government incurs with the Bank, which are even used to support large transnational corporations.

While Bill Gates, the world’s richest man, has a net worth of US$40.7 billion [US$46.5 billion in 2005], the IDB controls over US$112 billion.  These funds include the “ordinary capital” (including each country’s quotas), other contributions, and its cash reserves.  They also include the Fund for Special Operations (FSO), which has US$10 billion, contributed by governments for the benefit of the poorest countries of the hemisphere, like Bolivia, Guyana, Haiti, Honduras, and Nicaragua.  This money, intended for the benefit of the very poor, is less than the combined wealth of just the two wealthiest Mexicans, who have benefitted from SA policies: Carlos Slim, the owner of Telmex, with a net worth of US$7.4 billion, and Jerónimo Arango, with a fortune of US$3.4 billion.  [Translator’s note: as was noted previously, Carlos Slim’s net worth has increased, since the writing of this article in October 2003, to US$23.8 billion.]

Finally, the IDB also earns income from bonds (approximately 80% of the money that it loans), and from its 4 fiduciary funds.

A government, and its national companies, can only participate in IDB projects by contributing money to the Bank.  Corporations receive around 6,000 contracts a year to provide goods and services to IDB-approved projects.  For public-works construction projects worth over US$5 million, or for sales of resources or companies for over US$350 million, governments are required to open their bidding process to foreigners, in what is called “international public competitive bidding.”  Only as long as the WTO or the FTAA do not oblige countries to always open their announcements of sales and bidding on government services to international competition, regardless of the price. 

So in order to take advantage of the investment opportunities presented by IDB-funded projects such as road, dam, gas and oil pipeline, airport, and port construction, the privatization services, and the sale of state-owned assets, the European member countries and Japan have had to contribute money to the Bank.  Governments, like those of Japan and Spain, have contributed to co-financing projects with the IDB, as has the World Bank.   Between 1996 and 2000, contributions for this co-financing were between US$1.9 and $3.5 million per year.  By 2002, Spanish multinationals had gained large concessions, projects, and investments by purchasing banks, power plants, oil wells, natural gas reserves, telecommunications systems, and the PPP’s Electrical Integration System for Central America, among others.  Endesa, Iberdrola, Unión Fenosa, Santander, Banco Bilbao Vizcaya (BBV), Repsol, Gas Natural, and other TNCs have managed to buy formerly state-owned enterprises in Latin America and the Caribbean. 

We have reached the conclusion of this first part of the study of the IDB.  Many people want to brush off and ignore the system’s critics.  For those people, the World Bank itself needs to say what so many others are already warning.  After the failure of the Fifth Ministerial Summit of the WTO in Cancun, the World Bank said: we were wrong.  It affirmed that what it has always said and promoted only leads to poverty.  In other words, they finally discovered the obvious.  If you want to learn more about the IDB and how it affects you, read the second part.

For years, people all over the world have been protesting the policies of the IDB, the World Bank, and the IMF.  Nevertheless, there are still people who do not want to understand more about those institutions, that impoverish so many, and who look for justifications to defend them.  Perhaps, to defend life, we must become as poor as Argentina or Honduras.  But today there are signs of a rising consciousness.  In Mexico, organizations from different sectors are calling for a protest against the IDB for the first time on October 12^th.  This agreement was a result of the Days of Resistance in Honduras, a meeting of Mesoamerican civil society.  And really, the effects of the IFIs policies have reached such a serious point that they present us with a moral and ethical problem.  Even if we cannot remove ourselves all at once from neoliberal dynamics and institutions, that does not mean that our populations should be paralyzed and do nothing in the face neoliberalism.

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