[mgj-announce] Reason 9 to Join IMF/World Bank Protests - Environmental Destruction and the IMF

[Robert Weissman]

			THE IMF AND ENVIRONMENTAL DESTRUCTION

                REASON NO. 9 TO JOIN THE FALL PROTESTS 
                AGAINST THE IMF AND WORLD BANK

                SEE WWW.GLOBALIZETHIS.ORG FOR PROTEST DETAILS

As one of the major institutions promoting rapid liberalization and
deregulation around the world, IMF loans are paving the way for further
resource-exploitative growth. This occurs as the IMF fails to recognize
the full economic and social value of environmental resources.
Furthermore, because of its secretive and exclusive loan negotiation
process, environmental ministries of the government cannot formally
participate in the economic decisions that will profoundly affect the
environment. In addition, IMF lending is not accompanied or guided by
any environmental policies or impact assessments. 

Export-led Growth and the Environment

IMF loans and bailout packages are generally centered around free trade
and export led growth, facilitated through currency devaluation. To
increase exports, countries extract natural resources at unsustainable
rates. Many IMF borrowers are also heavily indebted, and this debt also
forces countries to generate hard currency through exports. One of the
quickest sources of income is to liquidate natural resource stocks.
Indonesia’s program with the IMF, which calls for increased exports of
palm oil, is an example of this process. Yet land clearing for palm oil
plantations is one of the leading causes of devastating deforestation in
Indonesia. 

Removing Environmental Regulations

In order to become more competitive and attractive to foreign
investment, countries are induced to significantly lower environmental
standards. Compounding this problem is that severe IMF-mandated budget
cuts force governments to cut spending. Inevitably, government spending
cuts target environmental ministries as one of the first agencies to
suffer the budget axe. These spending cuts diminish the capacity of
environmental ministries to enforce the standards that do remain. The
result is a downward spiral of environmental conditions and a
competitive race to the bottom in which people and the environment lose
to exploitative transnational corporations. According to a World
Wildlife Fund study, published in Structural Adjustment and the
Environment, countries undergoing structural adjustment generally relax
existing standards in order to encourage private investment, as directed
by the IMF. In all but one of WWF’s nine cases, the staff of natural
resource departments was reduced, budgets were cut, and mandates were
scaled back. National environmental considerations were sacrificed for
short-term financial gain.

Creating Conditions for More Environmental Exploitation

The shrinking government budget has another more indirect, but equally
pernicious, effect. Along with environmental protection, the other are
water and sanitation, health care, education, and other social service
programs that fail to be adequately funded – though they are programs
that most benefit the poor. The poor become poorer, and this cycle of
poverty places greater threats on the environment. As the poor try to
survive, they cut down trees to build makeshift homes and to provide
heat for their families. As they are forced off farmland by large
landowners, they turn to marginal lands to subsist, and this leads to
deforestation, soil erosion, and soil infertility. The deepening of
poverty is another great threat to the environment.

Case Study: Guyana

A case study of Guyana, by Friends of the Earth-UK, revealed that
IMF-imposed budget constraints there led to low levels of funding for
the environment ministry, thereby weakening the government’s capacity to
enforce existing environmental laws. At the same time, the Fund was
encouraging the government to increase timber exports and grant
concessions to private companies. Regulations were relaxed and
unprecedented large concessions were given to private developers. Lax
regulations and reduced enforcement led to increased clear cutting and
environmental degradation. 


Adapted from a factsheet prepared by Friends of the Earth (www.foe.org),
posted at: http://www.bicusa.org/ptoc/htm/welch_envir2001.htm


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