Rethinking Multilateralism in Foreign Aid: Beyond the Neoliberal Hegemony 9780367425999, 9780367853808

Table of contents :
Cover
Half Title
Series Page
Title Page
Copyright Page
Table of Contents
List of illustrations
List of contributors
1 Multilateralism and development aid: concepts and practices
Introduction
A very brief conceptualisation of multilateralism
Bretton Woods multilateral
The discourse
Critiquing the Washington Consensus
Conclusion
References
2 Multilateralism, global development: unpacking the megatrends
Introduction
The Multilateral Development system
Origins of the multilateral development system
International development megatrends
Evolving theories of development
Marxist theory and development
Modernisation theory and development
Dependency theory of development
Economic growth, liberal, and neoliberalist thinking
Post-development,critical development, and decolonising discourse
Conclusion
References
3 Populism and a new world order
Introduction
A history of economic ideas
Populism
Institutions and institutional theory
Conclusion
References
4 Revisiting the Truman version of development and Eurafrica project of underdeveloping Africa
Introduction
The Truman version of development and underdevelopment in
Africa
The Eurafrica project
The World Trade Organisation’s role in global coloniality
Why has development eluded Africa in the post-colonialera?
The decolonial epistemic perspective as the future for Africa?
References
5 Seventy-fiveyears of financing and advising development: perspectives on work of the Bretton Woods institutions and
Africa’s chequered development
Situating the fund and the World Bank Group in historical
and hegemonic perspective
Some elements of Gramsci’s hegemony
The Fund and the World Bank in Africa’s development project
World Bank and IMF ’s free-marketversion of development
and debt burden
The Fund, World Bank, and poor advice
The rise of the ‘South’ in development financing
Conclusion
References
6 The Washington Consensus and global civil society: the road traversed
Introduction
Global civil society in perspective
A bit of history
Global civil society and the early encounter with the World
Bank and IMF
The real encounter – the Working Group with the Bank
Global debt crisis, Heavily Indebted Poor Countries (HIPC)
and Poverty Reduction Strategy Papers (PRSPs)
Global civil society today
Conclusions
References
7 Shifts in international development aid and their impact on
economic growth
Introduction
Review of literature
Preliminary data analysis
Model and estimation results
Model
Conclusion
Notes
References
8 Multilateral development banks: Washington Consensus,
Beijing Consensus, or banking consensus?
Introduction
Washington, Beijing, or banking consensus?
Development banks and financing infrastructure
Development Bank of Latin America
Islamic Development Bank
Asian Infrastructure Investment Bank
Conclusion
Notes
References
9 Rethinking global financial architecture: the case of BRICS
New Development Bank
Introduction
Rationale for the formation of the BRICS NDB
Objectives and governance of the New Development Bank
Capacity of the BRICS countries in managing the New
Development Bank
Role of the NDB in the global financial architecture
How the NDB can effectively bring about sustainable
development
Conclusion
References
10 The ADB and AIIB: cooperation, competition and
contestation
Introduction
The shared architectures of ADB and AIIB
The ADB
The AIIB
A shared development vision
ADB as knowledge-producer
The geo-politicsand autonomy of ADB and AIIB
Connectivity and harm
Conclusion
Notes
References
11 The World Bank’s resilience discourse: reactive environmental norm diffusion and the crisis of global
climate governance
Introduction
The World Bank and the environment
From sustainable development to resilience
The World Bank’s resilience discourse
Conclusion: reactive norm diffusion and the crisis of global
climate governance
References
12 Challenging the hegemony of the Washington Consensus:the development potential of BRICS ‘from below’
Introduction
The new scholarship of BRICS
Sustainable development and development finance
Standing on our own two feet: the NDB and the end of
‘dollar hegemony’?
Future benefits or ‘beggar-thy-neighbour’ – what has
happened to BRICS since 2014?
Right-wingpopulism, the defeat of Lula and the PT, and the
burning of the Amazon rainforest
BRICS from below?
Technology, climate change, and alternatives: ‘a more
expansive and balanced global capitalism’
In conclusion, a tentative optimism
References
13 Multilateral foreign aid and the shadow of Cold War II
Introduction
The supremacy of the Bretton Woods institutions
Bretton Woods Conference: A precursor to Cold War I
Foreign aid as an instrument of Cold War I
The Marshall Plan and the Molotov Plan
Cold War I: a foreign aid perspective
The World Bank: from Cold War Keynesianism to
neoliberalism
Challenging the Washington Consensus multilateralforeign aid
The challenge from within
The challenge from without
Towards Cold War II
Conclusion
References
14 A new ‘new’ multilateralism? The changing space of multilateralism in a contemporary development context
Introduction
The tangled web of neoliberalism, globalisation, and
multilateralism
Neoliberalism and the crisis of development
Old ‘new’ multilateralism
Defenders of multilateralism
Critiques of multilateralism
New ‘new’ multilateralism
Conclusion
Note
References
15 Competing multilateralisms: development aid under
scrutiny
Introduction
Geo-politicsand multilateralism in a multipolar world
Geo-economicfactors shaping multilateralism
Institutional capacity
Multilateralism within 2030 agenda for sustainable development
Conditionalities
Conclusion
References
Index

Citation preview

“This is an excellent book. It is thoroughly discussing current challenges to the multilateral aid system and its international financial institutions. The rising multipolarity of the global order and the dawn of right wing populism in western liberal democracies have brought the long-established architecture of multilateral development financing into jeopardy. The contention between ‘Washington Consensus’ and ‘Beijing Consensus’ – and their respective institutions and narratives – is analysed by a number of knowledgeable authors.” Prof. Dr. Matthias Rompel, Honorary Professor at Giessen University and Director at the German International Cooperation Agency GIZ “A strong analytical and a timely case study in an important, but clearly underresearched IR theory field. The authors were bold enough to question many deeply rooted perceptions about how multilateralism is related to neoliberalism. The book is a major contribution to our understanding of what an efficient multilateral international assistance should mean in the XXI century.” Andrey Kortunov, Director General, Russian International Affairs Council, and President, New Eurasia Foundation “Neoliberalism has been the archetype of development finance for the past four decades, a trajectory that is now increasingly overshadowed by the long reach of China’s economic ascendancy. Jakupec, Kelly, and Makuwira have assembled a timely and vital contribution that encourages us to reconsider the multilateral foreign aid paradigm as global hegemony shifts to the Far East.” Professor Simon Springer, Head of Discipline for Geography and Environmental Studies and Director of the Centre for Urban and Regional Studies, University of Newcastle, Australia

Rethinking Multilateralism in Foreign Aid

This edited book provides a contemporary, critical, and thought-provoking analysis of the internal and external threats to Western multilateral development finance in the twenty-first century. It draws on the expertise of scholars with a range of backgrounds providing a critical exploration of the neoliberal multilateral development aid. The contributions focus on how Western institutions have historically dominated development aid, and juxtapose this hegemony with the recent challenges from right-wing populist and Beijing Consensus ideologies and practices. This book argues that the rise of right-wing populism has brought internal challenges to traditional powers within the multilateral development system. External challenges arise from the influence of China and regional development banks by providing alternatives to established Western-dominated aid sources and architecture. From this vantagepoint, Rethinking Multilateralism in Foreign Aid puts forward new ideas for addressing the current global social, political, and economic challenges concerning multilateral development aid. This book will be of interest to researchers, academics, and students in the field of International Development and Global Governance, decision makers at government level as well as to those working in international aid institutions, regional and bilateral aid agencies, and non-governmental organisations. Viktor Jakupec is an Honorary Professor at Deakin University, Australia, the University of Potsdam, Germany, and Malawi University of Science and Technology. Max Kelly is an Associate Professor of International and Community Development at Deakin University, Australia. Jonathan Makuwira is a Professor of Development Studies and the current Deputy Vice Chancellor of Malawi University of Science and Technology (MUST). He is also a Research Associate in the Department of Development Studies at Nelson Mandela University (NMU), South Africa.

Routledge Explorations in Development Studies

This Development Studies series features innovative and original research at the regional and global scale. It promotes interdisciplinary scholarly works drawing on a wide spectrum of subject areas, in particular politics, health, economics, rural and urban studies, sociology, environment, anthropology, and conflict studies. Topics of particular interest are globalization; emerging powers; children and youth; cities; education; media and communication; technology development; and climate change. In terms of theory and method, rather than basing itself on any orthodoxy, the series draws broadly on the tool kit of the social sciences in general, emphasizing comparison, the analysis of the structure and processes, and the application of qualitative and quantitative methods. Practices of Citizenship in East Africa Perspectives from Philosophical Pragmatism Edited by Katariina Holma and Tiina Kontinen Political Financing in Developing Countries A Case from Ghana Joseph Luna Dilemmas of Regional and Local Development Edited by Jerzy Bański Security, Development and Violence in Afghanistan Everyday Stories of Intervention Althea-Maria Rivas Economic Development in Ghana and Malaysia A Comparative Analysis Samuel K. Andoh, Bernice J. deGannes Scott and Grace Ofori-Abebrese Rethinking Multilateralism in Foreign Aid Beyond the Neoliberal Hegemony Edited by Viktor Jakupec, Max Kell, and Jonathan Makuwira

Rethinking Multilateralism in Foreign Aid Beyond the Neoliberal Hegemony

Edited by Viktor Jakupec, Max Kelly, and Jonathan Makuwira

First published 2020 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 52 Vanderbilt Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2020 selection and editorial matter, Viktor Jakupec, Max Kelly, Jonathan Makuwira; individual chapters, the contributors The right of Viktor Jakupec, Max Kelly, Jonathan Makuwira to be identified as the authors of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Names: Jakupec, Viktor, 1945- editor. | Kelly, Max (International development researcher), editor. | Makuwira, Jonathan J., editor. Title: Rethinking multilateralism in foreign aid : beyond the neoliberal hegemony / edited by Viktor Jakupec, Max Kelly, and Jonathan Makuwira. Provided by publisher. Identifiers: LCCN 2020002082 (print) | LCCN 2020002083 (ebook) | ISBN 9780367425999 (hardback) | ISBN 9780367853808 (ebook) Subjects: LCSH: Economic assistance–Political aspects. | Development banks. | Hegemony. Classification: LCC HC60 .R36836 2020 (print) | LCC HC60 (ebook) | DDC 338.91–dc23 LC record available at https://lccn.loc.gov/2020002082 LC ebook record available at https://lccn.loc.gov/2020002083 ISBN: 978-0-367-42599-9 (hbk) ISBN: 978-0-367-85380-8 (ebk) Typeset in Times New Roman by Wearset Ltd, Boldon, Tyne and Wear

Contents

List of illustrations List of contributors 1 Multilateralism and development aid: concepts and practices

ix x 1

VIKTOR JAKUPEC, MAX KELLY AND JONATHAN MAKUWIRA

2 Multilateralism, global development: unpacking the megatrends

11

MAX KELLY AND JONATHAN MAKUWIRA

3 Populism and a new world order

31

MICHEL DE PERCY

4 Revisiting the Truman version of development and Eurafrica project of underdeveloping Africa

46

SABELO J. NDLOVU-GATSHENI AND BUSANI MPOFU

  5  Seventy-five    years of financing and advising development:  perspectives on work of the Bretton Woods institutions and Africa’s chequered development

63

CHARLES H.B. MPHANDE

6 The Washington Consensus and global civil society: the road traversed

78

JONATHAN MAKUWIRA

7 Shifts in international development aid and their impact on economic growth MANEKA JAYASINGHE, ELIYATHAMBY A. SELVANATHAN AND SAROJA SELVANATHAN

93

viii

Contents

8 Multilateral development banks: Washington Consensus, Beijing Consensus, or banking consensus?

113

SUSAN ENGEL AND ADRIAN ROBERT BAzBAUERS

  9  Rethinking global financial architecture: the case of BRICS  New Development Bank

132

TAFADzWA CHITENDERU AND RONNEY NCWADI

10  The ADB and AIIB: cooperation, competition and  contestation

145

KEARRIN SIMS

11 The World Bank’s resilience discourse: reactive environmental norm diffusion and the crisis of global climate governance

160

PETER FERGUSON AND LINDA WOLLERSHEIM

12 Challenging the hegemony of the Washington Consensus: the development potential of BRICS ‘from below’

178

JANET CHERRY

13  Multilateral foreign aid and the shadow of Cold War II

195

VIKTOR JAKUPEC

14  A new ‘new’ multilateralism? The changing space of  multilateralism in a contemporary development context

215

MAX KELLY AND JOHN MCKAY

15 Competing multilateralisms: development aid under scrutiny

236

JONATHAN MAKUWIRA, MAX KELLY AND VIKTOR JAKUPEC

Index

250

Illustrations

Tables 7.1 7.2 7.3 7.4 7.5 8.1 8.2 10.1 10.2 10.3 11.1

Summary statistics, CDA, MAID, PCGDP, and EXPO, 2000–2014 Correlation matrix Estimation results for individual countries Test for unit root Panel data results (fixed effects) Case study MDBs AIIB’s loan portfolio, 2016–August 2019 ADB Subregional Integration Programs ADB top-ten subscribed capital providers and vote-holders AIIB top-ten subscribed capital providers and vote-holders World Bank’s resilience discourse

98 103 105 107 108 120 126 146 151 151 168

Figures 7.1 7.2 7.3

Multilateral aid disbursements, 2000–2014 Chinese development assistance, 2000–2014 Growth rates in multilateral aid disbursements against Chinese development assistance, 2000–2014

99 100 102

Contributors

Adrian Robert Bazbauers holds a PhD from Australian National University and is Lecturer in International Public Sector Management at the School of Business, UNSW Canberra. His research interests include climate change, global governance, multilateral development finance, and international public sector management. His current focuses are climate finance and comparative organisational analyses of multilateral development banks drawing on constructivist International Relations and organisational sociology. In 2018 he produced the book The World Bank and Transferring Development: Policy Movement through Technical Assistance (Palgrave Macmillan). Janet Cherry is a South African social justice activist and academic. She is currently Professor and Head of the Department of Development Studies at the Nelson Mandela University in Port Elizabeth. She has a PhD in political sociology from Rhodes University. Her main areas of research are sustainable development, political economy of development, democratic participation and social and political history. She has been involved in research for, among others, the Human Science Research Council (Democracy and Governance Programme), the South African Truth and Reconciliation Commission and the International Centre on Human Rights Policy (Geneva). She has published two books as well as a number of articles and chapters in books on South African history, labour, women’s and social movements, transitional justice and sustainable development. Tafadzwa Chitenderu is Lecturer at the Nelson Mandela Metropolitan University, Port Elizabeth, South Africa and holds a PhD in Economics from the same University. She also holds a Master’s degree in economics and a Bachelor of Commerce degree, both from University of Port Hare, South Africa. She also holds a certificate in Real Estate management and E-Business Development from UV University Amsterdam (Netherlands). Her area of specialisation is development economics and monetary economics. Michael de Percy is Senior Lecturer in Political Science in the School of Government and Policy and an Academic Fellow of IGPA at the University of Canberra, Australia. He is a graduate of the Australian National University

Contributors

xi

(PhD) and the Royal Military College Duntroon, and he is a Chartered Member (CMILT) of the Chartered Institute of Logistics and Transport. His research interests include Government-business relations, leadership, innovation, comparative politics, historical institutionalism, transport policy, communications policy, broadband, infrastructure policy, social media, online learning. Susan Engel is a Senior Lecturer in Politics and International Studies at the University of Wollongong. She holds a PhD from the University of Wollongong, Australia and an MA in international relations from the Australian National University. She lectures in the areas of development, international politics and political economy and Southeast Asian politics. She has written a book The World Bank and the Post-Washington Consensus in Vietnam and Indonesia: Inheritance of Loss (Routledge) and over 25 journal articles and chapters. She is currently researching multilateral development finance, development cooperation between the nations of the Global South, the role of emotions in development in particular in sanitation and microfinance programs, and teaching and learning in international studies. Susan Engel worked in the government, community, and aid sectors before becoming an academic and since 2002 has volunteered with indigo foundation, a not-for-profit community development NGO. Peter Ferguson is a Senior Lecturer in Politics and Policy Studies at Deakin University. He holds a PhD in political science, a Master of International Politics and a Bachelor of Planning and Design (Architecture) all from the University of Melbourne. Peter is a discourse analyst and critical theorist, whose research focuses on the political barriers to moving toward a socially just and ecologically sustainable states system and global economy. This was the focus of his 2018 book Post-Growth Politics: A Critical Theoretical and Policy Framework for Decarbonisation (Springer). Prior to joining Deakin University, he was a lecturer in environmental politics at the University of Melbourne. Viktor Jakupec is an Honorary Professor at the University of Potsdam, Germany, Deakin University, Australia and the Malawi University of Science and Technology. He holds a Dr.phil. from FU Hagen, and a M.Ed. (1st Hons) from James Cook University. His research background is in development studies and politics of education. His most recent publications (co-authored with Max Kelly) are Foreign Aid in the Age of Populism: Political Economy Analysis from Washington to Beijing (Routledge), Development Aid – Populism; The End of the Neoliberal Agenda (Springer) and Assessing the Impact of Foreign Aid: Value for Money and Aid for Trade (Academic Publishers/Elsevier). He has over 20 years of experience as a consultant on World Bank, Asia Development Bank, Millennium Challenge Corporation, International Finance Corporation and European Training Foundation funded development aid projects in South-East, Central and South Asian, and Balkan and Middle East countries.

xii Contributors Maneka Jayasinghe is a Lecturer in Economics in the Asia Pacific College of Business and Law at Charles Darwin University, Australia. She holds a PhD in Economics (Griffith University, Australia), Master’s degree in Public Policy (National University of Singapore) and Bachelor of Arts in Economics (University of Colombo, Sri Lanka). Her research interests include consumer demand analysis, tourism analysis, poverty, and inequality and gender focusing mainly on South Asia and Australia. She has published a number of papers in international refereed journals, such as Social Indicators Research, Applied Economics, Food Policy, and International Journal of Social Economics. She has also received a number of research grants and awards including best paper and best presenter awards. Max Kelly is an Associate Professor of International and Community Development at Deakin University, Australia. She holds a PhD in International Development (Kingston), a Masters in Rural and Regional Resource Planning (Aberdeen), and a Bachelors in Agricultural Science (Dublin). Her recent research has focused on Political Economy Analysis, livestock development and animal welfare, Impact Assessment in development policy and practice, and research methods in an African Context. Recent publications include: Foreign Aid in an Age of Populism: Political Economy Analysis from Washington to Beijing (Routledge, co-authored with Viktor Jakupec), Women Researching in Africa (Palgrave Macmillan), Assessing the Impact of Foreign Aid: Value for Money and Aid for Trade (Academic Publishers/Elsevier). She has consulted and volunteered with a wide range of organisations, including international NGOs, multilateral organisations and government departments. Jonathan Makuwira is Professor of Development Studies and the current Deputy Vice Chancellor of Malawi University of Science and Technology (MUST). He is a Research Associate in the Department of Development Studies at Nelson Mandela University, South Africa. His research includes NGOs and development; the political economy of development aid; disabilityinclusive development; peacebuilding and development; participatory development; and partnership building in development processes. He taught International Development (RMIT University), Comparative Indigenous Studies (Central Queensland University) and Peace Studies (University of New England). He has worked as a Primary, Secondary and Teacher Educator in Malawi. He is an experienced development practitioner who worked with NGOs and is the author of over 40 journal articles, 25 book chapters and a book: Non-Governmental Development Organisations and the Poverty Reduction Agenda: The Moral Crusaders (Routledge). John McKay is an Honorary Professor in Development Studies at Deakin University and a Partner with Analysis International. He is one of the authors of the best-selling textbook International Development: Issues and Challenges (Palgrave Macmillan). Since the 1960s, he has focused on work in Africa, first in Sierra Leone, and then as a Research Fellow in the Bureau of

Contributors

xiii

Resource Assessment and Land Use Planning at the University of Dar es Salaam, Tanzania. Following appointments at the African Studies Centre of the University of Liverpool in the UK and at the Ohio State University in the USA he accepted the position of the Foundation Director of the Development Studies Centre, the Monash Asia Institute and the Australian APEC Study Centre, Monash University, Australia. Most recently he has written a number of studies on the lessons for Africa of the Asian economic ‘miracle’, relations between Africa and Asia, and the possibilities for Africa to enhance its development potential in the current environment in which Asia is very much at the centre of the global economy. He is currently a Research Associate of the Brenthurst Foundation in Johannesburg. Charles H.B. Mphande, is a Senior Lecturer in International and Community Development at Victoria University, Australia. He holds a PhD from Victoria University, Australia, an MA, University of Warwick, UK, BEd (Hons.) from University of Malawi. His research stems from his previous work in Africa. His academic work in communication and development involved working with civil society organisations in social mobilisation. He evaluated Information Education and Communication components of World Bank sponsored long-term national programmes and he undertook research among new and emerging African communities in Victoria concerning communication and literacy usage for the former Victorian Multicultural Commission. Charles led an evaluation of local government and community partnership capacity building programs and is currently working with the Pan-African Australasian Diaspora Network and the African Union in their diaspora engagement for Africa’s development. Busani Mpofu is a Senior Researcher at the Archie Majefe Research Institute, University of South Africa. He holds a PhD in Humanities from University of Edinburgh, an MA in African Economic History, BA (Special Hons.) in Economic History and BA General, both from University of zimbabwe. His research focusses on Third-world urbanisation and the history of African cities, urban poverty, inclusive development, development discourse and theory. He has published on urban histories, land reform questions and development discourse. His latest publications include a book co-edited with Sabelo J. Ndlovu-Gatsheni titled Rethinking and Unthinking Development: Perspectives on Inequality and Poverty in South Africa and Zimbabwe (Berghahn Books). Ronney Ncwadi is currently a Full Professor and Director of the School for Economics, Development and Tourism at Nelson Mandela University in Port Elizabeth, South Africa. He holds a PhD in Economics from Nelson Mandela Metropolitan University, MA in Economics from the University of Port Elizabeth and BA (Hons) Degree in Economics. He also holds a certificate in Marine Studies from Washington University (USA) and a certificate in MacroEconometric Forecasting (IMF). Professor Ncwadi’s areas of specialisation are

xiv

Contributors

Macroeconomics, Public Finance, International Finance and Applied Econometrics. He is the editor of the South African edition of Macroeconomics and Microeconomics textbooks published by Cengage Publishers. Sabelo J. Ndlovu-Gatsheni is Research Professor and Director of Scholarship in the Department of Leadership and Transformation in the Principal and Vice-Chancellor’s Office at the University of South Africa. He holds D.Phil., MA, BA (hons.) all from the University of zimbabwe. He has widely published in areas of African politics, African history, African development and decolonial thought and theory. He held academic positions at universities in South Africa, zimbabwe and the UK. His latest major publication is a book entitled Epistemic Freedom in Africa: Deprovincialization and Decolonization (Routledge, July 2018) and is currently finalising Decolonization, Development and Knowledge in Africa: Turning Over A New Leaf (to be published by Routledge in 2020). Eliyathamby A. Selvanathan is Professor of Econometrics and currently the Director of the Economics Policy Analysis Program at the Griffith Business School, Griffith University, Australia. He is one of the authors of the bestselling textbook Business Statistics published by Cengage. His research interests include applied econometrics, time series modelling, tourism economics, consumer demand models and stochastic index numbers. He has published eight research monographs and well over 100 articles in leading journals such as Review of Economic Studies, Journal of Econometrics, Journal of Economics and Business Statistics, Review of Economic Statistics, Tourism Analysis and Tourism Economics. Saroja Selvanathan is a Professor of Econometrics in the Economics and Business Statistics Discipline at Griffith University, Australia. She is also the CoEditor-in-chief of the Journal of the Asia Pacific Economy. Her research interests include consumer demand, time series analysis, tourism analysis and applied econometrics. Professor Selvanathan has published five research monographs and over 75 journal articles in the broad area of applied econometrics. She is a co-author of the Australian best-selling textbook, Business Statistics, published by Cengage. Her publications have appeared in internationally referred journals, such as Review of Economic Statistics, Empirical Economics, Applied Economics, Economic Modelling, Tourism Analysis and Tourism Economics. Kearrin Sims is a Lecturer in Development Studies, at James Cook University. His approach to academia is centred on finding creative and collaborative mechanisms for bringing together teaching, research and community engagement activities. He has taught at multiple universities and has served in a number of volunteering positions for non-profit organisations both in Australia and internationally. To date, much of his research and community outreach has focused on Southeast Asia. In particular, he has a strong interest in transnational connectivity programs and the geo-politics of development in

Contributors

xv

Laos. By approaching the field of development as a highly politicised arena of resource struggles and competing value-systems that are entered from different positions of power, his research focus is on how processes of social and economic power redistribution might lead to greater representation and accountability for the poor. Linda Wollersheim is a PhD Candidate in Politics and Policy Studies at Deakin University, where she is also an casual academic. Her work explores policy aspects of renewable energies and environmental and social justice implications of renewable energy technologies. More specifically, her PhD project focuses on identifying opportunities of renewables to facilitate more democratic, bidirectional energy systems, and analyses policy levers facilitating ‘just’ low-carbon energy transitions in Australia and in Germany.

1

Multilateralism and development aid Concepts and practices Viktor Jakupec, Max Kelly, and Jonathan Makuwira

Introduction This introductory chapter provides insight into and a critical analysis of the concept of post-World War II development aid multilateralism with a focus on the rise and hegemony of the Bretton Woods institutions, the emerging increased influence of the so-called Beijing Consensus institutions, the impact of rightwing populism on development aid, and internal and external challenges to mul­ tilateralism and the world order. Based on these insights, major themes are identified and analysed. This includes analyses of underpinning concepts and practices embedded in, for example, the Washington (Williamson, 1989, 1990, 2002) and post-Washington Consensuses, the Beijing Consensus, and the rightwing populist constituents including nativism, and anti- and de-globalisation, as well as counterhegemonic development discourse that challenges the very nature of development personified by multilateralism. Collectively these concepts and themes provide a coherent framework for the chapters which follow. Subse­ quently the chapter provides a brief discussion showing how the individual con­ tributions in this monograph address the nexus between the identified themes, concepts, and practices. In conclusion this chapter offers a basis for a both crit­ ical and sympathetic discourse of contemporary notions of multilateralism in a context of foreign aid.

A very brief conceptualisation of multilateralism For the purposes of this discussion multilateralism is viewed from an inter­ national relations perspective. In brief, there are at least two schools of thought as far as the definition of multilateralism is concerned. The first school of thought defines multilateralism by contrasting it with bilateralism and unilateral­ ism. In its simplest form this contrast is based on quantity. In other words, the three concepts are seen as being quantitatively interrelated. Using this definition, the Bretton Woods institutions, for example, are multilateral organisations, for their membership consists of more than two countries, This, simple, numerical definition of multilateralism centred on ‘three or more’ criteria is seen by some scholars as sufficient (cf. Corbetta and Dixon 2004; Keohane 1990).

2

V. Jakupec et al.

A more complex definition follows the qualitative approach (cf. Eckersley 2012; Ruggie 1992, 1993; Weber 1993), which proposes that there are three characteris­ tics underpinning multilateralism: (1) indivisibility: is the notion requiring multilat­ eralism to be based on socially structured public good? (2) generalised organising principles; (3) diffused reciprocity. The latter two oblige multilateralism to militate against discrimination and preferential bilateralism, as it is emerging, for example in the USA under the Trump administration. From this vantage point, multilateralism repudiates a ‘case-by-case’ approach to development aid allocation based on the power of the donor organisation, or preferences of individual shareholders in respective aid organisations. If this stands to reason, there is a requirement for mutually acceptable cooperation between donors and recipients. In conclusion it may be appropriate to mention some subcategories of multi­ lateralism such as regional and plurilateral multilateralism which in turn differ­ entiate between specific interests, functional, and geographic forms of multilateralism. The focus of this volume is on the post-war multilateral institu­ tions, primarily the World Bank and IMF.

Bretton Woods multilateralism The year 2019 denotes the 75th anniversary of the Bretton Woods conference which led to the establishment of the two major multilateral development aid agencies, namely the World Bank and the International Monetary Fund (IMF). During those 75 years the Western multilateralism emerging from the Bretton Woods conference in 1944 has been subjected to a number of ideological changes. Ideologically, multilateralism as it emerged from the Bretton Woods conference was firmly couched in Keynesian economics. However, in the 1970s Keynesianism was replaced by Thatcherite and Reaganite forms of neoliberal ideology based on the writings of Friedrich Hayek (1948, 1960) and Milton Friedman (2002), amongst others. This gave rise to the Washington Consensus, which lasted unabated until the 2008 Global Financial Crises (GFC). Throughout this era the World Bank changed its focus from post-WWII reconstruction to infrastructure investment, to poverty alleviation, policy reform, and structural adjustment. More recently the World Bank embraced climate and environmental and social and gender equity policies and returned, to a certain extent, to its roots focusing on infrastructure and construction. Returning to the most recent times, namely the post-GFC epoch, two new events took place. One is in the form of multilateral institutions and the other as a political movement. The former refers to the formation of the China-led insti­ tutions and initiatives, namely the New Development Bank (NDB, formerly known as the BRICS Bank) and the Asian Infrastructure Investment Bank (AIIB) and the One Road One Belt (OROB) initiative. The latter refers to the rise of right-wing populism in the developed world and donor countries. Notwithstanding the above-noted changes over the last 75 years, the Bretton Woods institutions wield unprecedented hegemonic power, which allows them to dictate the discourse concerning multilateral development. However, since the

Multilateralism and development aid 3 Global Financial Crises in 2008 the discussion and hegemony has been gradu­ ally weakened due to the challenges to the neoliberal narrative. The con­ sequences of the GFC as far as development aid is concerned were acute. Yet, despite the global hegemony of these two multilateral institutions over the last 75 years, strong internal and external challenges are currently at work. Some of the challenges come from right-wing Western populist member coun­ tries, others from newly established development banks like the AIIB, the NDB and the OROB initiative. More explicitly, the Bretton Woods institutions and like-minded multilateral development banks are today being challenged on their policies and practices by the emerging political and social movements, inflexible internal structures and academe. That is, following the GFC, people and move­ ments in Western democracies began to question if the elite-led neoliberal project of globalisation has made any real contribution to a more equitable and just world. At the same time an increasing number of developing countries have realised that inequality and the promised poverty alleviation is not only a problem based on a nexus between the global North and global South but also on a principal–agent problem, namely donor–recipient power inequality. Given these circumstances, there are two paramount questions. First, to what extent can the Bretton Woods institutions continue to shape multilateral develop­ ment aid politics as they have done over the past 75 years, or are we witnessing the era of the World Bank and International Monetary Fund (IMF) hegemony coming to an end? To answer this question, one would need to focus on ideolo­ gies, policies, developments, practices, and procedures that govern the World Bank and the IMF and their relative power over the developing nations. Second, what is the potential impact of the rise of right-wing populism within some of the most powerful donor membership countries and the advent of China-led multilateral development banks on development aid policies based on existing neoliberal ideology driven Washington Consensus institutions? In responding to this question, it may be important to note that the power of the Bretton Woods institutions was always derived from the guidelines and backing received from the most powerful nation state members of the developed world. This political support for the Washington Consensus institutions was maintained until recent times.

The discourse The contributions in this book lament to a large extent the lack of success of the dominant Washington Consensus-based development aid. The result is the ten­ aciously large number of poor amongst the population of many developing coun­ tries and regions. Arguably this lack of success may be ascribed to the flawed neoliberal policies and practices of development aid and the imposition of neo­ liberal economic conditionalities, and the limited representation and thus voting power of developing countries within the multilateral development banks (MDBs) and other international forums. If this stands to reason, as is argued in this book by a number of contributors, the consequence of the latter, developed

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donor countries’ and economies’ ideologies have thus far dominated develop­ ment aid thinking and practices. From, however, various vantage points the dominant thinking and ideologies have been termed neoliberal, following the aforesaid ideas of Hayek (2001, 1960, 1948), Mises (1944, 1945,1949, 1951), Friedman (2002), and many like-minded economists. However, recently the Washington Consensus has been challenged; but it can only be efficaciously replaced by a more constructive development aid ideology and practice, includ­ ing an increase of developing countries’ voting rights ensuring a more open decision-making power. This in turn needs to ensure the promotion of nonconventional tailor-made solutions focusing on the lowest socio-economic strata of the population in developing countries, taking into consideration their eco­ nomic, social, and cultural needs. This argument is in direct contrast to the exist­ ing Washington Consensus with its ‘one-size-fits-all’ approach. One of the emerging alternatives is what is referred to as the ‘Beijing Consensus’, which is referred to throughout this volume. Ramo (2004) defines it as: China’s new development approach … driven by a desire to have equitable, peaceful high-quality growth, critically speaking, it turns traditional ideas like privatisation and free trade on their heads. It is flexible enough that it is barely classifiable as a doctrine. It does not believe in uniform solutions for every situation. It is defined by a ruthless willingness to innovate and experi­ ment, by a lively defence of national borders and interests, and by the increasingly thoughtful accumulation of tools of asymmetric power projec­ tion. It is pragmatic and ideological at the same time, a reflection of an ancient Chinese philosophical outlook that makes little distinction between theory and practice. (p. 4) However, the term ‘Beijing Consensus’ is contested and there are a range of cri­ tiques of whether there is indeed any kind of China ‘model’, whether there is any type of coherence that forms a type of consensus akin to the Washington Consensus, and whether or what impact this may have on international politics, trade, and development (cf. Bräutigam, 2011; Chen, 2017; Dirlik, 2006, 2011; Ferchen, 2012; Kennedy, 2010). The more recent evolution of Beijing-driven multilateral institutions, primarily the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB), and the prominence of the One Belt One Road initiative, provide a more pointed analysis of alternatives to Washington Consensus-based multilateral institutions. An in-depth analysis of the diverse and dynamic nature of Chinese aid is beyond the scope of this volume, but these three initiatives are the primary focus of Beijing Consensus discourse here. Returning to the Washington Consensus, seen from the vantage point concerning development thinking, the canons of the Washington Consensus are in the development aid literature perceived as being couched in the ‘catch-up’ theories, which had their prominence over much of the last decades. This means

Multilateralism and development aid 5 that in accordance with this theory developing countries and emerging eco­ nomies should follow the economic policies and practices adopted by developed industrialised counties who act as donors. With a view on institutions this book offers a critique of the above-stated ‘catching up’ model especially in a context of shaping institutions in develop­ ment aid recipient countries replicating corresponding institutions in the developed world. This creates problems for developing countries and thus this conditionality is highly questionable. The argument against this approach is that since government institutions in Western democracies are only effective as long as they are trusted and accepted by the majority of the population a consideration must be given to government institutions in developing countries and contextu­ alised within a framework of appropriate country-specific social, cultural, polit­ ical, and economic context.

Critiquing the Washington Consensus The contributors are unanimous in their critique of the Washington Consensus, although from differing vantage points. This critique is based on the con­ temporary academic literature providing a robust discussion regarding the short­ comings and weaknesses of the neoliberal mainstream development policies and practices pursued by the Washington Consensus-based MDBs. In other words, the most severe critique has been leveled at the Bretton Woods institutions and their ideologies, policies, and practices, and mostly from the developing world perspective. The critiques focus on neoliberal ideology, conditionalities imposed on developing countries, lack of developing countries’ voting power in shaping the Bretton Woods institutions policies and practices, an uneven playing field through globalisation (cf. Stiglitz, 2018), and unequitable advantages gained by donors through development aid. The critique extends to the neoliberal free market ideology, with its opposi­ tion to state and public good institutions and enterprises, and advocating a sequential and progressive approach and pragmatic gradualism advanced through the Beijing Consensus. There is a tendency amongst the contributions to argue in favour of a stronger role for the state and for stronger public institutions both for guiding the country-specific form of economy as well as the provision of public good services such as education, health, utilities, to name but a few. It has been also noted that the effects of the critique within Bretton Woods and other MDBs following the Washington Consensus have been mixed. Whilst the critiques have been mostly ignored by the IMF and the World Bank. Other MDBs such as the ADB are rethinking their approaches and are examining the potential to collabo­ rate with the Beijing Consensus-based MDBs. Much of the discussion in the following chapters centres around the notion that multilateralism and multilateral foreign aid institutions are increasingly being challenged from various quarters and diverse vantage points. However, prior to turning more specifically to multilateralism in foreign aid a few observa­ tions may be put in place.

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Today multilateral organisations such as the Bretton Woods institutions (World Bank and International Monetary Fund) have specific interests including the promulgation of the Washington Consensus and the function of upholding neoliberal values and norms within the realm of conditionalities. They are not limited to any specific geographic locality, like their regional counterparts such as the Asian Development Bank (ADB), African Development Bank (AfDB), Inter-American Development Bank, and the European Investment Bank, to name a few, but exert their influence globally. Until recently both the World Bank and the IMF were protected by the interests of the USA and the European Union. Both institutions are governed by the dogma that the USA and the European Union represent and are the vanguards of an exceptional and superior form of governance, namely exemplified by neoliberalism, or more specifically neolib­ eral capitalism. This, of course, was not always the case. As stated above, in the inception stage of the Bretton Woods institutions the dominant ideology was until the 1970s based on Keynesian economics. However, with the rise of neo­ liberalism and its free market philosophy, under the US presidency of Ronald Reagan and the UK prime-ministership of Margaret Thatcher, the situation changed. Foreign aid generally and development aid specifically moved towards the development aid philosophy of Value for Money and Aid for Trade. Against the above background this book addresses the threats faced by Western multilateralism and multilateral institutions from either the right-wing populist movement and/or the Beijing Consensus institutions respectively. The contributions provide a discourse on strength and weaknesses, sympathetic as well as antipathetic critique of populism and neoliberalism, and together con­ tribute and develop ideas on how they might be addressed. There is a general view prevailing that the World Bank and other dominant MDBs have succumbed to a degree of contentment, which militates against institutional erudition and thus prevents them to develop and implement strategies for how to address geo­ political, geo-economic, and socio-cultural issues in the developing economies. An equally important and concomitant view expressed by the contributors is that the failures of the World Bank and other dominant MDBs enhanced the rise of China-led NDB, AIIB, and the OROB initiative. In short, China-led Beijing Consensus-based institutions and initiatives are offering developing economies an alternative to the Washington Consensus-based MDBs, whereby the former enables the recipient countries to exercise political, social cultural, and economic self-determination. However, some contributors warn that the adaptation of selfdetermination strategies of the Beijing Consensus may be seen as over-simplistic notions, even in the light of economic experimentation and innovation by the aid recipient countries. Finally, and notwithstanding the above, the proposition that MDBs provide development aid which is geo-politically neutral is difficult to sustain, for there is always the potential that by virtue of the individual member nations’ vote-holder power geo-political priorities are realised. This brings into contrast the development aid beneficiaries’ understanding of freedom and selfdetermination vis-à-vis that of the individual and national self-determination under the terms of the free market.

Multilateralism and development aid 7 From a politico-economic ideological vantage point, the contributions are to a large extent critical of the neoliberal agenda of Washington Consensus-based development aid. These critiques are directed against the neoliberal symptoms, which fail to articulate substantial strategies for addressing the needs of the ‘poor’ in developing countries contextualised within inherent economic risks. Thus, the contributors suggest that the future of neoliberal multilateralism, as practised by the Bretton Woods institutions and other Washington Consensus-based MDBs is becoming increasingly uncertain. These views augment the argument that neo­ liberalism has its own theoretical weaknesses, such as an uneven development glo­ bally. This means that neoliberalism as a politico-economic ideology is characterised as being based on universal values and norms, and a taken for granted one-size-fits-all epistemic structure. If this stands to reason, as some contributions suggest, then the attempts to reform the neoliberal politico-economic ideology from within the MDBs themselves are problematic. The reason is that the propo­ nents of neoliberal politico-economic ideology fail to challenge existing structural and institutional issues such as asymmetrical power structures between donors and recipients, logics of capitalist policies, social injustices in recipient countries, and a tendency towards economic colonialism, to name but a few. Extending the discussion along the politico-economic and socio-political lines of multilateralism this book offers an insight into the rise of right-wing populism and its problematic impact on development aid. That is, right-wing populism is seen as a political movement and a ‘thin ideology’ (cf. Stanley, 2008) impacting on Washington Consensus-based MDBs through the underpinning drive towards nationalism and nativism at socio-political level and protectionism and mercantil­ ism at politico-economic level. The discussion articulates the arguments that due to the rise of right-wing populism as well as the proliferation of Beijing Consensusbased development aid, the currently dominant neoliberal multilateralism pursued by Washington Consensus-based MDBs is not sustainable. This brings to the fore the argument that in developing countries the absence of adequate institutions to advance development under the neoliberal conditionalities imposed by the MDBs is particularly detrimental for achieving development aims. This applies especially to the public social sector, such as education and health, and public utilities sectors, which are seen through the neoliberal lens chiefly as distort­ ing the free market, expensive, and thus socio-economically detrimental to devel­ opment. Subsequently, insufficient consideration is given to preventing public good institutions to be transformed into ‘for profit’ enterprises, There is little evidence to show that neoliberal development aid takes into consideration the need for social safety nets required for establishing and reinforcing the transformation throughout the development implementation process and its sustainability, this supporting the disadvantaged suffering from the imposed development aid change processes.

Conclusion The overriding question as a red thread in this book is to what extent can the two Bretton Woods institutions shape aid policies as they have been able to do

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over the last 75 years? To put it differently, to what extent is the era of World Bank and IMF hegemony diminishing? Arguably, and however speculatively, in order to respond to this question, one may need to focus on the USA’s willing­ ness to exert its political power as a major shareholder in both Bretton Woods institutions. In other words, one would need to focus on the power of the USA vis-à-vis China as its geo-political and geo-economic competitor. Furthermore, today the equally important issue concerning the USA’s willingness to exert its political power in support of the World Bank and the IMF is also dependent on the USA’s progressively dysfunctional domestic right-wing populist politics pursued by the Trump administration. Any analysis of the contributions shows much evidence that the politics of development aid lean towards a general departure from the rules-based, neo­ liberal global order. The assumption and idea that ‘there is no alternative’ to neoliberalism and that we have witnessed Fukuyama’s (1989) ‘end of history’ has been to a large extent discredited (cf. Rodrik, 2018). As such this depar­ ture will inadvertently impact on development aid. The credibility of develop­ ment aid couched in the neoliberal doctrine, with its reliance on free-market economy, advocated by Washington Consensus-based MDBs as the way to economic prosperity for developing countries, is under attack. The concurrent diminishing level of confidence in neoliberalism on the one hand and demo­ cracy, through the rise of illiberal democracies in donor countries, on the other, did not come into existence by a chance. Neoliberal ideology-based development aid, as a number of contributors claim, has debilitated demo­ cracy, equitable economic growth, and political and social integrity in the developing world for over 40 years. The above-mentioned lack of credibility concerning development aid couched in the neoliberal doctrine is further augmented by the emergence of new donors, like the China-led NDB, the AIIB, and the OROB initiative, which are not com­ pelled to follow the existing Washington Consensus-based rules or ideologies and are driving a wedge between development aid seeking countries and the existing dominant MDBs. Even though the activities of these new MDBs and initiatives may be focused more on the aim of securing access to natural resources and expansion of the geo-political and geo-economic sphere of influ­ ence, than on altruistic development assistance, they are, either way, contributing to (re-)thinking about development aid. The overarching context underpinning the discussions concerning much of the current academic literature about multilateralism and development aid con­ cepts and practices is the notion of neoliberal and US hegemony. Each of the contributions in this volume assesses multilateralism and foreign aid within a contemporary context where there are competing multilateralisms, that of the original Bretton Woods agreement and the resulting institutions of the World Bank and IMF. There are alternative institutions, with diverse ideological under­ pinnings, including those of the Chinese-led NDB and AIIB. Many of the con­ tributors consider these and other alternatives to a ‘traditional’ or ‘Western’ multilateral development system when considering the future of multilateralism

Multilateralism and development aid 9 with regard to aid and development. These discussions are delineated within an epistemic framework which acknowledges that multilateralism in development aid may have narrowed the gap between the peoples and nations, some have benefited, and others have been disadvantaged. Indeed, satisfaction with neolib­ eral multilateralism in the development aid arena varies – to an extreme degree. This is not only between donors and recipients, but between academics and prac­ titioners with diverse world views. between multilateral donors and aid recipient countries. The debate, as shown here around contemporary multilateralism and the role of multilateral institutions in future aid and development interventions is intensifying. Contributors address a range of issues, including neoliberal capit­ alism, the ‘Northern’ power base within multilateral institutions, competing interests, the role of government, and governance, the broader impacts of climate change and risk and security agendas, as well as shifts away from multilateralism and popular discontent across a broad range of issues and the impact of multilateral aid. Chapter 2 lays the groundwork for this analysis through the unpacking of the complex interlinkages between the multilateral development system and development theory and practice, analysing the potentially serious contradictions and thus threats, or need for reform, to neoliberal forms of ‘Western’ multilateralism.

References Bräutigam, D. (2011) Aid ‘With Chinese Characteristics’: Chinese Foreign Aid and Development Finance Meet the OECD-DAC Aid Regime. Journal of International Development, 23(5), pp. 752–764. Corbetta, R., and Dixon, W. J. (2004) Multilateralism, Major Powers, and Militarized Disputes. Political Research Quarterly, 57(1), pp. 5–14. Chen (ed.) (2017) The Beijing Consensus? How China has Changed Western Ideas of Law and Economic Development. Cambridge: Cambridge University Press. Dirlik, A. (2006) Beijing Consensus: Beijing ‘Gongshi’. In Globalisation and Autonomy Online Compendium. www.ids-uva.nl/wordpress/wp-content/uploads/2011/07/9_Dirlik1. pdf [Accessed 29 December 2017]. Dirlik, A. (2011) The Idea of a ‘Chinese model’: A Critical Discussion. International Critical Thought, 1(2), pp. 129–137. Eckersley, R. (2012) Moving Forward in the Climate Negotiations: Multilateralism or Minilateralism? Global Environmental Politics, 12(2), pp. 24–42. Ferchen, M. (2012) Whose China Model is it Anyway? The Contentious Search for Con­ sensus. Review of International Political Economy, 20(2), pp. 390–420. Friedman, M. (2002) Capitalism and Freedom (14th Anniversary Ed.). Chicago: Univer­ sity of Chicago Press. Fukuyama, F. (1989) The End of History? The National Interest, 16, pp. 3–18. Hayek, F. A. (1948) Individualism and Economic Order. Chicago: University of Chicago Press. Hayek, F. A. (1960) The Constitution of Liberty. Chicago: University of Chicago Press. Hayek, F. A. (2001) The Road to Serfdom. London/New York: Routledge. Kennedy, S. (2010) The Myth of the Beijing Consensus. Journal of Contemporary China, 19(65), 461–477, doi:10.1080/10670561003666087.

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Keohane, R. (1990) Multilateralism: An Agenda for Research. International Journal, 45(4), pp. 731–764. Mises, L. (1944) Bureaucracy. New Haven: Yale University Press. Mises, L. (1945) The Clash of Group Interests. In R. Ebeling (ed.), Money, Method and Market Process. Boston: Kluwer Academic Publishers, pp. 202–214. Mises, L. (1949) Human Action: A Treatise on Economics. New Haven: Yale University Press. Mises, L. (1951) Socialism: An Economic and Sociological Analysis (transl. J. Kahane), New Haven: Yale University Press. Ramo, J. C. (2004). The Beijing Consensus. London: Foreign Policy Centre. Rodrik, D. (2018) Straight Talk on Trade: Ideas for a Sane World Economy. Princeton: Princeton University Press. Ruggie, J. G. (1992) Multilateralism: The Anatomy of an Institution. International Organization, 46(3), pp. 561–598. Ruggie, J. G. (ed.) (1993) Multilateralism Matters: The Theory and Praxis of an International Form. New York: Columbia University Press. Stanley, B. (2008) The Thin Ideology of Populism. Journal of Political Ideologies, 13(1), pp. 95–110. Stiglitz, J. E. (2018) Globalization and Its Discontents Revisited: Anti-Globalization in the Era of Trump. New York: W. W. Norton & Company. Williamson, J. (1989) What Washington Consensus Means by Policy Reforms. In J. Williamson (ed.), Latin American Readjustment: How Much Has Happened? Wash­ ington: Institute for International Economics, pp. 421–427. Williamson, J. (1990) Democracy and the ‘Washington Consensus’. World Development, 21(8), pp. 1329–1336. Williamson, J. (2002) Did the Washington Consensus Fail? In PIIE, https://piie.com/ commentary/speeches-papers/did-washington-consensus-fail [Accessed 6 January 2018]. Weber, S. (1993) Shaping the Postwar Balance of Power: Multilateralism in NATO. In J. G. Ruggie (ed.), Multilateralism Matters: The Theory and Praxis of an Institutional Form. New York: Columbia University Press, 233–292.

2

Multilateralism, global development Unpacking the megatrends Max Kelly and Jonathan Makuwira

Introduction International development and foreign aid are fundamentally influenced by the multilateral development system (MDS) that emerged from the post-World War II (WWII) period. Chapter 1 explored understandings of multilateralism in brief, and multilateralism as a central tenet of international governance in the more traditional international relations context, as the organisational context for both development finance, and the impact on development policy, the underpinning concept of global rules based order, and a rules-based international system to tackle global issues. The most recent discourse on multilateralism is split between fairly opposing camps. On one side are those who decry the imminent downfall of, and crisis within, the existing multilateral system (see Adler and Varoufakis, 2019, for example). The opposing debate sees a renewed essential role for multilateralism and multilateral institutions in both the development and humanitarian sector as essential in working towards the 2030 Agenda for Sustainable Development (https://sustainabledevelopment.un.org/sdgs) (see for example OECD, 2018; Zoellick, 2009). The necessity for multilateral institutions in providing core roles in addressing global publics goods and ‘bads’ (OECD, 2018) is widely debated. Within these debates perhaps the biggest issue is, where and how do the multilateral institutions, namely the World Bank and the IMF, that have formed the basis of international development over the past 75 years fit in a new world order. Here we refer to a world order that has seen the number of multilateral institutions burgeon, the locus of power and control of development finance shift away from traditional donors, and challenges to human development, including climate change, increasing in complexity. As detailed in Chapter 1, the existing multilateral development system comprises the ‘Bretton Woods institutions’, the World Bank and the International Monetary Fund, in conjunction with an extensive range of development banks (ADB, AfDB, and many others) and the United Nations agencies directly concerned with development. This is a subset of the wider multilateral system, much of which is concerned indirectly with human development, through trade, security, and related global interrelationships. The agreement reached at the Bretton Wood Conference in the USA led to the creation of a new post-WWII

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international monetary order aiming at preventing economic and monetary problems and providing a system ensuring financial and monetary stability and promoting global economic and international trade. The evolution of the MDS from post-WWII economics and politics, driven by negotiations in which ‘Western’ powers, primarily the USA, with the United Kingdom, has, however, resulted in a system driven by ‘Western’ ideologies, power structures, neoliberal economics, and international relations between countries. The intervening 75 years have seen a number of ideological changes, both within political and economic ideology, as well as in the theory and practice of international aid and development. However, the multilateral institutions of today have changed little over the 75 years since their inception, in terms of governance, leadership, and basic economic ideology, although there have been shifts in focus, and approach. This chapter tracks these megatrends and considers how these contribute to existing challenges to multilateral development system, whether they may lose some or all of their global relevance and supremacy, themes that are taken up in more detail in the following chapters. Contemporary geo-politics and geo-economics provide an unprecedented challenge to this system. These challenges include those internal to traditional powers in the MDS (USA, UK, and Europe), and those external to these countries, shifting their very influence globally. Internal challenges are driven by the rise of populism, in particular, right-wing populism. External challenges focus on the rise of China as a global superpower, and its role as a key driver in alternatives to traditional aid sources and architecture, including the establishment of AIIB and NDB. A further challenge is of course to the established economic order embedded in a globalised neoliberal discourse that underpins the MDS. This chapter first explores the evolution of international development through a review of the theories. It then turns to the multilateral development system, exploring changes over time, and considers how these megatrends contribute to the existing challenges to the multilateral development system and whether multilateral development system may lose some or all of their global relevance and supremacy. The chapter argues that neoliberal forms of ‘Western’ multilateralism and the multilateral institutions face serious threats, as much from their inability to engage with critique and reform, as to the external context. Let us turn first to the Multilateral Development System in more detail, as a precursor to a discussion on development thinking over time.

The Multilateral Development system Multilateralism is frequently couched in an economic genre, and thus creates a potential problem, especially since many development aid stakeholders have not studied economics and thus may feel baffled by and marginalised if not excluded from complexities of discussions which often take on a status of ‘gnostic secrets’ accessible only to economists. However, it is a fallacy to assume that multilateralism is only understandable from an economic vantage point. Multilateralism is grounded in a range of academic disciplines, including political sciences,

Unpacking the megatrends 13 international relations, social sciences, and, alas, economics. Each of these disciplines offers a different vantage point from which multilateralism may be analysed and understood, without excluding others. Understanding and having informed disciplinary and cross-disciplinary views on multilateralism should not be the preserve of economists alone, especially since it affects the everyday life of millions of people in the developing and developed world. From the Bretton Woods Conference to the rise of Thatcher and Reagandriven neoliberalism, the Global Financial Crisis, and the upsurge of populism, the world has existed under the proverbial Chines curse of ‘living in interesting times’. During these times there were many analyses of the problems and weaknesses concerning multilateralism. Most notable is the major ideological change in thinking within the Bretton Woods institutions and other Western multilateral institutions, shifting from Keynesian to Hayekian economics. However, the emergence of populism has as yet not impacted overtly on the neoliberal multilateral ideology. One reason may be that populism is by itself not an ideology or at best a ‘thin ideology’ and may need to ‘attach itself’ to a ‘thick ideology’ which needs time to eventuate. Another reason may be that the impact of Chinaled multilateralism is seen by Western neoliberal multilateral organisations as potential partners who will eventually fall in line. Given the situation that the existing orthodoxy of Western neoliberal multilateralism is being questioned by populism from within by donor member countries of multilateral organisations, including the Bretton Woods organisations, and from without by Eastern, China-led multilateral institutions and initiatives, the question is: what will follow the aforesaid Western neoliberal multilateral world order? There is always a possibility that the status quo will be retained, namely that the populist movement will quickly subside, and that the Eastern China-led multilateralism will conflate with the Western neoliberal multilateralism. There is a quantitative aspect to the definition of multilateralism, in that it generally is noted as being relationships among more than two states (Cox, 1992; Keohane, 1990). Despite the diverse potential focus of multilateralism, in security, in trade, in international development, and in poverty alleviation, to name a few, multilateralism in its narrowest sense frequently refers to economic relations, and trade and finance in particular (with reference to the MFN (most favoured nation) status of the WTO). However, there is considerable ambiguity in a quantitative definition of multilateralism when it is the qualitative aspect of the relationship that is important, a point picked up by (Ruggie, 1992) when noting the importance of the qualitative dimension in the issue of international trade in the post-World War II world order. There is thus an ideological dimension to our understanding of contemporary multilateralism. Ruggie (1992, 1994) notes the definitional ambiguity of multilateralism due to a need to move beyond the notion of multilateralism in international relations as simply relations among three or more parties. What he identifies as a sufficient condition for multilateralism are the principles on which these relations are based in the ‘pure’ form of multilateralism ((Ruggie, 1994, p. 556). Indivisibility of interests is the first core principle of multilateralism, followed by equal

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protection (for example under a common security umbrella) which in economic terms requires diffuse reciprocity and dispute resolution arrangements, which together can form an ‘ideal type’ (Scott, 2015). Ruggie (1994) adds ‘commitments to national self-determination and universal human rights’ (p. 557). Of course, these principles express what Ruggie (1994) terms aspirations rather than specific commitments or implementable blueprints. Interstate or bilateral relations are limited to either diplomatic channels or interstate organisations (Cox, 1992). In regard to multilateralism in economic relations, this is a more complex case as it is driven by regulations and frameworks of states and international organisations. However, these intentionally frame how primarily non-state economic actors relate in what Cox (1992) identifies as ‘an historically specific form of capitalist market economy’ (Cox, 1992, p. 162), referencing back to Ruggie’s (1992) ideological frame of reference within which multilateralism is, in essence, an evolving discourse of a basically liberal and more recently neoliberal world order. Outside of this predominant focus on trade and finance, there is also a significant focus on the non-economic aspects of multilateralism such as proclaimed by Cecilia Malmström, EU Commissioner for Trade in 2016: For the EU, multilateralism is about using the rule of law to limit the strong and protect smaller actors. The EU itself is a regional embodiment of multilateralism; in fact we have gone even further by taking the path of supranationalism. (Malmström, 2016, p. 4) Advancing Malmström’s observation is Linn (2018) who argues that multilateralism is: … about developing and maintaining rule-based and fair global economic and social relations among countries and peoples, about setting widely accepted norms and monitoring their adherence, about establishing networks to create, collect, and exchange knowledge and data, and about resolving potential conflicts among partners and competitors for global resources, markets, and influence. (p. 86) Linn (2018) contrasts the rule-based approach of multilateralism with the transactional approach of bilateralism. In regard to the type of relationships, multilateralism can be much more inclusive in the interrelationships between parties, whereas bilateralism can be discriminatory. The power relationships between parties to multilateral relations has particular relevance to multilateral institutions in foreign aid and international development. Multilateralism can and does contain a final ambiguity in that it refers to both the order of relations between countries, and the specific organisations that operate between them (Ruggie, 1994). In his earlier analysis, Ruggie (1992)

Unpacking the megatrends 15 went as far as to claim that the term ‘multilateral’ is in fact simply an adjective modifying the noun institution, and thus is as a result an institutional form that relies on generalised principles of conduct. As such, the argument goes, institutions comprise international orders, international regimes, and international organisations. Thus, much of the debate around world order is an expression of multilateralism. Historically, multilateralism evolved from the post-WWII period, when as Linn (2018) notes: … globalization and globalism took hold, reinforced after the fall of the Bamboo and Iron Curtains by the integration of China and the former Soviet Bloc into the world economy. This was reflected in rapid global connectivity and economic integration, the development of a rule-based international order supported by the rise of the global and regional multilateral institutions, drastic declines in extreme poverty and increases in living standards across the world, and a growing recognition of continuing and new global challenges, and far-reaching agreement on the emerging global development and climate change agendas. The approval of the Agenda 2030, the Addis Agenda, and the Paris Agreement of COP21 in 2015 represented a high point in this trend toward a global agenda underpinned by multilateralist approaches. (p. 2) More recently, there appear to be an increasing number of challenges to the multilateral system. Some of these are driven by a significant shift towards a multipolar world, away from a unipolar world (USA) predated by a bipolar world (USA and USSR) (Krause, 2010; Linn, 2018; Staack, 2013). The growing economic and political balance is shifting towards emerging market economics, and in particular the so-called BRICS (Brazil, Russia, India, China, and South Africa). Linn (2018) perceives this shift to a multipolar world as being the result of the success of more than 70 years of multilateralism. Yet, he cautions that converging economic and political power has reignited East–West tensions, potential leading, as some (see Jakupec, Chapter 13 in this volume) would argue, to a new Cold War.

Origins of the multilateral development system The evolution of the multilateral development system has been in response as much to economic and political ideology as to evolving development theory and practice. The origins of the Bretton Woods institutions are a strong signifier of their current role and position. Events leading to the establishment of the Bretton Woods institutions are closely related to the WWII foreign policies of the USA and Great Britain. The idea to establish multilateral institutions may be traced back as far as 1941 to the thinking of the then US Secretary of State Henry Morgenthau Jr. It is noteworthy that multilateralism is not a new concept and

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well predates World War II. However, the existing MDS is a result of the Bretton Woods conference. Following the Japanese attack on Pearl Harbour in December 1941, Morgenthau requested his chief economic advisor Harry Dexter White to prepare a proposal for: … a Stabilisation Fund for the United and Associated Nations and an International Bank for Reconstruction and Development. The purpose of these two agencies is to meet the inevitable post-war international monetary and credit problems – to prevent disruption of foreign exchange and the collapse of monetary and credit systems, to assure the restoration of foreign trade and to supply the huge volume of capital that will be needed abroad for relief, for reconstruction, and economic development essential for the attainment of world prosperity and higher standards of living (Morgenthau, 1942, n.p.) It was not until the Bretton Woods conference (formally the United Nations Monetary and Financial Conference, meeting at Bretton Woods) in 1944 that Morgenthau’s proposals took concrete form. The two leading figures at the Bretton Woods conference were economists, the British John Maynard Keynes and American Harry Dexter White. The conference focused on institutions meant to advance financial stability, post-WWII economic reconstruction and multilateral cooperation. The history of the post-WWII international financial system, which emerged from the Bretton Woods conference and subsequent agreement has been subject to much discussion and analyses in the scholarly literature (see, for example, Boughton 2002; Steil, 2013; Varoufakis, 2016) and is beyond the scope of this chapter. It is important to note that an agreement was reached at the Bretton Woods conference acknowledging the need to create a post-WWII economic structure based on principles of cooperation and consensual decision-making amongst nations to ensure global economic relations and trade. It was agreed that a multilateral framework was required in order to counteract the threatening effects of preceding economic depressions and trade wars. Both the World Bank and the International Monetary Fund were set up in accordance with Morgenthau’s overall agenda (cited in Kwagyang et al., 2015, p. 52), stating that both institutions will facilitate the ‘… creation of a dynamic world community in which the peoples of every nation will be able to realize their potentialities in peace’. In short, the basic idea was that the World Bank focus on providing assistance countries with the aim of improving their trade capacity. This was to be achieved through lending money and providing grants to war-torn and developing and emerging countries for reconstruction and development. Within this context the World Bank was given the task to promote long-term economic development projects and programmes and the provision of technical assistance to its member states in various sectors. Currently the World Bank:

Unpacking the megatrends 17 … promotes long-term economic development and poverty reduction by providing technical and financial support to help countries reform certain sectors or implement specific projects – such as building schools and health centers, providing water and electricity, fighting disease, and protecting the environment. World Bank assistance is generally long term and is funded both by member country contributions and through bond issuance. World Bank staff are often specialists on particular issues, sectors, or techniques. (IMF, 2019, p. 1) The International Monetary Fund’s function was envisaged to afford temporary financial assistance and to act as a multilateral development lending institution to member countries facing problems with their balance of payments and to maintain a stable international trade environment by preserving exchange stability and harmonising monetary policies. In addition to providing short-term and medium-term loans, the International Monetary Fund also provided policy advise and technical assistance. To conclude, the International Monetary Fund and the World Bank each have their own distinct mandates. Both were, from their inception, required to complement each other, and both were focused on reconstructing infrastructures, stimulating mutually advantageous economics, and putting in place economic safety nets. To clarify, the International Monetary Fund’s mandate is the promotion of: … international monetary cooperation and provides policy advice and capacity development support to help countries build and maintain strong economies. The IMF also makes loans and helps countries design policy programs to solve balance of payments problems when sufficient financing on affordable terms cannot be obtained to meet net international payments. IMF loans are short and medium term and funded mainly by the pool of quota contributions that its members provide. IMF staff are primarily economists with wide experience in macroeconomic and financial policies. (IMF, 2019, p. 1) As far as the operationalisation was concerned, the originally proposed mandate and operational reach of the International Bank for Reconstruction and Development (subsequently, of course, the World Bank) was initially limited. Combatting poverty or to addressing key needs of the ‘underdeveloped’ countries was not foreseen, neither was there any expectation relating to governance reform. Its sole intent was to meet the unparalleled demand for foreign capital at the end of WWII by partaking in the provision of and warranting development aid loans for authorised governmental and business projects (Morgenthau, 1942). It was envisaged that a ‘competent’ committee consisting of Bank’s technical staff and an expert from the assistance-seeking country would determine the loan provisions (Morgenthau, 1942). Thus, the pattern emerged, whereby the Bank would provide a string of distinct project specific loans, the values of which are entirely to be verified and approved by a group of neutral experts located in the Bank’s headquarters in Washington.

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Since the initial Bretton Woods agreements much has changed, especially with the rise of neoliberalism in the West. The mandate of the World Bank has shifted over time, from the original mandate to rebuild Europe, with the first loan to France in 1947. The focus shifted away from Europe towards Latin America, Asia, and Africa, and from the 1950s infrastructure investment was core. In the current context, as can be seen above the mandate of the World Bank is broad, from poverty alleviation, economic development, health, education to sustainable development. In fact ‘mission creep’ is an accusation that has been levelled at the World Bank (and IMF) over recent decades (Einhorn, 2001; Gutner, 2005). The original mission was in essence the transfer of financial resources to underdeveloped nations, with the explicit aim of addressing ‘underdevelopment’ as a structural transformation. Initial engagements were primarily around engineering type solutions, and infrastructure investment (Stein, 2008). Perhaps the most contentious aspect of resource transfers were the structural adjustment loans under structural adjustment policies reaching a peak in the 1980s. Frequently for aid to be given, governments, in particular, had to undertake particular structural reform. Under the World Bank and International Monetary Fund (IMF), these reforms came under what were known as Structural Adjustment Programmes (SAPs). While SAPs were not foreign development assistance, they allowed countries to get a loan from the two institutions on condition that they would be willing, for example, to cut public spending, devalue their local currencies, eliminate any form of government subsidies, and/or introduce user fees, with a high social cost. For example, Abugre (2000) argues that the result of this for many African countries meant paying for water. Importantly, thus is the argument surrounding conditionalities, that in the process of lending, these institutions often prescribe certain commitments that countries have to satisfy and/or adhere to. These may come as prior actions or benchmarks. As stated above, while the two institutions may push for quantitative conditions – often a set of macro-economic policy prescriptions – the ones that have hurt Africa badly are the structural policy prescriptions which, besides policy conditions named above, also include trade reform, price liberalisation, and privatisation (Abugre, 2006). Not only are the conditionalities counterproductive to development progress in Africa but, given also the exorbitant interest rates that go with these conditionalities, countries are caught in the vicious cycle of dependency as they grapple to repay the loans with a huge backlog on accumulative interests. Sogge (1996) observed that for every 1 dollar (US$) donated in the name of aid to Africa, donors made US$14 in return through all the various policy prescriptions highlighted above. While aid giving may sound like a noble idea, conditionalities, especially on the African continent, have had a series of geo-political shifts which, when closely analysed, only help to refocus the same problem into a different state. A typical example is Zimbabwe where, despite looking to the East by opening up to the Chinese as a new donor, the significance of the shift is not strikingly different (Makuwira, 2011). The same kind of policy prescriptions abound, although more fluid than those from Western donors. What has happened over the years has been a glaring opening up of trade

Unpacking the megatrends 19 between African countries and countries that masquerade as donors but are exploitative to the extent where most African countries have no way to escape but to accept the reality of persistent influence of foreign traders who have regard for trade rules, capital flight. Arguably, most of these traders have very little interest in investing in African countries; and suppression of local entrepreneurship at the preference of foreign traders (Gukurume, 2015) In the 1990s, the World Bank shifted focus towards a poverty alleviation agenda, including poverty-focused loans, debt reduction, Poverty Reduction Strategy Papers (PSRPs), and comprehensive development frameworks (Stein, 2014). This provided more space for debate on what is development, and whether growth can be pro-poor. Stein (2014) suggests that the ‘hard-core’ neoliberalism of the 1980s and 1990s within the World Bank has more recently softened. The expanded agenda focuses on social spending and poverty reduction. The disconnect between poverty reduction and the World Bank’s ongoing commitment to neoliberalism is a point of contention for many authors (cf. Stein, 2014) given the argument that there is ‘strong evidence that they [neoliberal policies] exacerbate poverty and contribute to dispossession’ (Stein, 2014, p. 5). In trying to trace megatrends, the following provides an outline of core points of focus, and significant shifts. The origins of the multilateral development system, as outlined above, is the Bretton Woods and UN systems, which arguably started as a system of communities of practice, shifting to become communities of interest from the 1950s. From the 1950s to the early 1990s, the fundamental influencers to the MDS were of course decolonisation and the Cold War (Jenks, 2014). Core challenges, in particular to the World Bank, included criticism levelled at the World Bank’s failure to engage with the environmental impact of their investments in the 1980s and civil society in the 1990s (Einhorn, 2001), and generally criticism around governance including structural underrepresentation of the global south. The emergence of the multilateral development system commenced with a focus on resource transfer as detailed above and technical assistance. This was in essence a ‘communities of practice’ in the post-WWII era, and it transitioned to ‘communities of interest’ from the 1950s onwards as the focus of multilateralism became grounded in control of the allocation of resources. This coincides still with the relatively non-controversial investment in infrastructure (known as the roads and dams era). The 1970s, under McNamara, saw a shift to basic needs, income distribution, and the introduction of the poverty reduction agenda. This required a shift away from an engineering-heavy base of knowledge, and economists became the specialists, a position they have retained in the international financial institutions (IFIs) since. Following on from the late 1970s to early 1980s thinking shifted away from social goals (and the move away from the poverty focused agenda) and the 1980s introduced structural adjustment, under the guise of modernisation. This primarily required the reduction of state intervention and the start of the dominance of a neoliberal agenda driven by Reagan and Thatcherite

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right-wing conservatism. Structural adjustment loans grew in importance over the 1980s, and we turn to these in more detail subsequently. From the end of the 1980s, Stein (2008) argues that there was a further shift towards a national ownership agenda, contained within a neoliberal agenda, despite embedding of social and human dimensions into development strategies. The centre right turned to neoliberalism in the 1970s and 1980s, but perhaps the most momentous event in the 1980s and 1990s was that the left followed (Beinhocker, 2017). Herein lies the grounding of the hegemonic development discourse that remains today, and forms the basis for much criticism, the nonpartisan acceptance of a capitalist global economy, based on Western neoliberal principles, and although grounded outside the MDS, fundamental to its operations. The ongoing issue with many development outcomes (and the lack of progress embedded in the United Nations’ ‘Development decades’) produced the ‘Goal Setting’ era, the Millennium Development Goals, and currently the Sustainable Development Goals. One major change to the operations of the World Bank and the International Monetary Fund has occurred since the demise of the Soviet Union. Both institutions shifted from an overtly non-political stance to, at least in practice, a position whereby they can assert themselves through overt interference in the political realm of the aid recipient country, thereby putting into question the doctrine of economic neutrality. This is in stark contrast to the decade-long mantle of political neutrality and expertise as central pillars of the World Bank (cf. Easterly, 2014; Fiti Sinclair, 2017) and the International Monetary Fund mandate (IMF, 2019). It is necessary to note that the failures of development referred to here are not necessarily of certain component parts. It is undeniable that improvements have been made in certain ‘indicators’: education, maternal health, under-5 mortality rates, poverty rates, and many others (Lowder et al., 2017; Radelet, 2016). However, these improvements, although necessary, hardly seem sufficient when most of the MDGs were not fully met, inequality is unstoppable, and many issues carried over into the Sustainable Development Goals and remain critical. Even the 2019 United Nations progress report on the SDGs concludes that: Notwithstanding that progress, this report identifies many areas that need urgent collective attention. The natural environment is deteriorating at an alarming rate: sea levels are rising; ocean acidification is accelerating; the past four years have been the warmest on record; one million plant and animal species are at risk of extinction; and land degradation continues unchecked. We are also moving too slowly in our efforts to end human suffering and create opportunity for all. … It is abundantly clear that a much deeper, faster and more ambitious response is needed to unleash the social and economic transformation needed to achieve our 2030 goals. (Guterres, 2019, p. 2) Thus, we turn now to analysis of approaches to resolving the issue of unequal development.

