Contact l Sitemap

home industries issues reasearch weblog press

Home  » Issues » World Financial Institutions

The IDB—50 Years, Zero Reflection

Posted by Laura Carlsen on April 3rd, 2009
Americas Policy Program, Center for International Policy

At the end of March, the Inter-American Development Bank (IDB) celebrated its 50th anniversary in Medellin. The occasion presents an opportunity to revise concepts and move toward a fairer development model. It is logical to think that among the festivities, a process of evaluation and self-critique would begin regarding the bank's actions and work in the region.

The circumstances demand it. The continent has been plunged into a grave economic crisis, in part because of the string of structural reforms, deregulation, foreign market dependence, and privatization that the IDB has supported in the region. Limits on the use of non-renewable fuels have become more and more obvious while climate change threatens to affect the production of basic foods and increase the frequency of natural disasters. Forced migration characterizes modern life and growing inequality has become the most important challenge faced by all the countries in the region.

      Medellin: site of the 50th anniversary of the IDB. Photo: www.skyscraperlife.com.

In spite of this gray outlook, it seemed that until now everything suggested that the IDB would prescribe more of the same medicine. They predicted an increase in loans to the region for the record figure of US$18 billion for 2009 as a response to the crisis. This will generate a new wave of debt in the recipient countries, while at the same time the development model behind the loans faces a crisis of credibility due to its dubious results. For the IDB, development is seen as a process of ensuring the transnational mobility of capital, enabling foreign investment, the transfer of goods, and access to natural resources. In recent years, this model has been imposed on regions that were previously closed off due to their geographical location or because of little interest from big business. Now that the value of natural resources is increasing and national economies have opted for exports, mega-projects including transportation infrastructure and hydroelectric power plants, among others, have become attractive again. They generally target regions with a low population density, and, in many cases, significant indigenous populations. While these communities are often forgotten by their national governments and suffer high levels of marginalization, at the same time their territories are rich in both culture and biodiversity.

The IDB has been a major promoter of infrastructure mega-projects designed to drive this vision. Two mega-project master plans have been of particular interest to the IDB: The Plan Puebla-Panama (also known as the Mesoamerican Integration and Development Project) and the Initiative for the Integration of Regional Infrastructure in South America (IIRSA). These plans include the construction of super-highways, dams, electricity networks, and more. The projects signal a drastic change in the use of land and resources. Local, regional, and national markets—which generate more jobs and constitute the majority of food distribution—are seen as a hindrance, and natural resources—conserved by indigenous communities—are considered the spoils of transnational business.

Among its objectives, the IDB aims to generate development in these regions. However, a recent study revealed that the mega-projects financed by the IDB in many cases end up displacing thousands of people who are supposed to be the beneficiaries. The construction of dams is the clearest example because it entails the involuntary displacement through the flooding of vast areas which often include pre-existing communities. One example is the La Parota hydroelectric dam in Guerrero, Mexico which would displace around 25,000 people and has currently been halted due to popular resistance. A group of 43 grassroots organizations met prior to the IDB meeting in Medellin. They presented studies and testimonies on the impacts of these projects in an effort to change the IDB's policies. Through the campaign known as "The IDB: 50 years financing inequality," these groups argue that, rather than alleviate the issue of poverty, mega-projects channel the profits gained from natural resources into the hands of the private sector and destroy the social fabric and community networks necessary for indigenous survival.

The solution to poverty that the IDB fundamentally proposes would seem to be: reduce poverty by expelling the poor. The two meetings—that of the IDB authorities and that of the organizations which question its practices—present an opportunity to revise the concept of development and move toward a fairer development model.

Originally posted on April 1, http://americas.irc-online.org/am/6008.