Stop enforced privatisation and liberalisation in developing countries

12 December 2007

Stop enforced privatisation and liberalisation in developing countries

The SP is urging Development Minister Bert Koenders to call the World Bank to account for the pressure it exerts on developing countries to privatise and liberalise their economies. Research has shown that the Bank puts pressure on countries to liberalise their markets and privatise state-owned enterprises, despite recent promises of a change in policy.

In 2005, following persistent criticism, the World Bank adopted its so-called “Good Practice Principles”. Their central commitment was the imposition of fewer conditions on loans made by the Bank to developing countries. Yet when the Brussels-based development organisation Eurodad looked at the results, it turned out that more than seven out of ten - fully 71 percent - of the loans and subsidies paid by the World Bank to developing countries continued to carry provisos. The same research revealed that the number of economic conditions attached, which invariably consist of demands for liberalisation and privatisation, has not fallen.

SP Member of Parliament and development spokesman Ewout Irrgang, commenting on the findings, said, “Despite all those fine words, the World Bank is continuing with business as usual, dictating to developing countries how they should conduct their economic policies. Yet research has shown time and again how disastrous the privatisation of basic services is for developing countries. Take just one example, the privatisation of electricity supply forced on Nicaragua by the World Bank. This brought about an enormous deterioration in the quality of the service, while the price of electricity doubled."

Irrgang has put a number of questions on the issue to the minister, urging him to put the case at World Bank level for greater transparency in relation to the conditions attached to loans. This could be achieved by giving parliamentarians and civil society a role in strategic decision-making regarding World Bank programmes, prior to their being carried out. In addition, making the list of conditions attached to loans accessible, for example by their being posted on the World Bank's website, would contribute to a solution to the problem. "I've also asked the minister if he's prepared to make his commitment of new loan funds to the World Bank dependent on the improvement of the Good Practice Principles," said Irrgang. "We're not just talking, after all, about combating poverty, but about preventing poverty."

You are here