Unpacking the megatrends 21

International development megatrends There has never been a word in the social sciences field with such a profound impact as the notion of ‘development’. Be it in the field of human development, psychology, sociology, anthropology, politics, international relations, or other relevant fields, the idea of development is contentious. Its evolution over the years has eluded both theorists and practitioners alike. In particular is how the concept is used to shape the world we live in. Its historical metamorphosis has seen the word used to describe ‘something better’ – an improvement when people take deliberate action in an organised manner (Pieterse, 2010). Development as intentional social change has also been echoed by many (see Hettne, 2008; McMichael, 2012). The encroachment of the idea in the mainstream development discourse has often been associated with the coining of one other development discourse, ‘underdevelopment’, which, according to Truman (1949), was envisaged as one of the main obstacles to engendering modern progressive societies. The prescriptions that ensued after his popular inaugural speech of 20 January 1949 has, until now, been an inseparable bedfellow of development when ‘development’ continues to be understood as a ‘democratic fair dealing’ (Truman, 1949, n.p.). Further, Truman’s (1949) vision of development was one that decried the ‘old imperialism, [where] exploitation for foreign profit has no place in our plans’ (n.p.). What we envisage is a program of development based on the concepts of democratic fair-dealing. One may question what ‘democratic fair dealing’ has got to do with change, choice, freedom, improvement, inequality, poverty, unemployment, and societal structures. The moral connotation imbued in the notion of development is a good reason enough to invite a closer scrutiny on what development has been, is, and could be like.

Evolving theories of development Marxist theory and development Karl Marx (1818–1883) and Friedrich Engels (1820–1895) have been influential in their thinking on development since the eighteenth century. In their Communist Manifesto, both Marx and Engels (1848) presented what was to be one of the most popular socio-political pieces of work to impact on our understanding of how capitalist societies operate through a notion called ‘class struggle’, also known as ‘class conflict’ and ‘class warfare’. Class struggle resulted in ‘conflict theory’,a critical theorising of how, according to Marx, society in our world today is in a state of perpetual conflict as a result of competition for limited resources. Fundamentally, Marx and Engels highlighted issues of power. In a capitalist sense, it is the tension that exists between those that sell their labour in return for wages and those who control the means of production, the masters, managers, and employers who determine how much wage is tagged against a particular piece of work. Marxism, as a political theory, essentially aimed to

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unpack and expose the political and economic contradictions inherent in capitalism where people offer their labour in return for a meagre salary that does not meet the needs for their survival because the major focus of a capitalist means of production is about maximisation of profit over people’s welfare. A case in point is the Marikana massacre in South Africa (Coleman, 2012). Among the many causes of the massacre, one that stands out is the continued exploitation of the workers by their employers who have amassed wealth while the employees suffer and die underground; while above-ground they continue to live in inexplicable poverty. By inference, therefore, conflict theory as a way of understanding class struggle, elucidates how power is maintained by domination rather than consensus and conformity. Thus, according to conflict theory, the wealthy and the powerful try to hold on to power by any means possible, often by suppressing and subordinating the poor and powerless. Marxist theory was, and continues to be, an important lens through which we can understand the current politics of domination from a development perspective. The elite in society, governments, organisations, and those in the decision-making positions often make decisions that affect the lives of other people. Such critical decisions are often in their favour rather than those that are disadvantaged. In other words, Marx was deeply concerned with unseen structural power, which dominated over others who, as a result of lack of knowledge, became subsumed into the global apparatus of power dynamics. Ultimately, the more the hegemonic power dynamics are at play, the wider the chasm between the ruling elites and working class, thereby creating inequality which, in today’s society, is the major challenge of development. Marxist thinking and its exposure of capitalist operatives through exploitation of workers by the elites, and, similarly, its importation into some countries in Africa, provides evidence to suggest that the current wars, global discontent often highlighted by a growing global civil society advocating for social justice, accountability, transparency, good governance, and the rule of law, human rights and, overall, ‘making poverty history’, is a testimony in response to issues of class struggle. However, the focus on class conflict as the core issue in Marx’s thinking has not fared well to the extent that over the years, there has been an extension of his ideas in what is commonly known as Neo-Marxism which, subsequently, gave ascendancy to the current modernisation, dependency, and world systems theories of development (Taylor, 1996). Modernisation theory and development The encroachment of the Europeans into the new territories in Africa, Asia, and the Americas had an impact on the way such societies would be shaped and remoulded in response to the new influence. When President Harry Truman delivered his four-point inaugural speech on 20 January 1949, little did the socalled developing world know how the fourth point, ‘We must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped area’

Unpacking the megatrends 23 (Truman, 1949, para. 44), would change the development landscape. The declaration classified all the ‘underdeveloped’ areas as needing help. These nations needed new skills, in order to improve economic stagnation which, according to the speech, were still primitive. The contradiction in the speech is also visibly clear when he went on to the state: Such new economic developments must be devised and controlled to benefit the peoples of the areas in which they are established. Guarantees to the investor must be balanced by guarantees in the interest of the people whose resources and whose labour go into these developments. The old imperialism – exploitation for foreign profit – has no place in our plans. What we envisage is a program of development based on the concepts of democratic fair-dealing. To embrace the social, cultural, and economic systems of the developed countries as a cure to such stagnation was to transform from tradition to modernity. In other words, to follow in the footsteps of the newly developed countries (Makuwira, 2006; Matunhu, 2011; Njoh and Ayuketang, 2012; Obeng-Odoom, 2013). The transformation, however, has come at a price. Think of developments in Africa’s agricultural sector, where the process of agricultural modernisation has since been about innovation, that is, introduction of new ways of encouraging farmers to try new crops, new production methods, and new marketing skills (Matunhu, 2011). It is through agricultural innovation that we have seen the introduction of hybrids, the greenhouse technology, genetically modified (GMO) food, use of artificial fertilisers, insecticides, tractors, and the application of other scientific knowledge to replace traditional agricultural practices. The reliance on these new technologies has had its fair share in the economic development in many developing nations. Furthermore, the role played by multinational corporations who continue to exploit the emerging economies is contradictory to the Truman doctrine. Dependency theory of development The continued failures of modernisation theory and the growing discontent among scholars with the kind of thinking propagated by modernisation theory were soon to be challenged and subsequently replaced by a new theory, ‘dependency theory’. Dependency theory provided perhaps one of the earliest challenges to the myriad assumptions and effects of modernisation thinking. The fundamental principles of dependency theory, which emanated from Latin American economists and social scientists, and is argued by Isbister (1991) to be an outgrowth of Marxism premised on the observation that economic growth in some of the rich countries has resulted in the impoverishment of the underdeveloped world through the internationalisation of capitalism, which progressively began to grow in influence and dominated world trade. Not only did dependency theory come as a critical reaction of and reflection to the traditional approaches to economic development that emerged soon after World War II, but it also came as some scholars, such as Frank (1967), noted that there was a complete mismatch between classical development theorising and the post-colonial state on the one hand, and poor articulation of

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modernity, on the other. In particular, there was a growing unease that modernisation thinking was truly misleading in that it failed to clarify the exact relationship between the developed world and the developing regions of the world. In other words, this distortion of the truth about the coloniser and the colonised needed to be made clear. Even the admission by the Brandt Commission of 1980, that development based on the modernisation approach had failed, necessitated a wave of new thinking that resulted in dependency theory. When applied to a continent like Africa, dependency theory, in all its manifestations, must be understood from both pessimistic and structural standpoints. To start with, from a structural perspective, dependency theory – the expansion of the Western European nations through industrial and mercantile capitalism on the one hand, and the colonisation of the continent on the other – was not merely a system of exploitation but also one whose fundamental purpose was to repatriate the profits made in Africa back to Europe (Rodney, 1972). Matunhu (2011, p. 68) notes: ‘From a dependency perspective repatriation of profits represents a systematic expatriation of the surplus values that was created by African labour using African resources’. Hence the development of Europe can be viewed as part of the same dialectical processes that underdeveloped Africa. In other words, the domination of Europe over Africa retarded the economic development of the continent. For five centuries running, Europe capitalised on its encounter with Africa. Matunhu’s observations reflect those of earlier commentators, such as Peet and Hartwick (1999), Burkey (1993), and Isbister (1991), who also note that European development was merely based on destruction through colonialism and resource control. This ultimately led to what they called a Global Geography of European First World Centre and non-European Third World Periphery, where the centre–periphery dichotomy has been used as a means of social, economic, and cultural control. While the modernisation school saw the rich countries as having the potential to relieve the suffering of the poor nations, the dependency theorists viewed modernisation as the major obstacle to the well-being of the poor. To date, the pro- and anti-capitalist sentiments from the two ideological standpoints also pose a significant challenge to the way they respond to alternative means of mitigating the challenge. One suggestion, according to Isbister (1991, p. 51), is to ‘fight fire with fire, to transform capitalism from the enemy of the Third World to its saviour’. In other words, the ‘underdeveloped’ nations should attempt to mobilise local resources in order to create local industries that challenge those from the capitalist North. However, while there have been many attempts through, for example, free trade, the skewed socio-economic status of the two worlds continues to widen. This resulted in a new wave of thinking from a development perspective. Economic growth, liberal, and neoliberalist thinking The 1970s witnessed an increased development discourse propagated by the first World Bank’s Chief Economist, Hollis Chenery (Chenery et al., 1974). Chenery

Unpacking the megatrends 25 and colleagues rephrased the process of development from redistribution from growth to redistribution with growth, where development thinking became more comprehensive and more poverty and income distribution orientated. By the 1980s, most of the groundwork was laid by the followers of the neoclassical and neoliberal approach that was to become the new paradigm for decades to come. Taken in the context of the decline of socialism as an alternative form of economic governance, and a call for a ‘normal society’ based on the principles of democracy and a market-based economy (Aslund and Dabrowski, 2008), the principal criticism of neoclassical economic theory (in all its various forms) and neoliberal policy became apparent. This propagated recycled versions of trickledown economics with ‘growth’ given greater weight than income distribution and social objectives. The underlying assumption of the neoliberal approach was that policy reforms designed to bring about efficiency and growth would also promote better living standards, especially for the poorest. Furthermore, the social costs of structural adjustment programmes (SAPs), the main prescription of the neoliberal approach in the 1980s and 1990s, were supposed to be inconvenient but temporary. It was argued that they were inevitable in order for countries to return to more rational and viable economic structures (Pillay, 2002). However, even then, these (SAPs), did little to improve the lives of people, especially in Africa. Zambia is an illustrative example of the failure of structural adjustment programmes and the minimalist role of government in economic development to bring about significant reduction in poverty levels and improved living standards (McCulloch et al., 2000; Simutanyi, 1996). The imposition (selfimposed or coerced) and lack of success of SAPs in Africa and Latin America cannot be explained by the neoliberal approach or the criteria of the Washington Consensus. However, rather than shifting the development discourse to one that is highly contextualised, regionally and locally, the neoliberal view of development based on hegemonic globalisation and free markets remains without significant challenge, despite effectively dismissing ethnicity, culture (local thinking and practice), and history. The neoliberal view of development espouses the need for political liberalisation along with economic liberalisation in order to bring about mutually reinforcing processes of good governance and economic growth. Economic growth as development, modernisation, and related theoretical constructs, of course, are as much political as economic and accept capitalism as an immutable base for a progressive society, and economics as the tool that can navigate the vagaries of unintended outcomes and steer a new course. This is what Peet and Hartwick (2015) refer to as ‘conventional theory’ (p. 23). Alternatives to this conventional development thinking incorporate most approaches to critically analysing development that challenges the existing structure of capitalist society and promote what Peet and Hartwick conceive as ‘well-conceived development rather than more growth’ (p. 161), noting that growth is not necessary under various models. We turn briefly to some contemporary ‘critical or non-conventional’ development theory.

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Post-development, critical development, and decolonising discourse In response to the many failures of neoliberalism, the so-called ‘Washington Consensus’ model of development, development theory has embraced a range of critical and alternative discourses. Post-development, or what some refer to as anti-development, gained traction in the 1990s. Prior to this, from the 1970s a postmodern critique challenged the grand narrative of development. A postcolonial critique drew attention to the legacy of colonial rule. Without trying to conflate a number of critical and alternative discourses, it is important for the purposes of this chapter to identify these strong and building narratives that challenge the very essence of development, from the perspective of the ‘subaltern’. Post-development is a relatively radical response to the failures of development, both conventional and alternative development models. Development as discourse and practice is rejected as Western imperialism, ineffective, destructive, and creating greater power imbalances. It is rejected not only on its failures, but on its intent, when the middle-class existence of the powerful (and minority) is no longer attainable for the majority (Peet and Hartwick, 2015). Unsurprisingly this critique gained no traction within the development establishment. Postcolonial and decolonial critiques emerge from diverse socio-economic contexts, India and Latin America respectively, although this is a gross simplification, and like many academic endeavours, efforts to classify and delimit theory is by its very nature fraught. Postcolonial critique draws predominantly on the notions of a radical reframing of knowledge and the social identities drawn by Western colonial domination (Peet and Hartwick, 2015; Pieterse, 2010). Decolonising discourse fundamentally addresses the continuing impact of colonial and hegemonic power structures reproducing inequalities (see, for example, NdhovoGatshenii, Chapter 4 in this volume; Quijano, 2000). What ties together all critical approaches to development, in its conventionally understood form, as driven by IFIs such as the World Bank and IMF, is the notion that development, as it is currently practised, is a ‘ mistake of (natural and social) global proportions’ (Peet and Hartwick, 2015, p. 311). How to address this is less agreed, but it is in this disagreement that the relevance of development theory and discourse to development practice becomes a critical link. Currently, the capacity of entrenched development institutions to move beyond ‘conventional’ thinking is not apparent.

Conclusion In essence, if the megatrends in development discourse are considered alongside the megatrends in multilateral development system thinking and approach, it becomes clear that early shifts in theory and practice both within the development and within the MDS showed some clear linkages: shifts away from basic needs, through the integration of social considerations, and the huge growth and subsequent decline of structural adjustment programmes. More recent evolutions of development discourse show a strong shift towards a less conventional

Unpacking the megatrends 27 development orientation in theory, at least. Challenges to the neoliberal hegemony and significant discourse not only on the negative impacts of conventional discourse that accepts a capitalist society emerging from centuries of Eurocentric thinking, but on the current crises of environmental and social conditions, are driving a need for recognition of the need to evolve. These fundamental shifts include recognition of the impact of colonialism, the drastic impact of inequality between nations, and within nations, the potential for current human development models to limit the liveability of the planet itself. Nevertheless, there is limited response within multilateral institutions to these much more fundamental issues. Recognition of the growing influence of non-traditional donors, political shifts away from multilateral engagement, a funding crisis, and the governance crisis in terms of demands for a more inclusive system has shown little if any significant change. More recent initiatives whereby the World Bank and IMF are engaging with climate change discourse, as well as a greater focus on social aspects of development, have not in any way dented the fundamental, conventional thinking that underpins these institutions. The following chapters address a variety of aspects of the existing multilateral development system, including finance, governance, contemporary challenges, both economic and political, and the positioning of the World Bank and IMF within these global challenges and opportunities. The convening power and impact of the World Bank and IMF has been undeniably dominant in the global rules-based world order that has framed so much of human development decision making. Yet, the power on the world stage of these institutions is waning. Some of this is in response to the lack of significant and clear reform within the institutions, but yet more of it is to do with external factors; the increasingly inward focus of national politics globally, and the impact of low and inequitable growth models resulting from international policy cooperation, are two core factors, the growth of alternatives (AIIB, NDB) being another significant shift. The remainder of this book addresses each of these in more detail to analyse the existing existential threats to multilateralism, and therefore the role of the World Bank and IMF, within the broader multilateral development system, in guiding a future course. It seems as if the contemporary context for development is at a point where there is somewhat of a crossroads. The shift from a Eurocentric unipolar world, to a polycentric multipolar world provides a context for a critical analysis of the unit of development. Does a multilateral cooperative form of global order still make sense, to whom, and under what ‘rules’? The rules of course are ideological, political, economic, governance, representation, voice and agency driven. Only under such conditions of analysis is there potential for Morgenthau’s original vision to have contemporary relevance

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3

Populism and a new world order Michael de Percy

Introduction Populism remains a contested concept, but generally, in its current political context, the term refers to a set of policies driven by a charismatic leader who claims to speak in the interests of ‘the people’ and against an ‘established elite’ (Hawkins, 2003, p. 1138). Populism has been used to describe the policies of both the political left and right, but in recent times has been adopted to explain the rise in conservative policies such as Trump’s protectionist agenda and the United Kingdom’s (UK’s) ongoing process of withdrawing from the European Union (EU) (or Brexit). While populism can exist within domestic political con­ texts, on the global stage much of the focus of populist leaders such as Donald Trump has been on nationalist agendas. Globally, populist leaders point to inter­ national institutions such as the United Nations (UN) and the World Trade Organization (WTO) as the ‘established elite’ that ‘the people’ are railing against. The populist argument suggests that existing multilateral institutions, led by an ‘unaccountable internationalist bureaucracy’, are driving ‘conformity’ rather than facilitating the interests of independent nation-states represented by legitimately elected governments (Morrison, 2019). Political leaders in the United States of America (US), UK, and Australia have expressed such populist sentiment in recent times, suggesting that existing multilateral arrangements are suffering a crisis of legitimacy. This represents a significant move away from the foundational principles behind the Bretton Woods arrangements. The Bretton Woods arrangements, orchestrated by John Maynard Keynes and then Chief International Economist of the US Treasury Department Harry Dexter White, were initially designed to create an efficient global monetary system and to promote global economic growth. Although the Bretton Woods monetary arrangements were dissolved in the 1970s, the International Monetary Fund (IMF) and what would later become the World Bank remain as important legacy institutions of the original arrangements designed to rebuild Europe following the devastation of World War II. A key purpose of the arrangements was to provide global stability and growth, rather than a return to the nationalist agendas that had come to the fore during the war. Indeed, Rodgers, of the Bretton Woods Committee (an organisation of ‘prominent global citizens’ who support ‘global

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well-being’ through the ‘Bretton Woods institutions’), recently warned that nationalism and populism ‘were part of the problem seventy-five years ago, and these forces are still creating instability around the world today’ (Bretton Woods Committee, 2019). Although the purpose of the IMF and the World Bank has shifted from rebuilding Europe to focusing on developing nations worldwide, the foundational principle of achieving peace through a stable global economic system remains. In the meantime, changes in economic ideas, particularly the shift from Keynesian ideas of government intervention to ameliorate the busi­ ness cycle to Hayek’s ideas of strong states advocating free trade, have affected the roles of the Bretton Woods institutions, yet the multilateral system has remained relatively intact. Following the 2008 global financial crisis (GFC), however, populism and nationalism and a return to protectionism have chal­ lenged the legitimacy of the existing world order, particularly with President Trump’s recent threat to withdraw from the WTO. But is populism driving a new world order? And does it offer any alternative to the existing multilateral arrangements? This chapter examines the impact of the rise in populism and the re-emergence of nationalism on the international institutions of global trade. Using theories of institutional change, the chapter examines the extent that populist ideas about free trade versus protectionism are leading to a new world economic order. The chapter is divided into three sec­ tions. The first section outlines a history of economic ideas, where such ideas have led to changes in economic institutions. The second section considers the concept of populism in its historical and contemporary contexts and examines the recent rise in right-wing populism in opposition to the existing multilateral arrangements. The third section draws on institutional theory to map out the influence of economic ideas on the global economy from the time of the Great Depression to the present and, on the basis of the historical experience, argues that populism represents a reaction to contemporary global circumstances rather than a legitimate challenge to the existing world order.

A history of economic ideas Ideas about the efficiency of capitalist free markets have a long history, with classical economics generally agreed to have commenced with Adam Smith’s (1776/2003) seminal work, Wealth of Nations. The repeal of the corn laws in the UK resulted from this early intellectual movement, providing the rationale for various interest groups to pressure Robert Peel’s government to end mercan­ tilism (an early form of protectionism) in 1846 (Miller, 2012; Smith, 1776/2003). Classical economics then replaced mercantilism and remained the dominant orthodoxy for decades. In the US in particular, government intervention in the market was minimal, with only occasional interventions arising as a result of crises such as the ‘robber baron’ monopolies in the latter part of the nineteenth century (Josephson, 1962, pp. 448–9), leading to the Sherman Anti-Trust Law of 1890. It is interesting that this period coincides with the first use of the term ‘populism’ to describe the left-wing agrarian People’s Party in the US (Johnson,

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1983). Despite the Sherman law’s initial inefficacy, subsequent efforts by Theodore Roosevelt to limit the political and market power of major corpora­ tions in the early 1900s led governments to focus more on regulating competi­ tion (Roosevelt, 1913/2011, pp. 320–346). A form of laissez-faire economics then prevailed until, in response to the human cost of the Great Depression, Keynes’ (1936) major work The General Theory of Employment, Interest, and Money heralded a ‘revolution’ of government intervention (Ayres, 1946, p. 112). Keynesianism, as it came to be known, was cemented in the West by the 1944 United Nations Monetary and Financial Conference, better known as the Bretton Woods Conference. The International Monetary Fund (IMF) and the Inter­ national Bank for Reconstruction and Development (IBRD) (which would later form part of the World Bank) were established at this time. During the post-war period, Keynesianism became the new orthodoxy, leading to the growth of the welfare state in the capitalist West (as opposed to the communist economic system of the Eastern Bloc). For decades, Keynesianism flourished until the economic crises of the 1970s led to ‘stagflation’, or rapid inflation accompanied by slow growth, a condition that could not be explained by the predominant economic theories of the time (Grubb et al., 1982). In the 1980s, in response, Western nation-states adopted a type of classical economics (often referred to as neoliberalism) to undo the welfare state (to reduce the costs of government by placing greater economic responsibility on businesses and individuals) and to seek greater efficiencies in the public sector. Although state intervention in the market was limited, the state’s role would be to create a strong institutional framework for markets to function. The rationale for neolib­ eral economic policies was that governments should not provide anything that businesses could reasonably provide, on the assumption that businesses are inherently more efficient than governments due to the discipline of the profit incentive. Further, it was viewed as impossible for governments to ‘second­ guess market signals’ as state intervention tends to become biased due to the influence of powerful interest groups (Harvey, 2007, p. 2). Government business enterprises and other business-like entities and assets were sold off or privatised and other government-provided services (such as information technology ser­ vices and waste collection) were contracted out to businesses. In addition, exchange rates in developed economies were floated (as opposed to the fixed exchange rate system established at Bretton Woods) and the GATT, a set of rules designed to reduce tariffs established in 1947, remained a provisional agreement until the World Trade Organization was established in 1995 to provide a rules-based global trade regime (WTO, 2019). While the Bretton Woods system of monetary policy was dissolved, the IMF, World Bank, and later the WTO remained. Rather than focusing on rebuilding Europe, multilateralism became focused on promoting free trade among member states. However, a significant shift had occurred in that Keynes’ ideas gave way to the ideas of Hayek. Consequently, rather than the IMF and the World Bank enabling developing nations to borrow money to intervene in their economies under the auspices of Keynesianism, loans were contingent upon developing

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nations opening their economies to foreign investment and global competition. This period generally represents the beginning of what is known as globalisa­ tion, with developed economies, led by the UK and the US (and including Australia and New Zealand), reducing trade barriers and opening domestic eco­ nomies to international competition. A fundamental belief at the time was that globalisation was inevitable and global competition would intensify in the future. Therefore it was essential that developed nations prepared for a global future by becoming more efficient through the discipline of the market. It is interesting that since the introduction of neoliberal policies in Latin America, left-wing populism has arisen in Chile, Mexico, Argentina, also Venezuela (see Mander, 2016) as a response to growing inequality blamed on the free market models introduced by Milton Freidman’s (a student of Hayek) ‘Chicago Boys’ (students from the University of Chicago who gained prominent positions in Latin Ameri­ can governments). Yet during the 1980s, globalisation was regarded as inevit­ able and therefore generally beyond governmental control. As a result of the financial crisis of 2008, a re-emergence of Keynesianism occurred, with the Australian government, for example, spending through various industry-based packages and social payments to stimulate the economy. In doing so, Australia avoided the worst of the crisis. Although Keynesian economists still struggle with the original theoretical problems associated with stagflation, the GFC proved that neoliberalism, as practised from the 1980s, has its own theoretical weaknesses (Goutsmedt, 2017). Further, the inevitability of globalisation has been challenged, with US President Trump and recently Australian Prime Minister Scott Morrison referring to ‘globalism’ (the process of interacting with multilateral insti­ tutions) as something that nation-states freely enter into, rather than something that nation-states are subjected to without choice. Whether this change in ideas about globalisation represents the beginnings of a new world order remains to be seen, but it does represent a major reversal of the decades-long neoliberal policies that became popular in the 1980s. Clearly, the Bretton Woods Conference represents an important starting point for establishing a ‘new world order’ of multilateral institutions for global trade. Although members from Eastern Bloc states attended the 1944 conference (Schuler and Bernkopf, 2014), these states did not become active members of the global economic system until after the collapse of the Soviet Union in 1991. Nevertheless, with the failed attempt at establishing the International Trade Organization in the 1940s not being resolved until the establishment of the WTO in 1995, and with China and the Russian Federation not joining the WTO until 2001 and 2012 respectively, it is only in recent times that the new world order envisaged at Bretton Woods has been realised. Since the end of World War II, the extent of government intervention in markets has varied, usually in response to crises, and often in line with new economic ideas. In the interests of mapping out a trajectory of economic thought, it can be said that (1) mercantilism gave way to laissez-faire economics until the Great Depression; (2) Keynesianism and government intervention prevailed in the post-war era; and (3) a return to free markets (often referred to as the Washington

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Consensus), beginning in the 1970s, came into effect in the 1980s. Following the collapse of the Soviet Union, free market economics, scaffolded by a global rules-based trading system, has prevailed until relatively recently. However, the recent return to nationalism does not necessarily represent an overturning of a homogenous global system. Indeed, for the most part, not all nations practice capitalism in the same way. In developed Western nations, for example, free market ideas tend to manifest in macroeconomic measures, with national differ­ ences in economic policy occurring in the use of monetary policy (such as the setting of short-term interest rates) and fiscal policy (such as the mix of govern­ ment spending and taxation). Put simply, national variations in the practice of capitalism persist despite the so-called homogenising effects of globalisation (Dore et al., 1999; McAllister et al., 2004, p. 235). Moreover, and coinciding with the latest iteration of economic ideas, China has risen as a challenger to US global dominance, presenting the ‘Beijing Model’ as an alternative to the Washington Consensus (Lee et al., 2011). Yet economic ideas do not represent neat and tidy divisions in the practice of global trade, but rather, a set of general principles evident in the multilateral rules-based framework that are subject to modification based on contemporaneous circumstances. In the late 1990s, for example, anti-trade liberalisation and globalisation protests from the political left encouraged international institutions such as the WTO, World Bank, and the IMF to modify the application of ‘neoliberal adjust­ ment’ programmes. Put simply, developing nations could access loans for national development, but were required to open their markets to foreign trade and investment and to adopt competitive markets and privatise state-owned assets. In many cases, the IMF and the World Bank came under criticism for pushing a neoliberal agenda as part of so-called globalisation. Although the IMF’s Singapore Resolution of 2006 led to reforms to enhance ‘the participation and voice of low-income countries’ (Kofler et al., 2011, p. 243), the criticism remains. Early signs of populism’s challenge to neoliberal orthodoxy came from the political left, for example, Venezuelan President Hugo Chávez’s anti-elite, anti-globalisation, anti-market reform agenda (Hawkins, 2003, p. 1138). Follow­ ing the GFC of 2008, however, populist reactions to globalisation and free trade have risen from the political right and have challenged the Washington Consen­ sus and from within the heart of the Consensus itself. Most notably, the election of Donald Trump as the US President has arguably commenced a reversal of the free trade orthodoxy of the 1980s, manifesting as the levying of tariffs in a trade war with China. President Trump has also increasingly challenged the existing world order to the extent of threatening to withdraw from the WTO (BBC News, 2018) while riding on the back of a political movement that is often referred to as populism, which is discussed in the next section.

Populism Political populism is not a new concept, yet a precise definition remains con­ tested (Fieschi, 2004). According to Panizza (2005, pp. 3–4), there are three key

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theoretical approaches that provide some light on the nature of the term: empiri­ cist generalisations, historicist accounts, and ‘symptomatic readings’. Empiricist generalisations draw on case studies to identify ‘definitional characteristics’ or to ‘construct typologies of the concept’. Historicist accounts tend to relate to histor­ ical periods and typically centre around class-based political alliances with char­ ismatic leaders, such as those evident in Latin America from the 1930s to the late 1960s (Panizza, 2005, p. 3). On the other hand, the ‘symptomatic reading’ approach incorporates the characteristics of empiricist generalisations and historicist accounts but considers ‘the constitution of the people as a political actor’. A symptomatic reading approach constructs the identity of ‘the people’ through ‘the relation of antagonism’ with some ‘other’ or ‘enemy of the people’. Consequently, there is an ‘anti-status quo dimension’ to populism, usually pre­ sented as a barrier to ‘plenitude’, where some form of elite (be they religious, political, economic, and so on) is portrayed as preventing ‘the people’ from obtaining their ‘just deserts’. The latter approach is adopted by Bryant and Moffitt (2019) in their recent attempt to define populism in the current context. For Bryant and Moffitt (2019), populism consists of two core principles. First, populist leaders must claim to speak for ordinary people. Second, populists must point to some elite who are creating problems for these ordinary people. This approach is useful in that it can accommodate both left- and right-wing variants of populism. Clearly, the aspects of identifying ‘the people’ and ‘the other’ are inherently political: who decides (see Lasswell, 1936). But most importantly, Bryant and Moffitt (2019) point out that populism is not simply popular senti­ ment expressed as the will of the people in a democratic sense, but that popu­ lists’ construction of ‘the people … ostracises portions of society that don’t fit in with this group’. Trump’s use of the border wall with Mexico (and more recently his clashes with China and the WTO) and the UK’s Brexit are major examples of populist policies. It is interesting that in the cases of Trump and Brexit, the ‘process of deconstruction and reconstruction of identities’ that Mouffe (cited in Panizza, 2005, p. 5) states is part of the process of constructing an ‘us’ and ‘them’ narrative, is obvious in that first, both the US and the UK were propo­ nents of accelerated globalisation in the 1990s, and, second, that Trump and conservatives in the UK are part of the very elites they claim to be rallying against. How did this come about? Furthermore, why has populism gained so much traction on the global stage? What explains the rise in this contemporary right-wing form of populism? Before attempting to answer these questions, the discussion turns to the rise of populism in Australia, a middle economic power, as a counterpoint to populism in the US and the UK. In her first parliamentary speech in 1996, Pauline Hanson, an Australian politi­ cian, exhibited the hallmarks of populism by claiming to speak for the people and against the established elite. Hanson stated, ‘I believe we are in danger of being swamped by Asians’, before going on to suggest that the two major political parties had used immigration as a tool to win votes. Further, she introduced an anti­ globalisation stance, claiming that she would ‘find out how many treaties we have signed with the UN, have them exposed and then call for their repudiation’. In

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claiming to speak for the people, Hanson identified the contemporary political elite as supporting both Australia’s multicultural policy and the existing world order. Hanson had entered parliament as an independent candidate but had appeared as a member of the Liberal Party on the ballot paper despite being disendorsed by the party just before the election. Co-founding the political party One Nation in 1997, Hanson lost her seat at the 1998 election but returned as a One Nation senator in the 2016 election. In her first speech as a senator, Hanson claimed that Muslim immigration was at the centre of the ‘ordinary’ people’s woes, in that increased immigration increases the size of the consumer base and therefore ‘is only bene­ ficial to multinationals, banks and big business’. Hanson conducted numerous stunts to raise her political profile, such as wearing a burqa into the Senate chamber. Hanson and her party’s share of the vote have been significant, drawing mostly on the voter base of the conservative political parties. Hence, the impact of her party on Australian politics, despite its minor party status, has been substantial, prompting the Liberal/National Coalition to adopt increasingly further right-wing populist policies. However, populism has not taken such a hold in Australia as it has in the US and the UK because of Australia’s position as a middle power, both economically and militarily. China is now Australia’s largest trading partner, with Chinese students and tourists accounting for the largest numbers by nationality in these two major industries. Further, China’s demand for natural resources facilitated Australia’s recent mining boom, and any change in China’s economy routinely impacts upon Australia’s. Hanson’s anti-immigration stance is at odds with the reality of Australia’s reliance on China as a major trading partner, and despite the adoption of right-wing populist policies by the current Coalition government, Australia treads a difficult path between its reliance on the US for national security pur­ poses, and on China for its continued economic prosperity. This difficulty was highlighted in September 2019 when Prime Minister Scott Morrison, in a move apparently designed to demonstrate Australia’s support for the Trump adminis­ tration, called for China to admit it was no longer a ‘developing nation’, and should therefore be subject to the rules of the WTO as a developed nation. China has long claimed that it should have ‘special and differential treatment’ in rela­ tion to the use of trade barriers, a concession allowed to developing nations by the WTO. Indeed, when ranked on the basis of GDP per capita, China is well below that of the US or Australia and ranks only 70th in the world. This puts Australia in an awkward position, especially in the midst of the current trade war between the US and China. Much of the US-China trade war has focused on questions of ‘fairness’ – for example, is it fair that the number two economy in the world receives conces­ sions in relation to trade barriers and climate change while the US does not? Nevertheless, there have been some legitimate complaints that go to the heart of fairness in multilateral trade arrangements, such as the Trump administration’s accusations of intellectual property theft by China. To date, the US–China trade war has consisted of adding and increasing tariffs on goods imported from each country, with China and the US more or less matching the others’ impact of each

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new tariff or tariff increase, with no end to increasing tariffs in sight (BBC, 2018). While economic conditions in the US remain relatively stable with low unemployment and continuing (albeit slowing) growth, the major impact has been on the price of goods imported from China, resulting in a lack of consumer confidence and consequently consumer spending (Greve, 2019). For China, many foreign companies are shifting their manufacturing businesses to South East Asia to avoid the trade war. These have flow-on effects for businesses and consumers, and not just those in China or the US. Recently, WTO deputy director-general Alan Wolff stated that the WTO was powerless to stop a trade war between the two largest economies but called on middle powers like Australia to take on a leadership role. Australia’s response to date has been to go on the offensive with China, while at the same time relying on China as a major trading partner. Further, Australia joined the Chinese-led Asia Infrastructure Investment Bank (AIIB) in 2015, despite pressure from the US for Australia to remain uninvolved. While the Australian cabinet under Prime Minister Tony Abbott was split over the deci­ sion, economic interests were prioritised over traditional security ties. While populist sentiment may prevail in Australia at times, it is clear that any populist agenda tends to occur at the margins rather than to interfere with Australia’s broader economic interests directly. For example, the recent speech by Prime Minister Scott Morrison was immediately followed up with ‘damage control’ measures by both the foreign minister and the trade minister with their Chinese counterparts. Australia provides an interesting case study to test the validity of the populist agenda and its challenge to the prevailing multilateral arrangements established at Bretton Wood that is worth examining further. Before doing so, however, it will be useful to consider some additional conceptions of con­ temporary populism amid growing nationalism. In outlining their study of populism’s influence on voter behaviour in Chile and Greece, Hawkins et al. (2018, p. 3) point out that previous studies on popu­ lism tended to focus on three key ‘proxy measures of populism’. These include: (1) Support for ‘restrictive immigration and asylum policies’ (such as those espoused by Pauline Hanson in Australia or relating to the Trump administra­ tion’s focus on the US–Mexico border); (2) Employment issues resulting from ‘exposure to economic globalisation’; and (3) Declining levels of trust in polit­ ical institutions, which may now, since the GFC, include multilateral institutions. While all three proxy measures sum up contemporary populism, nationalism provides a common thread in that each of the issues can be seen as the impact of some ‘other’ on a particular nation state, whether it be immigration, globalisa­ tion, or the legitimacy of international institutions. In a global sense, the ‘other’ (whether this consists of immigrants, trading partners, or the WTO, for example) is seen as the antagonist to the ‘ordinary people’ whose concerns will be addressed by the ‘charismatic’ populist leader. For the US, the trade war with China can be perceived as President Trump, rhetorically at least, living up to his promise to curb the loss of US jobs. Whether this amounts to abandoning the existing multilateral institutions or is simply a domestic political device (used in

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the same vein as Ronald Reagan’s trade war with Japan in the 1980s – when globalisation was viewed as inevitable) remains to be seen (Rodrik, 2018). Nevertheless, such a view ignores China’s influence on an alternative multilater­ alism, for example, with the establishment of the AIIB, with what appears to be a greater threat to Bretton Woods multilateralism than domestic electoral popu­ lism in the Anglo-West. The AIIB has been touted as a potential challenger to the World Bank and the IMF (Perlez, 2015). While the AIIB has considerably fewer member states than either the World Bank or the IMF, it is significant in that it represents the largest multilateral global financial institution that is neither part of the UN system nor traces its roots to the 1944 Bretton Woods Conference. Moreover, the US (under President Obama) along with Japan, refused to join the Chinese-led institution, while countries such as Australia, South Korea, and the United Kingdom joined despite US opposition (Perlez, 2015). In addition to challenging the Bretton Woods institutions, the AIIB also presents a challenge to the US- and Japaneseled Asian Development Bank (ADB). Yet, this is not the only multilateral insti­ tution to be established by China. For example, the BRICS Bank (an arrangement between Brazil, Russia, India, China, and South Africa), now known as the New Development Bank (2019), and the ‘One Belt, One Road’ initiative, represent significant alternatives to the Bretton Woods arrangements. These Chinese-led arrangements have largely been welcomed by Asian nations, while US-led opposition has, according to the Brookings Institution, largely backfired (Dollar, 2015). Nevertheless, US-led initiatives such as the now-defunct Trans-Pacific Partnership (TPP) showed potential until being derailed by the Trump adminis­ tration – despite countries such as Australia being willing participants in both US- and China-led multilateral arrangements. Indeed, former President Obama had argued that without TPP, China would write the rules for Asia (Green and Goodman, 2015). Trump, on the other hand, suggested in 2015 that the TPP was ‘a deal that was designed for China to come in, as they always do, through the back door and totally take advantage of everyone’, a position that was bizarre in that China was not part of the TPP, and the whole point [of the TPP was] to build alliances and partnerships to better enable the United States to compete with China (Green and Goodman, 2015), which would have included middle powers such as Australia. Middle powers provide an important litmus test for assessing populism’s challenge to the Bretton Woods institutions. While general dissatisfaction in liberal democracy has been on the increase in the West, there has also been a sharp increase in nationalist sentiment reinforced by the events of 11 September 2001. It is arguable that populism has largely emerged as a reaction to globalisa­ tion and has manifested as a form of ‘cultural’ populism, what Huntington (1996) referred to as the ‘clash of civilizations’ thesis. As China’s economic and military power continues to grow, middle powers will find it increasingly diffi­ cult to maintain populist policies without affecting their relationship with China, and consequently their standard of living, especially in light of the relative decline in the power of the US. Yet in the US and the UK, populist policies, as

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reactions to globalisation, may be inadvertently accelerating the decline of the Bretton Woods multilateral institutions, which will now be examined. One of the major shortcomings of the new world order established at Bretton Woods was the absence of what are now major economies. Due to the war, Japan, Germany, and Italy were excluded from the process, yet today are ranked in the top ten largest economies in the world. Similarly, Russia and China (but not the People’s Republic of China) were involved in the establishment of the United Nations Security Council, but the then Soviet Union, as a planned economy, was involved only marginally in the order established at Bretton Woods. India, now ranked as the sixth largest economy, despite being repres­ ented at Bretton Woods, was yet to obtain independence. The significant change in global circumstances since World War II and the impact of the 2008 GFC are largely responsible for the contemporary ‘crisis of legitimacy’ that has exposed the limitations of the Bretton Woods arrangements (Pandit, 2019). Nevertheless, even with China’s leadership of new multilateral institutions such as the AIIB, it is important to note that China still relies on the IMF for access to low interest rates for infrastructure projects, and the World Bank remains a major investor in the AIIB (Bottelier, 2006). From the analysis above, two key themes emerge. First, populism is not so much driving change as it is a reaction to changing global realities. Second, and while the Bretton Woods arrangements are still functioning despite the chal­ lenges, changing global circumstances are exposing the limitations of the ori­ ginal arrangements, especially in terms of making the institutions ‘more representative’ (Pandit, 2019). According to Pandit (2019), China’s establish­ ment of the AIIB and BRICS Bank does not represent an alternative to Bretton Woods, at least in the near future, and the US is unlikely to withdraw from its commitment to the Bretton Woods institutions in the longer term. Further, the current trade war between the US and China appears to be unsustainable, with US businesses suffering from Chinese import tariffs amid claims that recent pro­ tectionist measures have cost the US some 300,000 jobs to date (Layne, 2019). While the Trump administration has ‘shifted away’ from multilateral institutions, China still relies on the World Bank, IMF, and the WTO for access to technical assistance in a variety of trade-related matters (Bottelier, 2006; Pandit, 2019; Stewart, 2004, p. 8; Wang, 2018). But do these changing international circum­ stances represent a significant shift in economic ideas? And are these changing ideas driven by populism? To address these questions, the next section draws on institutional theory to map out the influence of economic ideas on the global economy from the time of the Great Depression to the present.

Institutions and institutional theory Institutions, defined as the rules, routines, and procedures that organise society, are necessarily durable (March and Olsen, 1989). Institutions encompass the ‘rules of the game’; rules that are difficult to change. These rules also establish what March and Olsen (cited in Peters, 2005, p. 30) refer to as a ‘logic of

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appropriateness’ for decision making or policy setting. If institutions set the rules, and establish procedures that are difficult to change, then it follows that they cannot change themselves. An exogenous event, typically war, must occur in order to disrupt society to such an extent that the extant institutions can be changed. World War II presented such an opportunity to facilitate a change at the Bretton Woods Conference in 1944, leading to the establishment of what has become the current world order. But once victory for the Allies was complete, and the foundations for global capitalism were laid, it was not until the 1990s that a truly global capitalist economic system came into effect. Furthermore, while free trade agreements have proliferated, both bilateral and multilateral, since the 2008 GFC, a populist movement of anti-globalisation has risen in the US and the UK, the two major economies that first embraced the idea of globali­ sation in the 1980s. Since, however, the rise of China as an economic and military superpower has been a major driver of recent protectionist policy agendas, particularly in the US. Ideas can also bring about institutional change, as history demonstrates with the ideas of Adam Smith, John Maynard Keynes, and Fredrich Hayek. But is populism driving new ideas amounting to a new world order? Using a model of institutional change, this section examines the three major historical ideas in economic thought: classical economics (Smith); Keynesianism (Keynes); and neoliberalism (Hayek). It then applies the model to populism in light of the recent challenges to the Bretton Woods multilateral institutions. Conceptually, institutions have often been narrowly equated with organisa­ tions, and organisations such as the IMF, World Bank, and WTO are often referred to as international institutions. While the terms ‘organisation’ and ‘institution’ are not necessarily synonymous (Peters, 2005, p. 32), the IMF, World Bank, and WTO are responsible, on behalf of member states, for administering the rules or routines which influence or constrain political behaviour in relation to global trade and finance. The focus on institutions is useful to explain long periods of instability but is less useful in explaining institutional change. Critical junctures are typically viewed as large-scale events, which are exogenous to institutions, and which chal­ lenge the status quo or force change. However, these do not adequately explain how institutions may change endogenously through learning or deliberately adapt­ ing to the external environment (and consequently, change themselves over time). Consequently, the concept of ideas has been developed to demonstrate how an institution may change incrementally or through other dynamics such as policy learning or environmental change, particularly where ‘ideas’ encompass possible courses of action or strategies to deal with policy problems (North, 1990). In the political science literature, ‘ideas’ have been acknowledged as a form of change through ‘displacement’, where new ‘behavioural logics’ come to displace tradi­ tional ways (Streeck and Thelen, 2005, pp. 19–20). This approach was adopted by Crouch and Keune (2005) in explaining Britain’s transition to neoliberalism in the 1980s. For example, the liberalisation of domestic industries throughout most OECD-member nations represented a significant change from post-war Keynesianism. Subsequently, domestic and international institutions changed to

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implement the new idea, rather than necessarily reacting to a large-scale exogenous event which might be more accurately called a critical juncture. Another way of thinking about ideas as critical junctures, however, is to reconsider the relevance of the timeframe (Stark, 2017). Rather than a sudden ‘shock’ to the existing system, ideas may incrementally bring about long-standing changes in institutions that punctuate the equilibrium in a relatively short time compared to the overall tem­ poral sequence under review. It is generally acknowledged that multilateral institutions can change incre­ mentally (Keohane, 2017, p. 323), and have done so in response to various crises and changed circumstances since Bretton Woods (Bird and Joyce, 2001, p. 75). Yet when a longer temporal perspective is adopted, there are clearly three major ideational periods that can be identified in relation to global trade and finance: classical economics (Adam Smith); Keynesianism (John Maynard Keynes); and neoliberalism (Fredrich Hayek). These key ideas, at least, have remained extant from their adoption, only to be interrupted when each new idea has gained trac­ tion. This model of change is generally referred to as punctuated equilibrium, where long periods of stability are interrupted at critical junctures by exogenous events, or indeed, ideas. Further, institutions tend to be path-dependent, with an element of ‘lock-in’ where past decisions make it difficult to change course in the present, whether due to sunk costs or increasing returns for actors following the rules of the game. Nevertheless, it is not a neat and tidy process, with institu­ tions often littered with ‘flotsam and jetsam’ of past decisions and paths not taken (for example, the League of Nations and the UN and the failed precursor to the WTO) (Schneiberg, 2007). In the current context, populism has no ideational backing other than its opposition to the existing order. Indeed, media commentators have described President Trump’s focus on ‘disruption’ to be more about inducing chaos as a domestic electoral performance, rather than offering a serious alternative to the existing multilateral institutions (Kelly, 2019; South China Morning Post, 2018). However, each of former ‘logics of appropriateness’ have reflected ideas based on the Anglo-American dominance of global trade and finance; a dominance that is increasingly short-lived as China’s economy continues to grow. By adopting economic ideas as the catalyst for change in the global trade framework, and given the tendency of multilateral trade arrangements to change in response to changing ‘logics of appropriateness’, the theoretical aspects of institutional change suggest that populism does not represent an alternative logic that might displace the neoliberal logic that remained extant until the 2008 GFC, but rather populism is part of the exhaustion of the institutional traditions of Bretton Woods due to changing global realities (Jackson and Deeg, 2012).

Conclusion There is little doubt that the 2008 GFC challenged the legitimacy of the neoliberal agenda of the 1980s. Although cultural populism arose in the 1990s as a reaction against globalisation, exacerbated by Brexit in recent times, there are distinct

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differences between populists’ anti-immigration stance and the anti-elitism charac­ terised by contemporary political populism that has given rise to a return to protec­ tionism and a challenge to the legitimacy of the established multilateral institutions of trade. Nevertheless, and accepting the limitations of history being any guide to the future, past changes to multilateral institutions have reflected changes in eco­ nomic ideas. And while World War II provided the critical juncture that enabled wholesale change in the practice of global economics, history demonstrates that new ideas tend to replace the old, whether rapidly or incrementally, in the practice of global trade. If we accept the premise of either institutional change being brought about by the displacement of old ideas by the new, or the exhaustion of traditional institutions creating the opportunity for new ideas to be implemented, then populism provides no alternative in either case. As history suggests, the multi­ lateral institutions established at Bretton Woods have proven their ability to adapt to new economic ideas and changing global realities. Populism does not represent either. Rather, populism represents the reaction of domestic politics to the decline in economic dominance of the Anglo-West and subsequent dissatisfaction with the existing world order while offering no alternative to it.

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Revisiting the Truman version of development and Eurafrica project of underdeveloping Africa Sabelo J. Ndlovu-Gatsheni and Busani Mpofu

Introduction In his inauguration speech before Congress on 20 January 1949, US President Harry S. Truman paradigmatically laid down a post-1945 version of the long­ standing ‘Whiteman’s Burden’ hidden behind notions of democracy, fairplay/fair deal, and sharing the fruits of science and technology across the whole world. At its centre was the ideology of ‘assisted development’ to the underdeveloped parts of the world. Thus, the Truman speech set afoot a pat­ ronising and imperial version of development that was blind to the structural asymmetrical power relations responsible for undermining genuine decoloni­ sation and maintenance of Euro-North American global coloniality, which continues to underdevelop Africa. This happened alongside concretising the idea of Pan-Europeanism predicated on the Eurafrica project. This project openly expressed that the survival of Europe and the European Union was dependent upon its ability to appropriate resources from the African conti­ nent. We argue that the Eurafrica political project unfolded concurrently with the Truman version of development and its colonial intentions and exploita­ tive logics were hidden under notions of humanitarianism, reciprocity, and partnerships. This chapter thus revisits the Truman version of development, concurrently with the Eurafrica project from a decolonial epistemic perspective, with a view to unmask and reveal what has been concealed and the problematic idea of developing Africa through the Global North’s own image. It builds on the work of Arturo Escobar, Encountering Development: The Making and Unmaking of the Third World (1995/2012); Peo Hansen and Stefan Jonson, Eurafrica: The Untold Story of European Integration and Colonialism (2014); Yash Tandon Trade Is War: The West’s War against the World (2015); Sabelo J. Ndlovu-Gatsheni, Epistemic Freedom in Africa: Deprovincialization and Decolonization (2018); and Busani Mpofu and Sabelo J. Ndlovu-Gatsheni, Rethinking and Unthinking Development (2019). Using the decolonial epi­ stemic perspective, the chapter reveals coloniality that is hidden within the very ideology of developmentalism before it turns to the fate of Africa within this discourse and its practices.

Eurafrica project and underdevelopment 47

The Truman version of development and underdevelopment in Africa In this chapter, the Truman version of development refers to an encapsulation of all the post-1945 Euro-North American driven initiatives beginning with the Bretton Woods Conference of 1944, which not only invented a new international monetary system presided over by the World Bank (formerly known as the Inter­ national Bank for Reconstruction and Development) and the International Monetary Fund (IMF) (the institutional Trojan horses of global economic colo­ niality), and the World Trade Organization (WTO). Explaining the ‘Truman version of developmentalism’, Thandika Mkandawire interpreted its conception of development as a Euro-American missionary task of developing the Global South in general and Africa in particular (Mkandawire, 2011, pp. 7–8). In this Truman version, development falls neatly within global imperial designs articu­ lated in terms of ‘civilising mission’ and ‘Westernisation’ of the non-Western world (Mehmet 1995). The historian Robert Gildea in his book entitled Empires of the Mind: The Colonial Past and the Politics of the Present (2019) introduced the concept of ‘the imperialism of decolonization’ whereby the United States laid out a cogni­ tive empire after WWII as it pursued its economic supremacy as a non-military tactic through programs like the Truman Doctrine and the Marshall Plan (a postWWII European recovery plan providing an influx of American capital to rebuild Europe) (Winterhalt, 2018). Britain and France were also actively involved as was the rest of Europe. Truman’s inaugural address must be under­ stood in a broader context of a world that was losing colonies and the formula­ tion of other global designs aimed at domination and exploitation of Africa. Never be misled by the rhetorics of power which always hide the reality – Truman’s proposed aid programs for nations outside the European region, ‘offer­ ing American scientific techniques and technical expertise’ was part of an imperial rhetoric (Winterhalt, 2018, pp. 1–2). In his inaugural speech in 1949, Truman elucidated the Point Four Program which is now considered as the starting point of international development in the post-war world. Truman established the basis of support for four policies: that is: (1) supporting the United Nations; (2) continuing to support European Economic recovery; (3) aiding countries in maintaining their freedom, and most impor­ tantly, pertaining to global development; (4) ‘making the benefits of [United States] scientific advances and industrial progress available for the improvement and growth of underdeveloped areas’ (Winterhalt, 2018, p. 2). The fourth policy became the flagship for the new program for global development, and is what we regard as the Truman version of development in this chapter. Truman defined the large parts of the world as ‘underdeveloped’, in need of development, with greater production viewed as a catalyst for prosperity and peace (Sachs, 1992, n.p.). Truman declared that the majority of the global popu­ lation lived in poverty with little hope for economic improvement, which made them a threat to themselves as well as to more developed areas of the world

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(Winterhalt, 2018, p. 2). ‘Clothing self-interest in generosity, Truman outlined a program of technical assistance designed to ‘relieve the suffering of these peoples’ through ‘industrial activities’ and ‘a higher standard of living’ (Sachs, 1992, n.p.). Regarding the ‘underdeveloped’ Global South, development was thus seen as a simple exercise of ‘catching up’ with the ‘developed’ Global North, with the USA leading the pack. Winterhalt (2018, p. 5) argued that Truman’s anti-communist rhetoric at the beginning of his inaugural speech, taken together with his statement that poor people were a threat to themselves and to the developed world, indicated that the Point Four Program aimed to keep Western democracy and capitalism safe from communism in the post-WWII Cold War era. The Truman Doctrine and the Marshall Plan aligned with the US containment policy proposed by Kennan as a ‘long-term, patient but firm and vigilant containment of Russian expansion tend­ encies’. Point Four, stripped of its altruistic proclamations, also fitted nicely with the American foreign policy aimed at preventing communism from gaining a foothold in underdeveloped areas of the world. For Winterhalt (2018, p. 6), Point Four ‘aimed primarily to contain and weaken the Soviet Union. Improving the lives around the globe was a secondary consideration’. Winterhalt (2018, p.6) argues that when Truman was delivering his inaugural speech he perhaps had no idea that he was instigating a new era in global development as his anti­ communist message seemed bent on halting the advance of soviet communism. States aligned to the USSR viewed the Point Four program as Truman’s plan toward ‘American global domination, a colonial, expansionist, capitalist scheme out to acquire raw resources, and an attempt to prop up colonial enterprises’ (Winterhalt, 2018, p. 7). Gilbert Rist argues that Truman’s Point Four ‘primarily served the interests of the world’s most powerful nation’ while claiming to have ‘only the common good at heart’ (Rist 2008: 78). In the process, ‘development meant nothing more than projecting the American model of society onto the rest of the world’ (Sachs, 1992, n.p.). According to Sachs, world development, even its birth, was therefore ‘designed to remake the world in the image of the United States of America’ (Sachs, 1992, n.p.). Charles S. Meier, however, pointed fingers at both the United States and Soviet Union, as both ‘dangled development projects before the non­ industrialised world in an effort to marginalise the influence of the other’ (Meier 2010: 48). This had been highlighted earlier by Tlostanova and Mignolo (2009) who noted that the post-1945 world was dominated by the developmental and modernising mission of capitalism and socialism. The concretisation of the idea of Pan-Europeanism predicated on the Eurafrica project also gained momentum in the 1950s as a subset of the broader imperial drive in rebuilding Euro-North American hegemony after the end of World War II.

The Eurafrica project We argue that as a leitmotif of the Truman version of development, the Eurafrica (Europe–Africa relations) project’s true colonial intentions and exploitative logics

Eurafrica project and underdevelopment 49 were hidden under notions of humanitarianism, reciprocity, and partnerships. Peo Hansen and Stefan Jonsson’s book, Eurafrica: The Untold Story of European Integration and Colonialism (2014), argues that the creation of the European Eco­ nomic Community (EEC) through the signing of the Treaty of Rome in 1957 was born out of a common European geographical and economic effort to retain colo­ nial empires in Africa through the Eurafrica project. The Eurafrica project was never built on an equal partnership, mutual trust, and interdependence, but it resulted in ‘a licenced patronage in which the superior partner would continue overseeing and developing the inferior one’ (Hansen and Jonsson, 2014, pp. 253–254). European integration was never about spreading universal norms and values, human rights, and the rule of law as its promoters were racist, imperial­ istic, and imbued with the idea of the superiority of ‘Western civilisation’. Thus, the EEC was not simply ‘European’, but was born ‘Eurafrican’ (Garavini and Nybakken, 2012). At its foundation, the ECC comprised of Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany, and all colonial possessions of these member states – officially referred to as ‘overseas countries and territories’, that included Belgian Congo and French West and Equatorial Africa, and Algeria later (Hansen and Jonsson, 2014, p. 7). The Eurafrica political project openly expressed that the survival of Europe and the European Union was dependent upon its ability to appropriate resources from the African continent. It had three objectives: access and extraction of Africa raw materials, the consolidation of a new imperial entity that could compete with the United States and the Soviet Union, and, third, plans for largescale settlements of white Europeans in Africa. According to CoudenhoveKalergi, regarded today as the forefather of the European Union, in his 1929 Paneuropa issue titled Afrika, ‘Africa could provide Europe with raw materials for its industry, nutrition for its population, land for its overpopulation, labour for its unemployed and markets for its products’ (cited in Hansen and Jonsson, 2014). The idea of Eurafrica gained momentum between WWI and 1960, a period marked by the decline of Imperial Europe. It was seen as a process of European integration and rejuvenation through a common colonial project under the concept of Eurafrica. The view was that European colonies would become part of the European Economic Community (EEC), officially labelled as ‘inclu­ sion of the overseas territories’, but simply described as the creation of Eurafrica. For the EEC countries in 1957, the Eurafrica project allowed them to: ... posit their presence and interests in Africa as a new relationship of mutual association, formally accommodating the demands of the anticolonial move­ ments, while at the same time never really stepping out of their roles as patrons and tutors. For the African states … Eurafrica allowed the political elites of the emerging sovereign states to enter a compromise with their former colonial masters … through arrangements from which both partners would profit at the cost of the majority of Africans for whom decolonization … turned out to be ‘a non-event’, as Achille Mbembe puts it. (Hansen and Jonsson, 2014, p. 15)

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This is the reason why decolonisation did not signify a rupture with the past, especially for the French and Belgian colonies that became independent around 1960, as they remained stuck in various arrangements of dependence, clientelism, and as a reservoir of raw materials (Hansen and Jonsson, 2014, pp. 15, 246). Through Eurafrica, the EEC ended colonialism while at the same time author­ ising its continuation (Hansen and Jonsson, 2014, p. 251). Actually, Eurafrica and its successor, the European Commission’s Directorate General VIII were instrumental in keeping the empire alive by Europeanising it. While the Eurafrican project seemed to disappear from the political agenda in 1960, African states maintained multilateral EEC association through the Yaoundé Convention in 1963, the 1975 Lomé Convention (1975–2000), and the 2000 Cotonou Agreement (Hansen and Jonsson, 2014, p. 248). The Eurafrican project consolidated colonial inequality in the mid-twentieth century and perpetuated it into the contemporary world order (Hansen and Jonsson, 2014, p. 6). France, for example, retained monetary and financial control of most of its colonies in a way unmatched in Africa through the African Financial Community (CFA) (Amin, 2011, p. 176). This is a classic example of enduring neo-colonial relations between France and Francophone Africa. The CFA franc zone consists of 14 countries. The 12 former African colonies still use the CFA franc (CFAF) con­ trolled by the French Treasury. French products are guaranteed a market in Francophone markets. Kwame Nkrumah was therefore correct when he observed in 1961 that the 1957 Treaty of Rome marked ‘the advent of neo-colonialism in Africa’, and represented a new-fangled ‘system of collective colonialism which will be stronger and more dangerous than the old evils we are striving to liquidate’ (cited in Hansen and Jonsson, 2014, p. 244). We therefore argue that the Truman version of development and the Eurafrica project have always contributed to the underdevelopment of Africa. By under­ development, we mean that they contribute to the following: 1 2 3 4 5 6

Progressive loss by society over the control of its own destiny. Emergence and strengthening of structures of external dependency in the economy, health, education, culture, and state organs. Net transfer of resources and economic surplus to external companies and nations through gross underpayment to producers and unfair, illicit exchange. A growing gap between the dominant and dominated nations in terms of technological capacity, infrastructure, social amenities, and the standard of life. Consolidation of a pattern of social stratification whereby local economic and political elites benefit magnificently while the masses at the bottom experience marginal progress, at best. Increasing social tensions and conflict. (Rodney, 1972, summarised by Hirji, 2017, p. 2)

Eurafrica project and underdevelopment 51 According to Hirji, at its worst stage, underdevelopment is accompanied by a conviction that ‘without external “donors” that nation would plunge into an abyss’ (2017, p. 2). For Rodney (1972), the underdevelopment of Africa has been facilitated by exploitative, unfair terms of trade, and through investment (imperialism). The prices of minerals and agricultural products are always established by the big capitalist countries. European companies own land, mines, banks, and factories in Africa, and repatriate their profits. African governments survive on loans bor­ rowed from Western governments or multilateral institutions, which they have to repay with huge interest. This dependency, which deepened during colonialism, still survives now in the neo-colonial era. According to Babu, post-colonial gov­ ernments in Africa continue to rely heavily on guidance, expertise, and funding from the global financial institutions and imperial powers. While the local elites appear to prosper, the conditions of the masses improved just a little bit. Africa’s position relative to the West has worsened. Africa has essentially remained an exporter of primary products and importer of manufactured goods under unequal, exploitative terms of exchange. This deepening of Africa on the world market and foreign investments is what Babu regards as the primary cause of African underdevelopment (Babu, cited in Hirji, 2017). Gildea (2019, pp. 117–118) discussed how Europe and United States con­ structed ‘the global financial republic’. He elaborated on this idea of a ‘global financial republic’: What emerged was a new version of the global financial republic which reasserted its dominance of the global South not by military intervention but by exploiting its greatest asset: Third World debt. The global republic may be seen as a new form of imperialism in that it used debt to impose controls on developing countries that were financial and economic. Multinational companies were contemporary versions of the trading companies with sovereign powers that had extended empire in the eighteenth and nineteenth centuries. It was within this context that the persistence of the hegemonic Truman version of development ensued, backed up by what Adebayo Adedeji termed the ‘devel­ opment merchant system’ (DMS), ensuring that there is no autonomous develop­ ment that can spur African economic futures. According to Adedeji, the DMS is driven by the Bretton Woods Institutions (BWI), which finance the implementa­ tion of an exogenous development agenda (2002, p. 4). Therien (1999) noted that the DMS exists as a consortium of the IMF, the World Bank, the WTO, international nongovernmental organisations (INGOs), and multinational corpo­ rations (MCs). They advance a ‘Bretton Woods Paradigm’ of the African future that is amenable to global coloniality (Ndlovu-Gatsheni, 2018, p. 98). For David Slater, the DMS is characterised by the ‘imperiality of knowledge’, which is constituted by ‘interweaving of geopolitical power, knowledge and subordin­ ating representation of the other’ (Slater, 2004, p. 223). As a result, the DMS

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maintains coloniality long after the dismantling of administrative colonialism. Africa is still viewed as a space inhabited by a people ‘shorn of the legitimate symbols of independent identity and authority’ as well as a ‘space ready to be penetrated, worked over, restructured and transformed’ from outside (Slater, 2004, p. 223; Ndlovu-Gatsheni, 2018). Easterly advised countries having the potential to develop to avoid too strong and one-sided Western-centric ideas that emanated from the World Bank, the IMF, and the WTO, and other similarminded organisations (Easterly, 2007, cited in Mpofu and Ndlovu-Gatsheni, 2019, pp. 7–8). We will now focus briefly on how the operations of WTO promote the intentions of the superpowers.

The World Trade Organisation’s role in global coloniality The 1944 Bretton Wood Conference canvassed the establishment on an Inter­ national Trade Organisation, a proposition which remained latent until the estab­ lishment of the WTO in 1995. Conventional neoliberal wisdom regards ‘free trade’ development as benign. However, Yash Tandon’s Trade is War: The West’s War against the World reveals how the WTO and the Economic Partner­ ship Agreements like the EU-Africa EPA and the Transatlantic Trade and Invest­ ment Partnership (TTIP) are embedded in a rhetoric that hides their primary function as the agents of global business. Jean Zeigler argued that Western powers use the ‘weapon’ of international trade as one of their main armaments to exploit and maintain in bondage the peoples of the Global South (cited in Tandon, 2015, p. 16). Tandon’s examin­ ation of the 76 African, Caribbean, and Pacific (ACP) countries, all former colonies of European powers that used to enjoy some special trade status by virtue of the Lomé Conventions I, II, and III and the Cotonou Agreement, high­ lighted how this was brought to a brutal stop in 2007 by the European policy. The European Union cancelled all the preceding agreements and attempted to impose on the ACP countries the ‘Economic Partnership Agreements’ (EPAs) conventions that enforced unrestricted free trade. This removed all domestic market protection in the ACP countries. According to Zeigler, ‘depriving an ACP country of its customs duties amounts to reducing it to vassal status, to der­ eliction’ (Zeigler, cited in Tandon, 2015, pp. 16–17). What is surprising is that African governments tend to sign these agreements. According to Tandon, African governments, weakened by their dependence on ‘development aid’, are often ‘willing’ to sign these asymmetrical and total unfair agreements (Tandon, 2015, p. 22). Tandon described the global trading system as ‘war’, with the WTO as main arena for global trade and an organisa­ tion that is not a democratic at all. He noted that if small and middle-sized coun­ tries failed to ‘follow the rules’ as dictated by the big powers that controlled the WTO, they are then collectively or individually subjected to sanctions (Tandon, 2015, p. 20). According to Tandon (2015, p. 21), the WTO is ‘essentially a con­ spiratorial organisation’ whereby decisions are made by the select members that comprise the big powers and a small number from the Global South selected by

Eurafrica project and underdevelopment 53 the Global North. These decisions are binding even on those members that are not present. Another lethal weapon of the West’s trade war against the rest including Africa is intellectual property (IP). Medical knowledge, seeds for food, and others are all turned into property under capitalism, to be bought and sold as ‘IP’ (Tandon, 2015, p. 76). The institutions of global governance, including the WTO, are the creations of an asymmetrical world that is dominated by the early industrialisers of the impe­ rial North who have no interest in helping the Global South to industrialise and compete against them in the exploitation of the world’s diminishing natural resources (Tandon, 2015, p. 94). In African countries that were colonised, the imperial powers and their corporations seized control of the natural resources in those countries. In the post-colonial era, attempts by the formally colonised people to exercise control over their resources has been met with ‘hammer and tongs to restore their imperial control’ (Tandon, 2015, p. 98). Tandon has often led some East African countries to refuse to sign some of the EPAs. In 1997, he set up the Southern and Eastern African Trade Information and Negotiations Institute (SEATINI) to help build Africa’s capacity to negotiate trade agreements with self-confidence and to stand up against the dictates of the big powers (Tandon, 2015, p. 22). In 2007, the Kenyan Small Scale Farmers Forum filed a case against their own government as they argued that the EPAs would put at risk the livelihoods of millions of Kenyan and East African farmers (Tandon, 2015, p. 22). However, in June 2010, the European Commission (EC) still tried to get the countries from the East African Community – Kenya, Uganda, Tanzania, Rwanda, and Burundi – to sign the EPAs (Tandon, 2015, p. 26). Therefore, Escobar (1988, p. 498) succinctly argued, the concept of develop­ ment (the Truman version and of the Eurafrica kind) was embedded in the neo­ colonial construction of the world and was a key ideological tool in global power relations. Ndlovu-Gatsheni and Mpofu (2019) highlighted how Arturo Escobar (1995) made a strong argument about the need for the end of development and the beginning of post-development thought. Escobar interpreted development as a set of hegemonic discourses and practices cascading from the ‘West’ that pro­ foundly enabled the making of what became known as the ‘Third World’ charac­ terised by underdevelopment. He then posited three important arguments about development. The first was a call for decentring of development, that is, ‘to dis­ place it from its centrality in representations of and discussions about conditions in Asia, Africa and Latin America’ (Escobar, 1995, p. xii). Escobar also called for an opening ‘up of the discursive space to other ways of describing the con­ ditions, less mediated by the premises and experiences of “development” ’ (1995, pp. xii–xiii). The second intervention was a direct call for the end of develop­ ment, not so that there is a new search for ‘development alternatives’, but to enable ‘alternatives to development’ itself. The third point escalated the critique on development to the epistemological level (political economy of truth) and its imbrications with power. The ‘post-development’ discourse was, however, heavily criticised for overlooking poverty and capitalism as content of develop­ ment, for being essentialist, and for romanticising local traditions.

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Why has development eluded Africa in the post-colonial era? Decolonisation of African states only led to their incorporation at the lowest echelons of the asymmetrical modern global power structure without destroying global coloniality. African leaders in the post-colonial era have failed to rise above ‘the contradictions of the colonial political economy’ (Ndlovu-Gatsheni and Mpofu, 2019, p. 257). In the words of Ake (1981, p. 93), ‘the nationalist movement which arose from the contradictions of the colonial political economy achieved independence, not economic independence’. Hart and Padayachee argued that ruling elites in most of Africa often collude with foreign extractive, commercial, and military experts, with national political leaders today continuing the process of accumulation without development in most of Africa. As a result, Africa’s underdevelopment currently should be sub­ stantially attributed to the self-serving actions of the fragmented political class serving the interests of foreign powers (Hart and Padayachee, 2010, pp. 410–11, 423, 426). Moeletsi Mbeki (2009) blamed African ruling elites and labelled them ‘the architects of poverty’ for enriching themselves at the expense of their own people by serving the interests of foreign powers determined to exploit their countries’ human and natural resources. Julius Ihonvbere also blamed African leaders and the African elite for the failures of the African national project and development (1994, p. 17). George Ayittey also argued that it is naïve to blame Africa’s misery on external factors when African leaders themselves betrayed both the aspirations of their people and their indigenous political systems (Ayittey, 1994, pp. 15–20). Therefore, as Ndlovu-Gatsheni (2019, p. 38) also argued, African leaders and elites are not innocent as some squandered oppor­ tunities for development, betrayed the objectives of the African national project, and looted the resources meant to help poor people. We therefore argue that global coloniality produced a particular form of leadership in Africa – a petit-bourgeoisie that could not invent or even transform political, economic, and social institutions inherited from colonialism ‘into its own image’ so as to ‘become socially hegemonic’ (Nabudere, 2011, p. 58; Taylor, 2014, p. 5). According to Mafeje, African leaders have only succeeded in staying in power through balancing internal and external forces, with the interests of external forces often outweighing those of internal constituencies in African leaders’ political calculations. Thus, they preside over post-colonial states that are not entrenched in African society, but exist as ‘a bureaucratic con­ nivance’ (1992, p. 31: Young, 2012). Robert Calderisi, a former World Bank official, argued that most of the mis­ fortunes bedevilling Africa were self-imposed, and linked the failures of devel­ opment to kleptocratic governments, mismanagement, antibusiness behaviour, family values, cultural fatalism, corruption, and tribalism (Calderisi, 2004, p. 15). Even after the World Bank and the IMF sponsored SAPs that wreaked havoc on Africa, Calderisi still argued that Africans were to blame for the crisis. What this thinking ignores is the role of coloniality of power in making it diffi­ cult for development to take root in Africa. Žižek (2013) questioned whether

Eurafrica project and underdevelopment 55 African leaders would dare to touch the capitalist mechanisms or whether they would decide to ‘play the game’? The challenge, according to Žižek, is that if one disturbed the capitalist mechanisms, one was very swiftly ‘punished’ by market perturbations, economic chaos, and the rest (Žižek, cited in Mpofu and Ndlovu-Gatsheni, 2019). The constant danger faced by African leaders is that outright capitulation to the dictates of global coloniality always looms large over them. Capitalism, glo­ balisation, and neoliberalism are packaged as universal norms and values that every human being has to live by and practise. They are articulated from Europe and North America as natural processes that are not contestable. They are por­ trayed as a reality to which Africans must adapt rather than resist. Such defeatist discourses as ‘There is No Alternative’ (TINA) advanced by Margaret Thatcher was meant to undercut resistance. Euro-North American-centric modernity there­ fore produces rhetoric of emancipation that hides its coloniality machinations as part of subverting decolonial resistance (Ndlovu-Gatsheni and Mpofu, 2019). Ralph Austen (1987, p. 271) clearly understood that the major economic problem facing African people is that of the asymmetrical relationship between the ‘role of the continent in the world and the degree to which that world … has pene­ trated Africa’. We therefore argue that this perennial postcolonial problem com­ promises any initiatives aimed at creating autonomous development in Africa.

The tight clutches of global coloniality on African development initiatives Currently, the World Bank and the IMF are key drivers of the global neoliberal agenda predicated on the Washington Consensus. The Washington Consensus is constituted by ‘the set of ideas and institutional practices that have seemingly ruled the world economy since the 1970s, most commonly known as neo­ liberalism’ (Escobar, 2012, Preface). With the end of direct colonialism, global coloniality operates as an invisible power matrix that shapes and sustains asym­ metrical power relations between the Global North and the Global South (Ndlovu-Gatsheni and Mpofu, 2019). According to Mignolo, racism, the slave trade, imperialism, colonialism, apartheid, and neocolonialism not only consti­ tute global coloniality as a modern power structure but are also manifestations of what Mignolo described as the ‘dark side/underside’ of modernity (1995a, 1995b, 2000b, 2011b). Conceptually, according to Tlostanova and Mignolo, coloniality is the hidden side of modernity. Coloniality is constitutive of mod­ ernity. At the same time, ‘development’ is a companion concept to modernity. Underdevelopment is what development proposes to overcome. Modernity pro­ poses to overcome ‘tradition’, barbarism, ‘fanatic religious belief’, backward­ ness, and so on. Coloniality thus becomes ‘the hidden weapon of both the civilizing and developmental mission of modernity’ (Tlostanova and Mignolo, 2009, pp. 132–133). The coloniality of power, coloniality of knowledge, and coloniality of being all reinforce each other in the production and sustenance of global coloniality.

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At present, the United States and Europe occupy the apex of the modern global power structure informed by coloniality. The emergence of new powers from the Global South such as China, Brazil, and India has not yet deeply shaken the dominance of the United States and Europe. At the bottom is Africa and its people. Global coloniality is sustained by a particular epistemology that frustrates any meaningful autonomous development in Africa. According to Ian Taylor, when­ ever some African leaders attempted to articulate a vision of the future of their countries and the continent, either as individuals or as a collective, they have opted for ‘Westernisation’, that is, they push for ‘economic growth within the context of the existing neocolonial economic structure’ (Taylor, 2014, p. 7). The current celebrated economic growth of Africa is not founded on any radical eco­ nomic foundations outside of the neoliberal market ideology; it is based on the increased sale of primary commodities and the importation and consumption of finished products from elsewhere. Even the more famed discourse of Africa rising is more about diversifying dependency rather than a real leap into a better economic future (Taylor, 2014). The entry of Brazil, Russia, India, and China (BRICS) into the African market has only boosted the sale of primary commodities. There is no change in the forms of integration of Africa into the ever-evolving capitalist economy. The notion of ‘Africa Rising’ only exists as slogan championed by the benefiting global corporations. Such political and economic blocs as BRICS are not about creating a radical change of the world system and its global orders; they are about making neoliberalism work more efficiently in accordance with the long­ standing discourse of free trade (Taylor, 2014, p. 156). Above all, the countries in BRICS, in the arena of world trade, technology, intellectual property, and international finance are still regarded as relatively weak (Tandon, 2015, p. 20). Africa is thus forced to celebrate an economic growth that is premised on a prob­ lematic ‘intensification of resource extraction through diversification of partners, while inequality and unemployment increase and deindustrialization continues apace’ (Taylor, 2014, p. 160). The narrative of ‘Africa Rising’ ignores the new global ‘scramble’ for African natural resources and the concomitant land grabbing that is articulated by advo­ cates of neoliberalism as investment in land (Cotula, 2013). Emerging powers from the Global South have joined the traditional Euro-North American powers and multinational corporations in this new scramble. Global coloniality therefore delib­ erately celebrates these false starts to mask the asymmetrical modern world system and its imperial global orders (Ndlovu-Gatsheni and Mpofu, 2019). Therefore, as Ndlovu-Gatsheni argued, any development in Africa based on the intensification of resource extraction by diverse powers, whether European, North American, Brazil­ ian, Indian, Chinese, or Russian, rather than industrialisation is simply a mani­ festation of the coloniality of markets, which is at the centre of capitalism and is driving the new scramble for African resources today (2015, p. 35). Marxist-decolonial thinker Samir Amin (1985) thus highlighted the ubiquity and dominance of Euro-North American-centric conventional classical economic

Eurafrica project and underdevelopment 57 thought in all the African attempts to chart an autonomous economic trajectory for the continent. He therefore advocated for ‘delinking’ as part of enabling the Global South to escape from the constraints imposed by the world’s economic system. His concept of delinking is not one that is synonymous with autarky, that is the withdrawal from external commercial, financial, and technological changes. Amin’s concept of delinking referred to the ... pursuit of a system of rational criteria from economic options founded on a law of value on a national basis with popular relevance, independent of such criteria of economic rationality as flow from the capitalist law of value operating on a world scale. (Amin, 1985, p. 62)

The decolonial epistemic perspective as the future for Africa? We argue that the end of development as an imperial idea opens the way for the beginning of decoloniality as a future. Development has always existed as gift from Europe and North America, wrapped in capitalism, colonialism, neo­ colonialism, and neoliberalism. Decolonial thinkers have identified racism, colo­ nialism, neo-colonialism, and capitalism as major obstacles preventing the emergence of a genuinely postcolonial world (Mignolo 1995b, 2000a, 2011a, 2011b). Therefore, trying to reform the development ideologies, but from within the confines of mainstream neoliberal ideologies, is very problematic because ideologies cloned from mainstream neoliberal ideologies fail to confront present structural and agential sources of social injustices, asymmetrical power struc­ tures, patriarchal ideologies, logics of capitalist exploitation, resilient imperial/ colonial reason, and racist articulations and practices (McNally, 2005; Mpofu and Ndlovu-Gatsheni, 2019, p. 10). Decoloniality originated as a response to the capitalist and communist impe­ rial designs privileging the Euro-American hegemony that generates under­ development. The decolonial perspective attempts to directly engage with the modern structural power problem of global coloniality, which has been in place since the dawn of Euro-North American-centric modernity. It grapples with the interconnectedness of the coloniality of power, knowledge, and being (borrowed from Latin American decolonial thinkers) as constitutive elements of global coloniality as a power structure that makes it difficult for Africans to create their own futures (Ndlovu-Gatsheni and Mpofu, 2019). We deploy the concept of coloniality of power to understand the modern forms of domination, control, and exploitation (power). We use the concept of the coloniality of knowledge to sys­ tematically interrogate epistemicides that enabled the dominance of imperial/ colonial reason, and to explain how these processes culminated in the colonisa­ tion of African minds and the destabilisation of African imaginations of the future. We utilise the concept of coloniality of being to reveal complex processes of subjection and subjectivity that hinder the role of Africans as they try to create autonomous African development.

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The decolonial epistemic perspective does not attempt to claim universality, neutrality, and singular truthfulness. Its locus of enunciation is deliberately situ­ ated in those epistemic sites such as Latin America, Asia, the Caribbean, and Africa, areas that experienced the negative consequences of modernity and that are facing developmental challenges. At the same time, it openly accepts its par­ tiality, in the awareness that all forms of knowledge are partial. Its overarching objective is to expose epistemic silences hidden within Euro-American epis­ temology as well as the deceit and hypocrisy that conceal epistemicides. This enables us to analyse the development discourse from the perspective of ‘colo­ nial difference’ – the spaces, borders, and peripheries of empire that have suf­ fered from the negative consequences of modernity such as the slave trade, imperialism, colonialism, apartheid, and neocolonialism (Mignolo, 2000b, pp. 49–88). Ngugi wa Thiong’o (1986, p. 2), for example, posited that African predica­ ments were ‘often not a matter of personal choice’, but were a product of a ‘historical situation’, identifying imperialism, colonialism, and neocolonialism not as mere slogans, but as ‘real’. This meant that if the problems of develop­ ment arose from a historical situation and were structural, then ... their solutions are not so much a matter of personal decision as that of fundamental social transformation of the structures of our societies starting with a real break with imperialism and its internal ruling allies. Imperialism and its comprador alliances in Africa can never develop the continent. (Ngugi wa Thiong’o, 1986, p. xii) This structuralist decolonial argument questioned the possibilities of African people’s ability to create African futures within a modern world system struc­ tured by global coloniality. The 1955 Bandung Conference was one of the big decoloniality projects that sought to create a new human trajectory beyond capitalism and communism, building on the decolonisation momentum and Global South solidarity (NdlovuGatsheni, 2013). The Bandung Conference articulated development from the perspective of decolonisation. Development was understood as a liberatory human aspiration to attain freedom from political, economic, ideological, episte­ mological, and social domination that was installed by colonialism and colonial­ ity (Mkandawire, 2011, p. 7). In the Bandung version, development entailed overcoming major obstacles to human happiness and an attainment of material welfare, civil and political liberties, social peace, and human security. Those major obstacles included colonialism and coloniality (Ndlovu-Gatsheni, 2012, 2013). The Bandung Conference conceived development as a rational human response to historical experiences and human needs. However, this Bandung version of development has failed to transcend the coloniality embedded in the Truman version of development. African countries need to be in control of the present and their future in the process of taking charge of their self-improvement. To attempt to achieve this in

Eurafrica project and underdevelopment 59 recent times, the African Union’s Agenda 2063 envisions an African future that emphasises Pan-African unity, integration, prosperity, and peace. Africans have to drive the processes of self-improvement unhindered by external forces that seek to maintenance the dominance of Eurocentric tendencies. While global coloniality divides and atomises Africans, the African Union has identified PanAfricanism as the overarching ideological framework for unity, self-reliance, integration, and solidarity (African Union, 2013; Ndlovu-Gatsheni, 2014). Global coloniality was achieved through such processes as the racialisation of the human population, and the enslavement and colonisation of Africans, which practically colonised African imagination and disabled African agency. Such processes must be exposed. Only a people who are free politically, socially, economically, ideologically, and epistemologically are able to create their own futures and take charge of their destiny. While global coloniality intended to re-create Africans as perma­ nent colonial subjects who would reproduce a colonial future that was inimical to their aspirations, African people consistently resisted the colonial framework and colonial library through launching antislavery revolts and anticolonial nationalist-inspired decolonial struggles as part of their drive to create African futures (Ndlovu-Gatsheni and Mpofu, 2019). Decoloniality emerges as the encapsulation of all those struggles waged against coloniality of power, colonial­ ity of knowledge, and coloniality of being. For us, decoloniality unmasks the very concept of modernity as it is deployed to end the privileging of Europe as the marker of universal history (Bhambra, 2007; Grosfoguel, 2007; Maldonado-Torres, 2007; Ndlovu-Gatsheni and Mpofu, 2019, p. 251). This is because of the increasing realisation that Euro-North American-centric thought that has dominated the world for over 500 years has now reached an epistemic crisis – a form of exhaustion and irrelevance. Patrick Chabal succinctly argued that ‘the social sciences we employ to explain what is happening domestically and overseas – are both historically and conceptually out of date’. He elaborated that the Euro-North American-centric ‘theories are now obstacles to the understanding of what is going on in our societies and what we can do about it’ (Chabal, 2012, p. viii). He thus concluded that: ‘The end of conceit is upon us. Western rationality must be rethought’ (Chabal, 2012, p. 335).

Conclusion In this chapter, we argued that the scale of development challenges in Africa cannot be understood without a clear understanding of the historical, discur­ sive, and structural contexts of modernity, imperialism, colonialism, decoloni­ sation, neo-colonialism, neoliberalism, and globalisation. African conceptions of development are still suffocated by the Truman version and Eurafrica­ inspired versions of developmentalism currently championed by the Bretton Wood institutions. According to Taylor, African economies have remained integrated into

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We therefore anticipate that autonomous African development will be an outcome of struggles for a decolonised new world system and a deimperialised global order. Such an envisaged new world system and its new global orders can only be attained after the decolonisation of power, knowledge, and being. This makes it important that all those committed to fighting for autonomous develop­ ment in Africa should have a full understanding of the constitution of the present and a comprehension of how the modern world system works (Ndlovu-Gatsheni and Mpofu, 2019, p. 256).

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Nabudere, D, W. (2011) Archie Mafeje: Scholar, Activist and Thinker. Pretoria: Africa Institute of South Africa. Ndlovu-Gatsheni, S. J. (2012) Coloniality of Power in Development Studies and the Impact of Global Imperial Designs on Africa. ARAS, 33(2), pp. 48–73. Ndlovu-Gatsheni, S. J. (2013) Empire, Global Coloniality and African Subjectivity. New York and Oxford: Berghahn. Ndlovu-Gatsheni, S. J. (2014) Global Coloniality and the Challenges of Creating African Futures. Strategic Review for Southern Africa, 36(2), pp. 181–202. Ndlovu-Gatsheni, S. J. (2015) Genealogies of Coloniality and Implications for Africa’s Development. Africa Development, 40(3): 13–40. Ndlovu-Gatsheni, S. J. (2018) Epistemic Freedom in Africa: Deprovincialization and Decolonization. London and New York: Routledge. Ndlovu-Gatsheni, S. J. (2019) Rethinking Development in the Age of Global Coloniality. In B. Mpofu and S. J. Ndlovu-Gatsheni (eds), Rethinking and Unthinking Development: Perspectives on Inequality and Poverty in South Africa and Zimbabwe. New York and Oxford: Berghahn Books, pp. 27–49. Ndlovu-Gatsheni, S. J. and Mpofu, B. (2019) Conclusion: The End of Development and the Rise of Decoloniality as the Future. In B. Mpofu and S. J. Ndlovu-Gatsheni (eds), Rethinking and Unthinking Development: Perspectives on Inequality and Poverty in South Africa and Zimbabwe. New York and Oxford: Berghahn Books, pp. 251–266. Ngugi wa Thiong’o. (1986) Decolonising the Mind: The Politics of Language in African Literature. Portsmouth, NH: Heinemann Educational. Rist, G. (2008) The History of Development: From Western Origins to Global Faith (3rd Edition). London: Zed Books. Rodney, W. (1972) How Europe Underdeveloped Africa. Dar es Salaam and London: Tanzania Publishing House and Bogle-L’Ouverture Publications. Sachs, W. (1992) ‘Development: A Guide to the Ruins. The New Internationalist, 5 June 1992. https://newint.org/features/1992/06/05/keynote [Accessed 13 June 2019]. Slater, D. (2004) Geopolitics and the Post-colonial: Rethinking North-South Relations. Malden, MA: Blackwell Publishing. Tandon, Y. (2015) Trade Is War: The West’s War against the World. New York and London: OR Books. Taylor, I. (2014) Africa Rising: BRICS – Diversifying Dependency. Oxford: James Currey. Therien, J. P. (1999) Beyond the North-South Divide: Two Tales of World Poverty. Third World Quarterly, 20(4), pp. 723–742. Tlostanova, M. V. and Mignolo, W. D. (2009) Global Coloniality and the Decolonial Option. Kult 6, Special Issue. Epistemologies of Transformation: The Latin American Decolonial Option and Its Ramifications, Fall, pp. 130–147. Winterhalt, K. R. (2018) Truman’s New Deal: Point Four and the Genesis of Modern Global Development. University of Saskatchewan Undergraduate Research Journal, 4(2), pp. 1–8. Young, C. (2012) The Postcolonial State in Africa: Fifty Years of Independence, 1960–2010. Madison: University of Wisconsin Press.

5 Seventy-five years of financing and advising development Perspectives on work of the Bretton Woods institutions and Africa’s chequered development Charles H. B. Mphande Development, in most of the developing world, has fallen far short of expectations. Particularly, Africa as a region has persisted to trail behind other developing regions despite the billions of money and multiple advisors that have been involved. This chapter draws on critical views, and those notions that may be considered apologist, to review the Bretton Woods institutions as actors, and the resultant sporadic and intermittent development of Africa. As the chapter recounts the story of this engagement, it examines the posturing of the Bretton Woods institutions as they worked with African states in the wake of their independence from disparate colonial experiences. In the process, the conditions that went with development financing, and the resulting debt burden and exacerbation of poverty and suffering, are examined from a Gramscian reading of the hegemony of the Bretton Woods institutions, especially in the 1980s, known in the literature as Africa’s lost development decade. In the same vein, the chapter examines the efficacy of the HIPC1 and HIPC 2 debt relief initiatives (Highly Indebted Poor Countries Debt Relief Initiatve) as far as Africa is concerned. The foregoing analysis serves as a backdrop to the exploration of implications of the rise of the BRICS multilateral bodies in the development financing space.

Situating the fund and the World Bank Group in historical and hegemonic perspective The development financing and advisory roles of these twin institutions have assumed, especially in relation to the developing nations, including African, especially sub-Saharan states, an interesting story of organisational metamorphosis with a hegemonic agenda. At 75, the World Bank Group’s (n.d., n.p.) selfdescription of the twin institutions has it that: The World Bank Group works with developing countries to reduce poverty and increase shared prosperity, while the International Monetary Fund serves to stabilize the international monetary system and acts as a monitor of the world’s currencies. The World Bank Group provides financing, policy

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Further, the World Bank Group (n.d.) views itself as ‘one of the world’s largest sources of funding and knowledge for developing countries’. It is also instructive to note the Fund’s current factsheet iteration of the twin institutions’ legitimating roles at their founding: ... to establish a framework for economic cooperation and development that would lead to a more stable and prosperous global economy. While this goal remains central to both institutions, their work is constantly evolving in response to new economic developments and challenges (IMF, 2019, n.p.) The United Nations Monetary and Financial Conference (otherwise commonly referred to as the Bretton Woods Conference), was the gathering of 730 delegates from all 44 Allied nations to regulate the international monetary and financial order after the end of World War II (Schuler and Bernkopf, 2014). According to Haslam et al. (2017), some of the drivers of the formation of these twin institutions were lessons learnt from events of the 1930s that contributed to the outbreak of World War II. One of these was ‘unrestrained economic conflicts between European powers’ (p. 163). Another was monetary instability which was viewed as an important factor in the disintegration of international trade. It was the US’s delegates’ view that a fixed exchange rate pegged to the US dollar, which was in turn gold backed, would be an important precondition for a global economic order. One important point to bear in mind is that at that date, 1944–1945, many present-day sovereign states among the category of ‘developing world’ regions, were colonies under European nations. As such, they were not reckoned among states. However, the Great War created conditions that galvanised colonial subjects to demand self-determination, either peacefully or by force, where necessary (Arnold, 2005). As such, from 1960 to 2000, dramatic changes occurred throughout Africa, transforming ‘the continent from being a colonial extension of Europe into fifty independent nations’ (Arnold, 2005, p. vii). Arnold further points out that this period also saw the machinations of what Ghana’s Kwame Nkrumah famously described as a process of neo-colonialism. It was a description of the immense vulnerability of most African countries as they were subjected to external manipulation by a set of actors including: their former colonial masters, the emergent superpowers, with part of confrontations over their ideologies conducted in Africa, and the World Bank and the IMF which were wholly Western controlled. At this point it is important to provide a brief outline of some elements of Gramsci’s hegemony to clarify the said manipulations that were instrumental in elevating to dominance the World Bank and the Fund, with their economic power, in the (African) development space.

Bretton Woods institutions in Africa 65 Some elements of Gramsci’s hegemony This chapter draws on Gramsci’s conceptualisation of hegemony. Furthermore, the chapter also adopts the critical realist purposes Joseph (2002, p. 9) has attached to the explication of hegemony, to clarify manipulations that have elevated the World Bank and the Fund, with their economic power, to dominance in the (African) development space. Harshé (1997) points to the elasticity as well as complexity of Gramsci’s concept of hegemony. Its elasticity is in its capacity to be applied widely, not only to states and their workings with people within their polities, but also to any dominant mode of production such as capitalism. In this case, it is the capitalist multilateral institutions and their power and influence whose hegemonic operations are the interest of this chapter. The complexity of the concept is noted in the various elements of the socio-political practice that Gramsci attempted to understand in various socio-political formations of his time. It is not within the scope of this chapter to look at the totality of his concept; however, some key elements are worth pointing out. According to Harshé (1997) one of the complexities of the concept of hegemony are its two interrelated and dialectically interactive dimensions, involving the material base that sustains the hegemony and the superstructure that provides space to legitimise the hegemony. These lead to a ‘moral and philosophical leadership … which is attained through the active consent of major groups in a society’ (Bocock, 1986, p. 11). According to Gramsci (1971), the ideological and organisational functions that work within these dimensions, especially the superstructure, are accomplished by intellectuals (‘functionaries’) who are also subdivided into traditional and organic intellectuals. The ‘organic intellectuals’ are instrumental in performing mediating functions for the dominant class in the struggle of class forces. The ‘functionaries’ operate within two major superstructural levels, namely: ‘civil society’ ‘that is the ensemble of organisms commonly called “private”, and that of “political society” or “the State” ’ (Gramsci, 1971, p. 12). Furthermore, in exercising the function of social ‘hegemony’, which the dominant group exercises throughout the society, and ‘direct domination’ or command exercised through the State and ‘juridical’ government, two sides to hegemony are identified. One side is consent of the populations being led which they give to the dominant fundamental group; this consent has a historical position and function in the political economy of the context. The second side is the coercive power which may be deployed to enforce discipline when spontaneous consent has failed. Thus, according to Gramsci’s formulation of hegemony, consent was an important feature for hegemony to prevail; coercion was to be used marginally in deviant cases (see Bocock, 1986; Harshé, 1997). In bringing in critical realism, Joseph’s (2002) work has provided an important dimension to understanding the workings of hegemony; in this case critical realism is a dimension that sheds light on the workings of hegemony in relation to the Fund and the World Bank Group on the international political economy stage. In his view, a group becomes hegemonic when it has behind it the economic, political, and cultural conditions which allow it to put itself forward as leading. These

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conditions form the basic material background out of which hegemonic projects emerge. In this conceptualisation, hegemony is concerned with both the construction of a ruling bloc, and the reproduction of the social structures that create the material conditions for such a bloc. In relation to this point, Engel (2008) has analysed the World Bank Group’s operations in Vietnam drawing on Gramsci’s hegemony. The study highlights the point that change from the Washington Consensus to Post-Washington Consensus is a non-systemic change; rather it was a short-term strategic transition intended to deepen and extend the hegemonic control of a neoliberal pax Americana which would be achieved by reconfiguring the Bank’s mission from one largely focused on reshaping the economic structure of recipient countries to a project of reshaping the historical bloc to be compatible to US needs and more palatable to local social forces (p. 176). This chapter argues and shows that the metamorphosed role and expertise that the Fund and World Bank projected themselves into in the development space, within a framework of the Euro-American modernisation development paradigm, and with the collaboration of the neoliberalist Western industrialised nations that work(ed) with the two international finance institutions (IFIs), the apparatuses of ‘consent’ and ‘coercion’ have been exercised, as we see in sections below, to suit the neoliberalist agenda. The functionaries of the two IFIs have manipulated the individual countries of Africa, and even their Organisation of African Unity (now African Unity) grouping, and its regional bodies with absolute control and, sometimes, impunity. The Fund and the World Bank in Africa’s development project Arnold’s (2005) closely followed analysis of Africa’s social, political, and economic vicissitudes is enlightening. To begin with, the Fund and the International Bank for Reconstruction and Development (IBRD), which later came to be known as the World Bank, re-invented themselves within a short space of time from their creation. First, the IBRD, in the wake of the US’ own Marshall Plan providing credit directly to European nations from 1947, saw its purpose of making loans at preferential rates of interest to war-devastated European countries, highly diminished. According to Haslam et al. (2017, p. 163), the ‘fledgling IBRD [turned to] a new and growing set of clients through the ongoing process of decolonization … to provide development finance directly to these new countries’. Similarly, Arnold (2005) observes that the IMF’s primary purpose of maintaining monetary stability has long been abandoned. One of the reasons for this abandonment is that the IMF is no longer able to control its powerful members. Instead, the Group of Seven has turned the IMF into their instrument to instruct and control the poor nations for the interests of the rich. Further, Haslam et al. (2017) draw attention to other developments in the 1970s that rendered precarious the IMF’s original purpose, and the World Bank as an ‘instrument in a fight against global poverty and communism’ (p. 166). A significant development in 1971 was the US abandonment of the gold standard with the concomitant withdrawal of its support for the Bretton Woods system – a

Bretton Woods institutions in Africa 67 situation that drastically undermined the official role of the IMF to maintain currency stability. The IMF recast itself as an international lender of last resort. Countries that needed short-term cash injections to pay international debts were no longer required to maintain the value of their exchange rate. In fact, contrary to its original purpose, the IMF, now not infrequently, began to expand conditions for its loans which countries would need to accept. In the case of the World Bank, Haslam et al. maintain, there was a drive on the part of the Bank to lend beyond its traditional pool of countries to fund antipoverty efforts through ‘social programs and projects aimed at modernizing the agricultural sector’ (2017, p. 166) in an approach commonly known as the ‘basic needs’ approach. The World Bank’s lending went up from US$2 billion in 1970 to over US$11 billion in 1980. In addition, the World Bank’s lending for infrastructure fell to about 30 per cent, whereas loans for anti-poverty projects rose to almost 30 per cent. It is in view of these changes and the self-re-invention of the twin financial institutions that Haslam et al. (2017, p. 162) observe ‘they assumed a growing influence on developing countries in the subsequent decades. By the 1980s, the IMF and World Bank began to use their considerable financial power to promote their controversial set of policies known as “structural adjustment”.’ The literature is replete with assessments of the IMF and World Bank workings, and with debates about the impacts of their operations, especially during the 1980s, the period referred to as Africa’s lost decade, and also the last decade of the Cold War (see, for example, Anuoluwapo and Babatunde, 2016; Arnold, 2005; Commission for Africa, 2005; Leandro, 2012; Lubeck, 1992; Singer, 1989; United Nations Economic Commission for Africa, 2016). The following sections provide highlights of the Bretton Woods institutions’ coercive workings with Africa, and examples of ill advice, albeit they view(ed) themselves as being conversant with the continents’ issues and that their advice would turn around the downward trend of Africa’s failing economy and the resulting poverty. Perhaps a telling point is the conspicuous lagging behind of Africa as a continent compared to other developing world regions.

World Bank and IMF’s free-market version of development and debt burden Nhema and Zinyama (2016, p. 156) depiction of the IMF and World Bank’s absolute control of the development space due to their vast economic power, backed by rich actors, is insightful: By the late 1980s, the developmental path promoted by the United Kingdom and the United States of America (USA) was publicised not as a promising path leading to greater quality and freedom, but as the only path pointing in that direction. This came to be known as the TINA principle, after the former British Prime Minister, Margaret Thatcher, had proclaimed that ‘There Is No Alternative’ but to follow her monetarist reform path.

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The language that dominated World Bank and IMF operations was ‘stabilisation’ and ‘adjustment’. Their two fundamental features in the Structural Adjustment Programs (SAPs) were: trade liberalisation and the reduction of government expenditure. These two features subsumed several conditionalities that were considered critical for those targeted countries, including: decontrolling of prices, deregulation of trade, devaluation of currency, reduction in public expenditure, wage restraints, privatisation, good governance, and human rights observance. These austerity measures, however, caused political, social, and economic havoc in most of the African countries’ economies. Arnold (2005) reports a 1982 experience of Sudan’s President Nimeiri illustrating the havoc caused by the Bretton Woods institution’s operations, despite the latter’s claims that their operations were helpful: IMF had insisted that before it could provide assistance, he had to cut subsidies on sugar, petrol and bread. He explained that if he did so he would have riots in Khartoum, Port Sudan and Atbara. The IMF insisted. He cut the subsidies on sugar and petrol. Severe riots duly followed. The IMF said: what about bread? So he evaded cutting the price by resorting to a stratagem and decreed that the size of all loaves had to be reduced. The IMF then let him off the hook and provided some assistance. (p. 754) After three-quarters of a century, the Bretton Woods institutions continue to proclaim a mandate of poverty eradication, better living standards, and debt reduction (IMF, 2019). They also proclaim their ongoing achievements. The former president of the World Bank, Robert B. Zoellick, has spoken of how his organisation averted famine for 40 million people in 47 countries, by supporting farming and production through the Global Food Crisis Response Program (Zoellick, 2012). Other recent World Bank initiatives Zoellick lauds include a US$400 million health assistance programme for West African countries affected by the Ebola outbreak (Ravallion, 2016), raising capital for climate investment funds and enhanced governance and anti-corruption measures, including the over 2,000 anti-corruption officials network from 134 countries that form the International Corruption Hunters Alliance (ICHA) (World Bank Group, 2018). These initiatives notwithstanding, the overwhelming evidence points to the ravages of decades of Bretton Woods’ policies on developing nations. The African continent has borne the brunt of the impact of such policies. Africa’s debt burden illustrates this point. The Centre for the Study of the Economies of Africa’s (CSEA) (2018) analysis pointed out that significant numbers of African countries had exceeded two debt-to-gross domestic product (GDP) thresholds. Of the 54 countries in Africa, 19 had exceeded the 60 per cent debt-to-gross domestic product (GDP) threshold prescribed by the African Monetary Co-operation Programme (AMCP), and another group of 24 countries had surpassed the 55 per cent debt-to-GDP ratio suggested by the International Monetary fund (IMF). According to the United

Bretton Woods institutions in Africa 69 Nations Economic and Social Commission for Asia and the Pacific (2013) fiscal sustainability for developing nations is under threat whenever the debt-to-GDP ratio exceeds 40 per cent long-term. Moreover, sovereign borrowing, as distinct from concessional aid, now accounts for nearly 70 per cent of African debt, despite debt-alleviation strategies, such as the Heavily Indebted Poor Countries (HIPC) scheme (Lusigi, 2018). In fact, some of these schemes have raised debtservicing costs for at least 11 countries to levels higher than those prior to the granting of such ‘assistance’ packages (Reid, 2018). Proponents of the free market development approach conveniently ascribe the African debt crisis to failed leadership, corruption, and incompetence. However, the literature overwhelmingly argues to the contrary, placing blame for the destruction of African economies largely on the Bretton Woods institutions’ operations (see for example Gwaambuka, 2016; Kingston, 2011; Nhema and Zinyama, 2016). Africa’s debt woes can almost entirely be traced to the three early decades of the Bretton Woods institutions. Between 1960 and 1997 more than US$500 billion worth of loans were issued to African nations (Ayodele et al., 2005). This is roughly the equivalent of four Marshall Aid plans. Yet, from 1970 to 2000, Africa’s foreign debt had increased from US$5 billion to more than US$350 billion (Aluko and Arowolo, 2010). According to Kingston (2011) in 1986, the IMF became one of the most influential institutions in the world. At the time, its 2,500 staff dictated the economic conditions of the lives of over 1.4 billion people in 75 developing countries. Between 1980 and 1993, about 70 developing countries were subjected to a total of 566 stabilisations and structural adjustment programmes. Further, between 1984 and 1990, developing countries including African countries under SAP transferred US$178 billion to Western commercial banks. A point to underline is that by severely restricting government spending in favour of debt repayment, the loan terms of the IMF plunged African countries into spiralling poverty and hunger. In 1994, the World Bank published a two-volume evaluation study on Adjustment in Africa in which it claimed that SAP was working successfully for the benefits of Africa. This report generated major controversies and reignited the debate about the directions of Africa’s development. Kingston (2011, p. 118) observes: For most critics, the World Bank reports have been yet another major disjuncture between reality and dogma. It is shocking that the IMF and World Bank could make such assertion where the total GDP of the entire Africa was equal to that of Austria in 1993. Thus, Structural Adjustment Policies (SAPs) became IMF and World Bank’s hegemonic tool for coercing poor nations to service debt by their drastic cutting of expenditure on health, education, and social services, the privatisation of public services, attacks on labour rights, and the introduction of market liberalisations that crippled small and medium enterprises and smallholder farmers (Brunswicjk, 2019). Beyond states, SAPs have condemned millions of Africans to deplorable living standards (Shah, 2013). Whereas 200 million Africans lived

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below the poverty line in 1994, in less than two decades this number exceeded 350 million, or more than half of the African population (Ismi, 2004). By this time, for every dollar Africa received in aid, three dollars was being spent on debt. Zambia’s situation was not atypical. Despite more than 80 per cent of inhabitants living in poverty and a national life expectancy of 33 years, it spent more on debt than health and education combined (Pearce et al., 2005).

The Fund, World Bank, and poor advice Despite their self-elevation as one of the leaders in development knowledge and advice, the Bretton Woods institutions have a trail of bad advice given to their sovereign borrowers in Africa. The case of Sudan above reads much like a conspiracy rather than a case of poor knowledge of the context of operation. However, this was not an isolated case. Arnold (2005) argues, in relation to the drastic fall in investment rate during the 1980s with social, economic, and political ramifications: What comes across with increasing clarity … in all the pronouncements and reports emanating from the World Bank is the remoteness of the institution from the problems on the ground that it pontificates about so grandly. It is not that African leaders did not understand the causes of their declining economies but rather that they had to deal with complex political problems on the ground that were rarely understood fully by visiting missions from the multilateral institutions. (pp. 753–754) This application of a rigid set of SAPs principles demonstrated this lack of understanding of contextual matters. Further examples will demonstrate bad advice given to sovereign borrowers. Gwaambuka (2016) relates the 2002 predicament of Malawi, which was compelled by the IMF to sell its grain reserves in order to meet debt obligations. This directive occurred despite the pending onset of drought, which subsequently exposed Malawi’s 3 million citizens to food shortages. Similarly, Serrai (2015) tells the story of Ghana who the World Bank coerced to remove farming subsidies and import rice from wealthy nations. The result was the destruction of domestic production, especially the country’s northern farming communities. This ‘reverse transfer of wealth’ can be understood in the context of dependency theory. This theory views underdeveloped countries as being ‘dependent on the West for virtually everything, ranging from technology, aid, technical assistance, loans and culture etc. … making them susceptible and vulnerable to the machinations of the Bretton Woods Institutions’ (Aluko and Arowolo, 2010, p. 4). Thus, the African debt cycle can be unpacked by examining the ways developing countries are integrated into the developed world system. Meanwhile, the World Bank’s decision to endorse international sovereign bonds as a source of credit spells a continuation of suffering of the Global South.

Bretton Woods institutions in Africa 71 In absolute terms, these bonds have grown from US$4.3 billion in 2009 to US$15 billion in 2014. Unfortunately for African governments that borrowed extensively on international bond markets, servicing this debt has become problematic, due to falling world market prices of major African commodities, coupled with a rise in the US dollar that has inflated interest rates. The rise of the ‘South’ in development financing In view of the World Bank’s and IMF’s detrimental policies and operations on African states and people, Arnold (2005, p. 754) surmises: ‘It is little wonder that the IMF is generally loathed throughout Africa.’ Whether loathed or not, the Bretton Woods legacy in Africa’s, and indeed the developing world’s, development space, is clearly unenviable. As such, the South-to-South groping for an alternative or supplement that would not lead to the havoc experienced would not be an outlandish quest. The emergence of China-led multilaterals, including the New Development Bank of the BRICS countries, the Asian Infrastructure Investment Bank (AIIB), and the One-Belt-One-Road (OBOR) initiative, form the ‘Beijing Consensus’. The New Development Bank, or BRICS Bank as it is often referred to, is a development institution consisting of member nations Brazil, Russia, India, China, and South Africa. At its formation in July 2014, it started with an initial equity holding of US$50 billion. It is held as a symbol of the emerging South, funding critical infrastructure and development projects in the developing world – a function that until recently, was the exclusive space of the IMF (Nevin, 2013). Those in the South working with the BRICS Bank have taken a pragmatic, if conciliatory, tone, representing it as complementing the Bretton Woods institutions, given the vast size of the latter’s reserves (Thibault, 2014). Luna (2016) likewise raised doubts over the capacity of Brazil, Russia, India, and most certainly South Africa, to achieve the high rates of growth, foreign international reserves, and current account surpluses necessary to underwrite BRICS Bank loans. However, analysts may do well to allow observation time of China’s commitment to and operations with Africa compared to the domineering experience Africa has had with the Bretton Woods institutions. China is financing largescale infrastructure investments abroad (Ehizuelen and Abdi, 2018) in return for resources. So far what has appealed to African countries include faster loan approvals by Chinese lenders, as well as a non-blatantly coercive alternative to the current IMF and World Bank lending system (Swedlund, 2017). Findings from the China-Africa Research Initiative (CARI) at Johns Hopkins University are insightful; Chinese loans to African governments between 2000 and 2017 totalled US$143 billion. As such, 20 per cent of all African external debt is owed to China (Jubilee Debt Campaign, 2018). The OBOR strategy is redefining the global balance of power and has already positioned China at the top of the international diplomatic hierarchy (Ploberger, 2017). Currently, Africa is a marginal actor in the OBOR program, which aims

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to connect 4.4 billion inhabitants across three continents, or an area that incorporates 55 per cent of world gross national product (GNP) (Ehizuelen and Abdi, 2018). To date, OBOR projects have extended to only three East African nations. However, even by this small step, China overtook the US as the continent’s largest trading partner a decade ago (Kitaba, 2017). More African countries are scheduled for OBOR inclusion; China approved more African loans than the World Bank in 2010 and 2011, loans that contain fewer conditionalities and target sectors most in need. Furthermore, what has appealed to Africans is an ethos of non-coercive and non-domineering cooperation in the design and implementation of development projects (Jonker and Robinson, 2018; Mai and Wilhelm, 2012). Perhaps a pertinent observation of the Group of Seven (G7) nations is that they have a World Bank quota system that is slow to respond to reflect the considerable geo-political shifts that have taken place in the past three-quarters of a century. Surely, the regions that were undergoing the decolonisation process soon after the Bretton Woods institutions were created have an identity that requires some recognition. For example, the combined economies of Brazil, China, India, and Russia together comprise 24.5 per cent of world GDP, but they hold just 10.3 per cent of IMF votes. By contrast, the G7 European members’ (France, Germany, the United Kingdom, and Italy) aggregate share of the world GDP is 13.4 per cent, but they exercise 17.6 per cent of IMF votes (Sarkar, 2016). Attempts by the BRICS nations to exercise a greater say have been frustrated systematically over time (Kocourek, 2015) The Chinese-led AIIB facilitates the OBOR establishment and implementation; in the process, it is forging relationships with developed Western nations based on shared economic interests. In March 2015 the UK government announced it was joining the AIIB. This move drew the interest of Germany, France, Italy, Australia, South Korea, and Israel who followed suit, a move that was less than pleasant to the US (Yu, 2017), which remains critical of AIIB governance (Panda, 2015). The US’s greater concern are the implications of the Beijing Consensus’ pressures on the US dollar and by extension, the nation’s foreign policy influence. Just as the Marshall Plan reinforced the US dollar as a key reserve currency, China’s renminbi (RMB) is gaining popularity among BRICS members and throughout OBOR trade and investment regions (Enderwick, 2018). Developments in global transactions have brought about another twist to this story of reserve currencies. The US dollar remains in demand for foreign governments’ global transactions; however, in the 2004–2014 decade as a world reserve currency, the US dollar fell from 90 to 60 per cent (Sarkar, 2016, p. 98). The same period saw the renminbi join the US dollar, euro, British pound, and Japanese yen, as an IMF Special Drawing Rights (SDR) currency, positioned as an alternative to the dollar as a reserve currency (Sarkar, 2016). Furthermore, strategically, China has been steadily reducing its dependency on the US dollar by increasing its gold reserves, which rose by more than US$3 billion in the 12 months to December 2018 (Foeger, 2019). Similarly, China’s BRICS partner, Russia, led world gold purchases in 2018, in what analysts have

Bretton Woods institutions in Africa 73 described as a ‘gold-haven hedge’ against the US dollar, in order to minimise the impacts of US-imposed economic sanctions (Devitt and Fabrichnaya, 2019). Sarkar (2016) surmises that such actions, designed to erode US hegemony and prestige, may be having varying degrees of effect on both the US and its economic and political rivals.

Conclusion A summation of the discussion may look at the significance of the issues discussed. The literature is replete with commentary regarding long-standing and deep dissatisfaction with a number of inequities in international governance of global capital markets. One source of such dissatisfaction is a perceived level of disproportionate recognition and representation on the IMF Executive Committee, and other international bodies. Further, there have been objections even by European nations, most recently by Greece, to the stringent IMF-imposed austerity measures that are preconditions to sovereign borrowing under its rules (see, for example, Kitsantonis, 2014; Sarkar, 2016). The system of austerity measures has an inherent feature of unequal burden sharing. The debtor nations, principally, if not solely, bear the entire burden. This hardship has fuelled such discontent during the quarter century of the IFI’s operations. It should also be acknowledged that, at seventy-five, the World Bank and the IMF have gathered some valuable experience, including the ability to metamorphose when the original purpose was no longer relevant or found themselves competing against a more directly relevant provider of a service. Given that the IMF and the World Bank Group have been sole players in the development financing and advising space, with support of the richest and most powerful states or nations, it would not be far-fetched to suggest that the Bretton Woods institutions may have allowed into their operations a degree of complacency that perhaps failed institutional learning to enable them to notice and strategise how to work with technological, social, geo-political, and other changes that have so rapidly transpired within this period. A point that the chapter has tried to demonstrate is that the Fund and the Bank may well have been overtaken by events while they run business as usual with the poor of the world whom they held in absolute sway. The economies and lives that have been driven down to further poverty and misery, in a characteristic human behavioural response of self-preservation, have had to find a way to rise above the squalor. Hence the rise of alternative development financing structures from the South. On a positive note, it can also be said that after a quarter of a century of learning, the South has accumulated knowledge, practices, strategies, even clout, to experiment financing and advising in the development space. One may say time will tell of their viability. At this rate and at this point, the emergence of China and the other BRICS nations and the space they are claiming may as well be taken as fait accompli. Insofar as the potential of becoming major players in global development financing is concerned, it can be said that engaging Africa and other developing regions may potentially offer the BRICS multilaterals a fertile ground that

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has endured misery and neglect, if not ignominy, at the hand of the Bretton Woods institutions. Further, the BRICS multilaterals’ growing influence on global economic forums represents a reshaping of actors in a world that is plurilateral, with people of multiple identities celebrating diversity and inclusivity. How the US and Washington Consensus may respond to this development of shared space may be a step they may draw on their past reinvention of self. An important point to highlight also is that while the interests of the BRICS partners sometimes collide, they have a unity of purpose to forge a new development agenda that is in keeping with present day social, political, economic changes, responsive to challenges such as the environment, pandemics, and others. Whether the shifting dynamic in development financing might mean a mere change of superpowers manipulating Africa’s indebtedness remains to be seen in time. At present, however, what seems to have opened is space that allows negotiation – in a broad sense – which in turn at least permits optimistic dreaming that eventual economic prosperity is possible, even probable.

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6

The Washington Consensus and global civil society The road traversed Jonathan Makuwira

Introduction The year 1944 will go down in history as the year in which 44 nations met between 1 and 22 July to shape the future of the global economic order. It was in Bretton Woods, New Hampshire, where these nations agreed upon a set of new rules which would see the birth of the post-World War II international system. Not only was the conference significant in putting in place the post-WWII economic order, but the establishment of the International Monetary Fund (IMF) and the International Bank for the Reconstruction and Development (IBRD), later to be named the ‘World Bank’ (WB), was even more significant in shaping global politics, international relations, governance, development, and, more so, economic cooperation (Ocampo, 2015). Obviously such a high-level gathering must have had a good purpose. In examining the major thrust to the conference, three articles that define the purpose of the IMF, are of note. First, the creation of the IMF was to promote stability of exchange rates and financial flows. Second, the creation of the IBRD was not only meant to speed up the reconstruction process after World War II but also to foster economic development by lending countries in need to rebuild their infrastructure. The third aspect of the purpose of the conference was to foster, as it were, international economic cooperation (Solomon, 1982; Van Dormael, 1978; Yago et al., 2015). In essence, while fostering global monetary cooperation and achieving greater financial stability, the wider issues for which the IMF is known for, up until today, is to facilitate international trade; reduce unemployment and poverty; and promote sustainable economic growth, thereby eliminating extreme poverty. This year (2019), marks the 75th anniversary of the conference. For the World Bank and IMF, these years have not been smooth. Fletcher (2019, p. 1) explains in no ambiguous manner when he notes: After 75 contentious years supporting expansion of the interests of the Global North with the support of elites from the Global South, the World Bank and IMF now face a crisis of multilateralism in no small part of their own making, as failed economic policies have resulted in wide-spread skepticism of the effectiveness and equity of the international order they helped to shape.

Washington Consensus and civil society 79 Fletcher’s sentiments in the quote above cannot be overemphasised. Echoing these sentiments is Robert Kuttner (2013, n.p.) whose recap is sobering: The Bretton Woods conference was held seven decades ago, but the enduring concerns that Keynes and White sought to address in 1944 are still with us, with no solution in sight. One need only read today’s headlines reporting a prolonged slump following a financial collapse; failed austerity policies in Europe; speculative attacks on Asian currencies creating bubbles followed by crashes; and worries about the future of the dollar. The ills of the interwar period have recurred in different form. The complex nature of the two institutions – the IMF and the World Bank – have to be understood within the wider political economy of international relations much as is the case in global politics. The seven and half decades (1944–2019) have not been a time of an easy ride insofar as shaping economic cooperation and poverty reduction is concerned. With noble intentions, over the years, the resultant effects of the core issues that define, for example, the Washington Consensus, are as ever contentious. While this chapter is not about the history of the IMF and the World Bank, it is fair to say, right at the outset, that the two institutions are constantly in the spotlight of global political and economic discourse for propagating policies that have increased inequality. In a press release Number 2018/097/ENR titled ‘World Bank Report Finds Rise in Global Wealth, but Inequality Persists’, Sue Pleming and Huma Imtiaz (2018) acknowledge that global inequality has become substantial, as ‘wealth per capita in high-income OECD countries was 52 times greater than in low-income countries’. This reality tells a story whose wide implications to global development cannot be overemphasised. In commemorating the 75th anniversary of the Bretton Woods Institutional genesis, I take a critical look at not only how the Bretton Woods Institutions (BWIs) have fared but also how civil society organisations (CSOs) have contributed to the changing nature of the BWIs. This comes as the backdrop of global civil society has also been ‘mutating’ in its role of facilitating the governance of development aid and creating checks and balances while insidiously propagating a neoliberal agenda. However, there exists an information lacuna regarding their impact in this role. Against this background, this chapter aims to engage in a robust and critical analysis of the way CSOs have fared during the 75 years in which the BWIs have been in existence. First, the chapter takes a closer look at the historical metamorphosis of the CSOs in general and traces how they have moved from ‘welfarist’ protagonists to social change. Second, the chapter further seeks to analyse how the BWIs have influenced the behaviour of these CSOs and their modus operandi as intermediaries between neoliberal aid machinery and recipients, particularly those from the developing world. A closer analysis of the division between reformist CSOs seeking to soften neoliberalism and radical CSOs seeking to overturn the neoliberal agenda altogether is analysed. In strengthening this analysis, a number of case studies are provided to highlight the tensions, contradictions,

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and ambivalences in the role CSOs have played in advancing development and poverty reduction or propagating the neoliberal architecture which, up until now, has contributed to uneven development globally.

Global civil society in perspective The idea of ‘global civil society’ has, since the 1990s, received prominence in academic literature, sometimes with very limited analyses and understanding (Frederick, 1993; Ghils, 1992; Scholte, 2001). In recent times, the debate has been polarising as the behaviour of the so-called civil society organisations has been in a constant state of flux as they attempt to keep pace with the rapid social, political, economic, environmental, and cultural changes occurring around the world. Two important issues emerge as I attempt to unpack the term itself (‘global civil society’). On its own, the adjective ‘global’ may sound pretty straightforward. However, looked at from a simplistic viewpoint, its genesis emanates from the manner in which social justice issues have come to be understood beyond the national boundary, to call for a global approach to solidarity and citizenship. In our contemporary world, the term ‘global civil society’ further offers a liberative tone, as has been observed by Willetts (1996), in his book, The Conscience of the World. But for a fuller appreciation of the term, a good starting point is to understand what ‘civil society’ means. The notion of civil society has been a recurring theme not only in contemporary social sciences but more so in the normative social and political theory. Also variously known as ‘social movements’, ‘not-for-profit organisations’ (NPOs), ‘private voluntary organisations’ (PVOs), ‘non-governmental organisations’ (NGOs), just to name a few terms and depending on where you are in the world, the theoretical and empirical grounding is an acknowledgment of how inexhaustible the concept is, in the intellectual landscape. Dating back to the English political thought of the sixteenth century (Buckley, 2013; Cohen and Arato, 1992), the growth in the idea has, over the past three decades, mainly coincided with the surge in the need to propagate democratic ideas in the developing world. In the Eastern bloc, it has been due to the uprising of anticommunist opposition in East-Central Europe and, in Latin America, it has been due to the fight against military dictatorships. As a noun, ‘civil society’ is understood as a community of citizens linked by common interest and, very often, also with collective activities. From an organisational perspective and, of particular importance to this chapter, is when civil society is understood as organisations that manifest, advance, advocate and promote the interests and aspirations of their constituencies. As Axford (2004) puts it, ‘civil society institutions and practices are held to civilize governance. Far from being a mere description of a dynamic non-governmental realm of action and interaction, civil society also does service as an ethical ideal of pluralism and civility’ (p. 249). It is the seeming ‘advocacy’ nature of their work where commentators often define CSOs as being independent from state control and manipulation (Edwards, 2004; Whaites, 1998). Premised on this kind of thinking, the concept of civil society

Washington Consensus and civil society 81 involves a deeper examination of norms, values, and ethics that drive people, society, and organisations to act in a ‘civilised’ manner. The definition, although fluid in nature, highlights complex conceptions that need to be understood within the confines of a particular locale. For example, the way in which the idea is conceptualised and operationalised in Africa, may not be the same as in, say, South East Asia or Latin America. In the context of the present concept that imbues ‘global’ in its cursory label, it is obvious that it takes us to a new terrain where we have to begin thinking of ‘international community of interest’ on issues of social justice which, if not well managed at that level, has far-reaching implications elsewhere. In essence, therefore, in attempting to elucidate the meaning of ‘global civil society’, it becomes inevitable to step aside from the state–civil society nexus and look at the global power dynamics which have, today, created ‘global networks’ and the processes used to respond to the myriad issues that are transnational in nature. The current brand of global civil society has to also be understood through what Chesters (2013, p. 11) calls a ‘lens of global complexity’, where not only should global civil society be perceived as an actor or just an expression of political will but, from a wider perspective, also a domain of contestation punctuated by various cause and effect. Taking this debate further, Urry (2003) contends that global civil society should be understood as encompassing reciprocity and ambivalence – an outcome of not only the effect of global complexity but also that of an interaction between ‘networks’ and ‘fluids’ that bring to the fore planetary systems of production, mobility, and exchange. Axford (2004), however, adds that civil society conjures visions of a public sphere of voluntary association distinct from the state and, in some interpretations, from markets. Furthermore, in the context of multilateralism, the idea of global civil society takes a different connotation as we cannot avoid the globality of power and ‘globalisation’, a notion that has since the dawn of the millennium gained unprecedented ascendancy in the academy. Keane (2003) and Kaldor (2003) are more explicit when they argue that global civil society should not only be seen an ensemble of global actors but also a process. Keane, in particular, is of the view that global civil society should be seen as: … a dynamic non-governmental system of interconnected socio-economic institutions that straddle the whole earth, and that have a complex effect that are felt in its four corners. Global civil society is neither a static object nor a fait accompli. It is an unfinished project that consists of sometimes thick, sometimes thinly stretched networks, pyramids and hub-and-spoke clusters of socio-economic institutions and actors who organize themselves across borders, with the deliberate aim of drawing the world together in new ways. (Keane, 2003, p. 8) Hence, civil society, it seems to me, has a multiplicity of meanings – a specific sphere, a mode of action, an observable reality, a regulative idea, or a utopian concept. In the words of Anheier et al. (2001, p. 15), ‘can be all things to all people’. At the centre of discussion is that in an era of a neoliberal agenda, state

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autonomy is under increasing microscopic scrutiny from global civil society organisations in general, to ensure that the state fulfils its mandate and obligation to provide basic social services to its citizenry, besides checking its hegemonic behaviour. At the global level, it can be argued that as we attempt to locate the centrality of the idea, it is equally important to take note that the changing pattern of global hegemony, especially the kind of behaviour exhibited by global multilateral institutions, has also helped to redefine the roles and structures of these entities. A good example is how the behaviour of the World Trade Organisation (WTO) whose policies, influenced by the global machinery of EuroAmerican hegemony, has affected trade rules and regulations and created a skewed trade imbalance between the global North and South. This has precipitated action by global civil society to campaign against such. It is therefore critical that our scholarly approach to understanding global civil society must move beyond simplistic analysis of non-political economy to a more nuanced and deep analysis centred on the politics of global resistance. In doing this, we certainly move beyond looking at global civil society from a simplistic angle to see them as ‘social movements’ which, by naming them as such, allows us to also look at issues that transcend the structure of the actors and include issues of power and hegemony (O’Dwyer, 2014). It is also worth pointing out that the definition itself is not unproblematic. In fact, it is very problematic in a number of ways. One of the contentious issues in the global civil society narrative is lack of clarity because of the tendency to oscillate between particularity and universality (Axford, 2004). This is what globality is all about – highlighting the complex issues of the world and explaining who is excluded and included; whose voice is heard and whose voice is suppressed. I also further my argument by pointing out that the failure to problematise the definition has rendered the global civil society debate more fluid than it should have been. For example, the failure to note that there are various forms of engagement deployed by global civil society makes the narrative more compartmentalised and romanticised. This chapter, therefore, takes its analytical posture from the ‘global complexity approach’ (GCA) as espoused by Castells (1996) and Urry (2003). In a nutshell, the global complexity approach is a continuation of efforts by social scientists who have often used ‘social networks theory’ to better understand the interaction of issues affecting society. GCA pays particular attention to how social actors, at any particular point in time, interact with limited information, intentionally or unintentionally, yet ignore the interconnectedness of structures of power at the local and global levels, and whose ripple effects are boundless. In this chapter, the notion of ‘global’ in the global civil society narrative, while often misconstrued to mean a set of actors whose mission is to counter hegemonic elements of globalisation, seeks to transcend that narrow understanding, to look at how, over the past seven decades and half, the global civil society and the Bretton Woods Institutions, have fared along the way and what lessons can be drawn to offer alternative approaches to the skewed global power dynamics. The section that follows takes a brief historical account to the debate.

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A bit of history The status and history of global civil society which, in part, constitute nongovernmental organisations (NGOs), has evolved over a period of time. The diversity and reach of these organisations is difficult to quantify. According to Davies (2008), the entry and usage of the term ‘nongovernmental organisations’ in the United Nations (UN) Charter at the end of World War II had a lot of influence over what was to come. However, the onset of the modern era NGOs and, in the context of this chapter, global civil society, has been preceded by religious orders, missionary groups, and scientific societies which engaged in crosscutting issues of socio-political significance of the time. Many of the organisations included both secular and religious institutions. For example, the Roman Catholic monastic order still exists now. The evolution of the early NGOs was mostly significant in such areas as political activism, humanitarianism, and social justice. This was earlier noted by Risse (2002) who observed that some of the critical roles CSOs have fulfilled over time have, in part, included promotion of political solutions, providers of services, brokers of knowledge, and controllers of state and intergovernmental actions. A few of these organisations include but are not limited to: • • • • • • •

Society for the Recovery of the Drowned, in 1767; Universal Confederation of the Friends of Truth, in 1790; The Royal Jennerian Society, in 1803, to fight smallpox; The Pennsylvania Society for the Relief of Free Negros Unlawfully Held in Bondage, in 1775; British and Foreign Anti-Slavery Society, in 1839; World Alliance of Young Men’s Christian Associations, in 1855; and Red Cross Movement, in 1863, for neutral assistance to the wounded in conflict (Davies, 2008).

In his paper, Davies (2008) further observes that while by 1854 only six INGOs had been founded, by the turn of the century the number had increased to 163, and by 1945 over 1,000 INGOs had been established. By 2007, it is estimated that well over 60,000 global civil society organisations or, as Davies calls them, International NGOs (INGOs), were established around the world. While the increase in the number of civil society organisations has been the hallmark of the debate, the sector’s contribution to the current state of international development discourse has its own evolutionary and historical trajectory. The INGOs and other transnational civil society are said to have played a significant role in bringing the Cold War to an end; contributed towards the redefinition of development and security to include humanitarian concerns; and facilitated the institutionalisation of international agreements such as the 1987 Montreal Protocol and the 1997 Ottawa Landmines Convention. On the political front, civil society organisations have evolved with strong influence on activism. Most notably the anti-slavery movement, the founding of the League of Nations

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and United Nations organisations have had a lot of influence on the role that the sector plays in reducing poverty today (Charnovitz, 1997). However, while the growth of the sector in all these endeavours is noteworthy, it is also important to note that the growth came in waves of increased and decreased need. For example, the pre- and post-World War era, the Great Depression and other eventful occurrences saw the number of NGOs swell and dwindle. Also, global demographic changes had a great influence in shaping the role of the current civil society organisations. Take, for example, urbanisation, democratisation, globalisation, interstate peace building, transnational political issues, and other related issues – all these have shaped the way the current NGOs operate (Broome, 2009). The birth of such INGOs as Oxfam, World Vision International, Plan International, to name a few, mirror such a trajectory where altruism, faith, and mere philanthropy coalesce to shape the order in which human morality is dispensed (Makuwira, 2014). The section that follows highlights the link between the influence of global civil society and multilateral institutions, particularly the World Bank and the IMF.

Global civil society and the early encounter with the World Bank and IMF The popularity of the World Bank and the IMF over the past seven decades has had a polarising effect globally as the two institutions have become targets for global civil society organisations both from the global North and South. This, in the past, as has been elaborated in my attempt to elucidate the meanings of global civil society, demonstrated the contentious roles both the World Bank and the IMF have played in shaping global governance. The critique, on both institutions, has been scathing (see Easterly, 2002, 2005, 2009; Feder, 1983; Tousaint, 1985). Two camps have emerged in this critique – those who see the World Bank under the prism of a globalising agenda and for being responsible for unending poverty and global indebtedness due to harsh austerity measures by the World Bank and the IMF. Another camp sees the two institutions necessary overall globally but offers a caveat – that of reforming the manner in which they conduct business. For this, the key issues remains that of voice, that is, globally, there certain voices that are amplified and there those that are suppressed through low or high participation in decision-making processes at a global level (Ephraim and Herz, 2007; Lumumba, 2018; Qobo and Soko, 2019). In both cases, what is seemingly clear is the acknowledgment that World Bank and IMF policies have contributed to global inequality between and among nations. For the global South, this is clearly manifested though persistent poverty despite all the efforts to reduce it based on global development instruments with targets – here referring to, for example, the just ended Millennium Development Goals. Established in 1944 as a United States government initiative to lead in the post-World War II reconstruction and development in Europe and, later, the rest of the developing world, the two institutions (World Bank and IMF) have been

Washington Consensus and civil society 85 in the forefront in developing policies which have largely been aimed at not only spurring economic growth but also reducing poverty and providing technical and financial support to help countries to reform their country-specific development sectors in order to implement development projects in the education, health, agriculture, and infrastructure sectors of economy. However, along the way, these policies turned out to be very devastating effect due to the conditions attached to them (Bird and Willet, 2004; Collier, 1997; Dreher et al., 2007). Some of the critical ones included: • • • • •

Currency devaluation; Reduction in government spending and increase in taxes; Reduction in the growth of domestic credit and increase in real interest rates; Import liberalisation; Privatisation of public assets (Doroodian, 1994).

The negative effects of these conditionalities have been far and wide and have sparked increased criticism that, over the years, has been the hallmark of civil society campaigns and advocacy. As noted by Killick (1993), the criticisms can be clustered into four categories. The first criticism is based on the manner in which the IMF implements its development projects. Oftentimes the Fund does not take into consideration how its policies impact country-specific initiatives and contexts, for example cultural milieux. This, ultimately, renders the production system weak and affects broader issues such as job creation, ownership and weak governance and political systems. The second criticism is based on the IMF’s mode of operation which, when analysed critically, does not provide room for negotiation. In other words, the top-down approach to development in the developing countries essentially infringed sovereignty of the debtor countries, to the extent where structural transformation became very difficult. The third criticism of the IMF was the fact that most of its development programs were usually small, expensive, and of short-term in nature. For an emerging economy to make significant improvements and be able to deal with the balance of payment was very difficult, if not practically impossible. This further eroded the ability of countries to develop their economies. The fourth criticism was, and until now is, the governance of both the World Bank and the IMF. The governance structures of the two institutions are dominated by individuals from industrialised countries –Euro-America – who pay very little attention to development challenges of debtor countries. This is seen in a wider sense as a form of global hegemony to which global civil society has found a niche to echo its voice against the G-8 and global forums where industrialised countries come together to discuss matters affecting the world. While there have been substantial changes in the structure of both the World Bank and the IMF over the years, to a larger extent, the two institutions have maintained their bureaucratic composure to oversee their activities across the world.

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The real encounter – the Working Group with the Bank Historically then, the IMF’s encounter with global civil society can be said to have been visible in the 1980s during the Third World debt crisis and, also, at a time when structural adjustment programs (SAPs) took shape and were imposed on developing countries, especially those in sub-Saharan Africa. It was from the early 1970s when NGOs began to interact, on a regular basis, with the World Bank, at the operational level in developing countries where most of the Banksponsored projects were implemented which, in the end, opened up doors for NGOs to also interact with the Bank at the headquarters in Washington. As these interactions continued, it became essential to formalise them. It was in 1980, during a workshop on small-scale enterprises, that what seemed to be a diffuse and more ad-hoc engagement, was then formalised into a regular engagement. To demonstrate its seriousness, the World Bank invited 16 leading global NGOs in 1981, to become members of a World Bank NGO Committee. However, this development did not go well with other NGOs who observed that there was some level of compromise with the whole debate on independence of the sector. As a result, in 1984, some NGO members of the Committee decided to constitute themselves as an autonomous Working Group on the World Bank. It was this grouping that met separately to decide on NGO priorities before the annual meetings with World Bank staff in the Committee. The impetus created by this Working Group saw the increased frequency of meetings it held in developing countries, informed by research, information exchange, and the implementation of its own programmes. All this strengthened its inputs to policy dialogue with the Bank. Serviced by an office in Geneva, the Working Group had a strategic approach to engage with the Bank. For example, it created regional centres to play leading roles. This was seen when the Working Group used the Asociación Latinoamericana de Organizaciones de Promoción (ALOP) (Latin American Association of Development Organisations); later between October 1997 and April 1999, the Institute for Development Research in Boston; then the role was assumed by the Inter-Africa Group in Addis Ababa, between April 1999 and April 2000, followed by the Caribbean Policy Development Centre in Barbados. While this is just a brief account of the historical metamorphosis, the point to take is the fact that the NGO Working Group had clear mandates to execute, chief among them were to: • • • •

Increase transparency and accountability in WB operations in recipient regions; Increase and deepen public participation at the early stages of elaboration and execution of WB policies and projects; Increase exchange of information with WB on all WB socially and environmentally sensitive policies and projects; Support WB involvement with NGOs in the process of monitoring, evaluation, and follow-up on the project financed by WB.

Washington Consensus and civil society 87 While these mandates were broad in nature, their operationalisation was not as easy one would think. To have a global reach, the Working Group began a decentralisation process in 1995, through a series of meetings aimed to sensitise people in other regions of the world where the World Bank and the IMF has their footprint. These regions included Africa, Asia, Latin America, and the Caribbean. By October 1997, a decision was reached during the annual meeting of the global Working Group to formally restructure the network in order to promote regional versions of the BankNGO Committee. The regional meetings were further used as a platform to elect the members of the global Steering Committee. Not only did this process facilitate dialogue with the new decentralised structures of the World Bank to enable a wider range of Southern NGOs to participate and to strengthen the input from the grassroots to the global agenda, but it also further had powers to ensure that participation was meaningful. This was realised when, in 1990, the Global Working Group pressured the Bank to form yet another group called the ‘Participation Learning Group’ with three clear mandates: to document the World Bank’s experiences in participation in Bank-sponsored projects; to catalyse learning within and outside the Bank; and to identify areas within the Bank that needed further refinement in order to facilitate the Bank’s popular participation (McGee, 2002). The Working Group remains important at the global level as a North–South network and as the focus for advocacy on broad policy issues common to all the regions.

Global debt crisis, Heavily Indebted Poor Countries (HIPC) and Poverty Reduction Strategy Papers (PRSPs) One of the common policy issues to which this chapter lends its theoretical weight is the global debt crisis. The 1990s debt problem and the financial market crises that hit mostly Asia, Latin America, and Russia had further seen active engagement of global civil society and further affirmed the role and visibility in the Bank and the Fund (Scholte, 2001). The modes of engagement have been varied. In some cases it has varied from diplomacy to more of a social movement approach where advocacy and protests have been deployed. Good examples are where civil society has taken to the streets as an ‘anti-globalisation’ movement. In some cases these entities have targeted the ‘World Social Forum’ globally, seen as a gathering that furthers the interests of rich and capitalist countries to continue their hegemonic behaviour. The launch, in 1999, of the enhanced Heavily Indebted Poor Countries (HIPC) Initiative by the World Bank and IMF signalled a new era in enhancing global civil society participation in the Bank’s and IMF’s agenda to relieve countries from the cumulative effect of debt (Ludi, 2009). According to an IMF report of October 2017 (IMF, 2018), US$76 billion worth of debt was cancelled. The major aim was to rapidly relieve a larger number of countries that fell under the first HIPC Initiative, which was earlier launched in 1996, from debt. As Thugge and Boote (1999) observed, the Enhanced HIPC made the integration of debt relief into comprehensive poverty reduction strategy papers (PRSPs) one of the major precondition. While PRSPs may have started as a HIPC requirement,

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it soon became clear that the initiative was overly a new development strategy for World Bank and the IMF. As usual, its propagation invited a scrutiny from civil society organisations. The PRSPs were premised on the belief that they have to be country-driven, result-oriented, comprehensive, based on mutual partnerships between donors and governments, and long-term in nature (Hermele, 2005). By its nature, and equally based on the fact that this initiative was to be implemented under governments, a cursory process of intensive consultation was to be made. This was the entry point for civil society to ensure the principles that dictated the HIPC were followed. While space does not allow to venture into deeper analyses, over the years, the role played by civil society in specific countries remains an area that requires further exploration. The discussion on the role of global civil society in multilateral institutions cannot be complete without a brief synopsis of the Jubilee 2000 Movement. Lauded as one of the most powerful innovations to push multilateral financial institutions to relieve poor countries from debt, the movement united tens of millions of people, spanning nations and continents – all in the name of reducing the burden of developing-country debt – and showed the power of civil society organisations in engaging in global governance issues (Pettifor, 2006). The movement’s history and analysis of its successes and failures underscores the importance of civil society groups that led, ultimately, to the cancellation of more than US$100 billion of debt owed by 35 of the poorest countries. Despite its successes and failures since then, the awareness and global consciousness on matters of global concern was high and remains so till today.

Global civil society today As the increase in the use of information and communication technologies (ICT) has become real not only for civil society organsations but across sectors, the world of the twenty-first century is no longer at ease. The spaces of power have become porous. Global civil society has revolutionised citizen participation in global social, economic, political, environmental, and cultural issues. As aptly exemplified at the World Economic Forum (2013), the current brand of global civil society is not as conventional in their dealings with these issues; rather their organisation ranges from individual campaigners to very loose networks of individuals who use social media to mobilise others for a common good. Some are more organised into entities with structures from which they operate to advance the same agenda. A few examples of new forms of revolution abound, for example the ‘Occupy Movement’, a loose but highly sophisticated movement whose aim is to protest against social and economic inequality around the world and make the economic and political relations in all societies less vertically hierarchical and more flatly distributed (Campbell, 2011). Another example is the ‘Arab Spring’ revolution (Brownlee and Ghiabi, 2016). While space does not allow for a fuller dissection of this idea, the point I want to make is how a loose but powerful social media can mobilise to change power structures and challenge the status quo.

Washington Consensus and civil society 89 The global civil society reaction to the 2008 global financial meltdown is another example in point (Kelly, 2011). As austerity measures by the World Bank, IMF, and other transnational corporations affected even the countries of the global North, these loose networks of individuals and organisations mobilised themselves to stage protests in Greece, Spain, and other parts of the world (Haynes, 2013).

Conclusions Since Lyman C. White concluded in 1949 that: Surely the time has come for the students and teachers of international affairs to realise that international nongovernmental organisation is a great unexplored continent in the world of international affairs and that expeditions should be sent in search of the great riches to be found there. (p. 95) This chapter may not necessarily be an in-depth exposition but it has offered a modest contribution to the road traversed. The trajectory explored has provided new realism and insights for our appreciation of what the battle of changing power dynamics at a global level entail. The changes that civil society is undergoing strongly suggest that it should no longer be viewed as a ‘third sector’; rather, civil society should be the glue that binds public and private activity together in such a way as to strengthen the common good. In playing this role, civil society actors need to ensure they retain their core missions, integrity, purposefulness, and high levels of trust. The world will always need independent organisations and individuals to act as watchdogs, ethical guardians, and advocates of the marginalised or under-represented. Civil society in all its forms has an important role in holding all stakeholders, including itself, to the highest levels of accountability. The shifting definitions, roles, and contexts described in this report suggest that leaders across civil society, business, government, and international organisations possess the opportunity to harness these shifts in order to design new solutions to societal challenges. Civil society can play a particularly powerful role in this process as an enabler and constructive challenger, creating the political and social space for collaborations that are based on the core values of trust, service, and the collective good.

References Anheier, H., Glasius, M. and Kaldor, M. (2001) Introducing Global Civil Society. In H. Anheier, M. Glasius and M. Kaldor (eds), Global Civil Society. Oxford: Oxford University Press., pp. 3–22. Axford, B. (2004) Global Civil Society or ‘Networked Globality’: Beyond the Territorialist and Societalist Paradigm. Globalizations, 1(2), pp. 249–264, doi:10.1080/14747730 42000308596.

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Bird, G. and Willett, T. D. (2004) IMF Conditionality, Implementation and the New Political Economy of Ownership. Comparative Economic Studies, 46(3), pp. 423–450. Broome, A. (2009) When Do NGOs Matter? Activist Organisations as a Source of Change in the International Debt Regime. Global Society, 23(1), pp. 59–78. Brownlee, B. J. and Ghiabi, M. (2016) Passive, Silent and Revolutionary: The ‘Arab Spring’ Revisited. Middle East Critique, 25(3), pp. 99–316, doi:10.1080/19436149.201 6.1177919. Buckley, K. M. (2013) Global Civil Society and Transnational Hegemony: The Globalization-Contestation Nexus. Milton Park, Oxon.: Routledge. Campbell, E. R. A. (2011) A Critique of the Occupy Movement from a Black Occupier. The Black Scholar, 41(4), Special Anniversary Conference Issue: A Celebration of the First Forty Years (Winter 2011), pp. 42–51. Castells, M. (1996) The Information Age: The Rise of the Network Society. Oxford: Blackwell. Charnovitz, S. (1997) Two Centuries of Participation: NGOs and International Governance. Michigan Journal of International Law, 18(2), pp. 183–286. Chesters, G. (2013) Exodus: From Global Civil Society to Radical Disobedience. Spanda Journal, 4(1), pp. 11–20. Cohen, J. L. and Arato, A. (1992) Civil Society and Political Theory. Cambridge: MIT Press. Collier, P. (1997) The Failure of Conditionality. In C. Gwin and J. Nelson (eds.), Perspectives on Aid and Development. Baltimore, MD: Overseas Development Council. Davies, T. (2008) The Rise and Fall of Transnational Civil Society: The Evolution of International Non-Governmental Organizations since 1839. www.staff.city.ac.uk/tom. davies/CUWPTP003.pdf. Doroodian, K. (1994) IMF Stabilization Policies in Developing Countries: A Disaggregated Quantitative Analysis. International Economic Journal, 8(4), pp. 41–55. Dreher, A., Mölders, F. and Nunnenkamp, P. (2007) Are NGOs the Better Donors? A Case Study of Aid Allocation for Sweden. Kiel Working Paper No. 1383. www.ifwmembers.ifw-kiel.de/publications/are-ngos-the-better-donors-a-casestudy-of-aidallocation-for-sweden/kap1383.pdf [Accessed 10 April 2016]. Easterly, W. (2002) How did the HIPC Become Heavily Indebted? Reviewing 2 Decades of Debt Relief. World Development, 30(10), pp. 1677–1696. Easterly, W. (2005) What did the Structural Adjustment Adjust? The Association of Policies and Growth with Repeated IMF and World Bank Loans. Journal of Development Economics, 76, pp. 1–22. Easterly, W. (2009) How the MDGs are Unfair to Africa. World Development, 37(1), pp. 26–35. Edwards, M. (2004) Civil Society. Cambridge: Polity Press. Ephraim, A. and Herz, S. (2007) Accountability in Complex Organisations: The World Bank Responses To Civil Society. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=963135. Feder, E. (1983) Plundering the Poor: The Role of the World Bank in the Third World. International Journal of Health Services, 13(4), pp. 649–660. Fletcher, L. (2019) The Bretton Woods Institutions and the Second Crisis of Multilateralism. Jubilee Australia. www.brettonwoodsproject.org/wp-content/uploads/ 2019/07/75th-Crisis-Multilateralism-WEB.pdf. Frederick, H. (1993) Computer Networks and the Emergence of Global Civil Society. In L. Harasim (ed.), Global Networks: Computers and International Communication. Cambridge, MA: MIT Press, pp. 283−295.

Washington Consensus and civil society 91 Ghils, P. (1992) International Civil Society: International Non-Governmental Organizations in the International System. International Social Science Journal, 44(133), pp. 417−431. Gunduz, C. (2004) Human Rights and Development: The World Bank’s Need for a Consistent Approach. https://pdfs.semanticscholar.org/2636/7bdf77d77fb7f6086af38ff d5b1d67237ad8.pdf. Haynes, J. (2013) Faith-Based Organisations, Development and the World Bank. In G. Carbonnier (ed.), International Development Policy: Religion and Development. Basingstoke: Palgrave MacMillan, pp. 49–64. Hermele, K. (2005) The Poverty Reduction Strategies: A Survey of the Literature. Forum Syd, Stockholm. IMF (International Monetary Fund). (2018) Debt Relief under the Heavily Indebted Poor Countries (HIPC) Initiative. www.imf.org/en/About/Factsheets/Sheets/2016/08/01/16/11/ Debt-Relief-Under-the-Heavily-Indebted-Poor-Countries-Initiative. Jocknick, C. and Preston, F. A. (2006) Sovereign Debt at the Crossroads: Challenges and Proposals for Resolving the Third World Debt Crisis. Oxford: Oxford University Press. Kaldor, M. (2003) The Idea of Global Civil Society. International Affairs, 79(3), pp. 583–593. Katz, H. (2006) Gramsci, Hegemony, and Global Civil Society Networks. International Journal of Voluntary and Nonprofit Organizations 17(4), pp. 333–348. Keane, J. (2003) Global Civil Society. Cambridge: Cambridge University Press. Kelly, C. R. (2011) Financial Crises and Civil Society. Chicago Journal of International Law, 11(2), Article 21. http://chicagounbound.uchicago.edu/cjil/vol. 11/iss2/21. Killick, T. (1993) Does the IMF Really Help Developing Countries? ODI Working Paper, April. Kuttner, R. (2013) Bretton Woods Revisited. The American Prospects, November. https:// prospect.org/article/bretton-woods-revisited. Ludi, E. (2009) Brief Note No. 9, Poverty Reduction Strategies. www.shareweb.ch/site/ PovertyWellbeing/resources/Documents/Briefing%20Note%209%20-%20Poverty%20 Reduction%20Strategies.pdf. Lumumba, P. L. O. (2018) Africa on the Rise. www.youtube.com/watch?v=0F6vzs5PWE0. Makuwira, J. J. (2014) Non-Governmental Development Organisations and the Poverty Reduction Agenda: The Moral Crusaders. London: Routledge. McGee, R. (2002) Participating in Development. In U. Kothari and M. Minogue (eds), Development Theory and Practice: Critical Perspectives. Basingstoke, Hampshire: Palgrave, pp. 92–116. O’Dwyer, D. (2014) Banning Cluster Munitions and Legitimising the International System: The Role of the Irish Government and NGOs. Irish Studies in International Affairs, 25(1), pp. 137–164. Ocampo, J. A. (2015) The Governance of the International Monetary System. WIDER Working Paper 2015/046, May. Helsinki: UNU-WIDER. www.wider.unu.edu/sites/ default/files/wp2015-046.pdf [Accessed 30 August 2016]. Pleming, S. and Imtiaz, H. (2018) World Bank Report Finds Rise in Global Wealth, but Inequality Persists. www.worldbank.org/en/news/press-release/2018/01/30/worldbank-report-finds-rise-in-global-wealth-but-inequality-persists. Qobo, M. and Soko, M. (2019) The World Bank Needs Deep Reform to Reflect a Changing World Order. The Conversation, 17 February. https://theconversation.com/theworld-bank-needs-deep-reforms-to-reflect-a-changing-world-order-111366. Pettifor, A. (2006) The Coming First World Debt Crisis. London: Palgrave Macmillan.

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Risse, T. (2002) Transnational Actors and World Politics. In W. Carls-Naes, T. Risse, and B. Simmons (eds), Handbook of International Relations. London: Sage, pp. 255–274. Scholte, J. A. (2001) Civil Society and Democracy in Global Governance, CSGR Working Paper No. 65/01. https://warwick.ac.uk/fac/soc/pais/research/researchcentres/ csgr/papers/workingpapers/2001/wp6501.pdf. Solomon, R. (1982) The International Monetary System, 1945–1981. New York: Harper and Row. Thugge, K. and Boote, A. R. (1999) Debt Relief for Low-Income Countries. The Enhanced HIPC Initiative. Pamphlet Series 51. Washington, D.C.: IMF. Tousaint, E. (1985) The World Bank: A Critical Premier. London: Pluto Press. Urry, J. (2002) Global Complexity. London: Routledge. Urry, J. (2003) Global Complexity. Polity Press: Cambridge. Van Dormael, A. (1978) Bretton Woods: Birth of a Monetary System. New York: Holmes & Meier. Whaites, A. (1998) NGOs, Civil Society and the State: Avoiding Theoretical Extremes in Real World Issues. Development in Practice, 8, pp. 343–349. White, L. C. (1949) Peace by Pieces: The Role of Nongovernmental Organizations. Annals of the American Academy of Political and Social Science, 264, July. www. sweetliberty.org/issues/un/ngo.htm. [Accessed 9 December 2019]. White, S. C. (1999) NGOs, Civil Society and the State in Bangladesh: The Politics of Representing the Poor. Development and Change, 30, pp. 307–326. Willetts, P. (1996) The Conscience of the World: The Influence of Non-Governmental Organisations in the UN System. London: Brookings Institution Press. World Economic Forum. (2013) The Future Role of Civil Society. Yago, K., Asai, Y. and Itoh, M. (eds.) (2015) History of the IMF: Organization, Policy, and Market. Japan: Springer.

7

Shifts in international development aid and its impact on economic growth Maneka Jayasinghe, Eliyathamby A. Selvanathan, Saroja Selvanathan

Introduction It is widely accepted that development aid is linked with positive growth-related outcomes, and hence it is regarded as an important instrument to enhance eco­ nomic growth in many developing countries (Coppard et al., 2013). In recent times, the global foreign aid landscape is changing rapidly (Woods, 2008). One of the most critical points in the contemporary development aid discourse is that aid from non-traditional donors has started to play a key role in economic devel­ opment in many countries where Western multilateral aid (multilateral aid) was used to achieve political goals by the respective donors. In recent years, the prominence of the traditional multilateral donors, such as Asian Development Bank (ADB), World Bank (WB), International Monetary Fund (IMF), and United Nations (UN), and bilateral donors, such as United States of America (USA), United Kingdom (UK) and Japan, has been reduced by the increasing visibility of emerging donors like China, India, and Brazil in the context of foreign development assistance. For example, although traditionally India was the main provider of development assistance to Nepal, in 2016 China overtook India as the largest aid donor and source of foreign direct investment (FDI) to Nepal (Sharma, 2018). A similar trend was observed in Sri Lanka, where China surpassed the total amount of development assistance received from Sri Lanka’s largest traditional donor, Japan, by 2011 (Amarasinghe and Rebert, 2013). The non-traditional donor we focus on in this chapter is China. Chinese development assistance (CDA) and multilateral aid have several similarities and differences. Although China contributes to multilateral aid through the World Bank, IMF, and other UN agencies, about 93 per cent of China’s development assistance disbursements are in the form of bilateral development assistance (Kitano, 2016). Natural resources development assistance and infrastructure development assistance are the key priorities of Chinese foreign aid and govern­ ment investment activities (FAGIA). About 42 per cent of total Chinese FAGIA is allocated to the former, while about 40 per cent is allocated to the latter. Although slowly growing, the Chinese FAGIA on humanitarian aid is limited, comprising only about 18 per cent (Miglani and Adkin, 2015; Wolf et al., 2013). On the other hand, the focus of multilateral aid is on human welfare and basic

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needs. Consequently, global health, major global development agendas, such as the millennium development goals and sustainable development goals, disaster assistance, and migration and refugee assistance, are the main focus of the majority of multilateral aid (Zhang, 2016). Another notable feature of development assistance from emerging donors, such as China, is that their aid policies are more attractive for aid recipients and adopted easy and flexible aid conditionalities than those of traditional donors (Mawdsley, 2012). For example, conditionalities related to peace, safety and security, human rights, and good governance were common features of tradi­ tional donors and received a high priority when making aid disbursement deci­ sions (Whitfield and Fraser, 2000). However, these aspects received low priority or even overlooked completely by non-traditional donors, such as China. Alter­ natively, China has placed a high priority on the needs of the recipient country. In some instances, some developing countries have experienced an abrupt reduction in donors’ aid allocations from traditional donors resulting in a signi­ ficant decline in aid flows into those developing countries and thereby curtailing their economic development (Kragelund, 2010). Not surprisingly, the role of non-traditional donors becomes highly imperative in such instances (Kragelund, 2010). For example, Western donors insisted the addition of conditionality to the Tokyo Declaration on Reconstruction and Development of Sri Lanka on 10 June 2003 (Lunstead, 2005) and laid out a specific ‘linkage between donor support and progress in the peace process’ in paragraph 18 of the Tokyo Declaration (Ministry of Foreign Affairs of Japan, 2003). However, the impact of the pres­ sure put on Sri Lanka by traditional donors was blunted as non-traditional donors, particularly China, continued with disbursing development assistance to Sri Lanka. As a result, China has now emerged as the largest lender in Sri Lanka, with involvements primarily in the infrastructure sector (Amarasinghe and Rebert, 2013). Developments in the context of foreign aid for developing countries and notable differences in the nature and types of traditional multilateral aid and CDA highlight the need for examining the changing patterns of these develop­ ment aids to developing countries and the effectiveness of respective foreign development assistance on the economic development of these countries. Although donors also prefer using macroeconomic indicators, such as savings and investments, to establish the relationship between aid and growth-related outcomes and thereby aid effectiveness, the effectiveness of aid is often measured and evaluated by the extent to which aid contributes to the growth of per-capita Gross Domestic Product (GDP) (Biscaye et al., 2017). The objective of this chapter is twofold: (1) to examine the trends in inter­ national aid flows – traditional western multilateral aid and CDA – to South Asian countries, and (2) to examine the extent to which traditional multilateral aid and CDA have influenced the GDP growth in these countries. The existing literature highlights the lack of evidence on the impact of non-traditional aid on growth outcomes in developing countries (Kragelund, 2010). Therefore, this current study fills this gap in the existing literature by exploring the difference in

Shifts in international development aid 95 the effectiveness of multilateral and non-traditional development assistance on GDP. The selection of South Asia for the analysis is motivated by two reasons: (1) South Asia is the closest neighbour of China and is one of the main partners of the Chinese Belt and Road Initiative. In recent years, South Asian countries, particularly Bangladesh, Nepal, Pakistan, and Sri Lanka experienced a huge increase in CDA, while that of Afghanistan is also on the rise (Bhandari, 2018; Perera, 2018; Stone, 2019). For example, Sri Lanka ranked among the top 20 recipients of CDA with US$11.8 billions of FAGIA coming into the country during 2005–2014 (Perera, 2018). (2) South Asia stands out due to the purpose of CDA. More specifically, most CDA into South Asia was for infrastructure and financial aid, while that for other regions was for natural-resource develop­ ment (Wolf et al., 2013). The remainder of this chapter is organised as follows. Section 2 presents a brief review of the literature on the changing patterns in traditional multilateral aid and CDA. Section 3 provides a preliminary analysis of the data used in this study, while Section 4 presents the empirical model and discusses the estimation results. Section 5 provides concluding remarks.

Review of literature Foreign development assistance is one of the most important sources of inter­ national funding for many developing countries in the world (Coppard et al., 2013). The Organisation for Economic Cooperation and Development (OECD) Creditor Reporting System (CRS) reported that the total net Overseas Develop­ ment Assistance (ODA) flows accounted US$137.2 billion in 2014; out of this amount, US$42.6 billion (31 per cent) consists of multilateral disbursed via Offi­ cial Development Assistance (ODA). Since 1998, this share of multilateral ODA has been largely consistent (OECD, 2015). Manning (2006) raised concerns regarding the rise of non-traditional bilateral donors, particularly that of China and India. Since then, there has been an increasing attention of donor agencies, think tanks and academics on changing trends in international development assistance. Likewise, another area of the major concern of both donors and recip­ ients in the context of development aid is aid effectiveness. This is because several initiatives, such as the 2005 Paris Declaration on Aid Effectiveness, the 2008 High Level Forum on Aid Effectiveness, and the 2011 Busan Partnership Agreement for Effective Development Cooperation, place a significant concern on the effectiveness of development aid (Biscaye et al., 2017). Traditional multilateral aid donors have several concerns regarding the rapidly growing involvement of non-traditional donors, such as China, in the global development aid arena and the effectiveness of such aid due to two reasons. First, development assistance from non-traditional donors is considered to be allocated based on the strategic interests of donors and advance an ideo­ logical agenda (Alesina and Dollar, 2000; Burnside and Dollar, 2000; Milner and Tingley, 2013; Naím, 2007; Schraeder et al., 1998;). In contrast, traditional

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multilateral aid has frequently been seen to be targeted at assisting the recipient country in achieving development outcomes concerning access to clean water, better health facilities, and the improvement of primary education in developing countries or meeting global development agendas, such as millennium develop­ ment goals or sustainable development goals. Second, there have been some crit­ icisms that growing development assistance by non-traditional donors mostly with ‘no strings attached’ jeopardises achievements of the recipient country’s progress towards economic and political reforms, such as safety and security, good governance and human right initiatives (Kragelund, 2010). Lack of com­ mitment towards economic and political reforms in developing countries indi­ rectly supported by non-traditional donors may, on the other hand, promote dictators and thereby have negative implications for long-established develop­ ment efforts of the traditional donors (Kragelund, 2010; Naím, 2007). Gabas (2009) noted that the emergence of non-traditional donors will challenge the conventional aid system established by traditional donors since the end of the Cold War. McCormick (2008) argues that most of the potential negative impact of non­ traditional development assistance is without detailed evidence and rather general and hypothetical. For example, Taylor (2005) and Tull (2006) noted that there is essentially no escaping the supposition that China’s considerable focus on Africa exhibits a negative political expansion, which almost undoubtedly militates against democratisation, economic prosperity, and the advancement of peace, on the continent. It is also argued whether international development assistance, from tradi­ tional donors or non-traditional donors, will actually lead to long-term economic and social development. This depends on whether this aid assists the changes in existing economic, political and social structure in these countries (Kragelund, 2010). Kragelund (2008) found that while traditional donors targeted predomi­ nantly social sectors, non-traditional donors targeted the productive sectors. Consequently, the ECOSOC (2008) argued that aid from non-traditional donors is more often complementary to traditional aid. This is because investments in infrastructure, establishment of trade links, natural and human resources devel­ opment, which are the main focus of non-traditional donors, are rather a long­ term vision. However, to achieve these long-term targets, other factors, such as water and sanitation, primary health care and education, which are the focus of traditional donors are more important (Kragelund, 2008). Furthermore, develop­ ment assistance from non-traditional donors appeared to have gained confidence among the recipient countries as more predictable and quicker, partly due to the lack of lengthy procedures of approval of development aid. Additionally, devel­ opment assistance from non-traditional donors is considered as ‘tailor-made’ assistance. In contrast, traditional aid that has been evolved as part of the 1980s’ structural adjustment programmes has been often regarded as a ‘one-size-fits-all’ approach (Hilsum, 2005). To the best of our knowledge, there is no literature on comparing the effec­ tiveness of multilateral aid and non-traditional CDA. However, several studies

Shifts in international development aid 97 investigate the effectiveness of multilateral and bilateral aid on GDP outcomes and find no consistent results. For example, Girod (2008), Headey (2005, 2008), Nowak-Lehmann and Gross (2015), and Olanrele and Ibrahim (2015) found that multilateral aid is more effective in delivering GDP growth-related outcomes. On the other hand, Feeny (2005), Feeny and McGillivray (2010), Gounder (2001), Jeanneney and Tapsoba (2012), and Ram (2003) revealed that bilateral aid is more effective. While Javid and Qayyum (2011), Jeffrey (2015), Minasyan and Nunnenkamp (2015), Minoiu and Reddy (2007, 2010), and Wamboye et al. (2013) found mixed results, Askarov and Doucouliagos (2015), Gebregziabher (2014), Lessmann and Markwardt (2010), Mohamed et al. (2014), Rajan and Subramanian (2008), and Ram (2004) found no difference between the effective­ ness of multilateral and bilateral aid on economic growth. In general, the conclu­ sion that can be drawn from the existing literature is that the differences in type, nature, conditions, and purpose of development assistance of non-traditional donors compared to that of traditional multilateral donors do not automatically result in reduced aid effectiveness. However, further research needs to be under­ taken to further confirm the differences in aid effectiveness by donor type.

Preliminary data analysis The analysis of this chapter focuses on five countries in the South Asian region, namely Afghanistan, Bangladesh, Nepal, Pakistan, and Sri Lanka. The selection of the countries was based on the availability of data, particularly the data on CDA. This chapter uses data on net multilateral aid disbursement by country (constant USD millions), CDA-aid and non-concessional official financing (con­ stant USD millions), per capita Gross Domestic Product (PCGDP) (constant USD) and exports (EXPO) (constant USD millions) for the period 2000–2014. The data on multilateral aid was obtained from OECD, ODA database and CDA data was sourced from AidData’s Global Chinese Official Finance Dataset. AidData provides reliable data on different types of official development finance by China (Oh, 2018). The data on GDP and exports were obtained from the World Bank open data (World Bank, 2019). Table 7.1 provides summary statis­ tics on multilateral aid, CDA, PCGDP, and EXPO for the five countries. As can be seen, Pakistan received the highest amount of multilateral aid fol­ lowed by Bangladesh, Afghanistan, Nepal, and Sri Lanka. Pakistan also received the highest CDA, followed by Nepal, Sri Lanka, Bangladesh, and Afghanistan. On average, Pakistan received CDA about 7 times that of Nepal and 40 times that of Sri Lanka. The highest per capita GDP during the data period is achieved by Sri Lanka followed by Pakistan, Bangladesh, Nepal, and Afghanistan. The value of exports for Bangladesh and Pakistan is almost twice that of Sri Lanka, while Nepal’s exports are significantly smaller than that of the other three countries. Figure 7.1 plots the multilateral aid disbursements for the five countries over the sample period 2000–2014. As can be seen, overall, there has been a significant increase in multilateral aid flows to Afghanistan during the period

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Table 7.1 Summary statistics, CDA, MAID, PCGDP, and EXPO, 2000–2014 (1)

Minimum Mean Maximum Standard Deviation Minimum Mean Maximum Standard Deviation Minimum Mean Maximum Standard Deviation Minimum Mean Maximum Standard Deviation

Afghanistan (2)

Bangladesh (3)

Nepal (4)

Pakistan (5)

Sri Lanka (6)

Net multilateral aid disbursement (MAID) (constant USD millions) 296 318 65 25 –38 582 635 183 724 136 833 1087 343 1700 288 157 237 86 497 89 Chinese development assistance (CDA) (constant USD millions) 0.2 0.2 0.2 0.1 0.6 8 44 50 387 93 41 195 319 2627 438 12 57 85 697 116 Per capita GDP (PCGDP) (constant USD) 330 525 463 821 1784 450 702 555 945 2490 588 951 711 1056 3506 103 140 80 81 592 Exports (EXPO) (constant USD millions) – 403 150 1178 824 – 1549 168 2000 1074 – 2843 210 2455 1356 – 882 17 399 164

Source: Author’s calculations using data from OECD (2019)– MAID, AidData (2017)– (CDA), World Bank (2019)– PCGDP and EXPO. Note Exports data for Afghanistan are not available.

of concern. The multilateral aid flow to Afghanistan has notably increased between 2000 and 2007. The highest amount of multilateral aid flows (US$833 million) was reported in 2007. During 2006–2011, multilateral aid flow to Afghanistan has experienced significant fluctuations and was reasonably stable thereafter. Despite the sudden drop in multilateral aid flows to Bangladesh during 2009–2011, overall, multilateral aid flows to Bangladesh has an increasing trend. Multilateral aid flows to Nepal have seen a gradual growth during the sample period. Multilateral aid flows to Pakistan have experienced significant fluctuations during the sample period, with sudden surges in 2002 and 2014. Compared to other countries in the region, the multilateral aid flows to Sri Lanka are lower with an average of US$136 millions over the sample period of 2000–2014. The highest amount of multilateral aid to Sri Lanka was reported in 2003.1 Since 2005, aid flows to Sri Lanka remained relatively high and stable until the final stage of the war in 2009 and then experienced a slight drop thereafter. Overall, in all countries under consideration, multilateral aid from traditional donors has continued to be the dominant source of foreign development assistance.

Shifts in international development aid 99

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Figure 7.1 Multilateral aid disbursements, 2000–2014.

Figure 7.2 presents the CDA to the five countries. Some significant features that can be observed in CDA to these countries are that the amount of CDA is subjected to considerable fluctuations and that there are no particular long-term trends present. This could be attributed to the fact that CDA is attached to specific projects, particularly infrastructure projects in Asia (Wolf et al., 2013). However, in recent years, as a non-traditional bilateral donor, CDA is becoming more and more prominent in these countries. In what follows, we discuss the CDA patterns to these countries. CDA to Afghanistan was at the highest in 2014 (US$41 million) followed by 2002 (US$35 million). Traditionally, China has had low diplomatic priority con­ cerning Afghanistan until the fall of the Taliban government in 2001. However, with the withdrawal of US troops from Afghanistan in 2001, China’s involve­ ment in Afghanistan has greatly improved (Hong, 2013). Since 2002, when the two countrys’ diplomatic relationships started strengthening, China and Afghanistan have signed the agreement on Economic and Technical Cooperation and China provided financial and material aid to Afghanistan in the same year (Akbari, 2016). Since then, China has had very minimal involvement with Afghanistan. China even excluded Afghanistan from its Belt and Road Initiative, a massive network of infrastructure projects in over 60 countries. However,

M. Jayasinghe et al.

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Figure 7.2 Chinese development assistance, 2000–2014.

China’s role in Afghanistan has started to grow rapidly in recent years, particu­ larly after 2014 as a peace broker, aid donor, and investor (Ramachandran, 2018). It is anticipated that in the years to come, China will have more influence on the infrastructure and economic development in Afghanistan. CDA to Bangladesh has seen significant fluctuations between 2000 and 2010 and a drastic increase thereafter. In 2014, CDA to Bangladesh was at the highest with US$195 million. Some of the Chinese investment projects in Bangladesh during the period of 2005–2009 include: the construction of an aluminium phos­ phate fertiliser factory, the creation of the Bangladesh-China Friendship Exhibi­ tion Centre in Dhaka, provision of financial assistance and expertise to launch Bangladesh’s first space satellite, upgrading of the Pagla water treatment plant and the Shahjalal fertiliser factory, and building of the Pabna nuclear power plant and 900-kilometre highway linking Chittagong to Kunming. The dramatic increase in CDA since 2014 has taken place due to increased Chinese invest­ ments in infrastructure and the energy sector (Shamrat and Ali, 2018; Siddique, 2019; Yesmin, 2018). CDA flows to Nepal have seen significant fluctuations during the sample period, 2000–2014. There has been a surge in CDA to Nepal during 2004–2005, particularly due to military aid provided by China during the Nepal civil conflict.

Shifts in international development aid 101 This was in the wake of the suspension of military aid by the USA, UK, and India after King Gyanendra’s takeover of power (BBC News, 2005). China has always been an important partner in Nepal’s infrastructure and human resources development. Main Chinese investment projects that have been taken place in Nepal during the sample period include: the Arniko Highway, the Ring Road, Prithivi Highway, the Kathmandu–Bhaktpur road, the Gorkha–Narayanghat road, the Sunkoshi Hydro Project, the Birendra International Convention Centre, Hetauda Cotton Mill, Bansbari Leather and Shoe Factory, Bhaktpur Brick and Tile Factory, Bhrikuti Paper Mill, and Lumbini Sugar Mill (Prasad, 2015). When considering CDA to Pakistan, in addition to the strong bilateral trade relationship, there is also strong nuclear energy cooperation between the two countries (Muhammad and Xin, 2015). As can be seen in Figure 7.2, there was a surge in CDA to Pakistan in the years 2001 and 2003. This could be attributed to Chinese investments in a nuclear plant in Chasma in 2001 and two additional nuclear reactors that supplied an additional 680 MW of energy to Pakistan in 2003 (Rakisits, 2012). With increasing bilateral trade relationships with China and Pakistan, particularly since 2006, when the bilateral Free Trade Agreement (FTA) between the two countries was signed, there has been CDA to Pakistan in the form of infrastructure and investment projects. For example, China offered a US$300 million assistance in 2010 to reconstruct the Karakoram Highway, which was submerged by a major landslide in January 2010. This project assisted in restoring the connectivity between the two countries. In 2010 China agreed to provide assistance to build 12 small- to medium-sized dams and other technical support to develop hydro and wind power transmission systems to support Paki­ stan with its increasing energy needs (Rakisits, 2012). Since 2014, under the China–Pakistan Economic Corridor, several infrastructure projects are under construction throughout Pakistan with Chinese involvement. China withdrew from some of the planned infrastructure projects in Pakistan, resulting in sudden drops in CDA to Pakistan in some years, particularly due to an economic down­ turn during the Global Financial Crisis 2008 and concerns about security con­ ditions in the country (Haider, 2009). Sri Lanka has had a significant bilateral relationship with China, particularly as a supplier of arms since the early 1990s (Smith, 2016). Nevertheless, the Chi­ nese–Sri Lankan relationship was subjected to a dramatic transformation in 2005 after President Mahinda Rajapaksa came into power. Intending to end the civil war in the country, then-President Rajapaksa sought military assistance from India. However, India declined military support for political reasons. It is under this context that China gladly offered its military assistance, such as US$37 million deal for Chinese ammunition and ordinance, donation of F7 jet fighters, and provision of anti-aircraft guns and JY-11 radar (Smith, 2016). With the con­ clusion of the civil war in 2009, Western bilateral donors and multilateral donors drastically cut their development assistance to Sri Lanka, particularly due to con­ cerns over human rights violations. This resulted in increased Chinese involve­ ment in development assistance to Sri Lanka. The important Chinese investment projects in Sri Lanka include the Norochcholai coal power plant in 2006, the

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Mattala airport and a housing project in 2009, first and second phases of the Hambantota port project in 2010 and 2012, and the railway project in 2013 (Global Times, 2013; Perera, 2018). The funding targeted for these investment projects explains the patterns in CDA to Sri Lanka depicted in Figure 7.2. Figure 7.3 presents the scatter plots of growth rates in multilateral aid dis­ bursements against CDA over the period 2000–2014. As expected, the figures show a clear negative relationship between the two types of aid flows in Bangladesh, Nepal, Pakistan, and Sri Lanka. This is because China’s involve­ ment in these countries took place when these countries did not receive expected assistance from the traditional donors, hence depicting a negative relationship. However, in Afghanistan, the relationship is positive. This could be because CDA to Afghanistan has just begun, while the country continues to receive multilateral aid. Table 7.2 presents the pairwise correlations between the variables under con­ sideration for each country of this study. One additional variable to reflect the civil war period (WAR) is included in Nepal and Sri Lanka. As can be seen, per Bangladesh Multilateral aid (growth rate)

Multilateral aid (growth rate)

Afghanistan 120 100 80 60 40 20 –500

0 –20

0

500

1000

1500

2000

2500

3000

3500

–40 –60

100 50

–500

–400

–300

–200

–100

0

0

100

200

300

400

500

–50 –100 –150

Chinese aid (growth rate)

Chinese aid (growth rate)

Nepal Multilateral aid (growth rate)

100 80 60 40 20

–600

–400

–200

0

0

200

400

600

800

–20

–40

–60

–80

Chinese aid (growth rate)

Sri Lanka

500 400 300 200

100 –1500

–1000

–500

0 –100

0

–200 –300 –400 –500

Chinese aid (growth rate)

500

1000

Multilateral aid (growth rate)

Multilateral aid (growth rate)

Pakistan

100 50

–250

–200

–150

–100

–50

0

0

50

100

150

–50 –100 –150 –200

Chinese aid (growth rate)

Figure 7.3 Growth rates in multilateral aid disbursements against Chinese development assistance, 2000–2014.

Shifts in international development aid 103 Table 7.2 Correlation matrix Afghanistan Per capita GDP Per capita GDP Chinese aid Multilateral aid

1.00 0.14 0.50

Chinese aid

1.00 –0.17

Multilateral aid

1.00

Bangladesh Per capita GDP Per capita GDP Chinese aid Multilateral aid Trade

1.00 0.54 0.40 0.98

Chinese aid

1.00 0.25 0.46

Multilateral aid

1.00 0.39

Trade

1.00

Pakistan Per capita GDP Per capita GDP Chinese aid Multilateral aid Trade

1.00 0.36 –0.13 0.91

Chinese aid

1.00 –0.10 0.43

Multilateral aid

1.00 –0.12

Trade

1.00

Nepal Per capita GDP Per capita GDP Chinese aid Multilateral aid Trade Civil war

1.00 –0.17 0.91 0.03 –0.85

Chinese aid

1.00 –0.40 –0.02 0.27

Multilateral aid

1.00 –0.05 –0.81

Trade

Civil war

1.00 0.14

1.00

Trade

Civil war

1.00 –0.75

1.00

Sri Lanka Per capita GDP Per capita GDP Chinese aid Multilateral aid Trade Civil war

1.00 0.52 0.39 0.94 –0.87

Chinese aid

1.00 0.33 0.35 –0.28

Multilateral aid

1.00 0.46 –0.17

Source: Author’s calculations using data from OECD (2019): MAID, AidData (2017): CDA, World Bank (2019): PCGDP and EXPO.

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capita GDP (the dependent variable of the proposed model) is mostly reasonably correlated with the independent variables of the proposed model, namely CDA, multilateral aid, exports of goods and services, and WAR. The correlation between the independent variables is reasonably small and hence the degree of multicollinearity could be considered as low.

Model and estimation results One of the objectives of this chapter is to examine the effectiveness of multi­ lateral aid and CDA flows on economic growth in the countries under considera­ tion of this study. To measure the impact of foreign aid on economic growth, different types of aid, such as multilateral aid, bilateral aid, and concessionary loans have been used in the growth literature as an explanatory variable with GDP as the response variable (Feeny and McGillivray, 2010; Gounder, 2001). However, based on the objectives of the current study, in this chapter, we use multilateral aid and CDA as explanatory variables. We also include exports in the model based on the literature (Balassa, 1978). To this end, we propose the following regression model to analyse the impact of multilateral aid and CDA flows on economic growth. Model Based on the literature (see, for example, Balassa, 1978; Feeny and McGillivray, 2010; Gounder, 2001; Minoiu and Reddy, 2010) and availability of data, we consider a linear model (in log-form) that express PCGDP as a function of the independent variables CDA, multilateral aid, EXPO, and WAR in the following form. ln(PCGDP) = α + βln(CDA) + γln(MAID) + δln(EXPO) + μWAR + ε where ln(PCGDP) is log of per-capita income, ln(CDA) is log of Chinese devel­ opment aid, ln(MAID) is log of multilateral aid, ln(EXPO) is log of exports of goods and services. WAR is a dummy variable to reflect the civil war situation in Sri Lanka (= 1 for the years 2000–2009 and 0 otherwise) and Nepal (= 1 for the years 2000–2006 and 0 otherwise) and ε is a stochastic disturbance term that sat­ isfies all the required regression model assumptions. The estimation results for individual countries are presented in Table 7.3. As can be seen, CDA has a positive impact on PCGDP in all five countries and the impact is statistically significant at the 10 per cent level in Nepal. For example, a 1 per cent increase in CDA would increase the PCGDP by 0.046 per cent in Afghanistan, 0.016 per cent in Bangladesh, 0.002 per cent in Pakistan, 0.020 per cent in Nepal, and 0.019 per cent in Sri Lanka. Multilateral aid also plays a positive role in improving the PCGDP in Afghanistan, Bangladesh, Nepal, and Sri Lanka and the impact is statistically significant at the 10 per cent level in Afghanistan and Nepal. For example, a 1 per cent

Shifts in international development aid 105 Table 7.3 Estimation results for individual countries (1)

Bangladesh Pakistan (3) (4)

Nepal (5)

4.581* (0.000) 0.016 (0.102) 0.031 (0.518) 0.240* (0.000)

4.332* (0.000) 0.002 (0.638) –0.008 (0.414) 0.337* (0.000)

4.864* 2.044 (0.000) (0.231) 0.020** 0.019 (0.075) (0.154) 0.187* 0.015 (0.011) (0.748) 0.084 0.822* (0.623) (0.007) –0.079 –0.170* (0.200) (0.010)

B: quality measures and diagnostic test results Adjusted R Square 0.264 0.915 F-Statistic 3.150 39.626 (0.087) (0.000) Normality (J-B) 1.003 1.056 (0.061) (0.059) Serial Correlation 1.252 2.441 (B-G LM) (0.383) (0.143) Heteroscedasticity 0.501 0.118 (B-P-G) (0.621) (0.948)

0.782 17.726 (0.000) 1.533 (0.465) 0.443 (0.655) 0.446 (0.725)

0.869 22.054 (0.000) 0.439 (0.802) 1.418 (0.297) 1.902 (0.193)

A: coefficient estimates Intercept (α)

Afghanistan (2)

3.238* (0.024) Log of Chinese aid, 0.046 CDA ( β) (0.303) Log of Multilateral aid, 0.440* MAID (γ) (0.045) Log of Exports (δ ) WAR ( μ)

Sri Lanka (6)

0.924 37.319 (0.000) 0.354 (0.836) 1.369 (0.324) 5.647 (0.019)

Source: Author’s calculations using data from OECD (2019): MAID, AidData (2017): CDA, World Bank (2019): PCGDP and EXPO. Note p-values are given in parenthesis. *significant at 5%, **significant at 10%. Jarque-Bera (J-B) test H0: data is normally distributed. Breusch-Godfrey serial correlation LM (B-G LM) test H0: no serial correlation; Breusch-Pagan-Godfrey (B-P-G) test H0: no heteroscedasticity.

increase in multilateral aid would increase the PCGDP by 0.44 per cent in Afghanistan, 0.031 per cent in Bangladesh, 0.187 per cent in Nepal, and 0.015 per cent in Sri Lanka. The impact of multilateral aid in Pakistan, however, is negative but statistically insignificant. Our results also indicate that the positive impact of CDA on the economy (0.019 per cent) in Sri Lanka is slightly higher than that of the multilateral aid (0.015 per cent). In other coun­ tries, Afghanistan, Bangladesh, and Nepal, multilateral aid continues to con­ tribute to higher economic growth than the contribution made by CDA. As expected, exports play a positive role in all countries and are statistically significant at the 5 per cent level in Bangladesh, Pakistan, and Sri Lanka. The civil war had a negative impact on PCGDP in Sri Lanka (significant) and Nepal. For example, the war has reduced PCGDP by 0.079 per cent in Nepal and by 0.17 per cent in Sri Lanka.

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Part B of Table 7.3 presents the quality measures of the fitted regression models and diagnostic test results. The high adjusted R2 values reported ranging from 78 per cent to 92 per cent (except for Afghanistan where there is no data available on exports) and p-values of the F-test statistics indicate that the overall fit of the regression model is reasonable. The regression model diagnostic tests indicated by the J-B test implies that the normality assumption is satisfied at the 10 per cent level in all models estimated. Breusch-Godfrey (B-G LM) test results indicate that serial correlation is not an issue in any of the regression models estimated. Breusch­ Pagan-Godfrey (B-P-G) test results indicate that heteroscedasticity is not a problem in estimated models for Afghanistan, Bangladesh, Pakistan, and Nepal at the 5 per cent level and for Sri Lanka at the 1 per cent level. In Table 7.3, we presented estimation results for individual countries using the data (that consists of 15 observations) for the period 2000–2014. With the aim of improving the precision of the estimates, the same model was estimated as a panel estimation, under fixed and random effect models, by pooling the data across countries.2 The first step in this process is to avoid any spurious results by investigating whether the variables are stationary or if not stationary, whether they are co-integrated. For this purpose, we carried out panel unit root tests, Levin, Lin and Chu test, Im, Pesaran and Shin W-stat test, ADF-Fisher χ 2, and PP-Fisher χ 2; the results are presented in Table 7.4. As can be seen, most of the panel unit root test results indicate that variables are stationary either in level form or in their first difference form. The Fisher-Johansen panel co-integration test results reveal that the variables of the regression model are co-integrated and hence panel estimation results are not spurious.3 Table 7.5 presents the panel fixed effect model estimation results and the cor­ responding diagnostic test results.4 As can be seen, a 1 per cent increase in CDA would increase per capita GDP by 0.022 per cent, while a 1 per cent increase in multilateral aid would increase per capita GDP by 0.047 per cent and a 1 per cent increase in exports would increase per capita GDP by 0.262 per cent. Jarque-Bera (J-B) test results confirms the data is normally distributed and Breusch-Pagan LM test and Pesaran scaled LM test results confirm the crosssectional dependency of panel data.

Conclusion This chapter examined the trends in traditional Western multilateral aid and Chinese development assistance (CDA) to South Asian countries (Afghanistan, Bangladesh, Nepal, Pakistan, and Sri Lanka) and investigated the extent to which multilateral aid and CDA have influenced the GDP growth in these countries. Multilateral aid has traditionally played a significant role in social and human development and thereby economic growth in developing countries, including South Asian countries. However, the continuous emphasis on aspects, such as good governance and human rights placed by traditional aid donors through aid conditionalities and aid cuts, there is an increasing trend where recipient

Shifts in international development aid 107 Table 7.4 Test for unit root Variable (1) (log) Per capita GDP Level First difference

Levin, Lin and Im, Pesaran and Chu (2) Shin W-stat (3)

ADF-Fisher χ2 (4)

PP-Fisher χ2 (5)

0.583 (0.720) –2.746* (0.003)

2.638 (0.996) –1.687* (0.046)

4.193 (0.839) 17.707* (0.023)

3.456 (0.903) 16.177* (0.040)

–3.696* (0.000) –8.581* (0.000)

27.517* (0.001) 55.575* (0.000)

26.787* (0.001) 74.665* (0.000)

–0.282 (0.389) N/A

7.999 (0.434) 51.133* (0.000)

33.754* (0.000) 68.136* (0.000)

–1.525** (0.064) N/A

15.816* (0.045) 29.323* (0.000)

16.880* (0.031) 36.790* (0.000)

(log) Chinese aid, CDA Level –6.928* (0.000) First difference –13.349* (0.000) (log) Multilateral aid, MAID Level 0.548 (0.708) First difference –7.875* (0.000) (log) Exports Level First difference

–5.906* (0.000) –4.505* (0.000)

Source: Author’s calculations using data from OECD (2019): MAID, AidData (2017): CDA, World Bank (2019): PCGDP and EXPO. Note Dependent variable is the log of per capita GDP(PCGDP). p-values are given in parenthesis. *significant at 5%, **significant at 10%. Levin, Lin and Chu test H0: unit root (assumes common unit root process), Im, Pesaran and Shin W-stat, ADF-Fisher χ 2, PP-Fisher χ 2 tests H0: unit root (assumes individual unit root process).

countries move towards development assistance provided by emerging or non­ traditional donors, such as China who impose much lower levels of conditionality. In general, it is argued that development assistance from non­ traditional donors, such as CDA, is linked to political and ideological objectives and strategic interests of donor countries. We observed that CDA is rising rapidly in recent years in the South Asian countries that were examined in this chapter. However, it is still at a relatively low level and inconsistent compared to that of traditional multilateral donors. Although there is a growing concern over increasing Chinese involvement in the region, China’s interest in investing in infrastructure projects in South Asia appears to be driven by the demand side (Wolf et al., 2013). In particular, CDA has resulted in extensive development in infrastructure facilities in South Asia, and Sri Lanka is a good example. On the other hand, concerns have been raised over changing traditional aid architecture due to the rising involvement of

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Table 7.5 Panel data results (fixed effects) Variable (1)

Coefficient (2)

p-value (3)

Intercept (α) Log of Chinese aid, CDA(β) Log of Multilateral aid, MAID (γ) Log of Exports (δ) Adjusted R Square F-Statistic Normality (J-B) Breusch-Pagan LM Pesaran scaled LM

4.740* 0.022* 0.047** 0.266* 0.966 243.407 1.330 13.758 2.240

0.000 0.006 0.056 0.000 0.000 0.514 0.033 0.025

Source: Author’s calculations using data from OECD (2019): MAID, AidData (2017): CDA, World Bank (2019): PCGDP and EXPO. Note: Dependent variable is the log of per capita GDP(PCGDP). p-values are given in parenthesis. *significant at 5%, **significant at 10%. Jarque-Bera (J-B) test H0: data is normally distributed, Breusch-Pagan LM test and Pesaran scaled LM test H0: no cross-sectional dependence

emerging donors in recent years. Despite the changing volumes of multilateral aid and CDA, differences in motivations for providing aid, and differences in conditionality attached to multilateral aid and CDA, the important question is how effective are these traditional and non-traditional donors on development outcomes of developing countries. We used a standard regression framework at the individual country level as well as a panel model pooled across countries. Our results indicated that both CDA and multilateral aid have positive effects on the economic growth of these countries at the individual level as well as at the pooled level. Such a positive impact of CDA and multilateral aid on GDP demonstrates the central role these different types of aid have played in strength­ ening South Asian economies.

Notes 1 The year 2003 also marks the beginning of the peace process between the LTTE (Lib­ eration Tigers of Tamil Eelam) and the Sri Lankan government, which was strongly supported by the multilateral donors who also arranged a donor conference to help with the reconstruction in Sri Lanka (University of Edinburgh). However, in 2004, aid dis­ bursements fell sharply when the peace negotiations failed. Concerns regarding viola­ tions of human rights during the final stages of the war in Sri Lanka among the international community, including multilateral donors, may partly explain the drop in MAID disbursements to Sri Lanka during 2009–2014. 2 Afghanistan was excluded from the panel data model due to unavailability of exports data. 3 The Fisher-Johansen panel co-integration test results are not reported here, but are available on request. 4 We have used Hausman test to test random effect model against fixed effect model and the χ2 test statistic of 798.6 with a p-value 0.000 indicated that the fixed effect model is preferable to the random effect model.

Shifts in international development aid 109

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Shifts in international development aid 111 Minoiu, C. and Reddy, S. (2010) Development Aid and Economic Growth: A Positive Long-run Relation. The Quarterly Review of Economics and Finance, 50(2). Mohamed, M. R., Kaliappan, S. R., Ismail, N. W. and Azman-Saini, W. N. W. (2014) Impact of Foreign Aid and Foreign Direct Investment on Economic Growth: Evidence from Sub-Saharan African Countries. Jurnal Ekonomi Malaysia, 48, pp. 63–73. Muhammad, S. I. and Xin, Q. (2015) Rising Trend in Imports and Exports of Pakistan’s FTA Partners in Recent Years. Academic Research International, 6, pp. 320–331. Naím, M. (2007) Rogue Aid. Foreign Policy, October, pp. 95–96. Nowak-Lehmann, F. and Gross, E. (2015) What Effect does Development Aid have on Productivity in Recipient Countries? An Analysis Using Quantiles and Thresholds. Ibero-America Institute for Economic Research Discussion Paper 232. Göttingen: Ibero-America Institute for Economic Research. OECD. (2015) Table 2. Total Net Flows from DAC Countries by Type of Flow, Statistics on Resource Flows to Developing Countries. Paris: OECD. www.oecd.org/dac/stats/ statisticsonresourceflowstodevelopingcountries.htm [Accessed 17 August 2019]. OECD. (2019) Aid (ODA) Disbursements to Countries and Regions [DAC2a] Paris: OECD. https://stats.oecd.org/Index.aspx?datasetcode=TABLE2A [Accessed 20 August 2019]. Oh, Y. A. (2018) Chinese Development Aid to Asia: Size and Motives. Asian Journal of Comparative Politics. https://doi.org/10.1177/2057891119836521 [Accessed 5 November 2019]. Olanrele, I. A. and Ibrahim, T. M. (2015) Does Developmental Aid Impact or Impede on Growth: Evidence from Nigeria. International Journal of Economics and Financial Issues, 5, pp. 288–296. Perera, C. (2018) China Investments and Lanka’s Growth: Areas of Concern. www. sundaytimes.lk/180715/sunday-times-2/china-investments-and-lankas-growth-areas­ of-concern-302289.html [Accessed 27 August 2019]. Prasad, U. S. (2015) Study of Nepal’s Economic Relations with China. The Journal of Development and Administrative Studies, 23, pp. 23–32. Rajan, R. G. and Subramanian, A. (2008) Aid and Growth: What Does the Cross-Country Evidence Really Show? The Review of Economics and Statistics, 90, pp. 643–665. Rakisits, C. (2012) Pakistan-China Bilateral Relations 2001–2011: A Deepening but Cau­ tious Partnership. Security Challenges, 8, pp. 83–101. Ram, R. (2003) Roles of Bilateral and Multilateral Aid in Economic Growth of Develop­ ing Countries. Kyklos, 56, pp. 95–110. Ram, R. (2004) Recipient Country’s ‘Policies’ and the Effect of Foreign Aid on Eco­ nomic Growth in Developing Countries: Additional Evidence. Journal of International Development, 16, pp. 201–211. Ramachandran, S. (2018) Is China Bringing Peace to Afghanistan? The Diplomat. [Online]. [Accessed 29 August 2019]. Schraeder, P. J., Hook, S. W. and Taylor, B. (1998) Clarifying the Foreign Aid Puzzle: A Comparison of American, Japanese, French, and Swedish Aid Flows. World Politics, 50, pp. 294–323. Shamrat, A. S. and Ali, M. K. (2018) China’s Strategic Partnership with Bangladesh in 21st Century. South Asia Journal. http://southasiajournal.net/chinas-strategic­ partnership-with-bangladesh-in-21st-century [Accessed 5 September 2019]. Sharma, B. P. (2018) China-Nepal Relations: A Cooperative Partnership in Slow Motion. China Quarterly of International Strategic Studies, 4, pp. 439–455. Siddique, A. (2019) Infrastructure and Energy Bind Bangladesh to China. The Thirdpole. www.thethirdpole.net/en/2019/05/13/infrastructure-and-energy-bind-bangladesh-to­ china [Accessed 3 September 2019].

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Smith, J. M. (2016) China and Sri Lanka: Between a Dream and a Nightmare. The Diplomat. https://thediplomat.com/2016/11/china-and-sri-lanka-between-a-dream-and­ a-nightmare [Accessed 6 September 2019]. Stone, R. (2019) Slowly but Surely, China is Moving into Afghanistan. www.trtworld. com/magazine/slowly-but-surely-china-is-moving-into-afghanistan-24276 [Accessed 2 September 2019]. Taylor, I. (2005) The ‘All-weather Friend’? Sino-African Interaction in the Twenty-first Century. In: I. Taylor and P. Williams (eds), Africa in International Politics: External Involvement on the Continent. London: Routledge. Tull, D. M. (2006) China’s Engagement in Africa: Scope, Significance and Consequences. Journal of Modern African Studies, 44, pp. 459–479. University of Edinburgh. Peace Agreements Database. www.peaceagreements.org/ wview/1155/Declaration in Support of the Peace Process in Sri Lanka (Oslo Declara­ tion) [Accessed 2 September 2019]. Wamboye, E., Adekola, A. and Sergi, B. S. (2013) Economic Growth and the Role of Foreign Aid in Selected African Countries. Development, 2013, pp. 155–171. Whitfield, L. and Fraser, A. (2000) Negotiating Aid: The Structural Conditions Shaping the Negotiating Strategies of African Governments. International Negotiation, 15, pp. 341–366. Wolf, C. Jr., Wang X. and Warner, E. (2013) China’s Foreign Aid and GovernmentSponsored Investment Activities: Scale, Content, Destinations, and Implications. Santa Monica, CA: RAND Corporation. Woods, N. (2008) Whose Aid? Whose Influence? China, Emerging Donors and the Silent Revolution in Development Assistance. International Affairs, 86, pp. 1205–1221. World Bank. (2019) World Bank Open Data. https://data.worldbank.org. Yesmin, S. (2018) The Changing Dynamics of China-Bangladesh Relations. The Daily Star. www.thedailystar.net/opinion/global-affairs/news/the-changing-dynamics-china­ bangladesh-relations-1658695 [Accessed 4 September 2019]. Zeitz, A. O. (2015) The Changing International Political Economy of Development Assistance: The Ghanaian Case. Global Economic Governance Programme Working Paper 104. University of Oxford. Zhang, J. (2016) How does Chinese Foreign Assistance Compare to that of Developed Countries? Brookings Opinions. www.brookings.edu/opinions/how-does-chinese­ foreign-assistance-compare-to-that-of-developed-countries.

8

Multilateral Development Banks Washington Consensus, Beijing Consensus, or banking consensus? Susan Engel and Adrian Robert Bazbauers

Introduction Despite the shift away from multilateralism in recent years, emerging powers have been creating new Multilateral Development Banks (MDBs): the New Development Bank (NDB) was established by Brazil, Russia, India, China, and South Africa – the BRICS – and began operations in 2015, while the China-led Asian Infrastructure Investment Bank (AIIB) commenced in 2016. The geo­ political reasons for their establishment have been much debated but there is less on what kind of development they are promoting. Indeed, discussion on the developmental model of MDBs has tended to focus on the first MDB – the World Bank – or the larger regional development banks like the Asian Develop­ ment Bank (ADB). Yet there are around 28 MDBs and, as Chris Humphrey (2019, p. 167) argues, the smaller banks are important ‘in both academic and policy terms’. In academic terms, they shed light on shareholder influence, gov­ ernance, and the impact of financial markets. In policy terms, many of them have been growing rapidly in recent years and their role in the international develop­ ment finance architecture needs to be better understood. This chapter uses three MDB cases studies to explore their developmental model and priorities. We start with two of the older, less studied but increasingly influential banks before turning to the most recently founded MDB: the Development Bank of Latin America (CAF) and the Islamic Development Bank (IsDB), respectively estab­ lished in 1968 and 1974, and the AIIB. Smaller MDBs are generally posited to be closer to their borrowing members and less influenced by external hegemons. Thus, if a new Southern-based development consensus is emerging this is the place to look for it. Further, examining the China-backed AIIB lending – its types and geographical distribution – sheds light on its approach. The World Bank and other MDBs have generally accurately been framed as promoters of the neoliberal Washington Consensus, or in recent years a slightly modified version of it, which is a little more focused on reducing absolute poverty. The idea of a Beijing Consensus emerged in the early 2000s as a way of both describing China’s development experience and as a contrast to the (post)­ Washington Consensus of the largest MDBs. This chapter explores these models and their influence. We argue that China is not particularly interested in

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promoting an alternative to the Washington Consensus through its development lending because the neoliberal order now facilitates its development. The AIIB and NDB may be slightly less hostile to state enterprise than the World Bank, as both are lending to public utilities and organisations to deliver projects, but they also fund private companies. Indeed, their press releases and documents emphasise the continued importance of private sector engagement to develop­ ment and economic growth through lending to the private sector. Still, one notable change coming out of China’s policies is that infrastructure has been returned to the centre of the development debate. Indeed, quite a number of rather extravagant estimates of the dollar value of infrastructure needs are being bandied around by MDBs. For example, a World Bank report on Islamic infrastructure finance supports the Brookings Institution claim that between 2016 and 2030 US$90 trillion is needed for infrastructure (Ahmad and Alawode, 2017).1 For Asia, the ADB says developing countries need to invest US$26 trillion over the same period (Ahmad and Alawode, 2017). Hence our analysis of the three MDBs focuses on this topic. The chapter also argues that MDBs need to be framed not just as develop­ ment institutions but as banks and that there is a banking consensus that shapes their loans and operations as much as, if not more than, developmental models. Thus, our sample of sub-regional and specialised MDBs demonstrates that organisations pursuing regional- or country-specific interests remain constrained by a framework of minimal state control of development, the machinations of the global financial order and banking or financial rules. The chapter starts by examining whether the Washington, Beijing, or banking consensus is the best way to frame MDBs. Next, it explores the return of infrastructure to the centre of the MDB agenda and undertakes case studies of CAF, IsDB, and AIIB. In the conclusion, we turn briefly to the issue of whether the bank’s current focus on expanding debt relations may backfire and contribute to growing hostility to multilateralism.

Washington, Beijing, or banking consensus? In the immediate post-World War II period, development thinking was not really ‘left’ or ‘right’, rather there was general agreement that states needed more government intervention to promote economic growth (Rapley, 2002, p. 237). This thinking built on the analysis and ideas of British economist and public servant John Maynard Keynes but the larger Keynesian revolution was as much about changes in the role of the government as about economic thought (Meade, 1975). Across the world, states invested in infrastructure and services from roads to dams, telecommunications to airlines. They invested in areas sometimes regarded as belonging to the private sector such as steel manufacturing and agricultural expansion. The banking sector was tightly con­ trolled and quite a few states established banks in order to ensure that finance for key investments was available. States also took increasing responsibility for the welfare of people.

Washington, Beijing, or banking consensus? 115 This is the world in which MDBs were born. In this context, the idea of states joining together to form a development bank, given they were already funding their own state development banks, does not seem alien. Keynesian influence was very visible in the purposes of the first MDB, the International Bank for Reconstruction and Development (IBRD) – or World Bank – established in 1944. Its aims include ‘facilitating the investment of capital for productive pur­ poses’ and ‘the maintenance of equilibrium in balances of payments’ (World Bank, 2012). Most of the subsequent MDBs followed suit in having broadly Keynesian purposes promoting productivity. In debates over the World Bank, the impact that the IBRD’s establishment had as a bank is often forgotten. Its main founders, Keynes and Harry Dexter White, intended the IBRD as an alternative to private banks, which had been too exploitative and crisis prone (Oliver, 1975). But the ideals behind the World Bank were overwhelmed by its structure as a bank and by early managerial deci­ sions, which reinforced this approach. This is the case for most other MDBs too (Ben-Artzi, 2016; Humphrey, 2014, 2016). There are two key factors behind this, first, organisational structures and, second, staff selection. In terms of structures, all the MDBs are set up like companies but the share­ holders are exclusively or predominately nation-states. The number of votes states have is based on the quantity of shares they hold, and wealthy states own most of the shares. The system for shares, with paid-in and callable capital, pro­ foundly shaped MDB strategies and lending portfolios as it made them reliant on capital markets. The British played a significant role here as they did not think they would lend from the Word Bank and had limited capital, so they argued for a smaller bank than the US had proposed, and for less paid-in and more callable capital. In the end, only 20 per cent of a state’s capital was paid in and of that 2 per cent was in gold or US dollars with the remainder in the member’s currency (Gardner, 1980; Mason and Asher, 1973). At this time, the US dollar was the world’s only convertible currency, so the IBRD’s loanable funds were the US contribution plus that of other members in US dollars or gold (Mason and Asher, 1973). As one of us argued earlier, the ‘small initial capital stock and even smaller paid-in component made the Bank reliant on financial markets for capital, which profoundly shaped its subsequent operations’ (Engel, 2010, p. 29). Add to this a conservative debt-to-lending ratio position adopted by management early in operations and the idea of a ‘business-like Bank’ dominated (Kapur et al., 1997, p. 70). The priority of banking mandates holds for the four main regional development banks too. Indeed, Ruth Ben-Artzi (2016) concludes that they function more as banks than as development agencies. Chris Humphrey (2016, p. 107) made this case for regional and sub-regional MDBs as well, high­ lighting how ‘loan policies, financial management, country risk’ and other pro­ cedures are adapted to ensure approval of bond markets. Returning to the World Bank, reliance on financial markets initially meant Wall Street and hence bankers in key roles to gain their trust. The early Bank Presidents established a preference for key senior staff with commercial and banking backgrounds and very few of the early staff had development

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backgrounds (Kapur et al., 1997). Nevertheless, many Americans remained cau­ tious about buying international bonds, so the Bank had trouble raising capital. Little has changed in terms of the staff of newly created development banks. Recruitment in 2016 for the NDB saw senior positions requiring ‘a minimum of 15 years of experience in general multilateral operations, as well as the intrica­ cies of development finance’ (Santos, 2016). Further, senior staff in the NDB and AIIB came from other development banks or finance sector firms like Goldman Sachs (Engel and Bazbauers, 2018). For all the MDBs, rating agencies judge them based on the creditworthiness of their major industrialised country shareholders because they are the ones that could fork out callable capital should it be required (Ben-Artzi, 2016; Hum­ phrey, 2014). Thus, MDBs with only a few rich shareholders struggle to access financial markets and, in the case of the African Development Bank, they were compelled to admit non-African member countries in order to ensure their viability (English and Mule, 1996). Further, while the founding agreements of MDBs give them widespread immunity from prosecution, the regional MDBs specifically exempted immunity in relation to the activities around borrowing, guarantees, and buying, selling, and underwriting securities because a lack of legal recourse for borrowers would affect creditworthiness (Williams-Elegbe, 2017). Rating agencies also consider whether the loan portfolio is sound and the MDB has preferred creditor status. They also examine a range of financial ratios, in particular the equity-to-loan ratio for capital adequacy, and notably all MDBs have levels of capital adequacy well above those of commercial banks with few reasons for this, other than protecting member states from capital being called in (Humphrey, 2014). This increases their pricing structure and impacts their com­ petitiveness. Reliance on international banking and money markets has created institutions that prioritise conservative banking priorities over developmental ideals and this has sometimes been missed in analyses of the World Bank and other MDBs in favour of a focus on developmental paradigms, such as the Washington Consensus. The emergence of the Washington Consensus and its prescriptions is a story that has been told many times, thus the bare bones suffice here. It derived from the rise of neoliberal economics based on the views of Friedrich von Hayek and Milton Friedman that turned the idea of rational economic ‘man’ and market freedom into a religion, which the World Bank adopted (George and Sabelli, 1994). Neoliberalism became common sense in the Global North with the elec­ tion of supportive governments from the late 1970s and a range of countries started to adopt at least some neoliberal policies, though in many developing countries they were imposed by international financial institutions. The develop­ ment strategy associated with neoliberalism was labelled the Washington Con­ sensus by John Williamson in 1990 because it was hammered out in Washington, DC between the US Treasury, World Bank, and IMF (Fine, 2001). Washington Consensus prescriptions tended to be executed in two parts: the first focused on macroeconomic stabilisation, which was usually undertaken through ‘big bang’ reforms; and the second stage involved extensive liberal

Washington, Beijing, or banking consensus? 117 microeconomic ‘reforms’, which aimed at longer-term, private-sector friendly structural change (Chossudovsky, 1997). Over the 1980s and into the 1990s, most of these reforms were carried out either with little care for social costs or, indeed, in conjunction with cuts to social welfare in the belief that trickle-down growth would fix poverty – to a degree – over time. However, in most cases, the trickle did not start, and, in the meantime, poverty increased. Indeed, the 1980s were labelled the lost decade for many countries in the Global South. Thus, in the late 1990s and early 2000s, the World Bank and other development agencies added some focus on the alleviation of absolute poverty to the Washington Consensus. This along with an increased focus on good governance, local ownership of development initiatives, and better timing of reforms became known as the postWashington Consensus (Engel, 2010). The focus on poverty was later institution­ alised in the Millennium and the Sustainable Development Goals (SDGs). This was the development consensus when the concept of the Beijing Con­ sensus emerged. Joshua Cooper Ramo (2004) coined the term as a description of China’s strategy. He argued it was more an approach than a doctrine and it focused on ‘equitable, peaceful high-quality growth’ (Ramo, 2004, p. 4). It chal­ lenged the key neoliberal tenets of privatisation and free trade and promoted pragmatism, innovation, and experimentation. Ramo also identified a geostrategic element to the Beijing Consensus, namely a strong focus on selfdetermination, defence, and power projection. It is certainly useful to understand China’s development model, though the idea that it has put people first is overly optimistic. Williamson (2012) – coiner of the term ‘Washington Consensus’ and a neoliberal – concurred that China has a focus on gradualism, innovation, and experimentation but also highlights critically the reliance on foreign demand, use of state capitalism, and an authoritarian political system. Other literature rightly highlights the similarities with the Asian model of development popularised by the Asian Tigers, with its strong pro-developmental state and active management of foreign direct investment. China did this too and in an era that was less friendly to state development than the Asian Tigers thanks to its capacity to run an independent financial policy and maintain closed financial markets and exchange rate stability over the long term. This is unlikely to be replicable by smaller states (Yağcı, 2016). An element this literature does not emphasise is China’s strong investment in infrastructure, which has become a key focus in its support for Southern development. Certainly, the Chinese experience of fostering industrialisation differs sub­ stantially from the minimalist state agenda promoted by the World Bank and most MDBs, but it is important to note that even before the Washington Consen­ sus MDBs rarely funded state-owned industrial projects. Such projects were not supported by the economists and bankers within the IBRD and they struggle to raise capital to fund such projects. Still, China’s voice in the development debate has grown and they have a greater influence at the World Bank where, by 2019, they were the third largest shareholder. Further, they have been involved in cre­ ating two MDBs: the NDB and the AIIB. China did consider making the AIIB a purely Chinese institution but instead made it a multilateral affair, partly because

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of the benefits to its international standing, but we posit that it was also because multilateral institutions provide some insulation from the political consequence of lending, which China was starting to feel because of the negative con­ sequences of some of the large development lending of its national banks. These developments have seen scholars Jakupec and Kelly (2019) argue that China is opening up space for states in the Global South to adopt developmentalist approaches. However, we concur with Mustafa Yağcı (2016, p. 43) that, while China’s experience may be useful in opening up thinking about developmentalism, China itself is not interested in ‘enlarging space for develop­ ing countries’ trade relations and industrialisation efforts’. The capitalist Global Northern order has provided the footings for China’s development and they support the system of global economic governance around it (Bond, 2015; Robinson, 2015). In its relations with other countries, China largely promotes Washington Consensus policies and it may even be itself ‘kicking away the ladder for developing countries’ (Yağcı, 2016, p. 43); in particular, we posit because of its extensive use of debt instruments – consider China’s own history, external debt owed to the European powers was one factor in its economic col­ lapse in the second half of the nineteenth century and equally, its phenomenal growth from the late-1970s involved negligible initial external debt. China has shifted the development agenda in its big push in infrastructure. But this is not a new agenda – infrastructure was a key focus of the World Bank in the first two decades after its establishment. A ‘big push’ in spending to set countries on the path to development was an idea from Ragnar Nurkse (1953) and it became part of the Keynesian development consensus. Despite the fact that the IBRD added other priorities, it would be wrong to suggest that it ever abandoned infrastructure financing. In this light, if we view the Beijing Consen­ sus as Beijing’s foreign development policy, it might be better understood as broad support for most Washington Consensus policies with a strong focus on infrastructure spending by the state and private sector. It also seems to involve a big push for expanding debt for development. Still, when it comes to MDBs, the impact of their structures as banks has not disappeared, we expect to find that the banking consensus still has a major influence on them. The second half of the chapter uses the infrastructure sector to explore whether we can see changes in MDB lending today and whether this reflects a Beijing, Washington, or banking consensus.

Development banks and financing infrastructure Infrastructure lending was the original bread and butter for MDBs. This is not surprising when you think about their structure. First, they mostly lend to sovereign states, though private sector lending is on the increase. Second, the IBRD’s Articles of Agreement specify that loans must be mostly for specific projects that have been studied and recommended by a ‘competent committee’ (IBRD, 2012, Article III, Section 4). The World Bank’s competent committees mostly use estimated rates of return to determine project viability (Mason and

Washington, Beijing, or banking consensus? 119 Asher, 1973). Third, the IBRD and most MDBs have clauses in their Articles that they can only lend where the funds cannot be obtained on market terms. Infrastructure meets this brief perfectly as it generally involves a specific project that can produce strong rates of returns, but the scale, risk, and timeframes of many infrastructure investments severely constrain the willingness of private capital to lend for it. The World Bank’s 1994 World Development Report was on infrastructure – surprisingly as the IBRD was lending less for it at this time. Still it has data on infrastructure lending and from it we calculated that it was 63 per cent of total lending commitments in the 1950s, 81 per cent in the 1960s, 63 per cent in the 1970s, and it declined to 43 per cent in the 1980s with the rise of structural adjustment lending (World Bank, 1994). Infrastructure lending further declined in the first few years of the 1990s to just under 34 per cent of lending commit­ ments. Clearly, the Washington Consensus was not particularly friendly to infra­ structure financing. Data from Annual Reports shows that in the second half of the 2000s, infrastructure commitments increased slightly to 38 per cent of total commitments and in the second half of the 2010s they reached just over 40 per cent (World Bank, 2010, 2018).2 This demonstrates the continued key role of infrastructure and, at the same time, that the World Bank’s reduced funding for the sector opened space for other MDBs. In this neoliberal era, limited state budgets are generally still seen as a good thing, so the problems for infrastruc­ ture is defined by MDBs as a lack of bank finance for infrastructure and under­ developed bond markets (Ray, 2015). This reaffirms the original logic of MDBs of facilitating private flows of finance but in ways that are ever more friendly to private financial markets. Still, as noted above, infrastructure has always been risky for MDBs. They are not meant to fund the best projects, those that will be funded be private capital, so by definition, they are funding riskier projects. Most infrastructure projects involve long lead-times and high levels of political risk due to every­ thing from corruption to the challenges of resettling people, as well as complex construction and project management challenges. Further, generat­ ing a strong project pipeline has been a problem for MDBs (less so in the less concessional arms), so they have long been involved in proposing and devel­ oping project ideas. Consequences include borrower states not always having the necessary ownership of projects and project quality being a problem (George and Sabelli, 1994). Infrastructure is likely to be a key priority for the World Bank and other MDBs going forward. There are a few key factors driving this. First, in the wake of the 2008 Global Financial Crisis there are more stringent regulations which ‘have adversely affected banks’ lending ability to infrastructure projects. As banks are now required to hold more liquid assets and reduce their reliance on short-term funding, the cost of financing greenfield infrastructure projects has significantly increased’ (Marsh and McLennan Companies, 2018). This increases the likelihood of low- and middle-income countries turning to the MDBs. Indeed, it is already affecting Latin America, which earlier in the century had

Development Bank of Latin America (CAF)

Islamic Development Bank (IsDB)

Asian Infrastructure Investment Bank

1968

1974

2015

32

Membership

Data sources: AIIB, 2019b; CAF, 2019; IsDB, 2019b.

Asia

74

Islamic States 57

Latin America

Multilateral Development Region Banks

Year

Table 8.1 Case study MDBs

$100 bn (authorised)

$67.35 bn (subscribed)

$15 bn (authorised)

Capital

$3.253 bn

$1.1 bn

$13.7 bn

Annual Approvals 2018

AAA

AAA

AA-

Credit Rating

Beijing, China

Jeddah, Saudi Arabia

Caracas, Venezuela

Headquarters

120 S. Engel and A. R. Bazbauers

Washington, Beijing, or banking consensus? 121 been able to source over half of the capital for infrastructure projects from com­ mercial banks. Second, Chinese development finance has had a strong focus on infrastructure and other MDBs will likely expand financing to compete with them. Third, many of the MDBs have been dramatically expanding their financ­ ing capacity in the wake of the Global Financial Crisis and competition from China. Former World Bank President Jim Yong Kim was a key supporter of the mantra of shifting from billions of dollars of official assistance to trillions of dollars in total financing to meet the SDGs. This means more loans not aid. At the 2018 World Bank Annual Meetings in Bali a capital increase of US$13 billion was approved, including US$5.5 billion for the private sector arm the International Finance Corporation (IFC). Other MDBs have also successfully pursued capital increases. All this means the MDBs have more money to spend and some of that will need to be spent on infrastructure. Given these trends, what do the practices of three quite different MDBs in the infrastructure sector demon­ strate about development thinking?

Development Bank of Latin America The Agreement Establishing the Andean Development Corporation (Corpo­ ración Andina de Fomento) was signed on 7 February 1968 by Bolivia, Chile, Colombia, Ecuador, Peru, and Venezuela and it formally began operations in June 1970. Between 2006 and 2015, CAF redefined its mission and transformed itself from a sub-regional Andean financial entity into a Latin American one. In 2010, it adopted a new name to reflect this transformation, the Development Bank of Latin America (Banco de Desarrollo de América Latina). CAF’s current membership includes 19 member countries (17 Latin American and Caribbean states and Spain and Portugal) and 13 private banks from the region. Very few MDBs have private banks as members. CAF’s commercial banks constitute only 0.05 per cent of shareholding but the fact those banks are Latin American affirms strong regional ownership (Ocampo and Titelman, 2009, p. 256). CAF’s largest shareholders are Peru, Venezuela, and Colombia, each with around 18 per cent. Its equity has more from paid-in capital than retained earnings compared to the World Bank because member countries are more willing to contribute as even the largest ones are borrowers (Humphrey, 2014). CAF’s revised purpose ‘is to promote sustainable development and regional integration, by providing multiple financial services to clients in the public and private sectors of its Shareholder Countries’ (CAF, 2015b, Article 3). Financial services include credit operations, non-reimbursable services, and technical and financial support. In terms of annual approvals, CAF has undergone a remark­ able expansion over the past two decades. In 2000, US$2.3 billion of new loans were approved. By 2010, this had increased to US$10.5 billion new annual approvals. In 2017, the World Bank approved US$5.9 billion to Latin America and the Caribbean and the Inter-American Development Bank approved US$13.4 billion, while CAF approved US$12.3 billion and US$13.7 billion in 2018. The dramatic expansion of lending derives from a combination of a sudden build-up

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of paid-in capital (an increase from US$990 million in 2000 to US$8.8 billion in 2018), a rapid loan approval process (usually under three months), and a decen­ tralised decision-making structure. However, there are questions surrounding its project quality and environmental and social safeguards (Humphrey, 2015). As noted earlier, Latin America has been able to garner high levels of funding from the banking sector for infrastructure. Between 2005 and 2014, commercial banks supplied 50.55 per cent of capital to infrastructure projects, followed by national banks with 13.65 per cent. The MDBs ranked fifth in cumulative invest­ ment providers, with 7.34 per cent (Marsh and McLennan Companies, 2018). The MDB share is likely to increase with new banking regulations since 2008. Like other developing regions, predictions of Latin America’s needs are large. One estimate is that it will require US$13 trillion between 2011 and 2040 for new capacity and maintenance (Kohli and Basil, 2010). During the first two decades of operations, CAF investments focused on inter­ national trade and short-term credit for private banking for promoting exports – in other words, quite a neoliberal agenda. But, in 1992, CAF introduced a physical and border integration plan designed to promote infrastructure invest­ ments at the time the World Bank under the Washington Consensus had reduced focus on the sector. Indeed, CAF’s infrastructure commitments doubled every five years from the early 1990s. Between 1991 and 1995, CAF committed US$2 billion for infrastructure, which increased to US$4 billion between 1996 and 2000 and US$8.8 billion between 2001 and 2005 (CAF, 2000, 2005). In other words, CAF’s drive for regional integration and sustainable development has led to a focus on infrastructural investments, notably public sector loans to promote road corridors and trade connections within Latin America. CAF’s cumulative loan portfolio as of March 2015 has the transportation sector at 36 per cent approvals followed by 28 per cent in the energy sector (CAF, 2015a); it has clearly long been an infrastructure-focused MDB. Of these cumulative approv­ als, 82 per cent were public sector loans and only 18 per cent were private sector, so it has retained a strong state focus as well. The banking consensus impacts the bank too: between 2014 and 2018, Peru, Colombia, Brazil, and Argentina were the largest recipients of CAF loans, cumulatively receiving over 53 per cent of new annual approvals. In other words, the largest and most creditworthy borrow­ ing countries are the largest loan recipients, plus they are also among the largest shareholders. CAF is a unique MDB. It is rare for a small sub-regional development bank to expand so rapidly over two decades and has transformed into a regional develop­ ment bank rivalling the historically largest MDBs operating in its region. Its early decades were defined by a largely neoliberal approach, but since the 1990s it has increasingly defined itself as an infrastructure lender. Neither the Washington nor Beijing agendas seem to encapsulate CAF, rather it is more effectively defined by banking principles and unique innovations – such as preferring paid-in capital over retained earnings – made necessary by its small membership and specialised role as a project financier focused on infrastructure and sustainability. As Humphrey (2015) concludes, the ‘impressive growth of CAF – in terms of projects,

Washington, Beijing, or banking consensus? 123 membership, and bond rating – suggests that its policies, operational style, and governance arrangements hold lessons for other MDBs’, particularly given that CAF began operations as a small and niche development bank.

Islamic Development Bank An international Islamic financial institution, IsDB’s Articles of Agreement were ratified in 1974, and it began operations in October 1975. Its establishment was part of the emergence of Arab finance as a significant political economic actor between the late 1960s and mid-1970s. Several Arab-led MDBs emerged at this time, including the Arab Fund for Economic and Social Development, Arab Bank for Economic Development in Africa, and OPEC Fund for International Develop­ ment. In these MDBs, Arab countries – particularly Saudi Arabia – are the largest shareholders (Neumayer, 2003). The reasons for their emergence include that they were part of a concerted response to the Arab–Israeli Wars, a way to disburse vast petrodollar inflows after the 1973 Oil Shock, an attempt to promote regional stability and solidarity, and an effort to build an alternative to Global North systems (Corm, 2006; Kellerman, 2019; Porter, 1986; Williams, 1976). The IsDB has 57 member countries. Arab states are numerically a minority of members, but the largest capital subscriptions and therefore voting power is with Arab members (Shushan and Marcoux, 2011). Saudi Arabia is the largest share­ holder (23.5 per cent), followed by Libya, Iran, Nigeria, the United Arab Emir­ ates, Qatar, Egypt, Kuwait, Turkey, and Algeria, and together they control 86 per cent of votes. Illustrating Saudi Arabia’s influence, IsDB is headquartered in Jeddah and its Presidents have both been Saudi nationals. The first President, Dr Ahmad Mohamed Ali Al Madani, led IsDB from 1975 to 2016, an unusually long period (Hernandez and Vadlamannati, 2017). IsDB day-to-day decisions are met by a ‘larger than usual number of engineers and other technical members. The bank more or less relies on the judgement of these teams, and thus avoids the need for the Board’s involvement for every project approval’ (Ray and Kamal, 2019, pp. 204–206). Unique to MDBs, IsDB pursues its mandate in accordance with Shari’ah prin­ ciples, which prohibits interest being charged on loans (Tok et al., 2014). It has developed instruments that effectively mimic interest rates, like short-term trade credits delivered under a service charge, the leasing of capital goods, and receipt of rent from borrowers (Corm, 2006; Porter, 1986). Further, it charges a service fee to recoup administrative costs of no more than 2.5 per cent per annum (Shushan and Marcoux, 2011). Comparable to other MDBs, it mobilises resources through shareholder capital and retained earnings. In 2018, IsDB’s paid-in capital was US$6.91 billion while its subscribed capital was US$63.75 billion. In addition, it mobilises resources through sukuk transactions, or Islamic financial certificates similar to financial bonds. In 2016, sukuk issued came close to twice its paid-in capital. Between 1975 and 2019, the largest recipients of IsDB financing were Bangladesh (15.2 per cent), Pakistan (8.9 per cent), Egypt (8.7 per cent), Turkey (8.5 per cent), and Morocco (5.1 per cent) (IsDB, 2019a).

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These five countries are among the larger and most creditworthy of countries that would regularly borrow from the IsDB. Thus, banking norms are clearly not absent in Islamic finance. IsDB is part of the larger IsDB Group, similar to the World Bank Group’s organisations: the Solidarity Fund for Development, International Islamic Trade Finance Corporation (ITFC), Islamic Research and Training Institute, Islamic Corporation for the Insurance of Investment and Export Credit, and Islamic Cor­ poration for the Development of the Private Sector. Each organisation emphas­ ises conformance to Shari’ah financial principles. Between 1976 and 2018, IsDB Group approvals totalled US$131.3 billion. It approved US$4.8 billion during its first decade (1976–1985) and US$84.1 billion during its most recent decade (2008–2018). IsDB Ordinary Capital Resources (OCR) loans comprised 40 per cent of IsDB Group approvals in 2017 and were surpassed by the ITFC at 50 per cent and, in 2018, IsDB OCR approvals totalled US$1.1 billion whereas ITFC commitments were US$5.2 billion. This is because IsDB is in the midst of restructuring its OCR program. Recent annual approvals declined as it focused on project implementation and delivery of existing projects with less emphasis on new approvals while directions are redefined (IsDB, 2018). Infrastructure accounted for at least 59 per cent of OCR flows in 2018, which is similar to 2010–2014 when it was 60.6 per cent (Aid Flows, 2019). IsDB notes that infrastructure has been a priority since its inception and the sector is one of its key strengths. It has claimed that it ‘has gone farther than most peer MDBs in prioritising this area. Almost 80 per cent for requests for [IsDB] financing from member countries are in infrastructure sectors – energy, water, transport, and telecommunication’ (IsDB Group, 2016, p. 19). This focus on infrastructure is likely a safe space for the MDB working with many quite conservative religious regimes and with major shareholders reliant on fossil fuel rents, though they also claim that 56 per cent of projects include climate-proofing components (MDB Working Group, 2016). Equally as importantly, the infrastructure and trade finance focus fit the banking consensus which emphasises bankable projects. Still, examining recent IsDB projects, it is easy to find funding for what is normally regarded as com­ mercial industries that are wholly or partly state-owned, which many MDBs are unlikely to fund. For example, the Ma’aden Phosphate Fertiliser Complex in Saudi Arabia is 50 per cent state owned and the Nouadhibou Port in Mauritania is owned by the National Industrial and Mining Company, which is 78 per cent government-owned. In contrast, however, IsDB’s Annual Report 2018 emphas­ ises the importance of infrastructure contracts based on the building, owning, and operating frameworks of public–private partnerships (IsDB, 2018), which Washington Consensus approaches laud increase space for markets. IsDB is an influential Arab-led specialised development bank. It is part of a broader network of interconnected Arab-led MDBs and national development agencies but is unique in emphasising Shari’ah principles leading to unique financial instruments. Adding in the high level of infrastructure finance and the funding for state-owned enterprises, overall the IsDB seems to conform less to

Washington, Beijing, or banking consensus? 125 the Washington and banking consensus than other MDBs, though banking norms are still at play. Indeed, here is a case where the idea of the Beijing Consensus may have some applicability, but the IsDB pre-dates it.

Asian Infrastructure Investment Bank The AIIB was first proposed by China in 2013, though it was not clear initially that it was going to be an MDB – but a hard-nosed MDB emerged. An initial memo­ randum was signed in October 2014, five negotiation meetings were held between then and May 2015; the Articles of Agreement were opened for signature in June 2015 and came into force on 25 December 2015. The Chinese said the AIIB would contribute to a major financing gap for infrastructure in Asia and challenge the Western dominance of the global financial architecture. The US responded with hostility and tried, albeit unsuccessfully, to discourage allies from participating in the institution. Contra US doubts, the international community has had an impact on the institution leading to changes in clauses around membership, capital contri­ butions, veto power, and standards. The resultant AIIB Articles of Agreement are almost a copy of the ADB’s and hence the organisation has all of the strictures of a development bank outlined earlier, even the exemption from immunity in relation to activities around raising funds (AIIB, 2015, p. 3). As of August 2019, the AIIB had 44 regional members, 30 non-regionals, and 26 prospective members. Its authorised capital was a substantial US$100 billion though it is not as large as the ADB, which had just under US$150 billion in subscribed capital as of the end of 2018, or the World Bank, which, after the capital increase agreed in 2018, has authorised capital of US$300 billion. The AIIB is aiming to lend US$10 to US$15 billion per annum but only reached just over US$3 billion in 2018. This is not surprising as, first, most MDBs have taken time to get established and develop a project pipeline and, second, the focus on the complex realm of infrastructure makes developing the pipeline harder. Much of its lending is through co-funded projects already developed by other MDBs. The AIIB has secured an AAA credit rating based on a pretty standard MDB loan portfolio, demonstrating the influence of banking norms. The majority of loans are specific projects with sovereign states (29 of 45), there are seven loans to private firms, and, notably, nine to financial intermediaries, though some of these are backed by states and some by other international financial institutions. As Table 8.2 demonstrates, the largest loans have gone to the larger, more cred­ itworthy Asian states, in particular India, Indonesia, and Turkey. Still there are a number of risky loans here, including the Upper Trishuli-1 Hydropower Project in Nepal, which involves dam construction that impacts the river system, reloca­ tion of ethnic minorities, and more (Ghale and Ghale, 2017). Controversy around hydropower in Nepal is growing, so the MDBs are distributing risk through cofinancing, in this case the AIIB is providing US$90 million to a US$647 million project co-financed with the IFC, ADB, and other development finance institu­ tions. The AIIB is directly funding five fossil-fuel projects, albeit all gas not coal, but still these have generated controversy from climate activists.

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Table 8.2 AIIB’s loan portfolio, 2016–August 2019 Region / Country

Amount USD m

No. Projects

Asia Azerbaijan Bangladesh Cambodia China Egypt Georgia India Indonesia Lao PDR Myanmar Nepal Oman Pakistan Philippines Sri Lanka Tajikistan Turkey

1,225.0 60.0 505.0 75.0 250.0 510.0 114.0 2,269.0 939.9 40.0 20.0 90.0 501.0 400.0 207.6 280.0 87.5 900.0

4 1 5 1 1 2 1 10 5 1 1 1 2 2 1 2 2 3

Total

9013.99

45

Data source: AIIB, 2019a.

The small loan portfolio to China indicates that there is truth to the proposi­ tion that the AIIB was in part about providing a path for excess Chinese savings to be recycled as loans outside the country. The loans for the Asian region are all to regional investment funds and is money that is unlikely to have been on-lent through those funds yet, so this makes the AIIB’s portfolio look larger than it, in fact, is. However, the more important point here is that the AIIB is using or establishing quite complex financial intermediaries that lack transparency. For example, there is US$150 million for the IFC’s Emerging Asia Fund, which is financing a cement company in Myanmar using coal-fired power (Inclusive International Development, 2018). The financial intermediary projects are not just regional; there are state-based projects in Turkey, India, and Indonesia (AIIB, 2019a). These portfolios mean that the AIIB is exposed to the underlying assets and that public transparency about funding is low. Doing due diligence on underlying assets is a difficult task especially around social and environmental standards and, as the Global Financial Crisis demonstrated, it only takes a pro­ portion of the underlying assets to go bad for whole schemes to collapse. Returning to our core framework of the Washington, Beijing, and banking consensus, it is very hard to see Ramo’s (2004, p. 4) Beijing consensus of ‘equit­ able, peaceful high-quality growth’ in the AIIB’s infrastructure dominated lending. Maybe there is some pragmatism visible in the loans, but innovation and experimentation are only occurring in relation to financial instruments, which is more indicative of neoliberalism than the Beijing Consensus. In terms

Washington, Beijing, or banking consensus? 127 of challenging the Washington Consensus’s privatisation agenda, there is some funding for state-led developmental projects but also for private providers, public–private partnerships, and international contracting. Further, the AIIB has not completely abandoned conditionality. It has environmental and social safeguards and of course banking conditionality to ensure loans can be repaid. Indeed, we have demonstrated that the banking consensus is a very useful framework through which to view the AIIB’s lending portfolio.

Conclusion Banking norms loom large over all of the MDBs studied here as they do for the World Bank – China and India are often still the World Bank’s largest borrowers because of their size and creditworthiness. The MDB focus on infrastructure is not new and while it seems to be the case that the AIIB’s establishment is prompting the World Bank to engage more actively in the sector, CAF and the IsDB have had it as their key priority even through the early years of the Wash­ ington Consensus, which was quite hostile to infrastructure. In fact, infrastruc­ ture has always been a logical focus for MDBs given their structures and needs as banks, so even the Word Bank did not abandon it during the height of the Washington Consensus. The AIIB demonstrates very few of the traits that have been linked to the Beijing Consensus, rather we demonstrated how banking norms are significantly shaping who it lends to, what it lends for, and even how it lends. Indeed, the AIIB looks more like a hard-nosed, somewhat neoliberal development bank than CAF or the IsDB, which have kept more of their unique local flavours and inter­ ests. CAF has a strong local ownership and a focus on infrastructure and sustain­ ability. Ben-Artzi (2016) concluded that a key way the regional MDBs could become more developmentally focused would be to increase ‘the paid-in com­ ponent of committed funds’, which CAF has already done. The IsDB focus on infrastructure and trade does reflect banking priorities but also suits the major shareholders who are socially conservative, and have a high reliance on fossil fuel exploitation and strong active states. So it is not afraid to fund state-owned enterprises, which is rarer for an MDB reliant on raising funds on capital markets. MDBs were first established because of the failures of private capital markets and the political backlash that direct lending through state-owned banks created – multilateral institutions were seen as a better pathway. We also demonstrated that the AIIB and World Bank, in particular, are now increasingly using complex financial instruments to expand loan financing. This reflects both their DNA as banks, which pushes them to continually expand their loans in order to survive, and the Washington Consensus agenda of facilitating private sector capital flows. Yet there many challenges that result from this approach, one is that as the loans outlines above demonstrate, money still does not flow to the poorest countries as they do not have acceptable credit ratings. Further, the poor data and lack transparency and

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accountability on the MDB use of blended finance undermines trust (Attridge and Engen, 2019). Indeed, the use of financial intermediaries to fund private activity in infrastructure increases the likelihood that MDBs will fund unsolic­ ited proposals from private firms rather than projects that citizens have agreed are a developmental priority. Yet, many of these intermediaries have sover­ eign guarantees meaning citizens will bail them out should they fail. Finally, it is important to note that the MDBs expansion of loan financing is occurring at a time when a growing number of developing countries are – again – facing debt distress. Debt can be a very blunt instrument and when MDB lending is seen as violent and exploitative there is often strong backlash, as occurred in the 1990s with protests against the international financial institutions. The danger in current times is that such a backlash would feed into populist move­ ments against multilateralism more broadly.

Notes 1 All figures are in USD unless specified otherwise. 2 Authors calculations using the Word Bank sectors of: energy and extractives; informa­ tion and communications technologies; transportation; and water, sanitation and waste management. These are the sectors identified in the World Development Report on infrastructure minus irrigation, which is part of the agriculture, fisheries, and forestry sector. Our data does includes the extractives sector but gives a very indicative picture of trends. Note that the data is commitments not actual disbursements.

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9 Rethinking global financial architecture The case of BRICS New Development Bank Tafadzwa Chitenderu and Ronney Ncwadi Introduction A financial system is defined as a system of monetary relations which contains general settings of financial activities. The international financial system is the worldwide framework of legal agreements which facilitate the international flow of financial capital. The international monetary system has become a significant part of the global economy and is a major source of funds for development. Due to its importance, several attempts have been made to develop policies and schemes to ensure its stability but the world economy in general has never been particularly stable. The international financial system is a crucial part of development, especially in African economies where most are either still developing or are under-developed. The BRICS’ (Brazil, Russia, India, China, and South Africa) New Development Bank (NDB) was recently introduced and numerous African economies are awaiting the benefits that this development will bring to their economies. The main goal of most financial institutions is to bring about economic growth and development. Development is important for poverty alleviation and improvement of welfare. The international financial system is currently dominated by the Bretton Wood Institutions, namely the International Monetary Fund (IMF) and the World Bank. These two institutions are the most influential international financial institutions in the world and are serving as the main sources of funds for most developing countries. However, it is argued that these institutions use loans as leverage to prescribe policies and order major changes to the economies of the recipient countries. With the rising of new financial institutions, particularly the NDB, the position of these dominant international financial institutions is now under scrutiny.

Rationale for the formation of the BRICS NDB BRICS is a group of five countries, namely Brazil, Russia, India, China, and South Africa that came together to form an economic integration. The union of these five economies has an agenda for supporting the Global South in achieving the main objectives of reducing poverty and inequality and to bring about

The case of BRICS New Development Bank 133 sustainable development. BRICS countries as an economic integration are making a considerable contribution towards global economic growth. Brazil, Russia, India, China, and South Africa are all leading developing countries distinguished by their fast-growing economies and their influence on regional affairs, as well as their influence in the world. Together, the BRICS countries contain about 42 per cent of the world’s population. Economists predict that Brazil, China, India, and Russia will join the United States as the five largest economies in the world by 2050 (O’Boyle, 2014). The BRICS union was formed in June 2006 at a UN General Assembly in New York, where dialogue concerning ways in which the members could cooperate politically and economically took place. At this point only Brazil, Russia, India, and China were part of the group. After the global financial crisis of 2008, BRIC (as it was known before South Africa joined in 2011) finance ministers met in São Paulo, Brazil and a communique was released that detailed their commitment to work together. After this meeting they agreed to arrange the BRIC heads of state summit and the first was held in June 2009 in Russia. The grouping has held annual summits since 2009, with each member country taking a turn to host. Their first formal summit commenced on 16 June 2009 in Yekaterinburg with all leaders of the four (BRIC) countries in attendance. The main agenda items for this summit were to find means of improving the global economic situation, as well as ways of reforming financial institutions and to deliberate on how best they, as a group, could cooperate in the future. At this summit the BRIC nations brought up the need for a new global reserve currency, which was not intended to be a direct attack on the US dollar as the dominant currency but this did spark a fall in its value against other currencies (O’Boyle, 2014). The second BRIC summit was held in 2010 (the then South African president, Jacob Zuma, attended as an observer), and the topics discussed included the importance of cooperation in areas of energy and food security. At the end of 2010 South Africa was officially invited to become a member as a way for the BRIC economies to connect with African markets, and in the third summit in China in 2011, BRIC became BRICS with the joining of South Africa. At their summit in 2012, the heads of state called for expanded voting rights in the IMF and in June 2012 the BRICS nations pledged US$75 billion to boost the IMF’s lending power; however, this loan had reforms of the IMF voting system as a condition. The members of BRICS considered the idea of a global financial institution out of frustration with the IMF and World Bank and they also began considering an alternative BRICS development bank. This proposal was formally agreed upon at the BRICS’ fifth summit held in South Africa in 2013. It was also agreed in this summit to establish the BRICS Business Council, which would be made up of five entrepreneurs from each country who would discuss ways of expanding cooperation (Sinha, 2015). In July 2014 at the sixth summit, the leaders signed agreements to establish a currency reserve pool and a development bank. In July 2014 the leaders formalised the New Development Bank (NDB) (formally known as the BRICS Development Bank), which had the obligation of

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mobilising resources for infrastructure and sustainable development projects in the member countries as well as other emerging economies. At this summit they also discussed the lack of reforms in the IMF to allow greater representation for the developing economies. Lack of representation of emerging economies in the IFIs, particularly in decision-making issues, led to the BRICS countries coming up with the idea of a development bank. By 2010, 188 members of the IMF had agreed to the IMF representation reforms, but the US Congress took about six years to get the reforms approved and they only became effective in 2016 (Sinha, 2015). In other words, the BRICS countries were frustrated about the delayed reform process due to one country. The inequalities presented in the International Financial Institutions (IFIs) are viewed as old rules that require that a European always to head the IMF and an American the World Bank (Blomfield and Davydov, 2015). In this sense, the NDB represents an alternative to the Bretton Woods institutions. Under the new IMF governance structure, China would have the third largest IMF quota and voting share, with the US and Japan being the first and second respectively, and India, Russia. and Brazil would be among the top ten members of the IMF (The BRICS Post, 2016). These reforms would see an increase in the role of emerging economies, particularly China, in the IMF. China’s voting share increased from 3.8 to 6 per cent, India’s share increased from 2.3 to 2.6 per cent, Brazil now has 2.22 per cent and Russia 2.59 per cent. The US share decreased slightly from 16.7 to 16.5 per cent (IMF, 2015). Other frustrations with the conduct of the IFIs include the issue of loan conditionality, lack of transparency and, above all, the lack of development in the countries that have received development loans from these institutions. In addition to the frustrations, there are many other reasons that could be attributed to the development of the BRICS Bank. One of the reasons is the lack of adequate development funds to meet the ever-growing demand. The existing institutions are unable to meet the growing financial needs. A number of countries still need funds, as their economies are still struggling with basic services such as access to clean water, health services, and basic education, to name but a few, but according to the International Development Association (IDA) they no longer qualify for the World Bank’s concessional support (Preet et al., 2013). Regional and international development banks have played an important role in helping to fill the finance gaps but there still remain gaps particularly in developing countries as the available financial resources are not sufficient to meet the financial needs. Given the gap between funds that are available and the demand, there is a need for additional sources of funds that can be provided, such as those added to the pool by the BRICS Bank. Furthermore, creating a BRICS Bank gives developing and emerging economies greater bargaining power to voice their interests, both for the development of their own countries and other developing and under-developed economies. BRICS nations themselves suffer from a substantial financing gap. Although they have abundant energy resources, most BRICS economies have been hindered by under-developed infrastructure; Brazil’s roads, ports, and air transport, China’s mobile telephone subscriptions, India’s electricity supplies and

The case of BRICS New Development Bank 135 telecommunications, and Russia’s roads all need attention for development purposes (Lingxiao et al., 2015). Outdated infrastructure has become an impediment for growth and development in these countries, as is the situation in most developing economies. Roads, ports, railways, electricity, and information communications technology are all vital for economic growth and sustainable development. BRICS national have all received funds from IFIs but wide gaps in infrastructure as well as socio-economic issues prevail. Establishing a bank over which they have control may assist them in sharing unconditional loans to enable them to address the gaps in their countries. Existing financial channels cannot meet the demands of these developing economies, from the point of view of either domestic channels or international financial institutions (Lingxiao et al., 2015). For example, in 2012 Brazil, South Africa, and India had current account deficits of US$52.45 billion, US$23.33 billion, and US$88.16 billion respectively, indicating a gap between aggregate savings and investment (IMF, 2015). For most developing economies domestic savings fall short of infrastructure investment demands. Even when countries have savings (surplus current account), like China and Russia in 2012, they lack the mechanisms to channel these savings into investments. The creation of a bank controlled by developing countries can thus help countries that have large surpluses to recycle those savings into productive investments in their own and other developing countries. The NDB is a multilateral development bank that has the mandate to finance development projects aimed at fostering sustainable development among the five member states as well as other emerging and developing economies. BRICS have established a development bank as a way of giving themselves access to more funds and control over financial matters, which they do not have in the IFIs. They have regularly criticised the Bretton Woods institutions for their inability to reflect the growing contribution of the emerging economies to the global economy. As highlighted above, China is the second largest economy in the world but has only slightly more voting power in the IMF than Italy, for example, which is far smaller than China (IMF, 2002). Since the creation of these institutions they have been led by the Americans and Europeans, leaving emerging economies frustrated (Prasad, 2016). The establishment of the Bank appears to be a concrete attempt to address these biases.

Objectives and governance of the New Development Bank The role of the NDB in the global financial sphere can be best understood by understanding the objectives and/or mandate of the bank. According to the New Development Bank’s agreement, the bank will support public and private projects through loans, guarantees, equity participation, and other financial instruments. It further stipulates that the bank will cooperate with international organisations and other financial entities and aid with projects to be supported by the bank. NDB also aims at assisting countries to respond quickly to the rapid pace of change in technology and clients’ needs.

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The main objectives of the NDB can be summarised as follows: 1 2 3

to promote infrastructure and sustainable development projects with a significant development impact in member countries; to establish an extensive network of global partnerships with other multilateral development institutions and national development banks; and to build a balanced project portfolio giving proper respect to their geographic location, financing requirements, and other factors.

The NDB has a mandate to provide interest-free loans to developing countries for sustainable infrastructural development projects in the BRICS economies (BRICS, 2013, 2015). The main activity of the bank is therefore to utilise resources in support of infrastructure investments. The NDB highlighted that it is prioritising projects aimed at developing renewable energy sources and it aims at cooperation with other institutions in accelerating green financing expansion and promoting protection of the environment. According to NDB (2017), the BRICS Bank’s official development aid (ODA) will target countries that are not reached by the conventional development financial institutions. In 2016 the bank’s board of directors approved loans for seven projects in member states totalling more than US$1.5 billion. On 21 December 2016 the NDB signed its first loan agreement to finance a project in China, the Shanghai Lingang Distributed Solar Power Project. China received a loan from the NDB of US$81 million for a project in renewable energy (solar rooftop PV) and US$298 million for a wind power project. In April 2017 the NDB also signed an agreement with the Brazilian government to provide a loan of US$300 million aimed at developing the renewable energy sector in Brazil. In 2016 India received a loan from the NDB amounting to US$250 million through the Canara Bank that was guaranteed by the government of India. This loan was for a project in the renewable energy sector. An additional loan from the NDB was received in the same year ($350 million) to upgrade major district roads. In 2017, India received US$470 million under the Madhya Pradesh Multi-Village Rural Drinking Water Supply Project targeted at rural areas and in the same year it received US$345 million to finance the irrigation and agriculture sector (NDB, 2017). As the NDB grows it will be able to provide more loans, both to member countries and other developing economies. If the total paid in capital doubled to US$100 billion from the current US$50 billion (either through increasing contributions by current members or adding new shareholders), the NDB could provide loans to other countries to the value of US$50 billion in ten years (or US$5 billion annually). This can be increased as retained profits are added to the lending pool and assuming that leverage will be double that of the CAF, annual lending capacity could reach US$14 billion and after 20 years it could reach US$34 billion (United Nations, 2017). According to the United Nations (2017), in 20 years’ time if the NDB expands its operations to other countries as it did to its member countries, then it would have a lending capacity not far below that of the current institutions, such as the World Bank, which had a capacity of US$45

The case of BRICS New Development Bank 137 billion in 2015. The loans that have been issued to the current members had no conditions attached (NDB, 2017). Given that the NDB can expand to lend to other countries with no stringent conditions, then it can integrate into the financial system and help reduce the gap that exists between financial needs and available funds as well as challenge the current dominant institutions as well as the US in particular. In doing so it can then be able to bring about the much-needed sustainable development to its loan recipients. As far as governance is concerned, the NDB operates on an equal power basis (no provision for a veto). For the first five years of operation (2014 to 2018), the headquarters is in China and the bank’s leadership composition comprises the first president, K.V. Kamath, from India with the presidents of the other four BRICS countries as the vice presidents of the bank. The president of the bank is elected rotationally from one of the founding members and there will be at least one vice president from each of the other founding members. The agreement stipulates that voting powers for each member country are equal to its subscribed shares. Currently, no single country has more power than the others. This is a paradigm shift from the IMF and World Bank ideology, and since the group currently has six members it will take at least three members to agree to decide and no member has veto power to stop the others from acting. The board of governors for the NDB comprises all the member countries’ finance ministers in accordance with the agreement. This is a direct challenge to the IMF and World Bank where member countries do not have equal power and the US has veto power. The principle of fair governance, a non-intervention approach, and constructive supplements are among the NDB’s principles of operation. The fairness principle is seen in the structure of the leadership of the bank and the nonintervention principle insists on respecting the rights of the countries on the choice of their own policies as well as their own development paths (Zhu, 2015). The non-intervention principle is a shift from how the current dominant financial institutions operates, where policy prescriptions are often given as conditions to getting the loans.

Capacity of the BRICS countries in managing the New Development Bank The BRICS member countries have demonstrated great potential in managing development banks, as evidenced by their participation in various development banks both domestically and internationally. The member countries have vast experience that is useful to the NDB, making the bank a beneficial institution for member countries as well as other developing countries. Brazil has a strong network of development banks, with the Brazilian National Development Bank (BNDES) standing at the centre (United Nations, 2017). The BNDES is a national development bank that has a crucial role in the developmental issues of the country. The bank is fully owned by the government and was established in the early 1950s. Russia also has a development bank known as Russia’s

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Development and Foreign Affairs Bank (Vnesheconombank (VEB)), which mainly promotes Russian economic competitiveness through the stimulation of economic activities towards infrastructure development, support of exports, and development of SMEs (VEB, 2017). The bank also collaborated with the World Bank and other banks to fund foreign investment projects (VEB, 2017). India also has a development bank known as the Indian Export-Import Bank (EXIMINDIA) that is responsible for aligning the country’s foreign trade and direct investments with economic growth. This bank funds export credit projects, offers project consultancy and provides credit to foreign entities and development banks channelled towards infrastructural equipment imports (EXIMINDIA, 2015). EXIMINDIA funds projects outside India as well, particularly other developing economies in Africa and the Middle East. According to EXIMINDIA (2015), the bank supported the construction of a petroleum refinery in Nigeria and airport construction in 2014 in Saudi Arabia, to name but just a few. EXIMINDIA can therefore also aid in the functioning of the NDB. China’s stateowned development bank is known as the China Development Bank (CDB), an entity mandated to provide loans for industry (and other growing sectors) and infrastructure development. The CDB also provides financial assistance to grassroots investments and promotes China’s international business partnerships (CDB, 2015). South Africa is the home of the Southern Africa Development Bank (DBSA), which was formed with the objective of bringing sustainable development to the Southern African Development Committee (SADC) region. In 2013 the DBSA lengthened its distribution scope to provide access to infrastructure development solutions to the SADC and sub-Saharan African states (DBSA, 2015). The DBSA has financed developmental projects in the region for the construction of roads and other infrastructure projects, but the DBSA’s efforts fall short of the substantial need for financial assistance in the region and in Africa as a whole. Africa needs investment in infrastructure, particularly subSaharan Africa, and the NDB could be an additional source of funds for this cause by expanding the DBSA’s and other regional banks’ scope and the cofinancing of infrastructural projects (DBSA, 2015). Given the experience that the BRICS countries have shown in managing the development banks in their own countries, the NDB can take advantage of the different experiences of each member country and direct its conduct using the expertise and experiences. It can thus be said the NDB has capacity through these experiences as well as the experiences gained through conduct with other regional and international development banks.

Role of the NDB in the global financial architecture At the BRICS presidential summit in 2013 the members agreed to create an institution that would serve as an alternative to the current dominant financial institutions, namely the IMF and the World Bank. This institution is intended to complement and perform similar functions as those of the dominant international financial institutions. The NDB has the obligation of mobilising resources for

The case of BRICS New Development Bank 139 infrastructure and sustainable development projects in the member countries as well as other emerging economies. The infrastructure development role of the NDB in the BRICS nations serves as a stimulator for trade and investment opportunities amongst the developing countries. BRICS have clearly articulated their continuing support to African countries in their industrialisation process by stimulating foreign direct investment, exchange of knowledge, capacity-building, and diversification of exports from the African countries (Mazenda and Ncwadi, 2015). BRICS and the New Development Bank stipulate the need to stimulate infrastructure investment in developing economies on the basis of mutual benefit in terms of job-creation, food and nutrition security, and poverty eradication. Further, the bank encourages greater cooperation of economies while at the same time removing too much dependency on the developed world, particularly those that currently dominate the IFIs. The NDB has an important role as a cooperative mechanism among member countries, as it can help reduce the pressures on infrastructure finance and at the same time offer a feasible solution to the problem of low returns on foreign exchange reserves and the high costs of self-contained management. The capital subscriptions and re-lending performed by the NDB can allow the BRICS countries’ central banks to bring together the foreign exchange reserve held in each country. By issuing bonds, for example, the NDB can effectively attract funds that are idle within BRICS countries, thereby improving the efficiency of transfer between the demand for and the supply of finance (Lingxiao et al., 2015). The NDB can maximise meeting the infrastructure finance needs of its member countries, thus promoting economic growth and development. The shared interests of growth and development through the NDB are also advantageous to the member countries, as they will be able to increase complementarity rather than competition, share benefits and experiences of economic growth, and boost local currency settlements (as that which occurred between China and Russia) (Yao, 2016). In the long run, the increased internal trade and investment will reduce the member countries’ dependency on the dollar for trade. In a nutshell, the NDB is significant in the provision of economic and social benefits to BRICS nations as well as other developing countries as it expands its operation. The NDB was also created to boost investments among BRICS countries. The NDB acts as an advisor and coordinating facility in this field. The NDB can promote not only intra-BRICS investment but must also enhance the role of BRICS countries in the international financial architecture and foster their transition into developed economies. In a nutshell, it can be ascertained that the establishment of the NDB is a tool to enhance the idea that developing economies need to be allowed to determine their own terms of development. The NDB was created as a complementary effort to cover the financial shortfall and to promote efficiency in the existing institutions. Although the NDB has a lot to cover before it can become an engine for the reform of the international financial system, this does not prevent the bank from making a difference in developing countries as well as posing a threat to the current dominant financial institutions.

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How the NDB can effectively bring about sustainable development The areas posing challenges to the Bretton Wood institutional framework are mainly Western dominance, unfair representation, lack of transparency, lack of accountability, and issues of loan conditionality. The NDB stands as an engine for reforms in the global finance space and can do so by addressing these issues, amongst other things. The NDB was formed so as to mobilise resources for infrastructure and sustainable development projects in member countries and other emerging economies in a manner that supplements the current efforts of financial institutions, both regional and international (NDB, 2017). It therefore follows that the NDB must ensure that its activities do not bear the same results as the existing financial organisations. It must be remembered that the main challenges in developing countries are poverty, inequality, and unemployment. One of the ways in which the NDB can be made effective in developing countries is by ensuring that investment flows from the NDB are utilised predominantly in the economic sectors of the developing countries. The economic sectors encompass the development of infrastructure, such as export promotion zones, transport and communications networks, education and health facilities, as well as funding businesses that need large capital layout. This does not in any way undermine any investment in social services such as housing. However, focusing on economic sectors in the developing countries will go a long way towards ensuring that, through a ‘trickle-down effect’, poverty is addressed (Todaro and Smith, 2012; Oxfam, 2014). Given the importance of addressing inequality and poverty reduction, the NDB should direct its investments and activities towards making societies fairer and authorities more accountable. It can do so by addressing social exclusion, gender inequalities, and the needs of the most marginalised and vulnerable groups in society. This would make a difference and can foster economic growth and development. The NDB can also impose tax transparency policies and policies that increase accountability. It is clear that rule of law and corruption have an adverse effect on economic growth and as a result the NDB must ensure that corruption and other economic ills are addressed through transparent policies. This is particularly important when it comes to ensuring that development funds are used specifically for what they are meant for. The issues of transparency of public policies, as well as conditions attached to loans, have been the main criticisms levelled at the Bretton Woods institutions. The bank should be guided in its activities by the principles of South–South cooperation that emphasise national sovereignty and ownership, nonconditionality, non-interference in domestic affairs, and mutual benefit (Oxfam, 2014). If there is ever a need to attach conditions or policy recommendations to the loans, these should be transparent and the affected country must be involved in formulating the conditions. According to Boakye (2008), financial assistance is likely to have a positive effect in countries that have good fiscal, monetary,

The case of BRICS New Development Bank 141 and trade policies. In some cases where these are lacking, the NDB should assist such countries in formulating these policies. When doing so it must involve the recipient country so that there is ownership of the policies and avoid making generalisations that may not necessarily be relevant to all countries. Stiglitz (2002) holds that IMF and World Bank policies are often designed without consultation with the country in question and the resultant policies are not always applicable. The World Bank institutions and other regional development banks have, without doubt, provided critical development finance; however, this has not been as effective as expected due to the conditions imposed on recipients. These conditions range from economic structural adjustments to human rights conditions (Hochstetler, 2015). The experiences of a developing world are of importance when designing development policies. Stiglitz (2002) posits that sustainable development and growth can be fostered if all countries concerned have a voice in the policies affecting them. Involvement can create a sense of responsibility and accountability that will further enhance the economies of the developing nations. In this respect the NDB should be guided in its operations by four principles, namely professional, efficient, transparent, and green (Blomfield and Davydov, 2015). According to Stiglitz (2002), the Western countries often advise developing countries to open up their economies to trade, that is to eliminate trade barriers but at the same time the Western countries kept their trade barriers up, especially in their agricultural sectors. A current example would be the ongoing trade tensions as a result of US President Trump’s trade manoeuvres and trade tariffs that affect countries such as China. This prevents the poor countries from exporting their agricultural products, which deprives them of much-needed income from exports. Stiglitz (2002) also expresses a view that even sectors that were opened for global competition were opened gradually and never with a ‘big bang’ approach, as expected from the developing countries. It is no wonder therefore that the developing countries have remained under-developed for long periods in history despite funding received from the West. Additionally the New Development Bank, to be able to integrate successfully into the international financial architecture, should be prepared to enter into agreements with the existing financial institutions. Given the substantial financial gap, the NDB needs to partner with other regional, monetary, and financial institutions to support infrastructure projects. This means that the NDB can cosponsor projects with other institutions in an attempt to bridge the finance gap. The involvement of the NDB with other institutions will allow it to gain the necessary experience and expertise. It is therefore crucial to balance relationships with existing international and financial institutions for funding and for expertise. This implies that the future of the global financial architecture should go beyond ideological battles and focus on development issues. The NDB should play a role in championing a ‘beyond ideological rhetoric’ era instead of engaging in competition with the existing institutions. In other words, the NDB is not a replacement for the IMF or the World Bank, but rather plays a complementary

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role catering for the needs of developing countries (Ncwadi and Ruzive, 2015). Although anti-hegemonic in that they aspire to a more multipolar system, BRICS do not aim for a systemic break. While the group’s official discourse stresses the need for a multipolar, equitable, and democratic international order, these countries’ primary aim is to expand their own influence in the world, rather than replace or disengage from established international institutions. The member states’ dissatisfaction with the current global governance architecture is stressed in their summit declarations, which note that established international institutions have not proven able to adequately respond to global challenges. Their desire for change, combined with the promotion of somewhat different approaches to certain international relations issues compared with those of Western countries, for instance the importance of national sovereignty, has often led to the characterisation of the coalition as an anti-Western bloc. This umbrella statement tends to disregard the extent to which the individual BRICS countries rely upon international institutions and norms (Hou, 2014). It is pleasing to note that the NDB has structured its governance in a way that shows that its reactions to the unequal power distribution is serious. For example, the NDB membership and governance structure represents equal power and no country has veto power. As a starting point for its capital base, the NDB has all members contributing equal capital and they have adopted a one-country onevote practice giving all member countries equal voting and decision-making power. According to the NDB (2014), the bank may add members as it increases its operations and when this occurs it is important for the bank to maintain the fairness represented by its governance structure.

Conclusion Both the purpose of, and the need for the NDB are intrinsically linked to the imperative of efficiently channelling global savings into infrastructure and sustainable development. It is worth noting that the BRICS countries’ share in global savings is now larger than that of the United States, Japan, and the EU combined. Given the location and availability of global savings, the NDB is expected to mainstream development financing. It is expected to encourage not only broader participation of institutional investors that are managing a large share of these savings but also more efficient financial intermediation. The New Development Bank risks repeating the tragic mistakes of these other institutions, which for many years concentrated only on economic issues in their operational decision-making. Following a number of scandals they began to pay more attention to the social, human rights, and environmental impact of their operations. Members of the New Development Bank seem to share this concern. The BRICS leaders have reiterated their commitment to achieving sustainable development in its three dimensions – economic, social, and environmental – in a balanced and integrated manner. However, it is difficult to see how the bank is expected to meet this commitment if it continues to place more emphasis on speed in project implementation than on identifying and managing the adverse

The case of BRICS New Development Bank 143 environmental, human rights and social effects of its projects. To fulfil their commitment to promote a more just and equitable global economy, BRICS will need to up its game. It is against this background that the authors contend that the NDB needs to harness the core competencies available within BRICS countries, and to become familiar with other emerging and developing countries. The NDB may consider giving preference to developing countries other than those within the BRICS itself in terms of direction of project financing flows. In this and the other ways discussed in this chapter, it may challenge Western dominance while at the same time bringing much needed sustainable development to third-world countries.

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NDB (New Development Bank). (2014) About Us. www.ndb.int/about-us/essence/ourwork [Accessed 3 October 2018]. NDB (New Development Bank). (2017) New Development Bank Funds Projects in BRICS States. www.ndb.int [Accessed 12 January 2018]. Ngwane, T. and Dan, G. (2000) Rainbow Warrior. Sowetan. www.rainbowwarriors2005. wordpress.com [Accessed 7 November 2015]. Ngwane, T. and Dor, G. (2000) South Africa: IMF Can Only Bring Misery. www. rainbowwarrior2005.wordpress.com/2008 [Accessed 16 November 2016]. O’Boyle, E. H. Jr. (2014) GDP Projections from PwC: How China, India, and Brazil will Overtake the West by 2050. www.theguardian.com [Accessed 23 May 2018]. Oxfam. (2014) The BRICS Development Bank: Why the World’s Newest Global Bank Must Adopt a Pro-Poor Agenda. www.oxfam.org [Accessed 6 August 2017]. Prasad. E. (2016) China’s Stuck between a Rock and a Hard Place on Reforms. www. cnbc.com [Accessed 23 April 2017]. Preet, S., Sapra, S. and Mehdi, A. (2013) Articulating a Vision for a Progressive BRICS Development Bank. Unpublished. Salai-i, M. (1997) Economic Growth. Economics, 1, pp. 1–26. Sinha, D. (2015) India, BRICS and the World Economy. Indian Foreign Affairs Journal, 10(2), April–June, pp. 160–173. Stiglitz, J. (2002) Globalization and its Discontents. London: Penguin Press. The BRICS Post. (2016) IMF Quota and Voting. www.thebricspost.com/category/bricsnews [Accessed 27 August 2017]. Todaro, M. P. and Smith, S. C. (2012) Economic Development (11th Edition). New York: Addison-Wesley. United Nations. (2017) Resolutions and Decisions Adopted by the General Assembly During its Fifty Ninth Session. New York: United Nations Publications. VEB (Vnesheconombank). (2017) About Us. www.veb.ru [Accessed 3 February 2018]. WHO (World Health Organisation). (2016) Trade, Foreign Policy, Diplomacy and Health. www.who.int/trade/glossary/story059/en [Accessed 6 June 2016]. Yao, O. (2016) The Development of the BRICS and the Large Country Advantage. www. springer.com [Accessed 15 May 2016]. Zhu, J. (2015) New South-South Co-Operation and the BRICS New Development Bank. BRICS Insights Paper 2. www.saiia.org.za/wp-content/uploads/2015/03/BRICSInsights-2.pdf [Accessed 23 October 2016].

10 The ADB and AIIB Cooperation, competition, and contestation Kearrin Sims

Introduction The perception that future socio-economic progress across ‘developing Asia’ hinges on massive infrastructure investment is now normative.1 Indeed, while the last decade has seen developing Asia build more infrastructure across all sectors than any other region, the Asian Development Bank (ADB) estimates that the region still requires US$26 trillion of infrastructure investment over the next 15 years (ADB, 2017, pp. vii, 10). In order to meet this challenge, new forms of cooperation between nation-states and multilateral development banks (MDBs) are required.2 Such cooperation is occurring, but takes place alongside new forms of competition and contestation. This chapter explores some of the emergent collaborations and tensions between two of Asia’s leading providers of infrastructure financing: the ADB and the Asian Infrastructure Investment Bank (AIIB). It provides a brief summary of the similarities and differences in the institutional size, scale, and objectives of these institutions; an analysis of the geo-political relations in which they are embedded; and a critique of their repeated assertion that transnational connectivity, economic growth, and infrastructural modernisation naturally lead to positive development outcomes for all. The chapter argues both that AIIB and ADB projects have the potential to cause substantial harm alongside benefits, and that while AIIB has quickly emerged as a leading financer of infrastructure development, the ADB remains far more influential in producing development discourse and norms. Finally, the chapter suggests that the co-existence of ADB and AIIB is likely to further reinforce the increasing redirection of the global development sector away from a poverty reduction mandate towards the prioritisation of economic growth-focused investments and interventions (Mawdsley et al., 2018; Murray and Overton, 2016).

The shared architectures of ADB and AIIB The ADB Formed in 1966, ADB has 68 members (including 49 from within Asia and the Pacific) and a total subscribed capital of US$150 billion. As a MDB, the ADB

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provides loans, technical assistance, and grants to member governments that advance its seven operational priority areas of: (1) addressing remaining poverty and reducing inequality; (2) accelerating progress in gender equality; (3) tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability; (4) making cities more livable; (5) promoting rural development and food security; (6) strengthening governance and institutional capacity; and (7) fostering regional cooperation and integration (ADB, 2019a). The latest ADB strategic vision – to 2030 – seeks to align ADB priorities with those of the United Nations Sustainable Development Goals and the 2015 Paris Climate Agreement, while remaining committed to the institution’s core business of large-scale infrastructure funding. In addition to these operational priorities, ADB also supports five sub-regional integration programmes (see Table 10.1), which it considers to be the ‘building blocks’ of Asia’s regional integration. As of 2018, demand for ADB assistance was growing, with new commitments for that year reaching US$21.58 billion in loans and grants, and 37 per cent year-on-year growth for private sector commitments (ADB, 2019a). Indeed, from 2014 to 2020 ADB seeks to scale up its operations by 50 per cent, with 70 per cent of total funding being directed into infrastructure (ADB, 2019b). Since 1980, approved ADB lending has quadrupled (when adjusted for inflation), and over the course of its history, Asian member countries have received 97.5 per cent of ADB’s approximately US$276 billion dollars of total lending (again, in inflation adjusted terms) (ADB, 2019c; O’Keeffe et al., 2017: 52). In terms of governance, ADB’s highest policy-making body is its Board of Governors, which consists of one Governor and one Alternate Governor appointed by each member country. Almost all Governors are situated within economic Ministries/Departments (Finance, Treasury, Trade, Banking, or Business) in their home countries – with the exception only of Canada, Denmark, Finland, Norway, Tajikistan, and the United Kingdom. Current ADB President Takehiko Nakao is a former Vice Minister of Finance for International Affairs for Japan, carrying on a continued tradition of all ADB President’s holding former positions in finance for the Japanese Government. This governance structure reflects the strong economic development focus of the ADB, which is discussed further below. Table 10.1 ADB Subregional Integration Programmes Brunei-Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA) Central Asia Regional Economic Cooperation (CAREC) Greater Mekong Subregion (GMS) Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT) South Asia Subregional Economic Cooperation (SASEC) Source: Author.

The ADB and AIIB 147 The AIIB The AIIB is a MDB headquartered in Beijing that commenced operations in January 2016 (AIIB, 2019a). As its name suggests, the AIIB’s chief remit is to fund infrastructure investment in energy and power, transportation and telecommunications, rural infrastructure and agriculture development, water supply and sanitation, environmental protection, and urban development and logistics. Investments in each of these domains contribute to the advancement of AIIBs three chief thematic priorities of: sustainable infrastructure; cross-country connectivity; and private capital mobilisation. While the AIIB pursues a diverse investment portfolio, its investments in the energy and transport sectors are expected to account for up to 70 per cent of its exposures over coming years, including 2019 investments of approximately US$3.5–4.5 billion in 15 to 20 projects (AIIB, 2019b, 2019c). AIIB has a subscribed capital of US$100 billion and a much larger membership than ADB, with 97 approved members that provide investments via sovereign and non-sovereign loans, equity participations and guarantees (AIIB, 2019b). According to Wilson (2019, p. 148) AIIB is currently the world’s fourth largest MDB by capital subscriptions. In terms of governance, AIIB’s structure is almost identical to that of ADB. The Board of Governors consists of one Governor and one Alternate Governor appointed by each member country and – with the exception of Denmark, Jordan, Norway, and Tajikistan – all 97 membercountry governors and alternate governors are situated (mostly as Ministers) within Finance, Treasury, and Banking governmental departments (AIIB, 2019c). Like the ADB, this governance structure reflects the strong economic focus of AIIB’s work, and is indicative of its ‘trickle-down’ and ‘growth-first’ approach to poverty alleviation and development (see below). Perhaps even more so than ADB, AIIB can be considered a largely ‘Asian-led’ multilateral bank, with 74.5712 per cent of its votes being held by regional members (AIIB, 2019c). AIIB’s largest shareholder is China, with 26.5269 per cent voting power, and putting aside Russia (which straddles both Asia and Europe), the largest European shareholder is Germany, with 4.1753 per cent voting power. A shared development vision ADB and AIIB development discourses share much in common. In particular, both demonstrate faith in growth-first, top-down, and trickle-down technocratic approaches to development, all of which may be broadly encapsulated under the generalist category of a modernisation approach. Focusing primarily on infrastructural and industrial modernisation, economic connectivity, and nationalscale development priorities, ADB and AIIB offer depoliticised technical interventions designed to integrate poor countries into international markets and stimulate economic growth. Both institutions present poverty foremost as a consequence of infrastructural deficits and market isolation (rather than complex social, cultural, and political entanglements) and emphasise the primacy of the

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market and private sector in leading development processes. Indeed, AIIB does not even include poverty alleviation within its mandate (Wilson, 2019). As is discussed further in the next section, ADB and AIIBs advancement of such modernisation approaches to development are reflected both in their funding allocations and their discursive outputs. Both institutions allocate the majority of their funding to physical infrastructure projects, and both use deeply problematic international poverty lines (see Hickel, 2016) that are calculated on the basis of economic expenditures when reporting on poverty shifts. The means through which ADB seeks to frame development as a purely technocratic exercise has now received considerable critique (for example, Sims, 2015). To provide just one example regarding AIIB, its 2019 annual meeting was themed around ‘cooperating and connectivity in recognition of the economic and social benefits to be realized through better connectivity…’, and did not include any scheduled time to consider the potential negative social or economic outcomes of transnational connectivity (AIIB, 2019e). Thus while ADB and AIIB may have some geo-political tensions to negotiate, one clear area of mutual interest is in advancing the notion that connective infrastructures are both ‘urgent and inevitable’ for improved development outcomes (Zoomers and Otsuki, 2017).

ADB as knowledge-producer While ADB and AIIB now have similar governance structures, development priorities, and lending capacities, one domain in which the former far exceeds the latter is in terms of its knowledge-production activities. As touched on above, ADB not only finances development, rather it also continually reinvents and reconstitutes what development is; why it is needed; and how it can be best achieved. To be clear, ADB does not simply identify the ‘abnormalities’ that development must treat, it also establishes them; it systematically forms, groups, and arranges categories of knowledge in particular ways in order to create specific discourses – specific ways of seeing, understanding, and framing development (Escobar, 1984, p. 386). ADB has invested heavily in making its visions for development – its ‘representation, analysis, and mode of action for the project of development’ – that which is ‘naturalised, legitimate, and durable’ and, at least within the Asia-Pacific region, has had much success in making its worldview, development framework, and data sets those that most people choose above others. Having established problems for development to solve, ADB then positions itself as the best provider of these solutions. To ensure that its worldview of development remains predominant, ADB invests heavily in research and publication outputs. For example, a search of ADB’s online publications database reveals that in 2018 alone it produced 7,102 outputs, ranging from articles to blog entries, evaluation documents, infographics, news releases, reports, videos, and other materials. From January 2015 to August 2019, such output rises to more than 28,000 materials. Similarly, in 1997 ADB established the ADB Institute (ADBi) with the mandate to provide ‘intellectual input for policy makers in ADB’s developing member countries’ (ADBi,

The ADB and AIIB 149 2019). Significantly, the role of ADBi is not simply to provide technical assistance to such countries, but also ‘to identify effective development strategies’ and ‘be a trusted source of insight, knowledge, and information to which policy makers, academics, and others interested in Asia’s development issues turn for guidance’ (ADBi, 2019): in short, to produce particular discourses of development that align with ADB priorities. One of the most significant ways in which ADB discourse has sought to establish normative views on development has been through its efforts to represent transnational (primarily infrastructure) connectivity as constitutive of development. This is most evident in its imagining of new subregional geoeconomic configurations, such as the Greater Mekong Subregion (GMS). The GMS is an economic connectivity programme that was formulated in 1992 following an ADB-initiated meeting of the now GMS member-states of Cambodia, China, Laos, Myanmar, Thailand, and Vietnam. Initially beginning as a programme targeting transnational infrastructures, the GMS framework has since expanded to include 10 working sectors and 11 flagship programmes that each contribute to ADBs efforts to build ‘a well-integrated and prosperous Mekong Subregion’ (ADB, 2008, p. 5). Through the GMS and its other subregional programs, ADB has constructed new spatial-economic domains that consolidate its particular development visions. While the region’s discursive legitimation is grounded in its imagined association with existing forms of social, cultural, and ecological connectivities, ADB has placed little effort on advancing such ties – and in some cases has actually supported investments that weaken or erase such existing connectivity. AIIB is a new institution, and over time it may come to play the same knowledge-producing role as the ADB. In the longer term, it is also possible that divergent views on development could become a point of contention between the two institutions. China has been actively constructing alternative discourses of development to distinguish itself from ‘traditional’ donors such as ADB – couched in the language of ‘win-win’ outcomes, mutual benefit, and ‘South– South cooperation’ between equal partners. China has also emphasised non-interference in domestic affairs as central to its development cooperation – an approach that has received condemnation for contributing to authoritarianism and weakening hard fought norms of international aid. In the immediate term, however, ADB remains a far more important knowledge-producer.

The geo-politics and autonomy of ADB and AIIB Perhaps unsurprisingly given their shared commitment to infrastructure development, ADB and AIIB have been quick to form cooperative relationships. Asia’s enormous push for infrastructure presents many opportunities for collaborative engagement, and as of 2019 ADB and AIIB have signed memoranda of understanding including agreements on project co-financing. AIIB has also established a co-financing framework agreement with the World Bank, and Memorandums on joint cooperation and co-financing with 12 other development banks/funds

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(AIIB, 2019f). A number of senior AIIB staffers are also former ADB and World Bank employees, and since it was founded AIIB has been eager to emphasise its position as ‘a member of the international family of development banks’ (AIIB, 2019f, n.p.). Clearly, ADB–AIIB collaboration has emerged quickly and is growing. Yet, such collaboration is also accompanied by persistent geo-political tensions between shareholders of these institutions. The notion that MDBs offer politically neutral financing is an illusion, made clear by the different voteholder powers of member states and, on closer analysis, the alignment of particular MDB projects with the geo-political priorities of particular nation-states (Saito and Ishida, 2007). The shareholding and voting rights of MDB lenders are embedded within the geo-political relations of nation-states, and the work of multilateral agencies can never be fully separated from the tensions that exist between member states. In terms of ADB and AIIB, this is nowhere more clearly demonstrated than in the US and Japan’s decision not to join AIIB, as well as the former’s criticism of its political-economic ally’s Australia and the United Kingdom for becoming AIIB members (AIIA, n.d.; Watt et al., 2015). Beginning with ADB, the United States (US) and Japan are the institution’s two leading share-holders – each contributing 15.571 per cent of total subscribed capital and maintaining 12.756 percentage voting power – and as such the institution has always served as a vehicle for advancing the geo-strategic interests of these two countries. Indeed, while China and India are the third and fourth largest ADB share-holders, respectively, it is important to note that the combined vote of Japan and the United States is greater than that of the next five largest shareholders combined. ADB is headquartered in Manila, Philippines, reflecting the United States long historical relations with its former colonial subject. Of the US$23.04 billion of capital subscriptions provided by the US (as of April 2019), some US$3.36 billion had been channeled into US companies and consultants (ADB, 2019c). While Japan and the US provide equal lead financing for ADB, the general consensus of scholars is that the institution is primarily Japanese-led. As previously noted, every ADB president has been Japanese, and Japanese staffers also tend to dominate many senior institutional positions. Japan provides 50 per cent of the Bank’s concessional financing, which (unlike the non-concessional arm) must be paid in hard currency and, according to Saito and Ishida (2007), ADBfunded projects can be mapped against Japan’s geo-political priorities. Accordingly O’Keeffe et al. (2017, p. 25), have suggested that ADB functions as ‘one of the most intimate and intricate of Japan’s international relationships’. Where ADB is predominantly Japanese-led, AIIB is primarily a Chinese-led institution (Wilson, 2019). China is AIIB’s largest shareholder and, as demonstrated in Table 10.2, it is important to emphasise that China’s 26.5 per cent voting power within the AIIB is larger than the next five-largest vote-holders combined, and more than 20 per cent greater than its voting power within the ADB. Significantly, the gap between China’s vote holding in the AIIB and the

The ADB and AIIB 151 Table 10.2 ADB top-ten subscribed capital providers and vote-holders Country

Year of Membership

Subscribed Capital Voting Power (% of total) (% of total)

Vote-Holder Rank

Australia Canada China Germany India Indonesia Japan Korea, Republic of Malaysia United States

1966 1966 1986 1966 1966 1966 1966 1966 1966 1966

5.773 5.219 6.429 4.316 6.317 5.434 15.571 5.026 2.717 15.571

5 7 3 9 4 6 1 8 10 1

4.917 4.474 5.442 3.752 5.352 4.646 12.756 4.320 2.427 12.756

Source: Author, using data from ADB (2018) Annual Report.

institutions second-largest vote holder (India) is larger than in any other MDB, giving China an effective veto power over all majority decisions (O’Keeffe et al., 2017, p. 22; Weiss, 2017). One example of this is China’s rejection of Taiwan’s application for AIIB membership, despite Taiwan being a member of many other international institutions and the AIIB’s Articles stating that any full ADB member can join the AIIB (Weiss, 2017: 10). As previously mentioned, AIIB is also headquartered in Beijing and its President Mr. Jin Liqun spent almost 20 years within the Chinese Ministry of Finance (AIIB, 2019d). The formation of the AIIB comes following criticisms by Chinese Communist Party (CCP) members of China’s under-representation in existing international financial institutions such as the World Bank. It is worth noting that 2010 International Monetary Fund (IMF) approvals to increase Chinese shareholding were not implemented until US congress finally approved the relevant

Table 10.3 AIIB top-ten subscribed capital providers and vote-holders Country

Year of Membership

Total Subscriptions (% of total)

Voting Power (% of total)

Vote-Holder Rank

Australia China India Indonesia France Germany Korea Russia Turkey United Kingdom

2015 2015 2016 2016 2016 2015 2015 2015 2016 2015

3.8166 30.7924 8.6516 3.4749 3.4903 4.6366 3.8658 6.7583 2.6986 3.1585

3.4746 26.5269 7.6064 3.1825 3.1957 4.1753 3.5165 5.9884 2.5191 2.9122

6 1 2 8 7 4 5 3 10 9

Source: Author, data from www.aiib.org/en/about-aiib/governance/members-of-bank/index.html.

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governance reform package in 2015 (Weiss, 2017, p. 3). Similarly, the United States has veto power over major governance decisions at the World Bank, the Inter-American Development Bank, and the IMF, enabling it to strategically block proposals raised by China and any other country (Weiss, 2017, p. 9). In short, China’s decision to establish the AIIB has emerged at least in part from a reluctance by the US to increase Chinese shareholding and influence in existing financial institutions. According to many commentators, one of the primary drivers behind the establishment of AIIB was to advance the CCP’s grand Belt and Road initiative (BRI), which seeks to reorient the global political-economy closer to China through (amongst many other things) new corridors of connectivity through Central, South, and South-East Asia, as well as the Middle East, Africa, and Europe (Weiss, 2017). Globally, BRI is estimated to require more than US$1 trillion in investment and, as of February 2019, the Chinese government reported that its state-owned companies had already invested in nearly 1,700 infrastructure projects (SCMP, 2019). Already, there is considerable overlap between AIIB and the BRI, including both being announced in 2013, both emphasising infrastructure and economic connectivity, and all current AIIB loans having been awarded to countries falling within the BRI program (Wilson, 2019, pp. 158–159) China is now a major infrastructure financier in the Global South and AIIB is one of a suite of new and old institutions (including the China Development Bank, the Export-Import Bank of China, the New Development Bank, Shanghai Cooperation Organisation, and Silk Road equity finance fund) that will continue to expand such financing. Described by Leksyutina (2018) as a ‘third wave’ of MDBs, such institutions are part of a historic shift in the global politicaleconomic landscape that has seen emerging economies, and particularly China, come to play an increasingly prominent role in shaping future global development trajectories (Mawdsley, 2017). Over the past 35 years, China has joined a number of MDBs including the African Development Bank (1985), the Caribbean Development Bank (1997), the Eastern and Southern African Trade and Development Bank (2000), the East African Development Bank (2004), the Inter-American Development Bank (2008), and the European Bank for Reconstruction and Development (2016), however, China’s steering role in the AIIB arguably marks a new leadership phase for Chinese multilateral financing (Leksyutina, 2018, p. 88).3 Accordingly, AIIB has been seen by many as a competitor to preexisting multilateral banks and international financial institutions (Dreyer, 2015; Jakupec and Kelly, 2015; O’Keeffe et al., 2017). In addition to expanding China’s global leadership role, AIIB also serves a number of other functions of benefit to the CCP. Notably, AIIB provides the CCP with a means to channel its capital reserves into new investment projects that simultaneously support Chinese construction firms while making diplomatic gains (Wilson, 2019). The successful management of a MDB also, arguably, enhances China’s status and influence in borrowing countries and across the Asian region, while simultaneously financing infrastructure projects that shape

The ADB and AIIB 153 economic regionalisation in ways that advance China’s geo-strategic and geoeconomic interests (Leksyutina, 2018; Wilson, 2019). As previously noted, this is not to say that MDBs are unable to maintain some distance from national interests. On the contrary, such institutions can provide a space for the funding of projects that would be politically problematic for bilateral aid, as is reflected in the lending patterns of both ADB and AIIB – which have funded projects in countries that are not allies of Japan, the United States, or China. To provide one prominent example, as of April 2019, 28 per cent of all AIIB loans had been allocated to India – China’s foremost regional competing ‘rising’ power. Similarly, it is important to note that AIIB president Mr. Liqun is also a former Vice President of the ADB, and both the AIIB’s Vice President and Chief Financial Officer are also former ADB staff members. Further, to date AIIB has already been invited by the World Bank to join seven of its pre-existing projects, and the ADB four (Wilson, 2019). Such co-financing and interchanging of staff speaks to the ways in which MDBs are shaped by geo-politics and can be used to advance the geo-political interests of nation-states, yet simultaneously provide a platform to build collaborative relationships across geo-political tensions. Nonetheless, how well the two institutions are able to maintain ongoing cooperation will also certainly be shaped by the bilateral diplomatic relations of leading financers – and most predominantly relations between China, Japan, and the United States, as well as Russia and India.

Connectivity and harm Irrespective of whether ADB and AIIB expand current forms of collaboration or retreat into more hostile forms of competition, their co-existence will bring new forms of social and environmental harm. The detrimental impacts and uneven distribution of the benefits of large-scale infrastructure projects have now been demonstrated in myriad ways. To offer just a brief summary, correlations have been demonstrated between major infrastructure projects and: clearance of protected forest lands; increased pollutive outputs of expanding industries; species loss through habitat fragmentation, poaching, and vehicle-wildlife collisions; deterioration of riverine ecosystems including fisheries loss through hydropower development; loss of livelihoods; spread of communicable diseases; expansion of the production and trafficking of illicit goods; community conflicts; loss of life through dam collapses and construction accidents; and forced displacement and resettlement (Alamgir et al., 2017; Baird et al., 2015; EIA, 2015; Sheaves et al., 2008; Sloan et al., 2018; Wilmsen, 2016). As Mawdsely succinctly states, such interventions ‘have brought dislocation and violence, extraction and exploitation’, as well as ‘expanded opportunities for legal and illicit profits, and [the] political entrenchment’ of political and economic elites (Mawdsley, 2017, p. 112). More specifically, ADB and AIIB have both faced direct criticisms for the detrimental impacts of projects they have funded. Beginning with the former, many civil society organisations have been critical of the social and environmental impacts of ADB projects (O’Keeffe et al., 2017). Over the past 50 years

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ADB has financed numerous projects that have caused massive environment destruction and loss of livelihoods, including examples such as: the loss of fish stock and crop biodiversity as a result of the Khulna–Jessore Drainage Rehabilitation Project (KJDRP) in Bangladesh; more than 10,000 people affected by the downstream impacts of the Nam Theun 2 Hydropower Project in Laos; river system contamination by the Marcopper mining disaster in Marinduque, Philippines; loss of livelihoods resulting from the Tata Mundra Coal Power Plant Project in India; and displacement and inadequate compensation of affected households in the Cambodia Railway Rehabilitation Project (Perreras, 2018, p. 10). Regarding the latter, some families are still experiencing water shortages and project-induced indebtedness more than eight years post-resettlement (Perreras, 2018, p. 11). As a relatively new MDB, AIIB has not yet financed many major projects, and only four projects independently (Wilson, 2019). Nonetheless, numerous concerns have been raised regarding the ways in which AIIBs stated aspirations to be more expedient than existing MDBs may lead to insufficient time and investment into Environmental Impact Assessments (EIA), Social Impact Assessments (SIAs), and community consultation processes (Laurance, 2018). Such concerns are warranted. At present, AIIB’s Environmental and Social Framework (ESF) only requires the institution to undertake free, prior, and informed consultation with indigenous project-affected communities, rather than their free, prior, and informed consent (Chow, 2017). Similarly, AIIB still ‘lacks a functioning oversight mechanism – also known as an independent accountability mechanism – to ensure that projects comply with environmental and social requirements’, as well as to ‘provide a forum to address the harms to individuals and communities that can result from violations of those requirement’ (Summers, 2018, n.p.). Finally, while AIIB has established a ‘Policy on the Project-affected People’s Mechanism’ this policy lacks the detail of ADB safeguards – and, it appears, is also not being adhered too (Mehedi et al., 2018). Although only four independently financed AIIB projects were underway at the time of writing, one – the Bhola Integrated Power Plant (IPP) project in Bangladesh – has already been the subject of scathing criticism. According to a special report produced by NGO Forum on the ADB, the Bhola IPP project EIA and SIA documentation lacked critical information and included misreporting or fabrication (Mehedi et al., 2018). Affected communities reported being undercompensated for land acquisitions and were reportedly afraid of talking with the study team for fear of violent reprisals (Mehedi et al., 2018, p. 33). The majority of project employment opportunities were not available to local residents, while additional negative project outcomes included problems with flooding and noise pollution, loss of livelihoods, waste pollution, forced displacement and inadequate compensation, reduced fisheries (Mehedi et al., 2018). Where some commentators have argued that Asia needs both ADB and AIIB to meet its infrastructure needs (and that healthy competition is a good thing), others have posited that their coexistence will create a ‘race to the bottom’ in terms of environmental and social standards. Indeed, one of the justifications for

The ADB and AIIB 155 the founding of AIIB was the need to respond to borrowing country complaints that the social and environmental safeguards (as well as other bureaucratic processes) of other MDBs unnecessarily slow projects down. Such criticisms of the slow moving and overly bureaucratic nature of existing MDBs by China is part of its broader discourse of ‘South–South’ cooperation, which emphasises ‘mutual benefit’, ‘win-win’ outcomes, and ‘non-interference’ in domestic affairs. It is important to stress, however, that criticism of the social and environmental impacts of Chinese-led construction projects have emerged from numerous countries across the Asia Pacific, Africa, and Latin America (Dreyer, 2015; Mohan and Tan-Mullins, 2019; Weiss, 2017). With such a dominant shareholding and voteholding power in AIIB, it is not unreasonable to be concerned that China’s problematic track-record of funding socially and environmentally deleterious projects may be reproduced through AIIB activities. The obvious risk here is that AIIB’s prioritisation of speed over rigour may have increased socially and ecologically deleterious effects.

Conclusion The perception that the Asia-Pacific needs major infrastructure investment is now a normative view. Accepting that investments into infrastructure can bring poverty-alleviating outcomes, and accepting the ADB’s view that ‘developing Asia’ will need US$26 trillion dollars in infrastructure investment over the next 15 years, there is plenty of space for the coexistence of ADB and AIIB. There is no shortage of infrastructure needs for the two institutions to function successfully, and there will be many emergent opportunities to work collaboratively. Indeed, collaboration between the two institutions is already occurring – and in spite of the US and Japan’s refusal to become AIIB members. However, some level of geo-political competition is also inevitable. Infrastructure financing and construction is one of the means through which geo-economic and geo-political power is projected (Mohan and Tan-Mullins, 2019). As such, future cooperation between ADB and AIIB will be shaped by the diplomatic relations of key member-states, most notably, China, the United States, Japan, Russia, and India. Under the stewardship of current President Donald Trump, it is the United States that has arguably become the most volatile of these powers, though it must be stressed here that China, Russia, and India have all been demonstrating concerningly aggressive nationalism in recent years. For future cooperation between ADB and AIIB to expand it is China that may have the most significant role to play. In addition to now spending more on infrastructure than North America and Western Europe combined, China is also a leading shareholder in both institutions and ADBs third-largest overall recipient of ADB lending (Mohan and Tan-Mullins, 2019, p. 1374; O’Keeffe et al., 2017, p. 23). While it is without question that AIIB advances China’s strategic and economic interests, it does so little more than ADB advances US and Japanese interests. Furthermore, according to Wilson (2019) China undertook considerable revisions to its initial proposal for AIIB in order to appease

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concerned states and to build a broad institutional membership. In other words, it has shown a willingness to compromise in terms of MDB leadership that exceeds that of the US. To this point, AIIB maintains an openness to US membership, and a number of analysts argue that the US should (re)consider joining (Weiss, 2017). With China assertively pursuing transnational connectivity through its BRI program and the US adopting an increasingly isolationist approach to the Asia-Pacific region, the need for AIIB financing is likely to continue expanding. Indeed, as Dollar (2015) notes, AIIBs success in membership recruitment demonstrates that Asian and European countries are happy to support Chinese-led infrastructure financing, and do not want to choose between China and the US. Whether or not AIIB will wield better or worse social and environmental outcomes than existing MDBs remains to be seen. As previously noted, there have certainly been numerous examples of Chinese-funded development projects that have had concerning outcomes, but this is also true of many other donors. Largescale infrastructure projects inevitably produce relative winners and losers, albeit in ways that are contextually uneven. Given AIIB is China’s first attempt to lead a MDB, many expect that it will seek to follow best practices and avoid reputational damage (Leksyutina, 2018; Weiss, 2017). Thus while there is reason to be concerned about AIIB’s social and environmental impact, it is also important to be considerate of wider geo-political and ideological struggles that influence the viewpoints of some commentators. What this chapter seeks to argue is that, regardless of whether or not AIIB meets the same standards as ADB, the manner in which it perceives and pursues development will bring many forms of harm. While these two institutions are shaped by different geo-political and geo-economic interests, they are aligned by their projection of shared development norms. Such norms represent a movement away from poverty reduction as the core objective of development towards the return of economic growth as the central aim of development (Mawdsley, 2015; Murray and Overton, 2016). As Engel and Bazbauers note (2018, pp. 1, 10), new MDBs such as AIIB ‘perpetuate a development system focused on economic growth and debt-based development finance’ that has ‘no space for meaningful poverty reduction let alone for civil society consultation and participation’. Such a system may offer some trickle-down benefits, but by-and-large it will increase inequality and environmental degradation through resource extraction and the privileging of political and economic elite interests over those of the impoverished.

Notes 1 The term ‘developing Asia’ is ADB vernacular that I draw on here to ensure consistency with the follow-on sentence, but which I also seek to problematise as a way of categorising such a diverse and heterogeneous region. 2 Multilateral development banks (MDBs) are financial institutions supported by more than two countries which provide financial and technical assistance, as well as expertise, to developing countries.

The ADB and AIIB 157 3 According to Leksyutina, ‘there are now more than 250 multilateral development agencies, including over twenty-five regional and sub-regional multilateral development banks’ (Leksyutina, 2018, p. 81).

References ADB (Asian Development Bank). (2008) Transport and Trade Facilitation in the Greater Mekong Subregion. Published report. Manila. ADB (Asian Development Bank). (2017) Meeting Asia’s Infrastructure Needs. Published report. Manila. ADB (Asian Development Bank). (2019a) Our Work. www.adb.org/about/our-work [Accessed 15 August 2019]. ADB (Asian Development Bank). (2019b) ADBs Focus on Infrastructure. www.adb.org/ about/infrastructure [Accessed 15 August 2019]. ADB (Asian Development Bank). (2019c) Asia Development Bank and the United States: Fact Sheet. www.adb.org/sites/default/files/publication/27810/usa-2018.pdf [Accessed 15 August 2019]. ADBi (Asian Development Bank Institute). (2019) About Asian Development Bank Institute. www.adb.org/adbi/about [Accessed 15 August 2019]. AIIB (Asian Infrastructure Investment Bank). (2019a) About AIIB. www.aiib.org/en/ about-aiib/index.html [Accessed 15 August 2019]. AIIB (Asian Infrastructure Investment Bank). (2019b) Fact Sheet. www.aiib.org/en/ treasury/_common/_download/Fact_Sheet.pdf [Accessed 15 August 2019]. AIIB (Asian Infrastructure Investment Bank). (2019c) 2019 Business Plan and Budget summary. www.aiib.org/en/policies-strategies/_download/business-plan-2018/Summaryof-2019-Business-Plan-and-Budget.pdf [Accessed 15 August 2019]. AIIB (Asian Infrastructure Investment Bank). (2019d) Members and Prospective Members of the Bank. www.aiib.org/en/about-aiib/governance/members-of-bank/index. html [Accessed 15 August 2019]. AIIB (Asian Infrastructure Investment Bank). (2019e) Previous Annual Meetings. www. aiib.org/en/news-events/events/2020-annual-meeting/events/2019.html [Accessed 15 August 2019]. AIIB (Asian Infrastructure Investment Bank). (2019f) Partnerships. www.aiib.org/en/ about-aiib/who-we-are/partnership/index.html [Accessed 15 August 2019]. Alamgir, M., Campbell, M. J., Sloan, S., Goosem, M., Clements, G. R., Mahmoud, I. M. and Laurance, W. F. (2017) Economic, Socio-Political and Environmental Risks of Road Development in the Tropics, Current Biology, 27(20), pp. R1130–R1140. Australian Institute of International Affairs. (n.d.) Australia and the Asian Infrastructure Investment Bank. www.internationalaffairs.org.au/australia-to-finally-join-the-asianinfrastructure-investment-bank [Accessed 15 August 2019]. Baird, I. G., Shoemaker, B. P. and Manorom, K. (2015) The People and their River, the World Bank and its Dam: Revisiting the Xe Bang Fai River in Laos. Development and Change, 46(5), pp. 1080–1105. Chow, L. (2017) Is the AIIB Really ‘Lean, Clean, and Green’? The Diplomat. https:// thediplomat.com/2017/08/is-the-aiib-really-lean-clean-and-green [Accessed 15 August 2019]. Dollar, D. (2015) The AIIB and ‘One Belt, One Road’. Brookings. www.brookings.edu/ opinions/the-aiib-and-the-one-belt-one-road [Accessed 15 August 2019]. Dreyer, J. T. (2015) The Asian Infrastructure Investment Ban: Who Will Benefit? Foreign Policy Research Institute (online).

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EIA (Environmental Investigation Agency). (2015) Sin City: Illegal Wildlife Trade in Laos’ Golden Triangle Special Economic Zone. London. Engel, S. and Bazbauers, A. (2018) Old and New Development Banks and the Future of Development Finance, paper presented at FLASCO-ISA Joint International Conference, 25–27 July 2018, Quito, Ecuador. Escobar, A. (1984) Discourse and Power in Development: Michel Foucault and the Relevance of His Work to the Third World. Alternatives, 10(3), pp. 377–400. Hickel, J. (2016) The True Extent of Global Poverty and Hunger: Questioning the Good News Narrative of the Millennium Development Goals. Third World Quarterly, 37(5), pp. 749–767. www.fpri.org/article/2015/04/the-asian-infrastructure-investment-bankwho-will-benefit [accessed 15 August 2019]. Jakupec, V. and Kelly, M. (2015) The Relevance of Asian Development Bank: Existing in the Shadow of the Asian Infrastructure Investment Bank. Journal of Regional SocioEconomic Issues, 5(3), pp. 31–46. Laurance, W. (2018) Why scientists fear the AIIB. Chinadialogie, 11 July. www.chinadialogue.net/blog/10726-Why-scientists-fear-the-AIIB/en. Leksyutina, Y. (2018) Functional Changes in China’s Participation in the Multilateral Development Banks: From Borrower to Creditor Status. International Organisations Research Journal, 13(1), pp. 80–98. Mawdsley, E. (2015) DFID, the Private Sector and the Re-Centring of an Economic Growth Agenda in International Development. Global Society, 29(3), pp. 339–358. Mawdsley, E. (2017) Development Geography 1: Cooperation, Competition and Convergence between ‘North’ and ‘South’. Progress in Human Geography, 41(1), pp. 108–117. Mawdsley, E., Murray, W. E., Overton, J., Scheyvens, R. and Banks, G. (2018) Exporting Stimulus and ‘Shared Prosperity’: Reinventing Foreign Aid for a Retroliberal Era. Development Policy Review, 36(1), pp. 25–43. Mehedi, H., Tuhin, S. H and Prince, M. A. (2018) Bhola IPP and its Impact on Local Communities: Voices From the Ground, A Civil Society Study Report. CLEAN (Coastal Livelihood and Environmental Action Network) and Bangladesh Working Group on External Debt (BWGED) and NGO Forum on ADB, Boyra-Rayermahal Khulna, Bangladesh. Mohan, G. and Tan-Mullins, M. (2019) The Geopolitics of South–South Infrastructure Development: Chinese-Financed Energy Projects in the Global South. Urban Studies, 56(7), pp. 1368–1385. Murray, W. E. and Overton, J. (2016) Retroliberalism and the New Aid Regime of the 2010s. Progress in Development Studies, 16(3), pp. 244–260. O’Keeffe, A. M., Pryke, J. and Wurf, H. (2017) Strengthening the Asian Development Bank in 21st Century Asia. Sydney: Lowy Institute. Perreras, A. (2018) Exposing the ‘Clean Energy’ Myths of ADB and AIIB. Bankwatch December 2018, NGO Forum on ADB, pp. 38–41. https://docs.wixstatic.com/ugd/898 604_9288a899a93741a2bc2bbad28bf26dad.pdf [accessed 15 August 2019]. Saito, T. and Ishida, K. (2007) ADB and Japan. NGO Forum on ADB, Manila, Philippines. SCMP Reporters. (2015) AIIB Welcomes Australia and Denmark, as More US Allies Apply to Join Beijing-led Bank. www.scmp.com/news/china/diplomacy-defence/article/1750561/ aiib-welcomes-australia-and-denmark-more-us-allies [accessed 15 August 2019]. SCMP (South China Morning Post). (2019) Explained: Belt and Road Initiative. 21 February. www.scmp.com/week-asia/explained/article/2187162/explained-belt-androad-initiative.

The ADB and AIIB 159 Sheaves, M., Duc, N. H. and Khoa, N. X. (2008) Ecological Attributes of a Tropical River Basin Vulnerable to the Impacts of Clustered Hydropower Developments. Marine and Freshwater Research, 59(11), pp. 971–986. Sims, K. (2015) The Asian Development Bank and the Production of Poverty: Neoliberalism, Technocratic Modernization and Land Dispossession in the Greater Mekong Subregion. Singapore Journal of Tropical Geography, 36(1), pp. 112–126. Sloan, S., Campbell, M., Alamgir, M., Collier-Baker, E., Nowak, M., Usher, G. and Laurance, W. (2018) Infrastructure Development and Contested Forest Governance Threaten the Leuser Ecosystem, Indonesia. Land Use Policy, 77, pp. 298–309. Summers, E. (2018) Absence of Environmental and Social Oversight Mechanism Continues in AIIB’s Third Year of Operations. Bank Information Centre, Bankwatch, December, pp. 5–6. Watt, N., Lewis, P. and Branigan, T. (2015) US Anger at Britain Joining Chinese-led Investment Bank AIIB. The Guardian. www.theguardian.com/us-news/2015/mar/13/ white-house-pointedly-asks-uk-to-use-its-voice-as-part-of-chinese-led-bank [accessed 15 August 2019]. Weiss, M. A. (2017) Asian Infrastructure Investment Bank. Congressional Research Service Report. https://fas.org/sgp/crs/row/R44754.pdf [accessed 15 August 2019]. Wilmsen, B. (2016) After the Deluge: A Longitudinal Study of Resettlement at the Three Gorges Dam, China. World Development, 84, pp. 41–54. Wilson, J. D. (2019) The Evolution of China’s Asian Infrastructure Investment Bank: From a Revisionist to Status-Seeking Agenda. International Relations of the AsiaPacific, 19, pp. 147–176. Zoomers, E. B. and Otsuki, K. (2017) Addressing the Impacts of Large-Scale Land Investments: Re-Engaging with Livelihood Research. Geoforum, 83, pp. 164–167.

11 The World Bank’s resilience discourse Reactive environmental norm diffusion and the crisis of global climate governance Peter Ferguson and Linda Wollersheim Introduction Since the mid-2000s, the language of ‘resilience’ has been articulated by many states, international institutions, and non-government organisations (Concern Worldwide, 2013; Oxfam, 2009; UK Strategic Trends Programme, 2014; UNDP et al., 2008; US Department of Homeland Security, 2007; World Bank, 2015) as a new discourse of environmental, development, and security governance (Felli, 2016; Hardt, 2018; Nadasdy, 2007). This has seen resilience become a central motif in sustainable development discourse (Chandler and Reid, 2016; Reid, 2012) and, in some accounts, even supplant sustainable development as the dominant global environmental and development meta-discourse (Felli, 2016; Frankenberger et al., 2014; Tierney, 2015). These actors articulate resilience in relation to a wide range of contexts, including natural risks and disasters, socio-ecological systems, financial crises, unemployment and development policy. Resilience has also been ascribed to various entities, such as human beings, communities, states, ecosystems, institu­ tions, and infrastructure (Felli, 2016). This diversity of uses of the term reflects the way that although resilience can be defined broadly as ‘the capacity of a system to absorb recurrent disturbances so as to retain its essential structures, processes and feedbacks’ (Brown, 2013, p. 108), multiple and often inconsistent articulations of the concept exist (Bourbeau, 2013; Cavelty et al., 2015; Ferguson, 2019; Methmann and Oels, 2015; Welsh, 2014). One of the most prominent exponents of resilience discourse is the World Bank (2017a, p. 1), which has made ‘[f]ostering resilience to global shocks and threats’ one of its key priorities over the last decade. This chapter briefly reviews the Bank’s historical role in global environmental governance, before charting the ways in which the sustainable development norms that once shaped its approach to the environment have recently been modified, and in some instances even displaced, by the concept of resilience. The key dimensions of the Bank’s resilience discourse, which is generally characterised as ‘neoliberal’ (Brown, 2012; Felli, 2016; Ferguson, 2019; Joseph, 2013; Tierney, 2015), are then clari­ fied via a discourse analysis of recent Bank publications. We demonstrate that,

The World Bank’s resilience discourse 161 first and foremost, the Bank’s resilience discourse asserts that resilience is some­ thing that can be built by vulnerable communities and states in order to adapt to climatic and economic risks, primarily through financialised forms of risk man­ agement. However, rather than articulating a path out of vulnerability, resilience language routinely depoliticises these risks, thereby obscuring the structural drivers of ecological and economic vulnerability. The chapter concludes by arguing that the current articulation of resilience discourse and the diffusion of resilience norms by the World Bank and other international organisations is principally a reaction to the current crisis of global climate governance. At one level, this has been occasioned by the shortcomings of multilateral process to achieve an ambitious and legally binding emissions reduction agreement to succeed the Kyoto Protocol, notwithstanding the 2015 Paris Agreement with its mixture of mandatory and non-mandatory provisions. More fundamentally, this crisis is the consequence of the failure of sustainable development to alleviate the twin global ecological and poverty crises during the three decades that has been the dominant meta-discourse of global environ­ mental and development policy.

The World Bank and the environment The World Bank has been routinely criticised for exerting influence over bor­ rower states by making its lending conditional upon domestic policy reforms, including trade and financial liberalisation, economic deregulation, privatising state-owned enterprises and natural resources, cutting government expenditure, and other market-oriented institutional reforms (Babb and Kentikelenis, 2018; Bayliss et al., 2011; Cammack, 2002; Goldman, 2005; Peet, 2009; Simon, 2008). The central environmental and development discourse of this neoliberal programme is sustainable development (Bernstein, 2001; Duffield, 2008; Reid, 2012), which since the World Commission on Environment and Development, or Brundtland (1987, p. 43) report, has been defined as ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’. Brundtland (1987, pp. 45, 205) also argued that there are no fixed limits to growth because ‘accumulation of knowledge and the devel­ opment of technology can enhance the carrying capacity of the resource base’, and that any limits that do exist ‘are imposed by the impact of present technolo­ gies and social organisation on the biosphere’. However, sustainable develop­ ment advocates have never demonstrated how, or even if, a synthesis between economic growth and environmental protection is possible (Chasek et al., 2012; Dryzek, 2013; Redclift, 2005). Sustainable development discourses and practices are articulated by the World Bank through two interrelated processes: conditionality and norm diffu­ sion. The former has seen the Bank attach environmental requirements to its loans to developing countries. For example, Operational Directive 4.02 of 1992 made it mandatory for borrowers to prepare National Environmental Action Plans (Busch and Jörgens, 2005). More recently the World Bank (2013a) has

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made its lending conditional upon recipient countries implementing prescribed resilience measures, including engaging in comprehensive disaster management programmes and obtaining sufficient disaster insurance. Although conditionality is the most widely cited means by which inter­ national organisations influence domestic policies, they also have at their dis­ posal subtler means of persuasion. Not only can these institutions withhold access to resources, but they possess considerable expert authority and organ­ isational capacity (Babb and Kentikelenis, 2018) and thus the ability to effect ‘the interdependent, but un-coordinated diffusion of practices by means of cross-national imitation, emulation or learning’ (Busch and Jörgens, 2005, p. 862). A prime example of this is the central role played by the World Bank from the late-1960s in extending development norms beyond merely industrial expansion and GDP growth to encompass poverty alleviation and, from the early-1970s, environmental protection (Finnemore, 1996). With respect to the latter, Park (2007) argues that norm diffusion has been more significant than conditionality in the articulation of sustainable development discourses and practices. Norms can be defined as ‘shared expectations about appropriate behaviour held by a community of actors’ (Finnemore, 1996, p. 22). These are diffused ‘by international organisations by forming international agendas, constructing dis­ course, enforcing rules, and mediating between states’ (Park, 2007, p. 536), thereby ‘creat[ing] patterns of behaviour in accordance with their prescriptions’ (Finnemore, 1996, p. 23). Importantly, dominant norms do not simply reflect the preformed ideas or interests of the diffusing organisation or their member states, but are the result of socialisation processes through which ‘ideas held by indi­ viduals become norms in the sense of collective understandings about appro­ priate behaviour … lead[ing] to changes in identities, interests and behaviour’ (Risse and Sikkink, 1999, p. 11). From the beginning of the sustainable development era, the World Bank has played a leading role in the development and diffusion of sustainable develop­ ment norms. In 1970 the Bank became the first multilateral development bank (MDB) to establish an Office of the Environment and to apply environmental criteria to some of its lending practices, although it was not until the mid-1980s that environmental considerations began to figure prominently in Bank opera­ tions and discourse (Moretti and Pestre, 2015; Park, 2007). These reforms were prompted by opposition to two major World Bank supported projects during the 1980s and 1990s. The first was the Polonoroeste project, involving the construc­ tion of a 1,500-kilometre paved highway into the northwest Brazilian Amazon to open the area to more intensive settlement and agriculture. This project was halted in 1985 after it was revealed that the project was accelerating the destruc­ tion of the rainforest and way of life of the local indigenous peoples (Wade, 1997). The other was the Narmada Valley hydroelectricity and irrigation dam scheme in central India, the first stage of which involved the construction of one of the world’s largest dams and the displacement of approximately 40,000 households. After years of opposition from activists, NGOs, and some lending

The World Bank’s resilience discourse 163 governments, and an independent external review, the Bank ended its involve­ ment in 1993 (Park, 2007; Wade, 1997). Against the backdrop of the Polonoroeste and Narmada debacles, and mount­ ing criticisms of the Bank’s environmental performance in general (Clapp and Dauvergne, 2011; Reed, 1997), the Bank completed ‘a paradigmatic shift from ‘frontier economics’ before 1987, to ‘environmental protection’ up to the early 1990s, and on to […] more comprehensive ‘environmental management’ there­ after’ (Wade, 1997, p. 730). This led to the ‘mainstreaming’ of environmental criteria within Bank operations, beginning with the instigation of Bank-wide environmental safeguard procedures in 1989. During the 1990s, the Bank under­ went considerable organisational change to integrate environmental concerns into its operations, the centrepiece of which was the creation of a central Environmentally and Socially Sustainable Development (ESSD) vice presidency in 1996. A decade later this position became the Vice Presidency for Sustainable Development, controlling approximately 40 per cent of the Bank’s lending port­ folio (Park, 2007). Other examples of the mainstreaming of sustainable develop­ ment within the Bank in the early-2000s include incorporating sustainability into its mission statement; increasing lending to environmental projects; employing more environmental staff; and providing training and incentives for staff to include environmental considerations in their work (Park, 2007). In the wake of the 2008 global financial crisis, there were some signs of a dis­ cursive shift within Bank and some of the other main sustainable development institutions, with the adoption of the language of ‘green growth’ and ‘green economy’ (ILO, 2012; UNEP, 2011; World Bank, 2012b; WTO, 2012). The World Bank (2012b, p. 2) defines green growth as ... growth that is efficient in its use of natural resources, clean in that it minimises pollution and environmental impacts, and resilient in that it accounts for natural hazards and the role of environmental management and natural capital in preventing physical disasters. While at one level these new discourses could be interpreted merely as a diver­ sion from the fundamental incapacity of sustainable development to facilitate the transition to an ecologically sustainable global economy (Wanner, 2014), the green growth/green economy agenda is somewhat more critical of industrial society than conventional sustainable development (Ferguson, 2015). However, at the same time that the Bank has been promoting green growth and publicly stating its intention to cease supporting greenhouse gas producing projects, it has continued to invest heavily in projects that are either large pro­ ducers or consumers of fossil fuels. For example, in 2013 the World Bank (2013b, p. 25) announced that it would expand lending to energy efficiency and renewable energy projects whilst ‘provid[ing] financial support for greenfield coal power generation projects only in rare circumstances … such as meeting basic energy needs in countries with no feasible alternatives to coal’. However, any new coal developments, irrespective of the jurisdiction in which they are

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located, are incompatible with avoiding global warming of 2 degrees Celsius, let alone keeping warming to 1.5 degrees (Davidson et al., 2013), above which many of the world’s most vulnerable communities are likely to suffer severe food and water shortages, adverse health impacts, and serious economic losses (Intergovernmental Panel on Climate Change, 2018). Meanwhile, in 2017 the World Bank (2017c) announced that it would cease financing upstream oil and gas projects after 2019, except in the poorest countries where there are signi­ ficant energy shortages and the project complies with the host countries’ emis­ sions reductions commitments under the Paris Agreement. Most recently, the World Bank (2018) announced a new set of climate targets for 2021–2025, including increasing finance for climate projects to US$200 billion over five years and supporting 36 gigawatts of renewable energy and 1.5 million gigawatt hours equivalent of energy efficiency improvements. However, a recent analysis of over 675 energy-related World Bank supported projects conducted by Mainhardt (2019) found that, although the Bank is con­ tributing a substantial amount of project finance and technical assistance to renewable energy development, it continues to require governments to adopt investment incentives for coal and upstream oil and gas, while its current energy lending significantly favours fossil fuels over renewable energy, US$21 billion to US$7 billion, respectively. This gap closes somewhat if large hydropower operations are classified as renewable, but remains significant at US$21 billion to US$15 billion. Moreover, the analysis found that since announcing its with­ drawal from funding new coal power plants in 2013, the Bank has approved over US$12 billion worth of loans to fossil fuel projects and only a little over US$5 billion for renewable energy, whilst continuing to hold US$1.3 billion of equity investments in fossil fuel projects compared to US$350 million in renewable energy. It should be noted that although the Bank disputed most of these find­ ings, it has not provided sufficient data to refute the analysis (Chavkin, 2019). In any case the energy lending practices of the Bank are not insignificant for global greenhouse gas emissions, given that in the five years to 2019, it has been involved in energy sector financial flows in more than 65 countries, either through providing energy project finance or energy-related development policy finance (Mainhardt, 2019).

From sustainable development to resilience At one level, resilience can be simply defined as ‘the capacity of an entity or system to withstand shocks, recover, adapt, or in some cases learn, evolve, or move to a new systemic equilibrium while maintaining basic functions’ (Corry, 2014, p. 257; see also Boas and Rothe, 2016; Brown, 2013; Walker and Cooper, 2011). However, analysts have identified a range of existing/emergent articula­ tions of resilience in contemporary environment, development, and security dis­ course (Bourbeau, 2013; Cavelty et al., 2015; Ferguson, 2019; Methmann and Oels, 2015; Welsh, 2014). Across these fields, resilience is most readily analysed in terms of its biopolitical role ‘in reproducing and disseminating neoliberalism

The World Bank’s resilience discourse 165 … [by] controlling ‘life’ or populations’ (Corry, 2014, p. 258; see also Chandler and Reid, 2016; Joseph, 2013; Reid, 2012; Walker and Cooper, 2011; Welsh, 2014; Zebrowski, 2016). This biopolitics of security does not preserve and protect in the traditional sense of security, but instead seeks to interpellate subjects to behave in ways that enhance their own security. Moreover, whereas ‘[c]lassical security discourse presumes […] that it is dealing with a fixed object, […b]iopolitical security discourses and techniques deal with an object that is continuously undergoing transformation and change’ (Dillon and Lobo-Guerrero, 2008, p. 283). For this reason, Ferguson (2019) argues that neoliberal resilience discourses are distinguished by the adoption of both discrete entities, such as vulnerable individuals, communities, and states, and systemic entities, primarily ‘the economy’ and ‘the biosphere’ as their key referent objects – that is those entities ‘that are seen to be existentially threatened and that have a legitimate claim to survival’ (Buzan et al., 1998, p. 36). In the case of discrete referents, these enti­ ties are assigned responsibility for ensuring their own security by developing the requisite attributes to increase their own resilience (Joseph, 2013). With respect to individuals, resilience is depicted as indispensable to survival in an unregu­ lated and unpredictable market system, in which the state takes little responsib­ ility for the welfare of its citizens, irrespective of how this is circumscribed by limited educational opportunities, poor health, ecological risks, or prevailing economic structures (Brown, 2005; Dean, 2009). For states, especially those that are highly vulnerable to political, economic, and environmental shocks, resili­ ence is articulated as an essential means of remaining competitive in the global market economy (Walker and Cooper, 2011). In both cases, the fundamental biopolitical function of resilience discourse is to imbue vulnerable states and individuals with the requisite characteristics to be resilient in the face of global socioeconomic and climatic instability (Grove and Chandler, 2017; Joseph, 2013). However, this is not necessarily to protect these subjects directly from harm, but to preserve the conditions for the perpetuation of neoliberal capitalism by constructing citizen-subjects as ‘entrepreneurs and consumers’ who are ‘adapted to the inherent insecurities of market life’ (Corry, 2014, p. 259). Hence the concern of resilience discourses with systemic referents such as ‘the economy’ and ‘the biosphere’, which are to be secured through dynamic trans­ formation in response to perturbations (Dillon, 2008). There is some debate as to whether resilience merely constitutes a new security value within the broader discursive matrix of neoliberal sustainable development (Chandler and Reid, 2016; Reid, 2012), or whether resilience is actually displacing sustainable development as the dominant meta-discourse of global environmental, development, and security governance (Felli, 2016; Frank­ enberger et al., 2014; Tierney, 2015; Zebrowski, 2016). For example, from the former perspective, Reid (2012) argues that sustainable development has shifted from its original focus on the security of states and their human inhabitants to a concern with the perpetuation of living systems. However, as Felli (2016, p. 275) points out, this account ‘puts too much emphasis on the continuity between

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sustainable development and resilience’, because the key cleavage between the two concepts is ‘that resilience insists on the adaptation to environmental change, whereas the discourse of sustainable development essentially aims at avoiding (or mitigating) environmental change’. According to Felli (2016), resilience also departs significantly from sustainable development, because whereas the former is concerned with facilitating economic production, the later seeks to shape the conditions of social reproduction.

The World Bank’s resilience discourse A number of studies have examined the World Bank’s turn to resilience dis­ course (Brown, 2012; Ferguson, 2019; Joseph, 2013; Tierney, 2015), the most comprehensive of which is Felli (2016), who provides an overview of the way the resilience language functions in the annual World Bank World Develop­ ment Reports (WDRs). He observes that while resilience does not have a stable meaning in these documents, since about 2008 the Bank has ascribed the potential for resilience to various entities, including human beings, com­ munities, states, ecosystems, institutions, and infrastructure, across various contexts such as those of global environmental change, development, dis­ asters, and adaptation. One of the Bank’s first significant textual forays into the resilience field was its 2008 Roots of Resilience: Growing the Wealth of the Poor report, which was jointly published with the United Nations Development Programme (UNDP), United Nations Environment Programme (UNEP), and the World Resources Institute (WRI). The contention of this document was that ‘properly designed enterprises can create economic, social, and environmental resilience that cushion the impacts of climate change, and help provide needed social stability’ (UNDP et al., 2008, p. vii) to lift the world’s poorest citizens out of poverty. Resilience was defined in this report as ‘[t]he capacity of a system to tolerate shocks or disturbances and recover’ which is dependent upon the ability of people to ‘adapt to changing conditions through learning, planning, or reorgani­ sation’ (UNDP et al., 2008, p. 27). Elsewhere, the World Bank has also defined resilience as ‘[t]he ability of a system, community or society exposed to hazards to resist, absorb, accommodate to and recover from the effects of a hazard in a timely and efficient manner’ (2015, p. 76); and ‘the ability of people, societies, and countries to recover from negative shocks, while retaining or improving their ability to function’ (2013b, p. 12). Concepts such as ‘climate resilient development’, which is characterised as a ‘set of institutional arrangements, processes and instruments that help identify the risks from disasters, climate extremes, gradual long-term climatic changes, and their associated impacts, and the design of measures’ to ‘help the poor become more resilient’ (World Bank, 2013a, viii, 3) have also been enunci­ ated. Another frequent trope is ‘resilient recovery’, which seeks to ‘build resili­ ence during recovery and promotes resilience in regular development … [as] a means to sustainable development’ (World Bank, 2015, p. 76).

The World Bank’s resilience discourse 167 Over the last decade, the World Bank (2011; 2012c; 2012a; 2013a; 2015; 2017d; 2017b; 2019e) has published a raft of reports promoting the concept of resilience; established resilience programmes, including the City Resilience Program and the Global Program for Resilient Housing (World Bank, 2019b); held a regular Resilience Dialogue to monitor and report on progress on its resili­ ence agenda (World Bank, 2019d); and complied resilience-focussed data sets, such as ASPIRE: The Atlas of Social Protection Indicators of Resilience and Equity (World Bank, 2019a) and the Open Data for Resilience Initiative (World Bank, 2019c). Meanwhile, resilience has been identified as a priority in several of the Bank’s recent annual reports, including in 2017, when ‘[f]ostering resili­ ence to global shocks and threats’ was identified as one of three key priority areas of Bank operations, along with ‘[a]ccelerating sustainable and inclusive economic growth’ and ‘[i]nvesting in people to build human capital’ (World Bank, 2017a, p. 1). Resilience has also featured in recent WDRs, especially in 2010, 2011, and 2014, the latter of which contained sections on ‘cohesive and connected communities creating resilience’ and ‘fostering resilience and pros­ perity through a vibrant enterprise sector’ (World Bank, 2013b). Although the WDRs are probably the most widely read publication in the development field (Babb and Kentikelenis, 2018), we have selected three other recent documents to analyse the Bank’s resilience discourse that focus prim­ arily on issues of climate change and sustainability. The criteria for selecting these documents were adapted from Ferguson (2019) and Hansen (2006), who contend that to be meaningful, the texts examined in a discourse analysis must be generated at a high level with the formal authority to define a political posi­ tion; clearly articulate a referent object and policy strategy/response; and be widely read and attended to, thereby signalling a reasonable degree of polit­ ical significance. The first criterion is easily satisfied, because as the preeminent MDB in terms of its public profile, near universal national membership, and capacity to diffuse economic, social, and environmental norms (Engen and Prizzon, 2018; Felli, 2016), any publication by the World Bank carries a high level of formal author­ ity. To satisfy the second criterion, ‘resilience’ had to be articulated as a strategy to reduce the vulnerability of both discrete and systemic referents. For each document, the prevalence of the term ‘resilience’ and its variants ‘resilient’ and ‘resiliency’ was established by expressing the number of times these terms appear as a proportion of the total pages in each document. On each occasion that resilience appeared, the referent object to which it was related was also recorded, as were the nodal points of each discourse. Nodal points are the set of key rhetorical devices that constitute the privileged or dominant forms of speech that fix the meaning of a particular discourse (Laclau and Mouffe, 2001). For example, notions of ‘freedom’ have one meaning when articulated as a nodal point within neoliberal discourse in terms of ‘free-markets’ and ‘free-trade’ and quite another within discourses of national self-determination or human auto­ nomy (James, 2004; Steger, 2005). Meanwhile, the third criterion concerning the level of attention attained by each text was measured using the number of times

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each document had been mentioned on Twitter as of September 2019. This data is contained in Table 11.1. The first document analysed was Resilient Recovery: An Imperative for Sus­ tainable Development (2015), which was prepared to inform deliberations at the third UN World Conference on Disaster Risk Reduction. The report ‘documents the challenges and progress around the world in integrating disaster risk reduc­ tion measures into post-disaster recovery and rehabilitation … and recommends policies and practices for achieving resilient development gains through the recovery process’ by ‘[b]uild[ing] resilience culture with knowledge [and] education’ and by implementing ‘community driven resilient investment’ (World Bank, 2015, pp. 40, 19, 31). It is also avers that ‘[c]ountries can greatly benefit from an approach that comprehensively allocates financial and human resources across sectors with an explicit aim for resilient recovery and reconstruction’ and that ‘recovery must be viewed as part of an integrated continuum, inseparable from preparedness, response, mitigation, and development’ (World Bank, 2015, pp. 22, 38). The primary nodal point in this report is ‘resilience building’ and related notions of ‘resilient recovery’, ‘resilient development’, ‘disaster resili­ ence’, and ‘community resilience’. As Felli (2016, p. 282) points out, the Bank’s notion of resilience as something that can be actively ‘built’ ‘conveys the idea that in the absence of such interven­ tions, resilience will be destroyed, lost or is simply insufficient’. However, while the Bank promotes building resilience, this is rarely something it offers to do itself. Nor does it advocate for a significant resilience building role for governments or Table 11.1 World Bank’s resilience discourse Document

Primary referent object/s

Nodal points

Prevalence Level of of resilience attention

Resilient Recovery: An Imperative for Sustainable Development (2015)

Developing countries, vulnerable communities (discrete)/ the economy, the climate (systemic)

Resilience building, 227 mentions/ resilient recovery, 76 pages resilient development, disaster resilience, community resilience

81 Twitter mentions (September 2019)

World Bank Group Climate Change Action Plan 2016–2020 (2016)

Developing countries, vulnerable communities (discrete)/ the economy, the climate (systemic)

Resilience building, 168 resilient development mentions/ and growth, climate 74 pages resilience, poverty reduction, adaptation, financialisation

6,650 Twitter mentions (September 2019)

The World Bank Group’s Action Plan on Climate Change Adaptation and Resilience (2019)

Developing countries (discrete)/ the economy, the climate (systemic)

Adaptation, systemic planning and resilience, climate resilience, financialisation

1,670 Twitter mentions (September 2019)

87 mentions/ 18 pages

The World Bank’s resilience discourse 169 public policy. This observation is consistent with other recent analyses of the Bank’s language, which since the 1980s has increasingly articulated development as a process of fostering certain attributes in target populations, rather than the achievement of tangible policy outcomes that directly improve people’s lives by reducing poverty, enhancing livelihoods, improving health and education, and/or mitigating environmental risks (Cannon and Müller-Mahn, 2010; Moretti and Pestre, 2015). The role of the state is also minimised in these discourses, via the replacement of the language of ‘government’ with ‘governance’, and by emphasis­ ing the role of transnational entities, such as UN agencies, MDBs and international monitoring, standards and accreditation bodies in the process of development, rather than national governments (Moretti and Pestre, 2015). Responsibility for generating resilience is thereby apportioned to ‘vulnerable communities’ and ‘developing countries’, who constitute the primary discrete referent objects of this articulation of resilience discourse. The focus on com­ munities, in particular, is an illustrative example of the ways in which governmentality through resilience discourse functions as an abstract process, in which specific agencies and responsibilities disappear. Meanwhile, the key systemic referents are ‘the economy’, which the Bank is loath to see subject to state inter­ vention, and ‘the climate’, which is depicted as a source of existential risk to vulnerable states and communities. However, imploring vulnerable communities to be resilient in the face of climatic risks that they did not produce and have limited capacity to manage or ameliorate effectively increases the exposure of the most vulnerable, while enhancing the adaptive capacity of the most privi­ leged (Zebrowski, 2016; Joseph, 2013; Welsh, 2014). The second document analysed was the World Bank Group Climate Change Action Plan 2016–2020 (2016), which sets out measures to help countries meet their obligations under the Paris Agreement in the areas of ‘clean energy’, ‘green transport’, ‘climate-smart agriculture’, and ‘urban resilience’. One of these actions is for the World Bank (2016, p. 10) to ‘have contributed to sustainable poverty alleviation and shared prosperity by building resilience to climate change impacts and policies and decarbonising development’. Another is to ‘rebalance’ the Bank’s lending portfolio by ‘putting a greater focus on adapta­ tion and resilience’ (World Bank, 2016, p. 2). Again, these are not clearly defined policy initiatives, but merely vaguely worded aspirations. The document also emphasises that ‘[b]uilding people’s resilience to prepare for and respond to climate disasters is critical to managing climate impacts and eradicating poverty’, to which end the World Bank (2016, pp. 50, 51) promises to ‘scale up and expand the use of community-driven development approaches to strengthen resilience at the local level’. As these quotations demonstrate, the key nodal point in this articulation of resilience discourse is once again ‘resilience build­ ing’, and associated notions of ‘resilient development and growth’, ‘climate resilience’, ‘poverty reduction’, ‘adaptation’, and ‘financialisation’. Similarly, the primary discrete referent objects are ‘developing countries’ and ‘vulnerable communities’, while ‘the economy’ and the ‘the climate’ constitute the under­ lying systemic referents.

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The final document analysed was The World Bank Group Action Plan on Climate Change Adaptation and Resilience (2019), which extends the commit­ ments made under the 2016 Climate Change Action Plan. This strategy increases the emphasis placed on climate adaptation by increasing funding to low-income and middle-income countries; supporting these states to take a mainstreamed approach to adaptation; and developing a new rating system to ‘incentivise’ investments in adaptation and resilience. In this document, ‘adaptation and resili­ ence are [articulated as] two sides of the same coin’ (World Bank, 2019e, p. 3), while borrowing nations are implored to ‘analyse policies, data, institutions, behaviours, and finance to identify potential barriers to increased adaptation and resilience action and to design the most cost-effective approaches to overcoming those barriers’ (World Bank, 2019e, p. 6). The World Bank (2019e, pp. 11–12) also undertakes to ‘increase its support to countries to access a wider, more diverse set of financing instruments […] to reduce their exposure to climate risks and improve the effectiveness of adaptation and resilience finance’. The primary nodal point in this document is ‘adaptation’, which, despite appearing 139 times across 24 pages, is never precisely defined. Instead, much of the report is focused on identifying and removing potential ‘barriers to adapta­ tion’ and ‘avoiding maladaptation’. However, as is the case with resilience, adaptation is a discursive construction that obscures the relations of power that structure global patterns of risk distribution. As a primarily technical concept, adaptation also rarely transcends the scientistic and ‘imposed rationality’ dis­ courses that are unfamiliar to the daily practices of the people who are actually at the centre of the interaction between the socioeconomic and ecological systems (Cannon and Müller-Mahn, 2010), and to whom adaptation discourses are directed. This would appear to be the case in the 2019 Action Plan on Climate Change Adaptation and Resilience, which articulates adaptation in terms of ‘systemic planning and resilience’. Notions of ‘climate resilience’ and ‘financialisation’ are also prominent tropes, while the key discrete referent object is ‘developing countries’, and the ‘the economy’ and ‘the climate’ are once again the primary systemic referents.

Conclusion: reactive norm diffusion and the crisis of global climate governance The current articulation and diffusion of resilience discourse and norms by the World Bank and other international organisations appears to be a reaction to the crisis of global climate governance. At one level, this is a response to the failure of world leaders to negotiate an ambitious legally binding emissions reduction treaty to succeed the Kyoto Protocol, notwithstanding the 2015 Paris Agreement, with its mixture of mandatory and non-mandatory provisions (Bodansky, 2016). Moreover, the continuing ambition gap between emissions reductions commit­ ments made by signatory nations and the level of total global cuts required to avoid warming of 1.5 degrees Celsius by the end of the century (Kemp, 2018), and the withdrawal of the United States from the treaty, have increased

The World Bank’s resilience discourse 171 scepticism on both the globalist/environmentalist left and populist right about the capacity of national governments and multilateral processes. This has opened up discursive space for alternative, non-state forms of climate governance to emerge. Resilience is uniquely suited to this role, because instead of being stateled and goal-oriented – that is, directly mandating emissions reductions – it is based upon collaborative, flexible, and learning-based forms of adaptive govern­ ance (Boas and Rothe, 2016; Chandler, 2014; Dyer, 2014). More fundamentally, the failure of sustainable development to arrest either the global ecological crisis or the crisis of global poverty over the last 30 years suggests a deeper normative crisis for global environmental and development governance. This problem stems from both sustainable development’s conflation of economic growth with development (Cannon and Müller-Mahn, 2010) and its demonstrable failure to reconcile continued growth with environmental protec­ tion (Chasek et al., 2012; Dryzek, 2013; Redclift, 2005). This has given rise to the ‘illusion … that it is possible to achieve the goal of development while at the same time allowing (even encouraging) increasing income and asset disparities and in general harming the environment’ (Cannon and Müller-Mahn, 2010, p. 624). However, much of this growth-based development has actually increased the vulnerability of the poor, who are in turn routinely forced to further degrade the environment to survive (Blaikie et al., 2005), sometimes aided and abetted by World Bank lending practices. Eckersley (2010, p. 264) describes this as ‘the sustainable development paradox’, in which environmental protection is claimed to be best achieved by pursuing increased economic growth, but this generates more aggregate environmental problems. So while sustainable devel­ opment may have provided an ‘artful political compromise’ (Eckersley, 2010, p. 263) by discursively dissolving the contradiction between economic growth and environment protection, it has not generated substantial or effective innova­ tion at the level of policy implementation (Redclift, 2005). In this context, the language of resilience has emerged to replace, or least attempt to reinvigorate, the largely discredited language of sustainable develop­ ment. However, like sustainable development, resilience is an ill-defined concept, leaving it prone to co-optation by widely divergent interests, actors, and contexts (Felli, 2016; Gillard, 2016; Joseph, 2013; Tierney, 2015). While in the long term this may render the discourse as meaningless as sustainable develop­ ment, in the short term resilience has the potential to produce consent between opposing perspectives. This is demonstrated by the way that resilience proffers solutions, or at least means of adaptation, to the problems of vulnerability, insec­ urity, poverty, and climate change that are not as threatening to existing capital­ ist structures as the defence or extension of universal public provision of social security or large-scale intervention in energy markets. For international organisations such as the World Bank, whose legitimacy largely derives from its ability to accommodate the often-contradictory interests of its major shareholders and developing country borrowers, resilience language is especially alluring. This is because resilience offers an ideological justification for the withdrawal of the state from welfare provision and social protection in

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the global North, while in the South it provides a rationale for rescaling develop­ mental policies to focus on small-scale behavioural interventions rather than fundamental structural change (Felli, 2016). In this way, the ‘recurrent transmu­ tation of social forces into abstractions’ such as resilience ‘turns the World Bank reports into strangely metaphysical documents, whose protagonists are often, not economic agents, but principles – and principles of so universal a nature, it’s impossible to oppose them’ (Moretti and Pestre, 2015, p. 15). The conciliatory potential of resilience discourse is also demonstrated by attempts, especially in the United States and Europe, to articulate climate change as a security threat (German Advisory Council on Global Change, 2007; UK Ministry of Defence, 2008; US Department of Defense, 2014). This has generated significant disquiet among the BRICS nations (especially China, India, and Brazil), who have argued vehemently that climate change is an issue of sustainable development rather than national security. The key concern of these states is that by construing climate change as a security problem rather than a development problem, issues of global distributive justice will be ignored (Conca et al., 2017; Oels, 2012; Warner and Boas, 2017). By shifting the focus from the simple causalities of climate-conflict narratives towards the complex interdependencies of social, ecological, and economic systems, resilience reframes security, environmental, and develop­ ment issues in less zero-sum, apocalyptic language, without losing the focus on the North-South divide (Boas and Rothe, 2016). In this way, just as the World Bank and other multilateral organisations adopted sustainable development as a palatable discursive compromise between environmental protection and development aspirations from the late­ 1980s, in the second decade of the twenty-first century, neoliberal articulations of resilience offer a new conciliatory discourse that seeks to satisfy a set of hitherto incompatible global environmental governance perspectives. It does this, on the one hand, by offering a discourse of ecological risk mitigation that resonates with globalist environmentalist perspectives, populist sceptics of multilateralism, and global capital. On the other hand, resilience offers a climate security and development discourse that accommodates both the national security objectives of major Western powers and the development aspirations of the BRICS nations. However, what resilience discourse, especially in its neoliberal mani­ festations, does not do is articulate a tangible strategy for the world’s most vul­ nerable people to mitigate the mounting ecological and economic risks they face. This is because, by appropriating metaphors of system function from ecosystem science and engineering, resilience discourse obscures the ways in which vulner­ ability is fundamentally socially constructed (Cannon and Müller-Mahn, 2010). This has led some observers to dismiss resilience as an inherently depoliticising and disempowering concept (MacKinnon and Derickson, 2013; Jerneck and Olsson, 2008; Reid, 2012), which is ‘actively employed as a tool to privilege and reinforce dominant political ideologies’ (Cretney, 2014, p. 632), first and fore­ most, neoliberal sustainable development norms.

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UK Strategic Trends Programme. (2014) Global Strategic Trends – Out to 2045. London: UK Ministry of Defence. UNEP (United Nations Environment Programme). (2011) Towards a Green Economy. Nairobi. United Nations Development Programme (UNDP), United Nations Environment Programme (UNEP), World Bank and World Resources Institute (WRI). (2008) Roots of Resilience: Growing the Wealth of the Poor. Washington, D.C. US Department of Defense. (2014) Quadrennial Defense Review Report. Washington, D.C. US Department of Homeland Security. (2007) National Strategy for Homeland Security. Washington, D.C. Wade, R. (1997) Greening the Bank: The Struggle over the Environment, 1970–1995. In D. Kapur, J. Lewis and R. Webb (eds), The World Bank: Its First Half Century. Wash­ ington, D.C.: Brookings Institution Press, pp. 611–734. Walker, J. and Cooper, M. (2011) Genealogies of Resilience: From Systems Ecology to the Political Economy of Crisis Adaptation. Security Dialogue, 42(2), pp. 143–160. Wanner, T. (2014) The New ‘Passive Revolution’ of the Green Economy and Growth Discourse: Maintaining the ‘Sustainable Development’ of Neoliberal Capitalism. New Political Economy, 19, pp. 1–21. Warner, J. and Boas, I. (2017) Securitisation of Climate Change: The Risk of Exaggera­ tion. Ambiente e Sociedade, 20(3), pp. 203–224. Welsh, M. (2014) Resilience and Responsibility: Governing Uncertainty in a Complex World. The Geographical Journal, 180(1), pp. 15–26. World Bank. (2011) Increased Productivity and Food Security, Enhanced Resilience and Reduced Carbon Emissions for Sustainable Development. Washington, D.C. World Bank. (2012a) Building Resilience to Disaster and Climate Change through Social Protection. Washington, D.C. World Bank. (2012b) Inclusive Green Growth: The Pathway to Sustainable Development. Washington, D.C. World Bank. (2012c) Resilience, Equity, and Opportunity: The World Bank’s Social Pro­ tection and Labor Strategy 2012–2022. Washington, D.C. World Bank. (2013a) Building Resilience: Integrating Climate and Disaster Risk into Development. Washington, D.C. World Bank. (2013b) World Development Report 2014. Washington, D.C. World Bank. (2015) Resilient Recovery: An Imperative for Sustainable Development. Washington, D.C. World Bank. (2016) World Bank Group Climate Change Action Plan 2016–2020. Washington, D.C. World Bank. (2017a) Annual Report 2017. Washington, D.C. World Bank. (2017b) Investing In Urban Resilience. Washington, D.C. World Bank. (2017c) World Bank Group Announcements at One Planet Summit. Washington, D.C. World Bank. (2017d) World Bank Resilience M&E. Washington, D.C. World Bank. (2018) World Bank Group Announces $200 billion over Five Years for Climate Action. www.worldbank.org/en/news/press-release/2018/12/03/world-bank­ group-announces-200-billion-over-five-years-for-climate-action. World Bank. (2019a) ASPIRE: The Atlas of Social Protection Indicators of Resilience and Equity. http://datatopics.worldbank.org/aspire/home. World Bank. (2019b) Global Program for Resilient Housing. www.worldbank.org/en/ topic/disasterriskmanagement/brief/global-program-for-resilient-housing. World Bank. (2019c) Open Data for Resilience Initiative. https://opendri.org.

The World Bank’s resilience discourse 177 World Bank. (2019d) Resilience Dialogue Series. Washington, D.C. World Bank (2019e) The World Bank Group’s Action Plan on Climate Change Adapta­ tion and Resilience. Washington, D.C. WTO (World Trade Organization) (2012) Harnessing Trade for Sustainable Development and a Green Economy. Geneva. Zebrowski, C. (2016) The Value of Resilience. Oxford: Routledge.

12 Challenging the hegemony of the Washington Consensus The development potential of BRICS ‘from below’ Janet Cherry Introduction BRICS (Brazil, Russia, India, China, South Africa) has been anticipated by progressive development analysts and practitioners, social justice activists, and labour movements in the developing world alike, to pose the first serious alternative to the hegemony of the Washington Consensus. As Brazilian analyst Pepe Escobar recently (2019a) announced, ‘The Unipolar moment is over!’; and as Gayton McKenzie (2017, n.p.) wrote: It’s likely you have never known a world in which the USA was not the dominant force, the de facto controller of the world ... so it may be hard to imagine any of that changing. Do not underestimate the power of the Brics (Brazil, Russia, India, China and South Africa) bloc and the change in the balance of world power that it represents…. Especially for Africa, BRICS represents the first major opportunity in centuries to break the grip of colonialism and post-colonial oppression for the continent. The ‘left populism’ of the dominant parties in South Africa and Brazil, the authoritarian state socialism of Russia and China, and the recent nationalist ‘right populism’ of Modi’s government in India and Bolsonaro’s in Brazil, have combined in a sometimes-uncomfortable challenge to the unilateral dominance of the neoliberal right populism of Trump’s USA in the global political economy. While some on the left have claimed this as a counter-hegemonic bloc, others remain deeply sceptical of the ability of BRICS to create a genuine multilateralism, one which will lead to a more just distribution of power and resources in the world. This chapter critically examines the potential of BRICS to pose a counterhegemonic bloc in the global political economy. Using a Gramscian analysis of power and ideology, as well as a class analysis of social movements, the argument is put forward that while the claim that BRICS is a counter-hegemonic bloc should be viewed with some scepticism, at the same time the new social movements that are emerging have the potential to pose a challenge to the status quo. It is cautiously concluded that there is an opportunity for developing countries of

Challenging the Washington Consensus 179 the South to use the institutional spaces created by BRICS and the New Development Bank (NDB) to forge decentralised and sustainable development partnerships.

The new scholarship of BRICS Since the inception of BRICS in 2009, there has been considerable academic interest and consequently funding of research into various aspects of this new institution which indicated that it had the potential to alter the balance of power in the global political economy. As 40 per cent of the world’s population are living in these five most powerful of the world’s developing economies, development researchers and analysts also have a serious interest in the role of BRICS in the global development debate. From 2010, when South Africa was included in the BRICS, a number of scholars have collaborated in at least two different transnational research projects. The mainstream research coming from the BRICS countries themselves is represented by the BRICS Think Tank Council (BTTC), with each country represented by a research institute. The South African BRICS Think Tank is funded by the National Institute of Humanities and Social Sciences (NIHSS) and chaired currently by Siphamandla Zondi, who took over in 2018 from Ari Sitas. Zondi, who participated in the BRICS academic forum held in Brazil in 2014, was optimistic about the potential of BRICS ‘to transform how we think about, discourse on and practice international development’ (2014, p. 78). Whereas to date, he argued, developing countries have remained ‘agenda takers’ rather than being ‘agenda setters’ in the global institutions on financial aid (2014, p. 79) he predicted that ‘BRICS countries will use their wealth and voice to promote a significant change in the nature of global development partnerships’ (2014, p. 78) Zondi, in 2014, set out four conditions for the BRICS’ potential impact on the international development agenda to be realised. The most critical of these, what Zondi calls ‘the proof of the pudding of the BRICS development agenda’, is … in how it conducts its development partnerships in ways less constraining, less patronizing, less subordinating than what development countries have become accustomed to in their experiences of the OECD approaches to development assistance. (2014, p. 81) In order to do so, he believes that the BRICS need ‘greater internal cohesion’ and that this should be built upon the principles of collective self-reliance, endogenous development, and solidarity (2014, p. 82). How internally coherent is BRICS, how have the BRICS development partnerships been functioning to date, and is solidarity possible between BRICS countries? These questions are asked, and attempts are made to find some answers from the scholars and civil society movements in some research projects conducted in the BRICS countries of the South. These research projects, upon

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which this article draws, are framed as ‘BRICS from Below’ – in other words, they are examining the grassroots movements and the subaltern classes in the BRICS countries, and their relationship to the national governments and elites of their countries, to ascertain who is really benefitting from BRICS, and how, at a sub-national level. Patrick Bond, Professor of Development Studies at the Centre for Civil Society at the University of KwaZulu-Natal, together with Ana Garcia and other scholars from Brazil, have engaged in a ‘BRICS from below’ project funded by the Ford Foundation. Their research, debated in Brazil and South Africa during the BRICS summits in 2013–2014, was published as an ‘anti-Capitalist critique of BRICS’ in 2015. Karl von Holdt, another South African scholar from the labour movement, and head of the Sociology, Work and Politics Unit (SWOP) at the University of the Witwatersrand, has engaged with other scholars internationally in a project funded by the NIHSS which focuses on the social movements within BRICS countries. Over the last ten years, a large body of research has thus been generated by scholars from within BRICS countries, scholarship which has been both positive about the actual and potential achievements of BRICS, and that which has been profoundly critical of BRICS. This chapter draws on this body of existing research, to evaluate BRICS in relation to the question of multilateralism, with a focus on ‘the grassroots’ and an answer to the question ‘who benefits’? The BRICS and the ‘new Scramble for Africa’ (Kimenyi and Lewis, 2011) has been a subject of much debate in South Africa as well as its trading partners, with China playing a significant and contested role in many sub-Saharan African economies. Moyo and Yeros (2015, p. 247) describe the newly emerging giants including China, India, and Brazil as ‘New giant blocs of domestic capitals … vying for a place in the sun’ and in the process these semiperipheral powers are engaged in a ‘new scramble for land and resources in Africa’. Some argue that ‘the collective emergence of these semi-peripheries implies a system-changing diversification of economic partners in the South’ (Moyo and Yeros, 2015, p. 248). South Africa’s addition to BRICS in 2010 led to the laying of emphasis on the optimistic notion that BRICS can lead to new development paths for Africa. Massive Chinese investment in infrastructure in certain African countries, in return for mineral resources; Russian interest in selling nuclear power to South Africa; and expanding trade relations with India, are all expressions of these new and significant economic relationships between BRICS countries and Africa. Critics have questioned whether these do in fact represent new development paths, or whether they are a new form of imperialism, following the old path of resource extraction. A more nuanced critique discusses whether a Pan-Africanist analysis is in any way useful, in the context of such great differences between African regions and countries within regions. An analysis following Wallerstein’s world systems theory understands the BRICS countries to be sub-hegemons within Africa; South Africa is thus the subhegemon in the Southern African Development Community (SADC) region;

Challenging the Washington Consensus 181 Nigeria in the Economic Community of West African States (ECOWAS) region. Between these regional sub-hegemons and the hegemonic USA (or G7) are the bigger BRICS players, in particular China. This does alter the world systems map significantly, as it distributes power from different points to Africa – in other words, a multilateral world system. As Ari Sitas (2018, n. p.) put it, We are living in the midst and are witnessing a major reconfiguration of the world system which is nudging us away from the unipolar world that emerged with seeming confidence under the USA’s stewardship on the eve of the Soviet world’s collapse. The left critics of BRICS are not convinced that this reconfiguration represents a significant change in power relations in the global economy. Patrick Bond, the most outspoken of the BRICS critics in South Africa, claims that ‘The BRICS offer some of the most extreme sites of the new sub-imperialism in the world today’ (2015, p. 15). Walden Bello (2014, n.p.) characterises the BRICS member countries as capitalist, labour repressive regimes, stating: ‘Make no mistake: the BRICS are capitalist regimes – albeit with large central apparatuses capable of controlling workers’. Examples of labour repression given include the brutal suppression of the platinum mineworkers at Marikana in South Africa, although it is debatable whether this is generally reflective of South Africa’s labour regulation which is understood to be labour-friendly and is criticised by neoliberal economists for being too highly regulated. China is notoriously labour-repressive; as Slavo Žižek (2009, p. 190) caricatured China it is ‘the ideal capitalist state: freedom for capital, with the state doing the ‘dirty job’ of controlling the workers’. China as the emerging superpower of the 21st Century thus seems to embody a new kind of capitalism: disregard for ecological consequences, disdain for workers’ rights, everything subordinated to the ruthless drive to develop and become the new world force. (2009, p. 191) Moreover, China’s extraordinary economic growth has been based not only on its own labour repression, but it can be convincingly argued that the price that has been paid for China’s extraordinary growth is ‘extreme exploitation and ecological devastation’ (Reddy, 2015, p. 275). In Putin’s Russia, political repression is combined with new legislation to contain labour action in the interests of the elite; as argued by Matveev (2019, n.p.), ‘the oligarchs got to save and expand their privatized empires. They also won the neoliberal reforms they needed, such as the new Labour Code that essentially prohibited strikes’. Any analysis of the potential of BRICS to pursue a social justice agenda should therefore differentiate between the authoritarian regimes of China and Russia, and the three democratic members of the South.

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Webster et al. (2014) suggest that in the democratic (though formerly authoritarian in the case of South Africa and Brazil) BRICS states of Brazil, India, and South Africa there has been a significant institutionalisation of social assistance, claimed as a right through ‘intense political struggle’ (2014, p. 297). In such a process, those considered ‘the poor’ or ‘the marginalised’ claim their citizenship and the state responds to their basic needs, through various policies including cash transfers and free basic services. They argue that this represents a ‘deepening of democracy’ (Webster et al., 2014, p. 305). They pose the question whether Brazil, during Lulu’s second term of office, represented a break with neoliberalism and the beginning of ‘a social democratic path in the Global South’ (Webster et al., 2014, p. 306). Subsequent events in Brazil, India, and South Africa would suggest that the movement is in the opposite direction; this is explored further below. Bello (2014, n.p.) argues that despite the criticisms above, ‘The dark period of unipolar domination by the United States, with its neoliberal institutions and ideology, has come to an end with the emergence of the BRICS bloc’; this, he argues, ‘is an extremely positive development’.

Sustainable development and development finance This positive development is understood to be reflected in the investment of BRICS countries in Africa. Peek (Amisi et al., 2015) offers a case study of Mozambique as an example of the BRICS developmental agenda, in which all five of the BRICS countries and their companies have invested ‘tens of billions of rand’ in various development projects in Mozambique. These include South African, Chinese, and Russian investments in offshore oil and gas, and Indian and Brazilian companies investing in mining coal and other minerals. China is Mozambique’s biggest development partner, financing and supporting infrastructure development on a massive scale. The Chinese government considers the ocean trade off the coast of Africa to be part of the ‘21st Century Maritime Silk Road’ and the infrastructure to support this trade includes the Maputo-Catembe bridge, the Maputo circular road, National Road 6, and the fishing port of Beira city, among the 13 ‘priority areas’ that were set out in a 2017 memorandum of understanding which included industrial parks, highways, agriculture, exploration of natural and energy resources, and port development (Macau Hub, 2018). The Industrial and Commercial Bank of China (ICBC) announced recently that it was increasing its investment in offshore oil and gas in Mozambique (Frey, 2019). Peek (Amisi et al., 2015, p. 105) argues that this is not a ‘random set of exploitations’ but represents instead ‘a well-orchestrated strategy to shift the elite development agenda away from Europe, the US and Japan, to what we now term the BRICS’. Peek concludes that while the BRICS countries ‘are challenging the power relations in the world, but sadly the model chosen to challenge this power is nothing different from the model that has resulted in mass poverty and elite wealth at globally’ (Amisi et al., 2015).

Challenging the Washington Consensus 183 Maguwu (Amisi et al., 2015, p. 107) illustrates how a similar pattern of the BRICS countries’ investment has occurred in Zimbabwe, but with the focus on extraction of mineral resources, in particular diamonds, gold, and chrome, as well as iron ore and platinum, with China again being the biggest ‘partner’ in the exploitation of Zimbabwe’s mineral resources alongside its junior BRICS partners. In terms of financing, before the establishment of the BRICS bank (i.e. New Development Bank, South Africa as a regional hegemon played a significant role in development finance through the Development Bank of South Africa (DBSA), which by 2014 was loaning US$1.45 billion for transport and energy projects in a number of Southern African countries (Bond and Garcia, 2015, p. 113). Bond argued at the time that the DBSA’s poor record should disqualify it from being a ‘core contributor’ to the BRICS New Development Bank. The BRICS bank is understood in this context to play a central role in the implementation of the strategy to shift the development agenda, albeit what is understood by Peek and the ‘left critics’ of BRICS to be an elite development agenda.

Standing on our own two feet: the NDB and the end of ‘dollar hegemony’? The BRICS anti-imperialist rhetoric stresses the importance of the role of a BRICS bank in enabling development finance without the IMF and World Bank ‘conditionalities’, as illustrated by South African politician Gayton McKenzie (2017, n.p.): Finally, the ANC’s old friends in the form of China and Russia, along with Brazil and India, have reached the point where they will be able to offer developmental finance to the world without the onerous conditions the International Monetary Fund and the World Bank are notorious for imposing. Many have adopted the anti-imperialist rhetoric that the NDB is an alternative to the existing international financial institutions; for example, Azikiwe (2018) notes that ‘BRICS has established a New Development Bank (NDB) whose aim is to provide an alternative to the International Monetary Fund and the World Bank’ and Bello (2014) says that the aim of the NDB and the CRA is to ‘break the global North’s chokehold on finance and development’. A more measured assessment of the NDB, however, understands it as complementary rather than alternative to existing multilateral finance institutions. As put forward at the BRICS Academic Forum in 2014, the new BRICS Bank was to be established to be ‘complementary and supplementary’ to existing development finance institution, with the targeting of investment in public infrastructure (Josie, 2014, p. 43). The NDB ‘signifies developing countries coming of age and reflects their aspirations to stand on their own two feet’, as the NDB strategy (2017, p. 6)

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optimistically states. At the Fortaleza summit of BRICS, civil society actors from both business and labour expressed their full support for the NBC as an ‘instrument for the transformation of the global economic architecture’ (Garcia, 2015, p. 280). Labelling itself as ‘a truly 21st century Multilateral Development Bank’ (NDP, 2017, n.p.), the New Development Bank (NDB) came into existence in July 2015 and was fully operational by February 2016. In its first year of operation, the NDB issued loans of US$3.4 billion for projects involving ‘green and renewable energy’ (sic), transportation, water sanitation, irrigation, and other areas (NDP website, 2019). The NDP’s strategy as set out in its ‘General strategy 2017–2021’ has sustainable development infrastructure at its core, and it committed to two-thirds of its financing in its first five-year cycle of operation being channelled into sustainable infrastructure projects (NDP, 2017). Tandon (2018) recently argued that because the NDB is based on different principles to the World Bank (WB) and the IMF, the potential exists for BRICS to offer a real alternative: Two of these principles are notable. One: unlike the WB/IMF, the NDB does not impose austerity measures on the borrowing countries. The NDB allows considerable policy autonomy to the borrowing countries. Two: unlike the IMF/WB, the NDB lends money to the borrowing countries of the South with a view to investing back in those countries for long-term development goals. (n.p.) The website of the NDB, with its slogan ‘Building Sustainable Future’, gives the impression that its focus to date has been on non-extractive development and renewable energy, with six out of the first seven NDB loans being in the renewable energy sector. Finance for water projects for both irrigation and sanitation has also been an important focus. The NDB is still a relatively new institution, and it remains to be seen whether it has made a decisive break from the extractive and fossil-fuel model of its member countries as outlined in the previous section. If this is indeed the case, it can be argued that the NDB is playing a significant role in financing of sustainable development and thus represents a departure from the previous investment relationships which were based on extraction of raw materials from developing countries. Critics such as Bond (2013) and Mazenda (2016) argue that the problem with the BRICS bank is that it is not transparent, and moreover its investment in infrastructure is focussed on supporting extractive development, in particular the exploitation of fossil fuels (as illustrated above in the case of Mozambique). Before the NDB was established, Bond (2013, p. 1) warned that: As for the BRICS Bank, precedents are not only the Bretton Woods Institutions, which some BRICS finance ministers say they aim to avoid, but also the countries’ own development finance institutions. The BRICS seem to

Challenging the Washington Consensus 185 need a bank to assure expedited extraction of Africa’s minerals, petroleum, gas and cash crops, raising further questions about how different their procorporate economic growth model is from the West. In addition to these criticisms of the NDB, as regards the US$100 billion Contingency Reserve Arrangement (CRA), it seems that the rhetoric of respect for national independence does not govern the terms of borrowing. While seen as ‘freeing developing nations from dependency on the IMF’, it ‘replicates the latter’s control’ by ‘requiring borrowers to prove ‘an on-track arrangement with the IMF’ to access over 30 per cent of the credit disbursement (Reddy, 2015, pp. 274–275). A third criticism of the NDB is its failure to challenge ‘dollar hegemony’. Hung (2015) notes that since the collapse of the Bretton Woods order in 1971, and especially since the 2008 financial crash, there has been an expectation that the hegemony of the USD would be replaced by ‘a multipolar global economy order with more or less even domination of multiple major currencies’ (Hung, 2015, p. 255). The predicted end of dollar hegemony did not come, however. The NDB and the CRA ‘require swap arrangements denominated in US dollars which completely contradicts the stated intention of weakening dollar hegemony’ (Reddy, 2015, p. 275). By the end of 2018, the NDB had loaned US$7.5 billion to various countries (Azikiwe, 2018).

Future benefits or ‘beggar-thy-neighbour’ – what has happened to BRICS since 2014? The move to the right in the USA and Europe has added further weight to China’s claim to be the champion of the new multilateralism and in particular of the global South. At the 2018 BRICS Business Summit in South Africa, President Xi made a strong statement: Unilateralism and protectionism are mounting, dealing a severe blow to multilateralism and the multilateral trading regime. We are facing a choice between cooperation and confrontation, between [an] opening up and a closed doors policy, between future benefits and the beggar-thy-neighbour approach. The international community has indeed reached a new crossroads. (Xi, 2018, n.p.) One of the characteristics of BRICS, the new ‘giant blocs of domestic capital’ as well as their investment instruments, both private and national, as well as the NDB as a multilateral finance institution, is their agreement on the need for sensitivity ‘to matters of national sovereignty’, or as is stated in the NDB strategy, ‘National sovereignty is of paramount importance to NDB in its interactions with member countries’ and consequently ‘NDB’s mandate does not include prescribing policy, regulatory and institutional reforms to borrowing countries’

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(NDB, 2017, p. 11, author’s emphasis). As noted by Tandon, this means that the NDB will not impose austerity measures, or structural adjustment programmes, unlike its ‘big brother’ the IMF. It also means that the NDB ‘will not interfere in the political affairs of member countries’ (NDB, 2017, p. 11, author’s emphasis). One can assume that labour regulations are included in the term ‘regulatory reforms’ – and thus the NDB strategy means that by default, member countries and borrowers are free to violate human rights and exploit labour as they see fit. This ‘sensitivity’ to national sovereignty can be understood to be giving free rein to authoritarian, right-wing populist and labour-repressive regimes in developing countries and emerging economies. Reddy (2015) notes the brutal policing in all BRICS countries, despite variations in the strength of organised labour. And unfortunately, as BRICS and the NDB have come into their own, the governments of both BRICS and the hegemonic global powers of the North have moved to the right. Narendra Modi’s Hindu-nationalist defeat of the Congress Movement in 2014, Cyril Ramaphosa’s replacement of Jacob Zuma in 2018 and Brazilian president Jair Bolsonaro’s ascension in 2019 together confirm the rightward political drift. (Bond, 2020, n.p.) Moreover, India’s experiments with heterodox economics has come to an end with the election of Modi, a market fundamentalist (Reddy, 2015).

Right-wing populism, the defeat of Lula and the PT, and the burning of the Amazon rainforest In August 2018, the tenth BRICS summit was held in South Africa. President Ramaphosa’s opening address to the BRICS business forum emphasised the ‘unprecedented challenges’ facing the multilateral trading system; and President Xi of China stressed ‘the need to oppose the Trump administration’s unilateralism’ (Azikiwe, 2018). By 2018, when the BRICS summit was held in South Africa, it was apparent that two blocks of academic thought had emerged. The more mainstream advocates of BRICS as a potential and positive challenge to US hegemony are represented by the BRICS Think Tank, which in South Africa includes economists and Africanists aligned to the ANC government, with a more cautious optimism being expressed by economists from the University of Cape Town (UCT) Business School and the neoliberal thinktank Centre for Development and Enterprise (CDE). The left critics are represented by civil society groups, including part of the labour movement, as well as environmental groups and policy thinkers associated with the Alternative Information and Development Centre (AIDC), GroundUp, and the University of KwaZulu-Natal Centre for Civil Society, with ideas popularised in accessible sites such as Pambazuka.

Challenging the Washington Consensus 187 The optimism at the BRICS Academic Forum of 2014, representing the first set of views from the South, will also surely be brought into question by the rise of the right-populists in both BRICS countries and in the US and Europe. One example of this is the critical issue of deforestation and climate change mitigation. In 2014, the Brazilian contributor to the BRICS forum (Roma, 2014, p. 38) noted the progress that had been made in Brazil with regard to strengthening of environmental sustainability, including policies on deforestation in the Amazon, and an ambitious climate change mitigation policy. He concluded by reminding us of … the urgency to strengthen institutional, academic and political cooperation among the BRICS and other countries, not only in respect to economic and social issues, but also on what concerns environmental sustainability. Otherwise it will soon be too late for implementing the changes needed to secure a sustainable future for mankind on planet Earth. (Roma, 2014, p. 39) Five years after the BRICS summit in Brazil, the disastrous Amazon forest fires of 2019, and the response of Brazilian president Bolsonaro are warnings of just how serious the implications of the rise of right-wing populism are. Former president Lula of Brazil, one of the original advocates of BRICS, acknowledged recently (Escobar, 2019b) that he is disappointed with what it has achieved to date. Lulu is understood, together with some other Latin American scholars like Escobar, to be promoters of a genuinely multipolar world economy, ‘seeking to break dependency on the West – but with gradualism and cooperation’ (Bond, 2019, n.p.). Bond’s analysis is that there are three positions emerging in relation to BRICS. The first is the ‘China first’ position – what he terms ‘a “centripetal” world economy based on “win-win globalisation” ’. The second position is the multipolar position, and the third is the ‘centrifugal’ position of the left, including Immanuel Wallerstein, who argue that ‘crisis-prone neoliberal globalisation now means the centre cannot hold’ and that BRICS of the South are now ‘splintering in unpredictable ways’ (Bond, 2019). What is the structuralist/world systems analysis of imperialism and subimperialism, and how does it help us to understand BRICS? Brazil, India, and South Africa are ‘sub-imperialist’ powers in terms of this analysis, each with a national bourgeoisie benefitting from dependent capitalism; while China and Russia fall into a different category, being neo-imperialist powers in their own right (Luce, 2015). Brazil, India, and South Africa can thus be regional hegemons, but the prospect of their uniting to form a South–South solidarity is compromised by their sub-imperial status. Moreover, the potential for BRICS to pose a real counter-hegemonic challenge – or, in a different framework, to create a more balanced, just, and genuinely multi-polar global political economy – has been seriously undermined by the emergence of the right-wing populist forces in the BRICS countries of the South (Brazil, India, and South Africa), from where one could anticipate a

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‘social and economic justice’ position to be articulated on the global agenda. The right-wing nationalist authoritarian regimes in China and Russia, together with the nationalist populism of Modi, Bolsonaro, and Zuma (in Bond, 2020) invite a refocus on inward-looking national priorities as well as an expansion of subimperialist dominance in the South (South America, sub-Saharan Africa, and India) where each of these countries plays the role of the regional sub-hegemon, with the support of China and/or Russia, rather than uniting in a South–South alliance for justice. This leads Bond and the ‘left sceptics’ to argue (Bond, 2020) that ‘the ‘anti-imperialist’ potential of the BRICS, if it ever existed, is exhausted. In a context where the governing parties of the BRICS countries are unlikely to play a progressive role, the potential for BRICS to play a progressive role – or to ‘manifest an international trend on behalf of a broad humanitarian project’ as put by Fontes (2015, p. 45) is going to be determined at national level, the extent to which the working (and non-working) classes are able to organise and form regional and global solidarity movements.

BRICS from below? As economic pressure on the poor grew all over the globe after 2008, Russia and China both saw unprecedented mass mobilisation and strikes (Bello, 2014; Matveev, 2019). Ngwane and the contributors to Urban Revolt (2017) reflected similarly on the expressions of resistance to these pressures from urban social movements in countries of the global South, including India, South Africa, and Brazil. Nilsen and von Holdt, in their introduction to the special issue of Globalizations (2019), examine how the urban poor and the ‘precariat’ in the BRICS countries engage in contesting hegemony in their local/national contexts. The articles in this edited volume, as do those in Ngwane’s volume, examine social movements both within their national and local contexts, and through the lens of the ‘micro dynamics that animate the collective articulation of grievances and claims in public spheres’ (2019, p. 128). Drawing on a Gramscian conception of hegemony, they examine how popular struggles ‘engage and appropriate hegemonic political institutions and idioms in order to pursue grievances, stake claims and articulate rights’, and how the dominant groups and state authorities combine accommodation with coercion ‘with the objective of reproducing a given hegemonic formation’ (2019, p. 128). Ngwane and others have examined the varied forms of mobilisation of the urban poor in India, Brazil, and South Africa, and conclude that these social movements can challenge the hegemony of global capital. Vanaik (2015, p. 264) agrees with Ngwane that the impetus for this challenge will come not from organised labour but from the urban poor and the landless rural populations of the South. This raises the question of how the organised working class relates to the new social movements of the urban and rural poor, and whether they can – separately or together – challenge the hegemony of their own ruling classes. As Nilsen and von Holdt put it, how do popular or working-class struggles ‘shape the configurations of accumulation and legitimation that undergird neo-liberalization’ in BRICS

Challenging the Washington Consensus 189 countries? (Nilsen and von Holdt, 2019, p. 129), and what potential is there for solidarity, both national and South–South, in the context of globalisation? These studies of social movements in the BRICS countries, and their potential to challenge the hegemony of national capital, reveal a number of common threads. The first is that the traditional working-class organisations are on the defensive, both in relation to globalisation and deindustrialisation, and in relation to new threats from climate change. The economic pressures on the national working classes, both in the North and in the BRICS countries of the South, manifests in right-wing nationalism, populism, and sometimes in xenophobic violence, as witnessed recently (i.e. September 2019) in South Africa. As economic pressure mounts, the working class becomes more inward-looking and regional (still less) global solidarity moves further off the agenda. Thus Garcia argues that BRICS are ‘not a topic of concern’ to Brazilian social movements (Garcia, 2015, p. 280) and the limitations of solidarity between civil society formations and social movements in the BRICS countries are acknowledged by Garcia and others. Within each of the countries analysed, there is little evidence of solidarity between the traditional or formal working class and the precariat or the urban poor, still less of solidarity between the urban and rural movements. As these movements become increasingly localised and atomised, their challenge to the hegemony of national and global capital is weakened. Transcontinental solidarity of the South becomes even less likely, with the inwardly focussed rise of right-wing populism and nationalism; and political repression and labour repression in China and Russia also impose constraints on the possibilities of effective South–South solidarity between social movements in BRICS countries. The idea that a global revolution, led by the precariat of the South, is now on the cards as an inevitable path of human development, is a reflection of failure to engage with the concept of hegemony as it has been articulated by some of the ‘BRICS from below’ analysts. International solidarity of social movements in the BRICS countries is unlikely to find expression in coherent resistance to global capitalism. However, the potential does exist for BRICS to ‘promote a much more social welfarist form of capitalist development’ (Vanaik, 2015, p. 261) as well as to lead the way in developing infrastructure based on new technology in particular in the field of renewable energy. It is from the latter that the challenge to global hegemony may come.

Technology, climate change, and alternatives: ‘a more expansive and balanced global capitalism’ In the context of the fundamental challenges to the global capitalist order that are posed by climate change and resource constraints, the developmental solutions may be found in new technologies and the financing of infrastructure development. It has been often noted that the post-2015 United Nations agenda understands that the Millennium Development Goals should ‘converge’ with the Sustainable Development Goals (Josie, 2014, p. 42) – although their precise relationship is a subject of debate among development theorists.

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As the developmental imperative to meet basic human needs through the provision of clean water, food, shelter, and energy is understood to be inextricably linked to infrastructure development, the challenge is to do so in a sustainable way, through the adoption of new technology and the financing of the appropriate infrastructure. As is well known, it is easier to adopt a new technology when there is nothing to replace, than it is to replace the old infrastructure. The resistance of corporations with huge vested interests in the oil-based and privatised transport system of the USA is a good example of this. The BRICS agenda consequently has a strong emphasis on technology and innovation partnerships, and it can be argued has the potential to contribute to a genuinely alternative agenda on climate, as is explored below. China’s arrival ‘has changed the balance of forces’ (Katz, 2015, p. 88), while the USA has lost its ‘unquestioning hegemony’ of the world system (Wallerstein, 2015, p. 270) and we have moved into a multipolar world. However, as Wallerstein argues, there are 10–12 large powers in this new multipolar world system that are ‘strong enough to pursue relatively autonomous policies’ (2015, p. 270) and which are ‘constantly shuffling alliances’. This relative autonomy of decision-making in BRICS (and some other) economies thus has the potential to further an agenda of transcontinental solidarity of the South, using the space created by BRICS markets and development finance to embark on alternative development paths, put pressure on democratic states to adopt decentralised new technology and move away from extractive fossil fuel economies. Nilsen and von Holdt tentatively try to discern ‘incipient patterns of alternative political economies’ within the social movements of the BRICS countries (2019, p. 129). While there is little evidence of this as yet, the potential does exist for social movements of the South to mobilise to take advantage of new technologies, most significantly decentralised renewable energy and decentralised banking. Changing relations of production through massive distribution of ownership and control of productive resources – which is not only possible but advantageous with certain new technologies – is the real ‘game changer’ in challenging the hegemony of global capital. The extent to which the BRICS governments allow such challenges, and indeed even support such challenges, is going to be decisive. In this context, the role of the NDB in providing development finance for such technology transfer and infrastructure development, and decisions about the kind of technology and infrastructure that is funded, are going to be of critical importance. The extent to which the BRICS governments are influenced by the social movements in their respective countries to make certain decisions is therefore of considerable significance.

In conclusion, a tentative optimism Altvater, using Gramsci’s understanding of hegemony, notes that the USA’s displays of military, technological, and economic superiority are not sufficient to maintain a hegemonic position because of the ‘lack of acceptance and

Challenging the Washington Consensus 191 cooperation’ (Altvater, 2015, p. 236). This understanding does allow some ‘space’ for BRICS and the countries that they invest in to engage in an alternative development strategy, which is distinct from the old imperialist extractivist model. The concern is that this ‘development neo-extractivist’ strategy should be premised from the beginning on the transition to an alternative, sustainable, and non-extractivist development model. Altvater noted in 2015 that the ‘chain of commodification and monetisation of natural resources in the world market remains under the control of strong and mostly left-wing governments’ (Altvater, 2015, p. 244); however, since 2015 this has changed. The left-populist governments of Zuma and Lula have been replaced; the right-nationalist governments of China, Russia, and to a lesser extent India, are dominant in BRICS. The space for a progressive strategy based on social justice and sustainable, non-extractivist development, has narrowed rather than opened up since the inception of the NDB in 2016. In June 2019, the meeting of the leaders of China and Russia resulted in the announcement that ‘the unipolar moment is over’; both powers were ‘committed to green, low carbon sustainable development’ (Escobar, 2019a, n.p.). President Xi emphasised that China will not ‘seek development at the expense of the environment’ and is ‘ready to share 5G technology with all partners’ on the way towards a pivotal change in the model of economic growth’ (Escobar, 2019a). While the ‘BRICS from below’ sceptics are justified in being sceptical about whether this is likely in the current global economic environment, the focus of the NDB on renewable energy rather than extractive resources is potentially an enormously significant change in focus. Whether this shift occurs in the interests of a more equitable distribution of resources and a social justice agenda, will depend at least in part on the mobilisation of civil society and social movements of the majority (the ‘non-elite’) in the BRICS countries. Mobilisation both with and against the state, to ensure policies that support the sustainable development as well as the social justice agenda, will likely be effective on a national scale in those countries that have the most open space for mobilisation, and will be least effective where governments decrease political space and maintain or increase labour repressive policies. The economic and political protagonism of BRICS can thus be understood as ‘being aimed … at constructing a more expansive and balanced global capitalism’ (Robinson, 2015, p. 232). Whether BRICS provides the potential for the exploration of alternatives to capitalism itself, depends on the organisation of civil society within and between BRICS countries. While organised labour in the BRICS countries is on the defensive in the context of neoliberal deindustrialisation, the potential exists for social movements to actively engage in the politics of prefiguration, through ‘seize[ing] control or power within the commons’ as Ngwane (2017, p. 2) would demonstrate. The creation of decentralised alternatives, in the circular (rather than extractive) economy and in new economies of decentralised production of food and renewable energy as well as energy from waste, potentially pose a serious alternative to the dominant global corporations in the mineral, energy, and food sectors.

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This surely is the biggest test both of BRICS and of its development finance institutions; whether they can indeed pioneer a ‘pivotal change’ in the model of economic development, premised on sustainability rather than export-, extractive-, and carbon-based economic growth. If so, there is certainly an opportunity for developing countries of the South to use the institutional spaces created by BRICS and the New Development Bank to forge decentralised and sustainable development partnerships.

References Altvater, E. (2015) BRICS at the Brink of the Fossil Bonanza. In P. Bond and A. Garcia (eds), BRICS: An Anti-Capitalist Critique. Johannesburg: Jacana. Amisi, B., Bond, P., Kamidza, R., Maguwu, F. and Peek, B. (2015) BRICS Corporate Snapshots during African Extractivism. In P. Bond and A. Garcia (eds), BRICS: An Anti-Capitalist Critique. Johannesburg: Jacana. Azikiwe, A. (2018) Tenth BRICS Summit Held in South Africa while United States Trade War Escalates. Pambazuka News, 10 August. www.pambazuka.org/emergingpowers/tenth-brics-summit-held-south-africa-while-united-states-trade-war-escalates [Accessed 17 June 2019]. Bello, W. (2014) The BRICS: Challengers to the Global Status Quo. Foreign Policy in Focus, 29 August. https://fpif.org/brics-challengers-global-status-quo [Accessed 9 September 2019]. Bond, P. (2013) The BRICS Bank and Shifts in Multilateral Finance: A View from South Africa, presented to the SouthGovNet conference panel: Institutions of South-South Cooperation, Fudan University Institute of International Relations, Shanghai, China, 12 September 2013. http://ccs.ukzn.ac.za/files/Bond%20Shanghai%20BRICS%20Banking% 20and%20Multilateral%20Finance%2012%20September%202013.pdf. Bond, P. (2015) BRICS and the Sub-Imperial Location. In P. Bond and A. Garcia (eds), BRICS: An Anti-Capitalist Critique. Johannesburg: Jacana. Bond, P. (2018) At BRICS Think-Tank, Scholars Get Drunk on Their Own Rhetoric. Mail and Guardian, 30 May 2018. https://mg.co.za/article/2018-05-30-at-brics-thinktank-scholars-get-drunk-on-their-own-rhetoric [Accessed 9 September 2019]. Bond, P. (2019) Lula’s BRICS Fantasy – and Wallerstein’s Realism. Progressive Economics Network, 2 September 2019. Bond, P. (2020; forthcoming) ‘Schizo’-Subimperial BRICS Enter the Bolsonaro-PutinModi-Xi-Ramaphosa Era. In Vishwas Satgar (ed.), US Imperialism and the BRICS. Johannesburg: Wits University Press. Bond, P. and Garcia, A. (eds). (2015) BRICS: An Anti-Capitalist Critique. Johannesburg: Jacana. Brown, D. (2018) Global Geopolitical Economy and BRICS Sub-Imperialism. Pambazuka News, 10 August 2018. www.pambazuka.org/emerging-powers/globalgeopolitical-economy-and-brics-sub-imperialism [Accessed 17 June 2019]. Escobar, P. (2019a) The Unipolar Moment Is Over. Consortium News, 25(243), 10 June 2019. https://consortiumnews.com/2019/06/10/pepe-escobar-the-unipolar-moment-isover [Accessed 30 August 2019]. Escobar, P. (2019b) BRICS was Created as a Tool of Attack: Lula. Asian Times, 29 August 2019. www.asiatimes.com/2019/08/article/brics-was-created-as-a-tool-ofattack-lula [Accessed 9 September 2019].

Challenging the Washington Consensus 193 Fontes, V. (2015) BRICS, Capitalist-Imperialism and New Contradictions. In P. Bond and A. Garcia (eds), BRICS: An Anti-Capitalist Critique. Johannesburg: Jacana. Frey, A. (2019) China will Continue to Increase Investment in Mozambique. Club of Mozambique, 22 February 2019. https://clubofmozambique.com/news/china-willcontinue-to-increase-investment-in-mozambique-icbc-says [Accessed 6 September 2019]. Fukuyama, F. (2019) Contemporary Populism. CDE INSIGHT, August 2019. www.cde. org.za/contemporary-populism [Accessed 8 September 2019]. Garcia, A. (2015) Building BRICS from Below? In P. Bond and A. Garcia (eds), BRICS: An Anti-Capitalist Critique Johannesburg: Jacana. Hung, H. (2015) China and the Lingering Pax Americana. In P. Bond and A. Garcia (eds), BRICS: An Anti-Capitalist Critique. Johannesburg: Jacana. Josie, J. (2014) Public Infrastructure Investment: A BRICS Perspective for Inclusive Sustainable Development. In IPEA (Institute for Applied Economic Research), VI BRICS Academic Forum, Brazil. www.ipea.gov.br/portal/index.php?option=com_content& view=article&id=24280 [Accessed 6 September 2019]. Katz, C. (2015) Capitalist Mutations in Emerging, Intermediate and Peripheral Neoliberalism. In P. Bond and A. Garcia (eds), BRICS: An Anti-Capitalist Critique. Johannesburg: Jacana. Kimenyi, M. and Lewis, Z. (2011) The BRICS and the New Scramble for Africa. The Brookings Institution. http://ccs.ukzn.ac.za/files/BRICS%20v%20africa_economy_agi_ kimenyi_lewis.pdf [Accessed 9 September 2019]. Luce, M. (2015) Sub-Imperialism, the Highest Stage of Dependent Capitalism. In P. Bond and A. Garcia (eds), BRICS: An Anti-Capitalist Critique. Johannesburg: Jacana. Macau Hub. (2018) China is Mozambique’s Largest Financier and Builder of Infrastructure. Macau Hub, 30 April 2018. https://macauhub.com.mo/feature/pt-china-e-o-maiorfinanciador-e-construtor-de-infra-estruturas-em-mocambique [Accessed 6 September 2019]. Matveev, I. (2019) In Russia, the Fight Is Alive. Jacobin Magazine, August. www. jacobinmag.com/2019/08/russia-opposition-repression-vladimir-putin [Accessed 9 September 2019]. Mazenda, A. (2016) The Effect of BRICS Trade Relations on South Africa’s Growth. EERI Research Paper Series, No. 11/2016. Brussels: Economics and Econometrics Research Institute (EERI). McKenzie, G. (2017) Kill Zuma by Any Means Necessary. ZAR Empire. Kindle edition. Moyo, S. and Yeros, P. (2015) Scramble, Resistance and a New Non-Alignment Strategy. In P. Bond and A. Garcia (eds), BRICS: An Anti-Capitalist Critique. Johannesburg: Jacana. New Development Bank. (n.d.) History. www.ndb.int/about-us/essence/history [Accessed 6 September 2019]. New Development Bank. (2017) NDB’s General Strategy: 2017–2021. www.ndb.int/wpcontent/uploads/2017/08/NDB-Strategy.pdf [Accessed 6 September 2019]. Ngwane, T., Sinwell, L. and Ness, I. (2017) Urban Revolt: State Power and the Rise of People’s Movements in the Global South. Johannesburg: Wits University Press. Nilsen, A. G. and von Holdt, K. (2019) Rising Powers, People Rising: Neo-Liberalization and Its Discontents in the BRICS Countries. Globalizations, 16(2), pp. 121–136. Reddy, N. (2015) BRICS after the Durban and Fortaleza Summits. In P. Bond and A. Garcia (eds), BRICS: An Anti-Capitalist Critique. Johannesburg: Jacana. Robinson, W. (2015) BRICS and Transnational Capitalism. In P. Bond and A. Garcia (eds), BRICS: An Anti-Capitalist Critique. Johannesburg: Jacana.

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Roma, J. C. (2014) Recent Dynamics of Environmental MDGs Indicators in Brazil: Forests, Climate Change and Biodiversity. In IPEA (Institute for Applied Economic Research), VI BRICS Academic Forum, Brazil. www.ipea.gov.br/portal/index. php?option=com_content&view=article&id=24280 [Accessed 6 September 2019]. Satgar, V. (ed.). (2020; forthcoming, March) US Imperialism and the BRICS. Johannesburg: Wits University Press. Sitas, A. (2018) Reconfiguring the World System: Envisioning Inclusive Development through a Socially Responsive Economy. Sunday Independent, 18 February 2018. http://sabtt.org.za/wp-content/uploads/2018/04/18th-Feb-attached.compressed.pdf [Accessed 31 August 2019]. Tandon, Y. (2018) The Ultra Left’s Confusion about BRICS. Pambazuka News, 10 August 2018. www.pambazuka.org/emerging-powers/ultra-left%E2%80%99s-confusion-aboutbrics [Accessed 17 June 2019]. Vanaik, A. (2015) The Future Trajectory of BRICS. In P. Bond and A. Garcia (eds), BRICS: An Anti-Capitalist Critique. Johannesburg: Jacana. von Holdt, K. and Naidoo, P. (2019) Mapping Movement Landscapes in South Africa. Globalizations, 16(2), pp. 170–185. Wallerstein, I. (2015) Whose Interests are Served by the BRICS? In P. Bond and A. Garcia (eds), BRICS: An Anti-Capitalist Critique. Johannesburg: Jacana. Webster, E., Fakier, K. and Metcalfe, A. (2014) A Quiet Revolution in Social Policy? A Case Study of a Community Work Program in Rural South Africa. In IPEA (Institute for Applied Economic Research), VI BRICS Academic Forum, Brazil. www.ipea.gov. br/portal/index.php?option=com_content&view=article&id=24280 [Accessed 6 September 2019]. Xi Jinping. (2018) Keeping Abreast of the Trend of the Times to Achieve Common Development. Speech to the BRICS Business Forum in Johannesburg, South Africa, 25 July 2018. www.chinadaily.com.cn/a/201807/26/WS5b5a80e3a31031a351e90857. html [Accessed 9 September 2019]. Žižek, S. (2009) In Defence of Lost Causes. London/New York: Verso. Zondi, S. (2014) BRICS’ Promise to Decolonize International Development: A Perspective. In IPEA (Institute for Applied Economic Research), VI BRICS Academic Forum, Brazil. www.ipea.gov.br/portal/index.php?option=com_content&view=article &id=24280[Accessed 5 November 2019].

13 Multilateral foreign aid and the shadow of Cold War II Viktor Jakupec

Introduction A cursory literature review concerning the Cold War points to military defence as the cause for and arms race as the effect of the post-World War II (postWWII) Cold War. A more in-depth review of scholarly literature shows that the Cold War was an outcome based on the difference between the Western post-WWII alliances led by USA and the USSR and its allies in the East. The Cold War arose from a dispute concerning development aid funding strategies and the roles of the Bretton Woods multilateral institutions, namely the World Bank and the International Monetary Fund (IMF). It is important to state upfront that IMF is not a development bank. Nevertheless, IMF impacts directly on developing nations through structural adjustment recommendation, financial support, and imposition of conditionalities which are closely fol­ lowed by the World Bank (Jakupec and Kelly, 2016). It is within this context that IMF and World Bank are as multilateral organisations linked since their inception into the foreign aid and development aid political, economic, and social environment. Development aid as a component of foreign aid in the form of an institu­ tionalised multilateralism in a contemporary context emerged as an outcome of the United Nations Monetary and Financial Conference held in July 1944 at the Mount Washington Hotel in Bretton Woods, New Hampshire (henceforth Bretton Woods Conference) (Helleiner, 2014a). Delegates from 44 countries attended the conference aiming to reach agreements on new regulations con­ cerning the post-WWII international monetary system (Mueller, 2018). Agree­ ments reached at the Bretton Woods Conference facilitated inter alia the emergence of post-WWII multilateralism by laying the foundations for the establishment of the World Bank and the International Monetary Fund jointly known as Bretton Woods Institutions (Steil, 2018). It is noteworthy that the Bretton Woods Conference also canvassed the formation of an International Trade Organization (ITO) (Bronz, 1949). Notwithstanding the signing of the General Agreement on Tariffs and Trade (GATT) in 1947, the plans to form the above stated ITO remained latent until the early 1990s with the formation of the World Trade Organization (WTO).

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Primarily, the basic aim of the Bretton Woods Institutions was two-fold. The World Bank (formerly International Bank for Reconstruction and Development (IBRD)) would provide assistance for reconstruction of the devastated postWWII European economies. Later its role expanded to provide concessional loans and grants focusing on poverty alleviation. Thus, the World Bank emerged as the main source of international finance for developing countries. The Inter­ national Monetary Fund’s original role was to stimulate global monetary and international economic cooperation and to secure global financial stability. Ini­ tially, this was to be achieved through the provision of concessional loans to member countries facing a balance of payment problems. However, later on with the advent of flexible exchange rates the IMF extended its role, and following the demise of the USSR, became the global last resort for member countries facing economic crises. In short, the IMF provides financial support to member state governments facing financial liquidity crises (Helleiner, 2014a) Today both institutions are buttressed by values of multilateralism based on ideology, practices, and an approach to international economic relations. Being in danger of oversimplification, but for the purpose of this discussion, multilater­ alism means that sovereign nations grant authority and legitimacy to supra­ national institutions such as the World Bank and the IMF with their own policies, principles, rules, and regulations. Thus, the latter are able to dictate to borrowing nations conditionalities in return for concessional loans or grants. With the formation of the Bretton Woods Institutions, a new post-WWII mul­ tilateralism dominated by the USA emerged. However, in 1949, the Soviet Union (USSR) institutionalised a competing multilateralism through the forma­ tion Council for Mutual Economic Assistance (COMECON). Thus, between 1949 and 1991 (with the demise of the USSR), there existed two competing multilateral alliances with contesting economic and ideological interests impact­ ing on foreign aid. As we will see in the following discussion, foreign aid played a significant role in establishing and maintaining the economic and politicalideological sphere of respective interests of the then two antagonistic world superpowers. The difference between the 1944–1991 era and today is that in the former epoch, there was little if any challenge to either the USA- or the USSRdominated multilateral foreign aid system from within. Throughout the Cold War I era, the USSR remained somewhat indifferent towards Western multilat­ eralism, disinclined to participate, and at the same time powerless, to success­ fully challenge it economically or politically. For this and other reasons, such as pursuing its own centralised development policies the USSR elected to act bilat­ erally with not only the ‘Eastern Bloc’ countries but also with the USA.

The supremacy of the Bretton Woods institutions Today, the supremacy of the Bretton Woods institutions is being challenged from within and from without. The challenges from within come from the rise of right-wing populist movements and illiberal democracies, and a shift towards

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unilateralism and nativism in donor countries who are members of multilateral foreign aid organisations. From without, the Western multilateral development aid institutions are being challenged by China-led counterpart multilateral insti­ tutions such as the New Development Bank (NDB), the Asian Infrastructure Investment Bank (AIIB), and the One-Road-One-Belt (OROB) initiative. The risk for the Western multilateral foreign aid institution is not only pointing to their continuing relevance and existing hegemony (Fioretos and Heldt, 2019), but also the prospect of a new economic Cold War (henceforth Cold War II). As a counter initiative to OROB, AIIB, and the NDB, the USA, Australia, and Japan have announced the formation of the Blue Dot Network (BDN) initi­ ative underwritten by USA’s Overseas Private Investment Corporation (OPIC), Australia’s Department of Foreign Affairs and Trade (DFAT), and the Japan Bank for International Cooperation (JBIC) (cf. OPIC, 2019). The BDN is … a multi-stakeholder initiative that brings together governments, the private sector, and civil society to promote high-quality, trusted standards for global infrastructure development in an open and inclusive framework. (OPIC, 2019, n.p.) At the moment, due to the fact that the BDN is in its formation stage, it is too early to discuss … how effective the Washington-backed initiative will be at holding back unsustainable BRI developments. Blue Dot Network organisers claim the initiative will serve as a catalyst for private finance, but it will have no lending function of its own. BRI, in contrast, is underwritten by billions of dollars from Chinese state-owned banks and companies. (Reed, 2019, n.p.) Setting aside the new BDN initiative, this chapter will mainly focus on the World Bank and will advance two linked theses. First, foreign aid as it is known in the contemporary context, has its roots in Cold War I, resulting from the for­ mation of Bretton Woods conference institutions in 1944. Second, the world has recently entered a Cold War II, also called the New Cold War era. With refer­ ence to the former thesis, this chapter will focus on the juxtaposition and a crit­ ical analysis of the Marshall Plan (officially the European Recovery Program) as a mechanism for the advancement of Bretton Woods system multilateralism (Mills, 2008) and the Molotov Plan (Berger, 1948) as an instrument of multi­ lateral trade agreements and economic cooperation amongst social ‘Eastern Bloc’ countries. Concerning the latter thesis, it will be argued that the rivalry between the afore-said Marshall Plan and the Molotov Plan, respectively, has parallels in the emerging contest between the Washington Consensus as opposed to Beijing Consensus institutions. It should be noted that both the Marshall Plan and the Molotov Plan were put in place to ‘contain’ the spread of the USA and USSR

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into each other’s geo-political and geo-economic sphere of interest. The instru­ ment of ‘containment’ was development aid. Today we are witnessing a com­ petition for geo-political and geo-economic dominance between the Bretton Woods institutions and other Western-led development aid banks with their adherence to the Washington Consensus and the China-led Beijing Consensus with the NDB, AIIB, and the OROB initiative. It will be argued that the emerg­ ing parallels are potential catalysts for a new cold war or Cold War II. As a final point, the chapter will outline emerging trends concerning development aid mul­ tilateralism by focusing on nexus and interplay between right-wing populism, and the Beijing Consensus-based development aid.

Bretton Woods Conference: A precursor to Cold War I The Bretton Woods conference may be perceived as a precursor to Cold War I (Mueller, 2018), which arguably had, as stated above, its beginning with the USSR’s rejection of joining the Bretton Woods institutions and the Marshall Plan in 1946 and ended in 1991 with the dissolution of the USSR. Although it may be tempting to unpack the phenomenon called the ‘Cold War’, it should suffice for the time being to define it in simplistic terms as a geo-political power play between the USA and USSR and their respective allies. The USA con­ sidered Great Britain, France, and other West European countries, and the USSR viewed the Eastern European and Balkan countries which it liberated from the Nazis, as their allies. Drivers for USA and USSR alike was global geo-political dominance based on their respective political and economic ideologies (Steil, 2018). Military build-up and the weapons race emerged only later as a constitu­ ent of Cold War I. It should be noted that the USA demanded to be the dominant global political and economic power and the USSR was willing to play a significant role in the post-WWII political and economic order. The USSR agreed to accommodate some distinct disadvantageous compromises, such as acceptance of the US dollar as the global currency and gold standard and the USA’s economic dominance vis-à-vis its Western WWII allies. This enabled the USSR to participate in eco­ nomic negotiations such as the Bretton Woods conference. However, it is ques­ tionable if the USSR and its foreign minister, Vyacheslav Molotov, were fully aware of all the complexities of the extensive political and economic politics played between the USA and United Kingdom, which gained momentum at the Bretton Woods conference (Gaddis, 1972). The former insisted to be the polit­ ical and economic world leader, whereas the latter pursued an agenda to obtain credits crucially important for its post-WWII survival. Be this as it may, the USSR delegation at the Bretton Woods conference signed together with the del­ egations from the other 43 allied nations the final act (Minkova, 2018). This sig­ nalled the USSR’s willingness to join the World Bank and the IMF. In fact, the USSR initially welcomed the Marshall Plan together with the potential to part take in the USA-financed European Reconstruction Programme. The USSR’s foreign policies of the day perceived its participation in the Marshall Plan as a

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vehicle for (1) an ongoing collaboration with the Western allies; (2) containment of a USA-led West European bloc; and (3) economic and political coexistence and stabilisation of Europe (Roberts, 1994). Notwithstanding the USSR’s acceptance of the notion of multilateral author­ ity, it became evident there was little benefit for the USSR to join either the World Bank or the IMF. Perhaps the USSR’s only inducement to join the World Bank was the prospect of gaining loans on favourable terms for its post-WWII reconstruction (Herring, 1973). As far as the membership of the IMF is con­ cerned, the USSR did not see any advantage due to the fact that in the conven­ tional sense, it did not experience the traditional temporary balance-of-power deficits (cf. Harrison, 1986) However, by 1946, significant changes to the disposition of the USA– USSR discussions concerning economic cooperation emerged. The USSR’s joining the IMF and the World Bank became contingent on other issues and emerging problems of multilateralism, including the USA agreement to grant a loan to the USSR. In effect the USA’s proposal to deal with this matter con­ secutively was contrary to the demands of the USSR, whereby the latter was prepared to join the IMF and the World Bank (Lavigne, 1990) subject to signing the afore-said loan agreement. It is evident that up to 1946 the USSR was still prepared to actively participate in international affairs concerning foreign aid. However, given the demands from the USA in dealing with eco­ nomic matters and conditions attached to loan availability, the USSR was halted from participating as a member in the workings of the IMF and the World Bank. From this perspective, 1946 signifies the advent of Cold War I. Subsequently, the USSR refused to join the Bretton Woods multilateral insti­ tutions, which in their eyes were considered to be branches of USA capitalism (Minkova, 2018).

Foreign aid as an instrument of Cold War I The Bretton Woods Conference ensured the beginning of the competition between the USA and USSR for financial and economic dominance first over war-torn Europe within their sphere of influence and subsequently developing nations. Given that the other potential contenders to global industrial and eco­ nomic leadership, Germany and Japan, were no longer a competition, the world conflict shifted to Cold War I between the USA and its allies on the one side and the USSR and its satellites on the other side. As stated above, from this per­ spective, Cold War I may be described as a state of ideological, geo-political, and geo-economic conflict between the two post-World War II superpowers. More to the point, during Cold War I, the USA and the USSR, together with their respective allies, used foreign aid as a diplomatic instrument to advance political relationships in order to obtain strategic geo-political and geo-economic advantages (cf. Fordham, 1998). It followed that foreign aid was withheld to penalise or disadvantage countries which relied too much on assistance from the opposing side.

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Foreign aid as it exists today has too a large extent its roots in Cold War I and may be perceived as a product of the ideological conflict between the USA and the USSR, which dominated global politics for nearly half a century between 1945 and 1991. Foreign aid as an instrument of Cold War I emerged not as a long-term programme to support economic development and poverty alleviation but as an initi­ ative to advance short-term post-WWII economic recovery of Europe. The USA forged its immediate post-WWII foreign policies through the Marshall Plan and the USSR by advancing the Molotov Plan within its satellite countries (Roberts, 2012). The political drive of both plans, in competition with each other, had the aim to protect the advancement of their respective spheres of political, economic, and ideo­ logical influence, the USA in Western Europe and the USSR in Eastern Europe. Taking a step back, the roots and aims of today’s foreign aid cannot be under­ stood outside the global political environment of its time. To be sure, in its postWWII beginnings multilateral foreign aid not only emerged as an outcome but also as a catalyst of Cold War I. Subsequently, it was based on the then existing division of nations into developed and developing economies and the antago­ nism that existed between the two superpowers of the day, the USA and the USSR. Arguably without Cold War I, there would be no foreign aid as we know it today, the reason being that it would have been difficult, if not impossible, to establish and maintain within donor countries domestic political support for foreign aid (Dunning, 2004; Gilpin, 1983; Meernik et al., 1998).

The Marshall Plan and the Molotov Plan Turning to the main post-WWII aid programmes, namely the USA’s Marshall Plan and USSR’s Molotov Plan, it could be argued that both plans in their own right established a schism between the then superpowers’ ambitions for global geo-political and geo-economic dominance. As stated above, one of the main strategies employed by both superpowers to gain political, ideological, and eco­ nomic global governance was foreign aid. The USA dominated the policies of the World Bank and IMF, implemented the Marshall Plan, and pursued a policy of ‘containment’, thus, endeavouring to prevent further USSR geo-political and economic expansion (Hogan, 2009). To explain, the notion of ‘containment’ was based on the Truman Doctrine and implemented through the Marshall Plan. It is a policy aimed to avert the expansion of Communism throughout Western Europe by political non-violent means (Gaddis, 1981). In competition to the Marshall Plan the USSR implemented the Molotov Plan. Furthermore, in 1947 USSR established COMINFORM (Communist Informa­ tion Bureau) with the aim to increase USSR’s control over the Eastern European communist countries (Healey, 1948) including Albania, Bulgaria, Czechoslova­ kia, German Democratic Republic, Hungary, Poland, and Yugoslavia. The aim for these countries was to form a cooperative alliance, fostering the establish­ ment of industries and economic and trade networks between them. COMINFORM was dissolved in 1956 (Claudin, 1975) mainly since it became irrelevant due to the de-Stalinisation of the USSR.

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To be sure, in essence, both plans were mainly politically and to a lesser extent, economically motivated. The aim of the Marshall Plan was to prevent further expansion of communism, especially in relation to Western European countries such as France, Italy, and Greece (Esposito, 1994), where commu­ nist parties had strong followings. The Marshall Plan had also the aim of sta­ bilising political and economic order in West Germany against the prevailing East German socio-economic system (Hogan, 2009). To summarise, the Molotov Plan was, as stated above, established to counter the USA’s Marshall Plan. The former was established in 1947 and may be perceived as the USSR’s version of the Marshall Plan. The implemen­ tation of the Molotov Plan prevented the Eastern European countries under the USSR sphere of influence gaining the benefits of the Marshall Plan. The USSR’s foreign minister Vyacheslav Molotov rebuffed the Marshall Plan through the above-stated establishment of COMECON. There is some evidence that the USSR considered the Marshall Plan as an USA instrument to undermine Soviet dominance within its allies as the acceptance of the Marshall Plan aid would require the recipient countries to accept its con­ ditions thus becoming dependent on the USA. At the same time the USA con­ sidered the USSR’s response to the Marshall Plan as a further sign of the latter’s rivalry and antagonism. In some USA administration quarters, the USSR’s rejection of participating in the Marshall Plan was considered some­ thing akin to a declaration of war as far as the political control of Europe was concerned (USA Department of State, 1947). In conclusion, it could be argued that ‘the Soviet rejection of the Marshall Plan in the summer of 1947 has long been viewed as a turning point in the development of the Cold War I’ (Parrish, 1994, p. 1).

Cold War I: a foreign aid perspective As we have seen, after 1947, the tensions between the USA and USSR were not based on differences limited to individual issues but a whole range of foreign aid policies on both sides as an instrument of attacking each other. The complexity may be illustrated by the inconsistencies of the Molotov Plan principles. The USSR provided aid to their East European satellite countries and simultaneously requested financial aid in a form of repatriation from the Axis powers. It is, however, important to note that both pursuits were essentially bilateral in nature. The former facilitated economic collaboration between individual (state to state) USSR satellite countries in Europe but nevertheless provided a platform for the expansion of multilateral foreign aid (Goldman, 1965). The latter was bilateral between the USSR and Germany. There is, however, a question to be addressed, namely what type of turning point did the Marshall Plan epitomise? Did the USSR reject the Marshall Plan in 1947 as a policy of confrontation with the USA-led West or was the Mar­ shall Plan with its offer of foreign aid a catalyst for the USSR’s fundamental re-evaluation of its foreign aid policies towards the USA and the West? The

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answers in Western literature are mainly that from a foreign aid perspective it was the latter, namely the USSR’s re-evaluation of its foreign aid policies; thus, shaping the advent of Cold War I (Griffin, 1996; Roberts, 1994). If this stands to reason, then both the Marshall Plan and the Molotov Plan were protective measures to avert the expansion of each other’s geo-political and geo-economic sphere of interests. That is, subsequent to the political expansions by both superpowers, there emerged economic motivations, at least as far as the USA was concerned. The USA moved to secure open access to global markets at times using not only ‘soft power’ (cf. Nye, 2005) diplo­ macy through foreign aid but also exerting aggressive power through foreign aid in order to expand its capitalist system globally. From this vantage point, the USSR’s rejection of the Marshall Plan may not be perceived simply as representing USSR’s expansionism. Arguably the USSR’s rejection of the Marshall Plan was a political response of a non-capitalist state attempting to prevent being integrated and subordinated into a USA-dominated capitalist global economy. If the Marshall and Molotov Plans were the basis for Cold War I, then the Truman Doctrine was the trigger for a full-blown Cold War I (Steil, 2018). The Truman doctrine was centred on foreign aid. In 1947 Truman requested the USA Congress to allocate aid initially for Greece and Turkey and more broadly requested aid for a ‘free world’ (Bostdorff, 2008; Capaccio, 2018) as a counter­ act to explicit or implicit aggression by authoritarian regimes, alluding to the USSR. Ironically, the implementation of the Marshall Plan without USSR parti­ cipation suited at least to a certain extent both superpowers. The USSR retained and strengthened its sphere of influence in Eastern European countries (Horvath, 1970), whereas the USA and its Marshall Plan allies were enabled to implement measures which stabilised the political, social, and economic situation in Western Europe. To recap, Cold War I was fought between the USA and the USSR on ideo­ logical, political, economic, and disinformation frontlines and on a global scale. Both superpowers engaged foreign aid as an instrument to achieve a globally dominant position to advance their respective economic and political advantages and for their own security purposes. The pursuit by the USA and the USSR to establish themselves as the dominant global power from the mid 1940s followed a similar path, one with the Marshall Plan and the other with the Molotov Plan, culminating in the Cold War, but with some differences. While the USA emerged mainly as a bilateral donor, and as a major contributor to post-WWII multilateral organisations, the USSR commenced a foreign aid race in the early 1950s by developing alliances through foreign aid. In both cases until late 1980s both the USA and the USSR perceived foreign aid as a constituent part of the Cold War. In other words, both the USA and the USSR perceived foreign aid as part of their respective security strategies by developing and reinforcing Cold War alliances.

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The World Bank: from Cold War Keynesianism to neoliberalism For a better understanding of the role of the World Bank, two issues need to be considered. First, it is important to note that there is a significant difference between the political foundation of the World Bank and IMF. The latter emerged as an outcome of cogent negotiations between the USA and Great Britain, whereas the former is to a large extent a USA creation. Notwithstanding these differences, the USA with its dominant voting power, retained a strong influence on general policies, procedures, and structures of the World Bank over the last 75 years. Second, although the World Bank was essentially established to guar­ antee reconstruction of the European countries devastated by World War II, the USA preferred to implement the Marshall Plan according it its own priorities because it could completely control financial aid procedures and functions of every recipient country. To be sure, the Marshall Plan with its inception in 1948 was not as much a supplement to Bretton Woods institutions, especially the World Bank, but a recognition of the latter’s failure (Tooze, 2019). Thus, in its initial stages, the World Bank played a marginal role in the provision of loans. However, it provided certain loans, for example, the first loan in its history in May 1947 to France (Kapur et al., 1997). However, the USA government with­ held the Marshall Plan loan as long as the French Communist Party remained part of the government (Brogi, 2011). Other examples of USA’s political inter­ ference in World Bank operations are the blocking of loans to Czechoslovakia and Poland in 1947 due to the fact that the Communist Parties were part of their respective governments (Gwin, 2010). These and other similar USA interven­ tions into the operations of the World Bank show the power the USA govern­ ment was and still is able to exercise over the World Bank. From this vantagepoint, it could be argued that the USA’s policies concerning the World Bank has continuously shown basic inconsistencies in relations to multilateral cooperation and development assistance. If this stands to reason, it could be argued that USA policies relating to the World Bank have over the last 75 years been erratic. These are characterised by USA’s political and foreign policy fluctuations, lacking a coherent standpoint concerning development aid funding role of the World Bank and thus impacting on its operational effectiveness (cf. Doucouliagos and Paldam, 2009; Krueger, 1978). In short, since its formation, World Bank policies were until 1991 determined within a context of Cold War I and USA interests. In other words, since its formation in 1944 and throughout its history, the World Bank’s main objective was to ensure the hegemony of spe­ cific Western developed countries over developing countries (Mason and Asher, 1973; Toussaint, 2007, 2008). From the above, however brief a discussion, it may be concluded that due to external influences the World Bank has since 1945 to the end of Cold War I and beyond had a varied past as far as the continuity is concerned, for there is a ques­ tion of political, economic, and other forms of continuousness. In short, any claim of coherent continuity of the World Bank over the last 75 years is, to a

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certain extent, questionable. To explain, within a year of their inceptions, almost the whole political and economic global agendas of World Bank and the IMF were placed on hold. One of the reasons was that already in 1946, the USSR withdrew its support for the formation of the two Bretton Woods institutions (Pechatnov, 2017). This in turn, as noted previously, led to Cold War I. Four years later, in 1950, the USA and its World Bank allies banished China when it became the People’s Republic of China, a Communist state, and allocated the seat to the Republic of China the anti-Communist government located on the island of Taiwan. It was only in 1980 that the People’s Republic of China took up its seat at the World Bank and the IMF. In 1991 the Soviet Union applied successfully for membership of the World Bank (Kleine and Thien, 1992). The effects of the emerging Cold War I led to a much narrower post-WWII order under USA hegemony, mainly concentrating on Western Europe and Keynesian economics. However, following the repudiation of Keynesian economics origin­ ally embraced by the Bretton Woods institutions, a new economic ideology gained traction in the 1970s with the USA Treasury, namely the neoliberal movement based on the works of Hayek (1973, 1979, 2001) and Friedman (1962, 1980, 2002) amongst others. Followers of the neoliberal economic ideo­ logy opposed the then USA State Department with its interventionist economic policies. The World Bank and the IMF followed suit valuing the freedom of markets and opposition to state intervention, except in cases of market failure (Slobodian, 2018).

Challenging the Washington Consensus multilateral foreign aid Challenges to the existing multilateral foreign aid in line with the current think­ ing of the World Bank may be analysed from various vantage points. However, for the purpose of our discussion, a combination of immanent critique and ideo­ logical critique as the underpinning methods for analyses will be taken. The rationale is that, first, the internal challenges come from within the Western multilateral thinking concerning foreign aid based on the Washington Consensus and, second, also externally from the emergence of a new Eastern multilateralist world view based on the Beijing Consensus. Third, the external and internal challenges can be unpacked through a combination of both forms of critiques. At the centre of these challenges and critiques are the Washington Consensus and the Beijing Consensus. Prior to advancing the discussion, it may be useful to delineate, however briefly the two aforesaid consensuses. The constituents of the Washington Consensus are: (1) imposition of fiscal discipline; (2) redirection of public expenditure priorities towards other fields; (3) introduction of tax reforms that would lower marginal rates and broaden the tax base; (4) liberalisation of interest rates; (5) competitive exchange rate; (6) liberalisation of trade; (7) liber­ alisation of inflows of foreign direct investment; (8) privatisation of state-owned economic enterprises; (9) deregulation of economic activities; and (10) creation of a secure environment for property rights (Williamson,1990, 2002).

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In contrast, the Beijing Consensus is based on (i) localisation of best bor­ rowed practices; (ii) combination of market and plan economies; (iii) flexible means to a common end; (iv) national policy rights; (v) stable political environ­ ment; (vi) national self-reliance; (vii) continuous upgrading of national industry; (viii) indigenous innovation; (ix) cautious financial liberalisation, and (x) eco­ nomic growth for social harmony (Li et al., 2009) The challenge from within There are a number of challenges facing the Bretton Woods and other Washing­ ton Consensus-based multilateral organisations (cf. Stiglitz, 2019). These include the challenges arising from right-wing populist movements, the rise of illiberal democracies, and de-globalisation sentiments in member countries. These chal­ lenges are inter-related and need our full attention. However, to analyse each at an appropriate depth is beyond the scope of this chapter. For this reason, the focus will be on right-wing populism (Jakupec, 2017). As it was noted above, over more than half a century, foreign aid as a catalyst for economic development was to a large extent politically supported by donor countries. With the rise of right-wing populism in Western democracies, this is not necessarily the case today. In short right-wing populism provides a platform from which the neoliberal ideals, upon which multilateral foreign aid of Wash­ ington Consensus institutions such as the World Bank and other like-minded institutions are built, is being challenged. To explain, following the Global Financial Crisis (GFC) in 2008 (Helleiner, 2014b, 2014a), the neoliberal world order with its Washington Consensus is being challenged from within due to the oppositional politics of right-wing popu­ lism pursued by a number of member states. As World Bank member countries shift increasingly towards right-wing populism they are gradually becoming politically and economically inward looking and thus are challenging the Washington Consensus neoliberal ideology of the Bretton Woods institutions. The challenge may be described as nativism, de-globalisation, anti-establishment and anti-elite sentiments; for example, the Trump administration’s disdain for multilateral organisations (Jakupec, 2017). These and other challenges faced by the Bretton Woods and other Washington Consensus-based multilateral institutions from within bring with them increased instabilities. More specifically, the aforesaid institutions are challenged by (1) their lack of adopting precipitous amendments relating to changing political power relations between their member countries, especially those countries which are aligning themselves with China prompted by foreign aid opportun­ ities; (2) failure to accept economic conditions existing in developing countries; (3) a persistence in imposing stringent conditionalities on aid seeking countries; (4) inability to accept a broad range of theoretical frameworks enabling the development of suitable conditions and strategies leading to development goals such as poverty alleviation; and (5) recognising political economic social and cultural differences which should shape foreign aid (Jakupec and Kelly, 2016).

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These and other challenges from within, unless addressed appropriately by multilateral aid agencies will prompt member countries to intercede directly in the operations of the development aid agencies, including budget and aid alloca­ tions on the basis of their own potential advantages. Giving these challenges from within, especially right-wing populist member nations and other quarters, the future of neoliberal multilateralism, as practiced by the Bretton Woods insti­ tutions and other like-minded aid agencies, is becoming increasingly uncertain. The challenge from without The challenges facing the Washington Consensus institutions may be mainly ascribed to geo-political power shifts such as the rise of China with its develop­ ment and foreign aid institutions and initiatives. It is noteworthy to state up front that China-led foreign aid institutions, such as the NDB, AIIB, and the OROB initiative although challenging the dominance of the World Bank and other Washington Consensus aligned multilateral aid institutions, the contest is not an ideological one (Turin, 2010). Both the USA-led and the China-led multilateral development aid institutions adhere to the ideology of globalisation. To clarify, a cautionary note is here in place. Whereas the USA-led multilateral institutions such as the World Bank are ideologically pursuing a neoliberal globalisation agenda based on the Washington Consensus, China-led counterparts pursue eco­ nomic globalisation without any overt ideological foundation. The main challenge to the Washington Consensus-based multilateralism from without is the Beijing Consensus, a concept which is difficult to define (Jakupec and Kelly, 2019). It is based on China’s aspiration to advance a fair, just, and peaceful economic growth without the need to accept neoliberal multilateral ideas such as privatisation, democratisation, and other conditionalities enshrined in the Washington Consensus. Yet at the same time, the Beijing Consensus is accommodating to an extent that it may not be considered dogmatic or doctrinar­ ian (Ramo, 2004). As such it is not as prescriptive as its Washington Consensus counterpart, for it does not require a ‘one-size-fits-all’ solution to every develop­ ment aid undertaking. In other words, the Washington Consensus is seen by its protagonists as a taken for granted ideal model for advancing economic progress in developing countries (Kirchner, 2019). This is a different approach to under­ standing post-Cold War I neoliberalism (Dirlik, 2011), for it acknowledges the distinct social, cultural, economic, and political features of each country. Using the Beijing Consensus flexibility, China is countering through its NDB, AIIB, the OROB initiative, and other instrumentalities the existing neoliberal Washington Consensus ideology of the World Bank. In doing so China is increas­ ingly diminishing the influence of Bretton Woods Institutions using ‘soft power’ (Nye, 2005) to develop economic arrangements with developing countries. China’s perspective on multilateralism is, to a large extent, couched in ‘soft power’-based international relations policy. As far as foreign aid is concerned this stance has motivated China to (a) challenge the basis of USA’s multilateralism together with its global hegemony through the World Bank and other multilateral

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development banks and (b) pursue its ambition to become recognised as a ‘benign’ emerging world power through its multilateral foreign-cum-development aid. These two aspects are significant international relation challenges China is facing to secure its rise as an economic superpower utilising development aid as a cata­ lyst, among other political and economic mechanisms. This approach enables China to develop through its multilateral banks and initiatives new external dynamics, especially following the rise of right-wing populism, the Trump admin­ istration disdain of multilateralism, and the inflexibility of the Washington Consen­ sus ideology pursued by the Bretton Woods and other aid institutions. The challenges and critiques concerning the World Bank from without, for example, are: (1) structural underrepresentation of developing countries and associated voting power; (2) biased and inconsistent decision making; (3) lack of applying lessons learned from development projects, and potentially causing harm through them; (4) effective impunity for economic, social, financial, and environmental harms caused; and (5) lack of transparency concerning development aid project positive and negative impacts (Bretton Woods Project, n.d.).

Towards Cold War II Following almost three decades since the Cold War I between the USA and the USSR with their respective allies came to an end, a new discourse is emerging: Is the world sliding into a Cold War II? As argued above, Cold War I was initially caused by the Soviet Union’s refusal to join the Bretton Woods institution and sub­ sequently developed its own foreign aid mechanism. The situation today is some­ what different. Although there is no emerging equivalent of the Marshall Plan or the Molotov Plan, China has for all intents and purposes taken the part played by the USSR during Cold War I. Through its multilateral aid agencies such as the NDB and AIIB as well as the OROB initiative China is increasingly pursuing a foreign aid race with USA-led multilateral development banks. This is not dissimilar to the approach taken by the USSR at the end of WWII. Prior to progressing further, it may be opportune to turn, however briefly, to the contemporary Cold War II debate. Cold War II, as it will be argued in the discussion below, is a re-match between two economic powers, namely the USA and China, rather than the USA and the USSR, as during Cold War I. There are, however, some marked differences. Today Cold War II is, in terms of foreign aid, not played out as East vs. West as was Cold War I, but on a global scale in Asia, Africa, and the Pacific and beyond. One of the debates concerning Cold War II centres around the competition between the Chinaled OROB initiative and the USA’s Indo-Pacific Strategy (IPS) (Panda, 2019). This is not dissimilar to the battle between the Marshall Plan and the Molotov Plan. It could be argued that China perceives the OROB initiative in parallel to the NDB and AIIB as a development and foreign aid endeavour (Kilby, 2017). The debate regarding Cold War II is twofold. First, from a Chinese per­ spective the IPS is a counterpoise to OROB, whereby the latter is supported by a well-defined fundamental flow of ‘soft power’ with a purpose to restrain any possible global hegemon, especially in the developing world, including Eurasia,

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the Pacific region, the Indian Ocean region, and Africa (Chan, 2018). Second, from a USA perspective with its influence on the World Bank and other Wash­ ington Consensus-based development banks, the China-dominated OBOR is seen as an instrument to advance its global geo-economic and geo-political incursion. Thus China-led foreign and development aid is seen by the USA-led development aid as a geo-political and geo-economic threat (Kilby, 2017). Today, China is cognizant of the fact that it needs to foster and maintain its links with developing countries in order to ensure its access to natural resources, develop export markets, proliferate its geo-political and geo-economic influence, and secure its political and economic place in competition with the USA and its allies. However, during Cold War I China used the notion of being a developing country as a mechanism to distinguish itself from the USA and USSR, the then super­ powers. In doing so, China is benefitting from its support for the developing coun­ tries globally (Bräutigam, 2009). In the post-Cold War I era, developing countries emerged as a ground for competition between the USA-led Bretton Woods institu­ tions and China-led multilateral banks and initiatives and an important area of geo­ political and geo-economic interests (Aidoo and Hess, 2015). As far as the USA is concerned, it remains a superpower and controls to a large extent the policies, procedures, and structures of the World Bank and the IMF. However, China is the second largest economy and is, unlike the USSR, a member of Bretton Woods institutions. Thus, from an economic and political ideological vantage point, China differs not only from the neoliberal ideology of the Bretton Woods institutions but also from the right-wing populist movement of the Trump administration. Thus, the greatest threat to Bretton Woods institutions’ hegemony lies in the unfolding of a Cold War II caused by the competing geo-political and geo-economic interests of the two largest global economies (Roach, 2019). It may be noteworthy that during their formation, the NDB, AIIB, and the OROB initiative kept a low profile on the global foreign aid stage and meticu­ lously steered clear from open competition and conflict with USA-led multi­ lateral organisations generally and the Bretton Woods institutions especially. Throughout this period, China used its foreign aid instrumentalities to build its geo-political and geo-economic strength through ‘soft power’ diplomacy. By 2019, namely 75 years after the formation of the Bretton Woods institutions, China has established itself as a foreign aid powerhouse, especially in Africa, the South Pacific, Asia, and beyond. Thus, it stands to reason that by extending its economic powerbase globally China will provoke the ire of the USA which in international relations is under the Trump administration moving away from pol­ icies of engagement towards confrontational tactics. China’s concern should not be the current approach of the Trump administration to foreign aid but the pro­ spect of a capable USA president who is ready to improve international relations with allies and provide through the World Bank and other USA-aligned multilateral aid agencies loans and grants in competition with the aforesaid China-led aid agencies and initiatives. The emerging USA–China contention is slowly spilling over into the global foreign aid arena, not dissimilar to the USA– USSR enmity in Cold War I (Edel and Brands, 2019; Mead, 2019).

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Conclusion In 2019 the World Bank and the IMF, the original Bretton Woods institutions, celebrate 75 years of their existence. Both institutions survived their hegemonic status all these years despite intense criticism, not least for their domination by the USA and its Western ‘rich world’ allies (cf. Kirchner, 2019). Furthermore, both the IMF and the World Bank are being criticised for loan conditionalities, with a focus on political and economic changes required from the loan recipients and the rights of donors without much concern for the developing countries’ benefits. Over the last decade, namely since the GFC, there is a strong indication in the scholarly literature that the world is witnessing a gradual disintegration of the global rules-based economic order (Switzer, 2018) and thus the established foreign aid system. There is a case to be made for reconstituted multilateral aid agencies to implement the rules for the benefit of foreign aid donors and recipi­ ents alike. In the same period, economic advancement in many aid recipient countries has, despite the interventions from Bretton Woods and other Washing­ ton Consensus-based multilateral institutions, in many aid recipient countries not significantly taken place. Globalisation and free market initiatives once seen as remarkable initiatives in the ambitions of Western multilateral institutions to alleviate poverty through the reduction of barriers militating against free flow of goods and services, have failed many developing development countries’ eco­ nomies they were trying to shape, but are facing challenges from within in light of the rise of populism and de-globalisation. Unsurprisingly, the World Bank, focussing on providing concessionary loans to developing countries, has been subjected to strong criticism for its failure to take note of the social, economic, and political needs and demands of recipient countries and its population, especially the disadvantaged. Thus, it is not surpris­ ing that developing countries and emerging economies are turning to alternative donors such as the NDB, AIIB, and the OROB initiative for development loans. From this vantage-point it is difficult to argue that either institution or their likeminded global and regional multilateral institutions will be in existence in another 75 years unless they transform from within or be transformed from outside to reflect the rising power of emerging multilateral organisations led by China. As China-led development banks and initiatives gain wider acceptance glo­ bally, and the rise of right-wing populism gains traction in the West, the future of both Bretton Woods institutions is uncertain, as is the future of neoliberal multilateralism in foreign aid existing today. As Gavin (2004) notes, the World Bank and the IMF avoided in the mid-1990s the attempts of the USA Congress to severely curb if not abolish both institutions. Neither institution has thus far been able to address either the critique coming from within, namely the right-wing populist movement and unilateralism of the Trump administration, or the competition from without, such as the newly established China-led multi­ lateral banks and initiatives.

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As multilateral organisations, established by international treaty, the World Bank and the IMF rely on global economic cooperation and support, which are two main pillars of their system. To confront the erosion of support, there is a compelling argument to be made for the development of a new Bretton Woods system, which includes not only the Bretton Woods and other USA-led foreign aid agencies but also the new China-led institutions and initiatives. The aim would be to reassert the notion of mutual benefit for emerging economies, devel­ oping countries, and advanced economies alike. Such benefits need to be equit­ able and based on international cooperation, rather than on a pursuit of unilateralism and protectionism. Failing to respond to the growing challenges such as the rise of right-wing populism in Western democracies, with the pursuit of nativism at home, bilateralism and protectionism in international economic relations, and a hostility towards globalisation (Frieden, 2019) it is inevitable that the prospect of a Cold War II will intensify with the odds clearly in favour of China-led multilateralism. As it stands, respective USA-led and China-led multilateral development aid agencies will increasingly become tools in the quest for expanding their respective geo-political and geo-economic spheres of interests. The USA-led multilateral foreign aid agencies such as the Bretton Woods institutions will, in order to maintain their hegemony, revert to a form of containment, for due to ideological differences, they cannot share the same geo­ economic and geo-political space with their China-led counterparts. If this stands to reason, then we are witnessing the beginnings of a Cold War II. To be sure, the Marshall Plan with its inception in 1948 was not as much a supplement to Bretton Woods institutions, especially the World Bank, but a recognition of the latter’s response to the ‘containment’ policy (Tooze, 2019). Thus, in its initial stages, the World Bank played a marginal role in the provision of loans. However, it provided certain loans, for example, the first loan in its history in May 1947 to France (Kapur et al., 1997). Today, the formation of the above stated BDN announced by OPIC (2019) at the Indo-Pacific Business Forum in Bangkok, Thailand on 4 November may be interpreted, however speculatively, and in broad terms as a parallel to a margin­ alisation of the World Bank during the implementation of the Marshall Plan, for BDN has all the hallmarks of implementing a new ‘containment’ policy, this time directed at China. To conclude, first, there are two arguments, which may justify the thesis that the world is emerging into a Cold War II. The first argument is that the under­ pinning reason for Cold War II is the existing USA dominance over the Bretton Woods and other Washington Consensus-based multilateral aid agencies, which has its roots in Cold War I. It also has its origins in the USSR’s antagonism in the post-WWII era and China’s post-Cold War I animosity towards the World Bank and the IMF. The second argument is that if the global hegemony of the above-stated institutions is defined as supporting the USA’s dominance despite the rise of China-led foreign and development aid institutions the USA-led insti­ tutions and thus the USA itself will lose Cold War II, including due to the rise of right-wing populism. Of course, it could be argued that right-wing populism will

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vanish with Trump’s presidency. This is potentially a simplistic world view, for there is little evidence in many Western nations, such as the USA, Italy, Austria, Czech Republic, Poland, Hungary, France, to name but a few, for a desire to return to business-as-usual neoliberal hegemony. Second, with reference to the thesis that post-WWII multilateral development aid has its roots in Cold War I, emerging from the formation of Bretton Woods conference institutions in 1944, the preceding discussion has shown the links between the formation of the Bretton Woods institutions and COMECON as well as the formation and aims of the Marshall Plan and the Molotov Plan, respectively.

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14 A new ‘new’ multilateralism? The changing space of multilateralism in a contemporary development context Max Kelly and John McKay Introduction The future of capitalism is increasingly under a critical lens following a Global Financial Crisis, the Eurozone crises, Brexit, the rise of Trump, the crisis of inequality, and a range of other contributing factors that are undermining what appeared to an almost unshakeable adherence to a neoliberal economic model (Gertz and Kharas, 2019). Critiques of this dominant economic ideology are broad but include issues of inequality (Hardoon, 2017), lack of context specifi­ city (Ostry et al., 2016), issues with growth of financial flows (Ostry et al., 2016), the ongoing debate about the existence and impact of free market funda­ mentalism and the fallacy of the market as an organising principle for collective decision making, when public goods, such as education, public transport, and so on will not be provided by aggregated market demand (Coyle, 2019) for those who are at the mercy of inequality. The impact of the failures of global capit­ alism, under the guide of the neoliberal economic model, and the notion that ‘the market is the organising principle for collective decision making’ is deeply chal­ lenged by the deterioration of the conditions of many in the so-called developed world (Coyle, 2019), embodied in growing public anger, and flatlining produc­ tivity (Coyle, 2019). Gallagher and Kozul-Wright (2019, n.p.) summarise the crises as ‘polarizing inequality, financial instability, and a breakdown of the climate system’. These same conceptual underpinnings (neoliberal globalisation) have formed the basis of the policies and practices of the multilateral development institutions that emerged in the post-World War II era. Neoliberalism refers to everything from an ideology, to a catch-all term of abuse, generally attributed by the more left-leaning academics, analysts, or general populace, to a form of political economy (Hardoon, 2017). The lack of clarity of exactly what neoliberalism actually means, has spawned multiple attempts to clarify the situation prior to any informed debate, particularly when it comes to alternatives to the neoliberal world order, post neoliberalism, or other forms of political economic organisa­ tion. The aim of the chapter is therefore to assess what, if any, conditions may promote the continued relevance of the World Bank and/or the IMF in a rapidly changing political economic global organisation, through the lens of a critical

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analysis of neoliberal capitalism and its impact on the Western-led multilateral development system. Critiques of multilateralism and calls for a new multilater­ alism will be assessed. The following section will analyse the complex web of neoliberalism, globalisation, and multilateralism, providing a context for ana­ lysis of a crisis of development, and the relevance of the USA-led neoliberal hegemony. Finally, the multilateral development system is unpacked, its emer­ gence, relevance in a contemporary geo-political context, the rationale for multi­ lateral rules based order, and its defenders and critics. The paper concludes with reflection on implications for existing multilateral institutions – and alternatives. A main argument is that two interconnected hegemonic phenomena, neo­ liberalism and globalisation, are negatively impacting on human development, and sustainability. Neoliberalism is ‘the ideology and practice of the dominant classes of the developed and developing worlds alike’ (Yates, 2007, p. 25), and whose visible consequences, market deregulation and state retrenchment, coexist with the internationalisation of economic activities. Running alongside this debate is the evolution of alternatives to ‘Western’ power, through the rise of China and other nations and voices from the ‘global South’.

The tangled web of neoliberalism, globalisation, and multilateralism Since World War II the global system has been dominated, and its direction determined, by the interplay of the twin ideologies of neoliberalism and globali­ sation with implications for the exercise of multilateralism in a range of areas including international development. Here we will argue that the interplay of these forces, and their use in intensifying the power and reach of the United States in the global economy, as well as the strategic and political spheres, can be traced back to the negotiations and struggles for power that commenced even before the end of the War, and that the foundations for a particular form of mul­ tilateralism that emerged at this time has had profound implications right down to the present. Also dating from this time, we suggest, is a particular ‘AngloAmerican’ mindset which has had profound implications for development assist­ ance and foreign aid programmes initiated by these core countries, and even for the very definition of development itself. Such an analysis suggests that any attempt to promulgate an entirely new and more fruitful approach to multilater­ alism can only be successful if we also challenge the ideological hegemony of neoliberalism and the particular manifestation of globalisation that is now dominant, in which large corporations strongly supported by governments are intensifying their monopoly powers. As it became clear that Nazi Germany faced imminent defeat, the conference convened in July 1944 at the New Hampshire resort of Bretton Woods involving representatives of 44 nations was charged with designing a new system of eco­ nomic rules and relationships for the emerging post-War world. In part these negotiations were backward looking, seeking in particular to avoid the punitive peace terms forced on Germany at the end of the Great War, seen by many as

A new ‘new’ multilateralism? 217 creating feelings of resentment and a desire for revenge that directly fostered the rise to power of Hitler. There was also an imperative to avoid the return of an economic crisis of the severity of the Great Depression, which was also credited with creating extreme suffering in Germany and hence the rise of Nazism. But the delegates were also forced to consider the implications of the new balance of power that emerged with the defeat of Germany and Japan, and the drastic reduc­ tion in the power and influence of Great Britain – a decline that was hastened by the ruinous cost of conducting the war against Germany and by clear indications that the British Empire could not survive long in the face of demands for inde­ pendence by the colonies. The United States was emerging from the conflict as the dominant economic, political, and military power, although even in 1944 the beginnings of the Cold War with the Soviet Union were becoming apparent. Thus, in the Bretton Woods negotiations the United States was determined to ensure that its interests and role in the new settlement would be enshrined and protected, and that everything possible would be done to establish a set of alli­ ances and military relationships that could counter the Soviet threat. In what he calls The Battle of Bretton Woods, Benn Steil (2013) has high­ lighted the conflicts – as well as some areas of agreement – between the chief delegate of the United States, Harry Dexter White, and his British counterpart John Maynard Keynes. The British Government was anxious to preserve what it could of its Empire as well as obtaining the best possible terms for post-War reconstruction, including a large loan from the United States, and it saw the tow­ ering intellectual skills of Keynes as its best hope. However, by this time Keynes was in declining health and the weakness of his real position soon became abun­ dantly clear (Skildelsky, 2009). Steil (2013) has argued that in any case a key aim of the United States was to ensure that Britain should no longer have a central role in global affairs and thus could not challenge US dominance. As a result, the United States was able to push through its entire agenda, creating a system of rules and institutions that have buttressed its power ever since. Between 1945 and 1949 the Truman Administration oversaw the foundation of the United Nations, the International Monetary Fund, the World Bank, and the General Agreement on Tariffs and Trade, the forerunner of the World Trade Organisation. The implications of Bretton Woods have thus been profound in themselves but have also created the foundations for the creation of the dominant neoliberal ideology, the related networks that constitute the current structure of globalisation, and of course the whole nature of multilateralism as well as the philosophy and practice of international development. The tone for future international development cooperation was soon set through the implementation of the Marshall Plan. This has often been portrayed as a large-scale philanthropic programme to rebuild post-War Europe, including Germany, but more recently Steil (2018) has called it the first example of a policy of ‘America First’. The paramount strategic goal was to create a series of alliances against the Soviet Union but the economies of the region had also to be rebuilt to allow each country to finance its own defence capabilities. Between 1948 and 1952 some US$130 billion in current value was transferred from the

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US to the 16 Marshall Plan countries, and there were undoubtedly strong human­ itarian motives involved here, but the underlying aim was also to begin the trans­ ition to a strong ‘Global America’ and to avoid expansion of Russian influence. It was feared that if Europe was not restored to economic health very quickly a disgruntled electorate would be attracted to the promises of Communism; however this was certainly not a crude programme for the exploitation of Western Europe – as it was often portrayed in Soviet propaganda – by financing massive imports of surplus American production. Rather, the motive was to rebuild strong economies capable of defending themselves and standing together with the United States against a common threat. Especially important here, Steil argues, was the restoration of the position of West Germany as the major exporter in the region. It is in this context that Steil portrays the Marshall Plan as the beginning of the Cold War. However, the United States certainly did consider its own long-term eco­ nomic interests and put in place strategies for the creation of its own future pros­ perity. This process has been described by Panitch and Gindin (2012) as the replacement of the partially informal empire of Pax Britannica by the informal empire of Pax Americana. The role of the American government was absolutely essential here: The American state, in the very process of supporting the export of capital and the expansion of multinational corporations, increasingly took respons­ ibility for creating the political and juridical conditions for the general extension and reproduction of capitalism internationally. (Panitch and Gindin, 2012, p. 6) This creation of the foundations of American hegemony was far more important than any short-term advantage that US companies might acquire: the system that was put in place was designed to enshrine permanent US centrality in the new international capitalist order. This did not involve some kind of world govern­ ment – individual nations were still responsible for their own regulations and laws, but they carried out their responsibilities within the new norms or para­ meters clearly set out by the US, and at every stage in the development of the new international economy other nations were expected to contribute to the orderly control of the international order by the US. The centrality of the states of all of the countries in the US informal ‘empire’ in the management of this system directly contradicts the conventional separation between ‘government’ and ‘markets’ (Weiss, 1998). The US took over from Britain the central role played by governments for several centuries – the creation and support for their own companies, pushing them to be ‘national champions’. Eric Hobsbawm (1968) argued that the real reason why the first industrial revolution originated in Great Britain rather than France was that successive British Governments con­ ducted foreign policy not for the glory of their monarchs but in the interests of British companies. In some cases the companies were even out in front creating the possibilities for later imperial expansion, notably the East India Company

A new ‘new’ multilateralism? 219 (Dalrymple, 2019). Thus, as Bieler and Morton (2018) suggest, it is better to see relations between state and civil society as internal linkages within an overall capitalist structure: there is a differentiation between the economic and political spheres, but there is no separation. As a new system of global capitalism emerged after World War II, along with it a distinctive view on the role and nature of multilateralism became apparent, including in the field of development. Once again, these foundations still retain their relevance today. The major protagonists at Bretton Woods, including Keynes, had a clear idea that their deliberations had an exclusive focus on Europe and North America. As Geoff Mann (2017, p. 48) has stressed, the non-West regions were seen as an undifferentiated and uniform whole, from which the core countries extracted resources according to rules that they decided upon among themselves, and multilateralism was confined to the creation of the norms con­ cerning the social and economic organisation of these ‘outside’ territories. It was also understood that multilateralism must be constructed to minimise domestic adjustment costs (Ruggie, 1982). This understanding was also reflected in the def­ inition of the whole concept of development and of the programs that were neces­ sary to achieve it. Critics of the whole concept of ‘development’ – and hence of ‘underdevelopment’ – assert that a new era dawned on 20 January 1949 when President Truman enunciated a new global development campaign, which they see rather as a charter for unchallenged and permanent US hegemony (see, for example, Escobar, 1995; Esteva, 2019; Parfitt, 2002). The goal of development was to make ‘them’ more like ‘us’ using the Western model and its technologies – this regardless of the diversity of histories, cultures, institutions, and aspirations found in Asia, Africa, Latin America, and elsewhere. As a plethora of newly inde­ pendent countries emerged on the world stage the dominant political message from the West was that development could be best achieved within the existing system led by the United States, and any kind of radical break or revolution was neither necessary or wise, a doctrine at the centre of Rostow’s iconic treatise on The Stages of Economic Growth (1960). The emphatic response, first from Latin America and then from the rest of the Third World, accused the West of being – rather than a saviour of the poor nations – the source of their continued exploita­ tion (see, as examples among many possible ones, Amin, 1974; Frank, 1969; Furtado, 1970). Also, important here was the publication of Frantz Fanon’s angry and hugely influential condemnation of the impact of European rule on the Third World The Wretched of the Earth (1963), which urged the exploited of these countries to rid themselves of this disastrous influence, using extreme violence if necessary. This critique, while going out of favour for a number of years, particu­ larly following the economic success of Japan and the Tigers of East Asia (to which we will return), is still very much alive and influential in the Global South. The vision of multilateralism and the role of foreign aid that was implicit in the writings of Rostow and other similar writers at this time became a particular target for the Dependency Theorists such as Frank, who argued that Latin America’s periods of real development coincided with the two World Wars, which served to isolate the region from exploitation by the West.

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While in the immediate post-War period the focus of writers on development was on the impact of the role of the Third World in supplying minerals and raw materials, by the 1970s the focus had shifted to include the role of the nonWestern world in two other key areas: the new international division of labour in manufacturing; and the spread of the global system of finance. From the 1970s onwards we witnessed what has been described as one of the greatest economic and social transformations in world history, the rise of Asia. Former US Treas­ ury Secretary Larry Summers has calculated that during the Industrial Revolu­ tion in Britain, within an average human life span, standards of living rose by perhaps 50 per cent, a noticeable improvement. But in contemporary Asia a person may well have experienced an increase of some 100-fold, or 10,000 per cent (Mahbubani, 2008, p. 10). This dramatic change was initially fuelled by the establishment of manufacturing industries, first in Japan and then in Korea, Taiwan, Hong Kong, and Singapore, and later in China and parts of Southeast Asia, initially for export to the US and European markets. The major features of this transformation have been documented by many researchers, but what has been in dispute is the main driver of this industrial development. Some have seen the simple uptake of principles of free market capitalism as the key (World Bank, 1993), while others have stressed the investment and co-ordinating roles of developmental states (Amsden, 2001; Johnson, 1982; Wade, 2004: WooCumings, 1999). While, in our view, the essential role of the state has now been well established, debate still continues on the more fundamental meanings of these developments. Alice Amsden (2001), for example, has argued that the Asian experience shows that it is possible for nations to break through and join the ranks of the rich and successful. By contrast, Arrighi et al. (2003) contend that while there has been a clear divergence in the level of industrialisation across countries at various levels of overall development, there has been no resulting divergence in income levels. In the current era of globalisation, they maintain, industrialisation does not represent either development or modernity. While industrialisation in Asia and other parts of the Third World was seen as an important stage in the process we now call globalisation, it was financialisation that soon came to be a more dramatic break with the past, with momentous consequences for the Global South. Once again, US companies were at the fore­ front of this process. As Peter Gowan (1999) has pointed out, the power of both the US government and American corporations have been greatly enhanced by the structure of the financial system put in place largely by the government in Washington in the ashes of the Bretton Woods agreement. Profits from complex financial instruments soon became a dominant component of the global economy: by 2007 the total (notional) value of financial derivatives of various kinds was some 10 times that of global GDP and by 2013 the total value of financial transaction was 100 times greater than the total value of trade and investment (Anderson, 2019). The whole house of cards came crashing down in 2007 of course (Taylor, 2010; Tooze, 2018), but following massive government bailouts those involved in the finance industry pretend that nothing much has changed. Certainly, no real lessons seem to have been learned, but the story is

A new ‘new’ multilateralism? 221 far from over. What we have also seen recently is the rise of ‘surveillance capit­ alism’, the use of new digital technologies to mine and use data on individuals, information that can be sold to companies for their targeting of advertising to people about which they now know a great deal, although the citizens may be completely unaware of what is going on (Zuboff, 2019). Once again it is USbased technology companies that have spearheaded this process, and as a result the largest companies in the world are these very lightly regulated technology giants (Foroohar, 2019). In all of these changes in the global economy, from an emphasis on trade and investment to a belief in Third World industrialisation followed by the creation of financial and technology juggernauts, approaches to development, and the role of multilateralism, have been similarly transformed. From the late 1970s the policy emphasis moved from ‘development’ to ‘globalisation’, but we would argue that the reality for the Global South remained depressingly the same. Selfinterest and Great Power rivalries dictated policy priorities rather than any con­ sideration for the needs of the poorer nations. Industrialisation in Asia was encouraged to enable Western countries to enhance their profits at a time when Europe and North America faced serious cost pressures, while products from these Newly Industrialising Countries were allowed unrestricted entry into Western markets to allow US allies like South Korea and Taiwan to build up their economies and hence their ability to finance their defence capabilities. Here, the rationale mirrored the earlier reasoning behind the Marshal Plan in Europe. However, the rise of the finance industries soon generated pressures from Wall Street on the US government to engineer an opening of the South Korean financial markets to outside speculative interests, resulting in the crisis of 1997 (McKay, 2003). In earlier decades Third World Debt was a major worry, now the threat of global financial instability is perhaps a more serious concern, although debt is mounting again. As we have tried to demonstrate, while it is usual to separate multilateralism in the economic domain from that in the security area, the two issues have always been closely tied together, and in some ways are becoming even closer. During the Cold War polices on international aid were very much determined by strategic rather than humanitarian consideration. Worries that the other side would increase its influence led to financial incentives to ‘stay with us’. Now, increasing rivalries between the US and China are resulting in similar programmes. The US ‘pivot to Asia’ and the recent Australian ‘pivot to the Pacific’ have both been based on a fear of growing Chinese influence. Thus, multilateralism as seen from the Global South continues to be driven by economic and stra­ tegic self-interest.

Neoliberalism and the crisis of development The underlying theory informing all of the changes that have taken place in the global economy and in development policy is of course neoliberalism, with its stress on the minimisation of the role of government, the privatisation of many

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public sector activities, and the spread of the market into all aspects of society. The multilateral organisations, notably the IMF, have been at the forefront of exporting this ideology to the Global South through the structural adjustment loans that have had such a devastating effect on many of these societies. Similarly, the World Trade Organisation’s rules on intellectual property as well as trade have made it very dif­ ficult for developing nations to use the very same protective measures that were so important for the now developed nations during their own processes of develop­ ment (Cahill, 2014; Chang, 2002). In our view, it is the replacement of neoliberal ideologies that is the essential first step in the creation of a new philosophy of devel­ opment and of a new form of multilateralism that can assist in the creation of a better world. As noted previously the global international capitalist order that resulted from the post-war negotiations (and dominance by the US) fundamentally changed from the 1970s and the widescale emergence of neoliberal capitalism in the 1980s has cemented a world order based on a set of values, norms, principles, and thus policy and economic decision making based on a set of capitalist con­ ditions that extend into every aspect of social life, where capital accumulation over­ rides pretty much all social forces, and government becomes the enabler of private enterprise, driven by individual entrepreneurialism, and supported by free markets, strong property rights, and free trade (Harvey, 2005). Nation states that still retain a vestige of adherence to an historic welfare state model, or to the advocating of general or public interest (health, education, environmental protections) or other forms of earlier liberalism of the post-war consensus, are considered as having issues of governance that must be rectified. The future of neoliberalism has been under something of a cloud following the Global Financial Crisis, the Eurozone crises, Brexit, the rise of Trump, and a range of other evidence that has undermined what appeared to be an impregna­ ble ideology (Gertz and Kharas, 2019). Critiques have included questions of inequality (Hardoon, 2017), lack of context specificity (Ostry et al., 2016), the dangers of massive speculative financial flows, the ongoing debate about the existence and impact of free market fundamentalism, and the fallacy of the market as an organising principle for collective decision making, when public goods, such as education, public transport, and so on will not be provided by aggregated market demand for those who are at the mercy of inequality. The impact of the failures of global neoliberalism, and the notion that the market is the organising principle for collective decision making, is deeply challenged by the deterioration of the conditions of many in the so-called developed world, embodied in growing public anger, and stagnant productivity (Coyle, 2019). Gallagher and Kozul-Wright (2019, n.p.) summarise the crises as ‘polarizing inequality, financial instability, and a breakdown of the climate system’. In spite of these criticisms, neoliberalism has demonstrated remarkable resili­ ence (Crouch, 2011; Mirowski, 2013). In part this has been the result of a lack of any clearly articulated alternative, but more important have been the ways in which this ideology has been embedded into the major element of modern society – the class structure, the major international institutions as well as the commonly accepted ways of looking at the world. Market fundamentalism is

A new ‘new’ multilateralism? 223 now seen by the majority of the population as ‘common sense’ and the normal way in which affairs should be conducted (Cahill, 2014). This reflects the inability of the many studies of the impact of neoliberal policies, including in a development context, to challenge the dominant ideology. There have been numerous analyses of the origins and general philosophy of neoliberalism (for example, Peck, 2010) and the term recurs in the media, popular press, and every­ where from international institutions (from the OECD to the IMF) and within civil society (Hardoon, 2017), but there is a desperate need for more clarity on exactly what neoliberalism actually means, what its impacts have been at the individual level, and what an alternative paradigm might look like. It is to such a vision for a new approach to multilateralism that we now turn.

Old ‘new’ multilateralism Multilateral development institutions, as embedded within a broader ‘Western’ world view are, as was noted earlier, the flag bearers for a development system driven by a neoliberal and globalised economic imperative neoliberalism under the dominant leadership of the United States and its key partners. Socio­ culturally this promotes the need for all societies to strive to create copies of a ‘developed’ world of democratic individualism, in a market-based economy, where human development is based on a growth economy, asset ownership, capital accumulation, and primacy of competition. As already outlined in Kelly and Makuwire (Chapter 2), the multilateral development system currently encompasses the Bretton Woods institutions (World Bank and IMF) as well as a range of international and regional financial institutions such as the Asian Devel­ opment Bank. It also encompasses the United Nations and its agencies, as well as the ‘non-traditional’ donors, whose influence is seen in the emergence of a range of new organisations such as the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB). The initial function of the MDS was the transfer of resources. However, as is usually the case, those who provide the finance can control the agenda, and notably the provision of development solutions (Bhattacharya et al., 2018). Development finance from the World Bank and IMF specifically is declining in importance espe­ cially for middle-income countries which can rely more on foreign direct invest­ ment, and many lower income countries now also receive significant flows of such private funds. A second and related issue is the increasing choice or power of lenders, given the large and increasing number of development banks and other lenders (Prizzon et al., 2017). This has particular relevance with the relatively recent establishment of the AIIB and the NDB, both of whom are significant players. However, it would be simplistic to frame the debate on the multilateral system just with these few organisations. As donors have invested more in multi­ lateral co-operation, the multilateral system is becoming increasingly complex. The multilateral system in 2011 comprised over 210 major organisations, funding an ever-increasing number of operations in developing countries, with resultant issues of fragmentation, replication, and coordination (OECD, 2012).

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More broadly the functions of multilateralism and the MDS are quite exten­ sive, and expanding. As already noted, multilateralism is seen by Linn (2018) as a series of organisations and related governance that develops and maintains a rules-based global economic and social order, based on shared norms, networks of people, knowledge, and data. Linn also argues that multilateralism is about ‘resolving conflicts, among partners and competitors for global resources, markets and influence’ (p. 86). Within these frameworks therefore multilateral institutions provide transfer of resources, including through platform provision whereby pooled funding can be consolidated (Bhattacharya et al., 2018), the financing of humanitarian operations, the ‘classical’ anti poverty capacity build­ ing development programmes (Jenks, 2014, p. 1826), and of significant con­ temporary relevance, the provision of global public goods, and management of global public ‘bads’ (Bhattacharya et al., 2018). The platform approach would suggest MDBs provide a space for the pooling of sources of funding – particu­ larly long-term development finance, and therefore increasing resulting capacity to provide concessional funds where required (Bhattacharya et al., 2018), lever­ aging funds based on small pools of paid in capital, against a much larger sub­ scribed capital base guaranteed by members. From a development perspective, therefore, MDBs in particular provide growth and development where financial markets are ‘imperfect’ and where knowledge or capacity gaps occur (Bhattacharya et al., 2018, p. 2). However, as Jenks (2014) identifies, there is a tension in the basic premise of multilater­ alism in development, between multilateralism as a function of the control of where the allocation system lies, and multilateralism as being about the purpose for which the financing is provided. The MDS is thus, by design, con­ strained by the US-led neoliberal vision of development. The defence of a ‘one world’ view of what constitutes an economic and governance system that promotes good human development is centred primarily on the uncritical acceptance of neoliberalism. Defenders of multilateralism Multilateralism is defended from a range of perspectives that can be best grouped by role. Efficiencies are gained through the value proposition of the multilateral development system (Bhattacharya et al., 2018), provision of scaled up and least cost services, pooled resources, avoidance of waste and duplication, in essence, resource transfer at low cost. This argument is based on the assump­ tion of ‘highly effective capacity’ in strengthening policy and institutional foundations, and the leveraging of finance (Bhattacharya et al., 2018, p. 2). The goal setting era that we are currently in (the Sustainable Development Goals) is partially built on the conceptual existence of multilateral institutions, which as the OECD (2015) argues is uniquely equipped to support this agenda. Multilateral organisations are politically neutral conveners of global partnerships, vehicles for upstream

A new ‘new’ multilateralism? 225 pooling of resources, facilitators for multi-stakeholder cross-border opera­ tions, and setters of global standards and norms. (p. 1) Which leads to the second line of defence for multilateral development aid within a broader rules-based system. Multilaterals are touted as trusted partners, with solutions tailored to client needs. This is argued particularly in the context of Fragile, Conflict, or Violence (FCV) affected states, where MDBs can provide a platform for pooled funding (including private and bilateral donors), avoiding overloading weak institutions, mitigating risk for FDI, and supporting full-scale comprehensive approaches. This promotes the benefits of a long-term view, which is arguably a legacy of the infrastructure investment background of MDBs, which necessarily required a long view. The OECD (2015) argues that multilateralism promotes a sustainable devel­ opment lens, and drives a global/regional approach to help tackle spill-overs (climate, disease, conflict, migration, economic shocks). The complexities inher­ ent in addressing climate change, among other issues, has created a consensus that international cooperation is essential to promote ‘transformative change and mobilise financing on an unprecedented scale’ (Bhattacharya et al., 2018, p. 2). The Sustainable Development Goals themselves are touted as the new global agenda, requiring radical change and greater ambition (Stern and Bhattacharya, 2019). The SDGs have a global reach, which has extended discourse around global public goods (and bads), yet the responsibilities and political-economic system that underpins the goals is not radical. Growth is still the predominant focus, and neoliberal capitalism the foundation. Critiques of multilateralism Critiques of the existing system and calls for a ‘new multilateralism’ are not new. Most critiques relate to process issues and how multilaterals operate. Bigger-picture critique, relating to why organisations behave the way they do, is far less widespread, yet the two questions are intricately connected. The initial issue of funding and control is problematic. A core critique of a shift to results-based and goal-driven development finance is the ‘bilateralisa­ tion’ (Jenks, 2014, p. 1817) of aid, given the dramatic increases in non-core funding. Non-core funding is allocated for specific purposes, rather than to the general pool, and thus is frequently at the mercy of bilateral negotiations. The core/non-core funding debate is problematic according to Jenks (2014), in looking at the financing of multilateralism.1 He argues for a much broader ‘bargain’ based around the functions of the MDS, platform function, provision of global public goods, financing humanitarian operations, and the ‘classical’ anti poverty capacity building development programmes (p. 1826). Potential competing mandates that can undermine or duplicate efforts of other inter­ national organisations, in particular the MDBs versus the UN system for example, can provide a duplication of effort. Given the proliferation of MDBs,

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there is now clear potential for competition (Bhattacharya et al., 2018), which may act in the interest of the ‘client’ country more so than the banks themselves. The impact of concessionary lending was at the core of the debt crisis of the Highly Indebted Poor Countries (HIPCs) through the 1980s and 1990s. Debt relief was implemented through the HIPC initiative (and widely criticised on the basis of the austerity measures and privatisation imposed as conditions). More contemporarily, a changing investment climate has seen the implementation of much less favourable terms and conditions thus increasing the debt burden of a number of countries. Christine Lagarde (2018) has noted the rising vulnerability to debt as an issue for the IMF to consider. Inequality, a global consequence of neoliberal policies, is of fundamental importance here: the global trade system is clearly unequal and is marked by great differences in the ability to control of resources. The function of the MDS raises also questions around the diverse and com­ peting priorities, or what Bhattacharya et al. (2018) call shareholder misalign­ ment. As argued previously, the political, security, and other concerns of donor countries, and those with the greatest power in the World Bank and IMF, are driving a system that gives greater priority to strategic rather than humanitarian concerns, and the current issue of influence and rivalry between the US and China is driving a resurgence of competing priorities. The provision of (and balance between) private goods, national public goods, and global/regional public goods is a major concern (Bhattacharya et al., 2018). The language of ownership and control is clearly embedded in the MDS, yet, the position of MDBs as providers of development solutions does not necessarily honour this. Bhattacharya et al. (2018) note that even with rhetoric around building country ownership of development priorities, in particular in response to the resultsbased agenda and harmonisation, the rhetoric considerably exceeds the reality. Building on the argument that shareholders have not systematically reviewed the MDS system since 1944, Chowdhury and Sundaram (2018) call this out more strongly arguing that institutional resistance to reform has made multilateral institutions unfit for purpose. The SDGs call for major ramping up of both the scale and quality of invest­ ment. The upgrading of infrastructure – a major focus of both the MDBs and SDGs – requires much higher levels of investment. However, considerable com­ plexities are involved here, including the underpinning ideology, the long time frames required, social consequences, externalities, and environmental impacts (Bhattacharya et al., 2018). Two particular points of note here are related to the functional ideology underpinning this investment. The first relates to the mobil­ isation of multiple capital sources, including private capital, with related issues of public goods (and bads), and potential inequality embedded in private invest­ ment under market-based models. The role of government in a neoliberal model of growth and development is as a stakeholder, but one of many, and there are a range of ideological and immanent critiques of the role of the state in neo­ liberalism – summarised by Gilbert (2016, p. 7) as

A new ‘new’ multilateralism? 227 ... deliberate intervention by government in order to encourage particular types of entrepreneurial, competitive and commercial behaviour in its citizens, ultimately arguing for the management of populations with the aim of cultivating the type of individualistic, competitive, acquisitive and entre­ preneurial … [to address] a certain habitual tendency towards collectivism. The second and related point of note concerns the embedded rules in the World Bank and other MDBs forbidding political interference, which is difficult to justify or work around, primarily in FCV states. Although acknowledging a need to analyse the political economy of any context, the World Bank falls short in applying a political economy analysis to its own institution and actions (Jakupec and Kelly, 2019). The OECD, as quoted earlier clearly identifies political neutrality, and the setting of global standards and norms as central to the func­ tion of multilateralism. Yet as we have argued they are not politically neutral, and their role as sole mandate holder for global standards and norms, when they are not globally representative, is questionable at best. At a more strategic level where the control of the allocation system lies, cri­ tiques are widespread around MDB governance, including but not limited to leadership selection, representation, and rules by which shareholders make deci­ sions, and following on from this, US hegemony. There is a ‘gentleman’s agree­ ment’ that puts an American at the helm of the World Bank, and a European at the IMF, which still stands, despite a plethora of international candidates put forward, particularly in 2012. The current World Bank President, David Malpass, is an American Republican, a fan of protectionist policies, and is seen as anti­ multilateralism. Given the rhetoric of democracy, good governance, account­ ability, country ownership, and so on, there is a fundamental disconnect in a system that promotes this rhetoric, yet is driven by a few powerful nation states, and their ideological frame. This returns us to the core critique of this chapter, neoliberalism. Historically and currently the neoliberal ideology of the World Bank since the 1980s has been a focus of ongoing and considerable critique (Peet, 2009; Wiseman Adhikary, n.d.). The challenges to this multilateral system are considerable, and are driven primarily by the fact that the world is no longer unipolar (Byanyima, 2019; Derviş, 2018), with the rise of more recent Chinese, Indian, and other centres of power. The shift in power comes alongside increasingly complex global issues, in particular climate change and sustainability, inequality, and poverty, and the substantial political shifts, towards right-wing populism, illiberal democracy, and the rise of the far right. The resulting shift to unilateralism by the US chal­ lenges the hegemony of US-led institutions, although Ikenberry (2003) argued that the Bush administration as long ago as 2000 shifted sharply away from multilateral rules-based order, so the recent tendency for protectionist unilateral­ ism is hardly new. It does impact on financial viability of multilateral institu­ tions, as funding commitments are not being met by member states. Many observers expected that the end of the Cold War would usher in a multipolar order with increasingly equal centres of power in Asia, Europe, and America.

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‘Instead, the United States began the decade as the world’s only superpower and proceeded to grow more powerful at the expense of the other major states’ (Ikenberry, 2003). A realist interpretation of the USA’s commitment to multilateralism is put forward by Kagan (cited by Ikenberry, 2003) that multilateralism is favour­ ably received by the less powerful, and that in essence the USA was in favour of multilateralism up to and through the Cold War, but more recently the country has veered towards unilateralism in response to its strengthened posi­ tion. The current shift away from multilateralism must then either be based on a false sense of power and importance globally (given the rise and rise of China), or other more complex factors, including right-wing populism. If people do not trust governments and therefore seek something else what does this say about power, and international control? As we noted earlier, chal­ lenges to dominant economic thinking – in the form of deglobalisation, post neoliberalism, and so forth – have had only a limited impact on political deci­ sion making despite some grass-roots activism, and popular discontent par­ ticularly relating to climate change, resulting in greater levels of polarisation. But is it possible then to envisage a revised form of multilateralism that might produce more positive results? New ‘new’ multilateralism The operation of the MDS (Stiglitz, 1998) in response to the failures of the Washington Consensus model of development argues for a new development paradigm, but what this may look like is contested. We argue that the dismant­ ling of a neoliberal hegemony is an essential starting point. Changes to governance and leadership of multilaterals has had some support, both in terms of representation of the interests and values of the global south in global ‘summitry’. (Hampson and Heinbecker, 2011, p. 299) as well as in repres­ entation and leadership of the multilateral system, both Bretton Woods and beyond. Ikenberry (2015) lays out the evolution of the ‘American led liberal hegemonic order’ (p. 399) that underpinned the multilateral system. However, he notes more recently the challenges to this hegemonic system of multilateral governance embedded in the wider distribution of power and wealth and the shrinking role of America in this increasingly multipolar world, asking: As the world becomes ‘less American’ will it also become less liberal interna­ tionalist? What might global governance look like in a post-hegemonic age? (Ikenberry, 2015, p. 400) Ikenberry (2015) argues that although American hegemony on multilateral gov­ ernance is troubled, the fundamentals, in his view of liberal internationalism that forms the core of the existing international order (rules and norms), are strong, and in the interests of increasing numbers of states. He argues that this is not a new state of affairs and that:

A new ‘new’ multilateralism? 229 ... liberal democracies have made repeated efforts to build and rebuild liberal international types of order. The interests and constituencies for liberal internationalism are deeply embedded in the globalizing logic of capitalism and liberal ascendency. American efforts to build a liberal hege­ monic order in the postwar decades was the most recent and most successful phase of this longer-term and wider struggle to build an open and at least loosely rule-based international order. In this sense, liberal internationalism and multilateral governance are not simply artifacts of American power or the postwar moment. (p. 400) Thus the crisis of liberal internationalism is a crisis of success in engaging with more states – non-Western states engaging in global governance. He argues in conclusion that the future of global (and thus multilateral) governance hinges on all states to renegotiate authority, and new bargains. Only in such a situation will collective leadership continue (which is a good thing in this argument, as interest in, and incentives for this are present.). Qobo and Soko (2019) take a different tack, arguing for ‘deep reforms’ including reflection on the purpose of a multilateral body, its role, and the need to strengthen inclusive multilateralism particularly for emerging economies and developing countries. Although the World Bank has had some fundamental shifts in its focus, dropping the structural adjustment loans of the 1980s in response to their widely acknowledged failures, but more notably under the leadership of Jim Yong Kim which saw a significant shift, in mandate (and in internal structures). However, a shift away from a neoliberal agenda would indeed be a deep reform. Patience (2017) argues that Europe never had the same blind adherence to neoliberal capitalism, which he argues arises from the notion of a ‘deep distrust of “possessive individualism” ’ (p. 1). Yet more broadly neoliberalism is under attack from both the left and the right. Alternatives to the negative externalities of neoliberalism encompass a wide range of options from diverse proponents for a social liberalism, a return to ‘real ‘socialism, as far as radical social move­ ments, or the embracing of new development experiences (Mondragon, Kerala, or similar), to options for a more regulated market, accepting the benefits that markets have brought, but utilising state or other forms of collective action to reduce negative externalities. Many of these options reduce the massive gains seen prior to the global financial crisis. However, as Crouch (2011) argued, the evidence of success is to be found in the ‘social investment welfare states of northern Europe’ (n.p.). Whether or where alternatives to neoliberalism as an underpinning ideology are to be found, the impact of deep reform to neoliberalism which is so deeply embedded in the existing ‘Western’ multilateral development system has several likely options. Pisani-Ferry (2018) argues that the preservation of the existing order as much as possible is one option. This is demonstrated by the response to the US withdrawal from the Paris Climate Agreement, generally a business as

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usual approach. However, the US shift to unilateralism is not necessarily the cause of the underlying problems and discontent with multilateralism, and thus this solution is limited. Pisani-Ferry’s second option is to use the crisis within multilateralism as an opportunity for reform, based on the notion of ‘salvaging those aspects of the old multilateralism that remain useful, but fusing them into new arrangements that are fairer, more flexible, and more appropriate for today’s world’ (n.p.). Given the impact of Chinese (and Russian) efforts to promote a multilateralism based more on their norms and values (and strategic political interests), this seems a more likely option. Yet a cautionary note is sounded by Hampson and Hein­ becker (2011), who argue that with increased power sharing, burden sharing, and benefit sharing (with countries of the global South or requesting greater recogni­ tion within the system) comes a need for a ... greater sense of international civic duty on the part of the emerging powers. The response to the Libyan crisis of the claimants to permanent member status in the Security Council, who all put ideology and rhetorical posturing before protecting the innocent, is an indication of the distance still to be travelled. (p. 300) The notion of a politically neutral international order is, it seems, not any more likely in a more representative global order unless vested interests can be managed to an extent that allows for the function of multilateral institutions for systemic benefit rather than short-term (national or corporate) interests. A shift away from a neoliberal base would provide some possibilities for this to occur. However, issues such as preferential arrangements, and resulting discrimination, and the role of private capital flows and unregulated financial markets need to be dealt with. Further issues that arise are the taxation system, the complexity of governance in complex situations where Westphalian notions of democracy are compromised, and the challenges that arise from a crisis of global magnitude, climate change, that requires global commitment to change, yet is currently driven by series of voluntary commitments by nation states, which are neither sufficient, nor enforceable, and thus little change is occurring. A final option but one that is difficult to grasp in an era of issues and prob­ lems of a global magnitude, climate crisis, refugee and migrant crisis, inequality within and between nations, is a shift away entirely from multilateralism. Regionalism (cf. Laryea, 2013), an increasing role for National Development Banks (Griffith-Jones and Ocampo, 2018), and new forms of diplomacy such as ‘minilateralism’ are touted as some potential ways forward – for example the G20 and beyond (Hampson and Heinbecker, 2011). An analysis of a viable post-neoliberal world would require much more space than we have, but it is possible to sketch a broad outline here. In the earlier part of this chapter we highlighted two particular problems that have emerged since 1945 with serious effects on the achievement of a more broadly based and

A new ‘new’ multilateralism? 231 equitable form of development. One has been the attempt, most particularly during the neoliberal era, to implement a single recipe for success applicable to all societies regardless of their history, culture, or institutions. Second, develop­ ment assistance and multilateralism have been seen primarily as methods for the intensification of dependency and hegemony. We would argue that the first requirement for a new paradigm then is a recognition that development policies need to be tailored to particular national needs and characteristics – one size does not fit all (McKay, 2013) – and development cooperation needs to involve dialogue and agreement between all parties on a basis of equality. These impera­ tives obviously involve a fundamental transformation of how multilateralism is designed and implemented. This new paradigm will also need to take seriously some new realities in the development landscape. These certainly include the serious challenges to the very existence of many nations presented by global climate change and other environ­ mental crises. Conflicts over power and the control of resources are tearing many societies apart, resulting in bloody conflicts and civil wars. Many segments of society are being left behind as levels of inequality reach unprecedented levels, resulting in dangerous instability and resentment. All of this is taking place in an era of rapid technological change, giving unprecedented access to communications systems, which intensify the desire of those being left behind to gain access to the better life that they now see on their screens. One clear impact of all of these changes has been an upsurge in the number of those seeking to migrate to richer countries. One recent study has predicted that in the next two decades large parts of Africa will become uninhabitable because of climate change and some 100 million Africans will seek to cross the Mediterranean (Asserate, 2018). The social, polit­ ical, and economic consequences would be catastrophic, but perhaps the prospect of such a crisis may force a recognition in the developed world that it is in the interests of everyone to create more prosperous, inclusive and stable societies in Africa and elsewhere in the Global South. As Asserate argues, most migrants would rather remain in their homes, and the West also has a clear interest in such an outcome. Developing such a new blueprint for co-operation able to challenge the neoliberal orthodoxy will be difficult, but even more challenging will be the creation of the political will to overcome the considerable strength of the vested interests that can be relied upon to defend the current order. Critique of multilateral development system needs to embrace high-level systemic change, which can and will impact on all aspects of multilateral institutions, and some of which will benefit from existing critique on process, governance, and other specific roles of the MDS. These critiques are useful, necessary, but not sufficient. However, we want to argue that a transformed multilateral system might be able to expand to clarify the new agenda and assist in its implementation.

Conclusion We argue that the mobilisation of collective action, through forms of multi­ lateralism, is required, but that deep reform is vital. The challenging of the

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‘Anglo-American’ mindset, the very profound implications of this mindset on both the design and operation of the multilateral development system and the very defi­ nition of development itself are based on the ideological hegemony of neo­ liberalism. As argued throughout this chapter, attempts to promulgate an entirely new and more fruitful approach to multilateralism can only be successful if we also challenge the ideological hegemony of neoliberalism and the particular mani­ festation of globalisation that is now dominant, in which large corporations strongly supported by governments are intensifying their monopoly powers. The charting of a path forwards requires that this ideological hegemony shifts ground substantially, to allow for a greater engagement with critical analysis of altern­ atives, and a substantial challenge to what is often referred to as ‘vital core values’ the neoliberal order, the liberalism, and embedded structures with outmoded and failing impacts. A post-neoliberal world can take many guises, but must at its core provide a rules-based order for humanity, not a rules-based order for private capital, based on a fair, equitable, transparent process of international agreement. To work out what form the new multilateralism could take is too big a question for one chapter. However, it is too important a question to leave unasked.

Note 1 Although his focus is on the UN development system, the argument would apply more generally to multilateral funding.

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15 Competing multilateralisms Development aid under scrutiny Jonathan Makuwira, Max Kelly, and Viktor Jakupec

Introduction Multilateral aid agencies have been instrumental in spurring aid to make an impact in the lives of billions around the world, especially in the so-called developing countries. However, as Kharas and Blomfeld (2013) observe, the need to rethink the multilateral aid architecture cannot be overemphasised in the current global uncertainty. Recent years have seen a huge shift in development discourse. The development agenda has broadened and become more complex. At the same time, the pace of global poverty reduction has slowed down despite the efforts to maintain progress. Furthermore, and sadly, income inequality is on the rise not only in developing countries but even in developed countries. While technology and innovation have been hailed as good, the truth of the matter is that they are threatening jobs and affecting income distribution. With the above snapshot, growing concern over the current multilateral aid agencies have been echoed in this volume and, more so, by Linn (2018) who agrees with our position that the current multilateralism and multilateral aid institutions are under threat of being unable to fulfil the agenda of reducing poverty and other critical social, economic, and political challenges of our time. With emerging and new multilateral donors like the BRICS, Islamic Development Bank, and Asian Infrastucture Investment Bank, the development finance architecture has also changed. Within current global multilateral development financing, the international capital markets, remittances, and foreign direct investment have overtaken some of the multilateral development banks and even Official Development Assistance, which now contribute a smaller share of the overall volume of finance (Prizzon et al., 2017). On the scene are new actors such as private philanthropic organisations and the Global Fund. With China, as one fast-growing and dynamic donor trading between multilateralism and bilateralism, the challenge for the traditional multilateral donors has become obvious. With the emergence of two major new Chinese-led banks, the Asian Infrastructure Investment Bank and the New Development Bank, the dominance of the Bretton Woods institutions has become more reduced and, not only are these ‘traditional’ development donor agencies under a global spotlight, but there is also waning optimism about the impact they make to their constituencies. In

Competing multilateralisms 237 addition, the more the global aid architecture becomes fluid, the more questions are asked about their global legitimacy in the current global geo-political reconfiguration and order. This seemingly crisis-like era for multilateral aid agencies is further exacerbated by issues such as Brexit and the discord over the future of European Union. The challenge to this scenario is the role such a bloc plays in a regional multilateral context. In trying to explain this, Moreland (2019) has argued the EU’s role as a global actor is also disrupted simultaneously, as China and Russia seek to reconfigure multilateralism. The impact of this reconfiguration in the post-Cold War era and in alternative and post-development thinking is far-reaching because the foundational principles upon which the post-Cold War multilateral order was instituted are shaken. As such, we concur with various sentiments expressed in this volume that the structural shifts that are taking place globally are changing not only the nature of international relations but are equally challenging the world’s capacity to mobilise cooperation in response to the growing threats of poverty, security, and international order. In this we also note the relevance of multilateralism in the development space not just to international development and foreign aid, but the complex interrelationships with security and geo-economic (trade) components of the broader multilateral system. The purpose of this book was to provide an independent and, at the same time, in-depth critique of the Western multilateralism and multilateral aid institutions in light of emerging and contemporary multilateralism. In particular, while the critique has been advanced from a right-wing populist movement or from a standpoint of the Beijing Consensus, there has been a convergence as well as a divergence of views on the strengths as well as the weaknesses of development itself, as well as the current multilateralism, which offer a rich reflection on what may be the future of multilateralism. In pulling these perspectives together, the chapter focuses on the following core themes that emerge from the analysis: • • • • • •

Rethinking multilateralism in a multipolar world Geo-political factors shaping multilateralism Geo-economic factors Institutional dynamics necessary for multilateralism Redefining development within the 2030 Agenda for Sustainable Development and other global development instruments Conditionalities.

To frame these discussions we turn first, however briefly, to consider theories that contribute to a deeper understanding of the core themes. An overarching theme across the contributions in this book is the concept of hegemony, related in this context to the hegemony of the neoliberal capitalism that drives the geoeconomic and geo-political context of international development, particularly within the Bretton Woods multilateral institutions, namely the World Bank and IMF. Mphande (Chapter 5) explicitly draws on Gramscian conceptualisation of

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hegemony. Yet across the volume it is perhaps the core implicit theoretical construct. Hegemonic theory has a range of precursors in international relations, but at its core it refers to ‘the ability of an actor with overwhelming capability to shape the international system through both coercive and non-coercive means’ (Norrlof, 2015, n.p.). In the context of the multilateral development system, traditional post-World War II multilateral institutions are driven by what Ikenberry and Nexon (2019, p. 395) refer to as ‘American hegemony’. This refers not only to the primacy of the USA-led economic theory, and the emergence of the notion of a hegemonic neoliberal world order (Chodor, 2015), but also to the hegemony of the USA in world politics, in the multilateral institutions that have until recently driven the multilateral development system, and thus, in development theory, policy and practice. A core focus of this volume has been the challenges to this hegemony, from diverse perspectives, including challenges driven by the rise of Chinese-led alternatives to unipolarity – and thus the emergence of a multipolar world, which includes not only China, but also Russia, and in particular the global South, a position which is upheld unanimously. The impact of course of external challenges, including but not limited to the rise of right-wing populism, illiberal democracies, and shifts away from globalisation, further weaken the hegemony of the USA. The internal challenges of a discourse based on ‘America First’ doctrine, which Norloff (2018) argues, will cause America to fall further as a great power, and arguably lose its primacy as the ‘liberal guardian’ (p. 88). The multiple debates contained in this volume on the rather unexpected emergence of the USA as the dominant power, and thus the global unipolarity, has spawned much discussion on the power, influence and thus, in a contemporary context, security. Many of these insights would fall under a realist tradition, primarily from an international relations perspective, although Walt (2009) notes that from a security perspective the USA held primacy rather than a hegemonic position. The shift to a unipolar world, followed by a shift now back towards a multipolar world, leaves a vacuum of experience in terms of the impact on international relations, in particular those that define and promote a vision of sustainable development, as encompassed by the Sustainable Development Goals (SDGs).

Geo-politics and multilateralism in a multipolar world In a book such as this, it is clear from the discussions that the multipolar politics are redefining how multilateralism should be understood. Competing multilateralism is fast being redefined. Robert Zoellick, a former World Bank president, in April 2010, gave a speech considered by analysts as the most important speech of a World Bank president. While Robert McNamara’s speech of 1973 set poverty reduction as the Bank’s new mission, Zoellick’s main argument rested on putting to an end the idea of ‘Third World’, and thus echoed: If 1989 saw the end of the ‘Second World’ with Communism’s demise, then 2009 saw the end of what was known as the ‘Third World.’ We are now in a

Competing multilateralisms 239 new, fast-evolving multipolar world economy – in which some developing countries are emerging as economic powers; others are moving towards becoming additional poles of growth; and some are struggling to attain their potential within this new system. (Zoellick, 2010, p. 1) Indeed, the reality that now China is the second largest economy in the world, behind the United States and ahead of Japan, casts a big shadow over a country that considered itself a leader in global politics. Also, if we consider the relative economic weight of China and several others who have joined the centre stage of global political contest through their economic might, what indeed is real is a big shift in geo-politics from ‘unipolar’ toward ‘multipolar’, less dominated by the so-called G7. The question that we ought to answer is: How is this change being translated into changes in authority and influence within multilateral organisations like the G20, the World Bank, and the International Monetary Fund (IMF) (Wade, 2011, p. 1)? At the seventy-fifth birthday of the Bretton Woods Institutions, these claims cannot be overemphasised. Not only is the hegemonic power slowly defusing but, as aptly argued by Mphande (in Chapter 5) and Ndhlovu-Gatsheni and Mpofu (in Chapter 4), part of the hegemony of the West often led by the World Bank and IMF is the use of language as power; where labels such as ‘third world’, ‘developing/developed’, and other binaries have been used to signal the need to attend to those considered less developed, have been used to legitimise action. Not only has the discursive move legitimised multilateral machinery to see the need to act and rescue the ‘developing’ and/or the ‘third world’ but also to cement the geo-political advantage of the colonial and postcolonial Cold War eras. Although inadvertent and futuristic, Zoellick’s view has to also be understood in a holistic manner because, in effect, he argues that power, which was defined by the extent to which the Bretton Woods institutions distributed material power in the interstate system, has become more or less defunct this time round than it was since the beginning of the Cold War. Within this period (75 years), while one may argue that there has been a stable dominance by the Bretton Woods Institutions, there has been a lot of ‘instability’ in the other camps (other superpowers, particularly China and Russia) which, given what is happening now, demonstrates a seemingly invisible Cold War (see Jakupec, Chapter 13). Going back to Zoellick’s sentiments, one would be tempted to argue that his views denote the crumbling of a larger global development agenda coined by Harry Truman’s inaugural presidential speech where he outlined the megaproject calling for the use of [‘our’] knowledge and resources to deliver development to the rest of the non-communist world. We want to also agree with scholars such as Engel and Bazbauers (in Chapter 8) who have noted that the demise of the traditional multilateralism is on two major fronts: the failure of macroeconomic stabilisation and liberal microeconomic ‘reforms’, also known as structural adjustment programmes

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(Chossudovsky, 1997). With cuts in social welfare in the belief that trickle-down growth would fix poverty – to a degree – over time, the lack, in reality has seen most of the traditional recipients of multilateral development aid ‘look elsewhere’. Geo-strategically, this lapse in the West’s thinking and agenda repositioning was immediately spotted as a major weakness which led to the emergence of the Beijing Consensus. Ramo (2004) coined the term as a description of China’s strategy, although it is noted that the term Beijing Consensus is contested and the nature of, and impact of Chinese-led international aid and development is intensely debated. Despite this, two views can be advanced from this development. First, this could be seen as an approach. Second, this can also be interpreted as dogma and/or a doctrine which essentially focuses on ‘equitable, peaceful high-quality growth’ (Ramo 2004, p. 4). What was obvious was its direct challenge to the dominant SAPs and their neoliberal tenets of privatisation and free trade among other prescriptions. It is emerges clearly from the discussions that Ramo’s analysis also identified a geo-strategic element to the Beijing Consensus. Its focus on self-determination, defence, power projection, and the non-interference in domestic affairs of any country gave China a comparative edge over other multilateral aid donors (Makuwira, 2011). In reflecting on this insidious politics, what we see clearly from the discussion is the sophistication with which China engages the traditional territory with its new development model – the claim of putting people first. Williamson (2012) – coiner of the term ‘Washington Consensus’ and a neoliberal – concurred that China has a focus on gradualism, innovation, and experimentation but also highlights critically the reliance on foreign demand, use of state capitalism, and an authoritarian political system. A critical in-depth analysis of the Chinese model was beyond the scope of the volume, but the diversity of Chinese aid and development approaches is a linked and vital discourse. Geo-economic factors shaping multilateralism The geo-political issues affecting multilateralism are not isolated from geoeconomic factors. Typically, national interests are shaped by processes that prevail in the context of how politics shapes thinking and, ultimately, reconfigure how countries can plan how to grow their economies. As Chitenderu and Ncwadi (in Chapter 9) have demonstrated, geo-economic interests are, primarily, concerned with how states compete with each other from an economic power point. What is clear from our analysis in this volume, and which supports Wigell (2016), is the fact that geo-economic dynamics often have their starting point when a dominant power or economy slowly loses its military might. In the 75 years the World Bank and the IMF have been in operation, they have been challenged in the context where the United States as a superpower in the post-World War II era slowly lost its grip on the developing world as more and more regional blocks sought to find other alternatives to issues of development, security, and economic development. This is further supported by

Competing multilateralisms 241 Moreland (2019) who put it simply: ‘To defend multilateralism, one cannot preserve it in amber, rather, those architectures must be adapted to, and adapted within, the prevailing geo-political environment’ (p. 3). What Moreland means is that the early agenda of the immediate post-Cold War era lacked reflection and anticipative planning from a country like the United States which has been instrumental in driving the agenda of multilateral development institutions. It is, until recently, when the establishment of the BRICS New Development Bank has, in a way, seen the hegemony of the World Bank and IMF, weakened. Further to that, the weakening of these Bretton Woods Institutions, coupled with Trump’s new nationalistic rhetoric of ‘America First’ and, in the case of Europe, nationalistic movements, have added a new layer beyond the geo-political set up. The World Bank and the IMF have thrived traditionally by using loans as a way of leveraging policy and to demand change and the reform of recipient economies. These kind of practices made room for emerging regional blocs to take advantage of some of these austerity measures to offer new ways of financing the development agendas of their member countries. Hence, it is not surprising that, for example, the New Development Bank, created by the BRICS, and those financed by Chinese bilateralism, are operating a new and silent attack on the traditional multilateralism. The major geo-economic strategy, which is clear from a geo-political stand, is what is stipulated in its mandate – that is, to provide interest-free loans to developing countries for sustainable infrastructure development (BRICS, 2013, 2015). As Chitenderu and Ncwadi (in Chapter 9), Baracuhy (2013), Khandekar (2014), and Szabo (2015) have observed, when regional powers emerge stronger and strengthen their foreign policies, there is high likelihood to weaken the hegemonic practice of a power or an entity. This cannot be true of how the World Bank and IMF have been weaned from a comparative advantage perspective. The economic means by which such regional multilateral aid agencies pursue a strategic agenda easily determine the geo-economic as well as the geo-political landscape of other blocs. This has emerged clearly from our critical analysis throughout the volume. It is also fair to agree with Wigell (2016) who notes that good trading relationships, investment capital, overseas aid, and any influence on monetary policy, have wielded economic power to change the behaviour of other players who, for a long time, have suffered conditions that have not improved the lives of their citizenry. Institutional capacity Most of the discussions in this volume have, so far, remained silent on the role of institutional culture in the management and substance of multilateral development agencies. Why should institutions matter in the context of the current global multilateralism? Part of the answer lies in the need for reform as a forward-looking agenda which the volume has strongly articulated. Reforming institutions such as the World Bank, the IMF, and others that are coming on the

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scene as a result of the geo-strategic, geo-political and geo-economic forces will require a complete overhaul of institutional ethos – a thing that is no mean feat to try. For multilateral aid agencies to close the gap will require institutions whose capacity to think transcends simplistic discernment of what development and institutional capacity are all about. In the words of Zoellick (2010): It is a new world where developing countries are not only recipients but providers of aid and expertise. Nor is it about ideological panaceas, blue-prints, or one-size-fits all. In a multipolar economy, development is about pragmatism, learning from experience, recognizing how markets and business opportunities change, sharing ideas, and connecting knowledge, just as we connect markets, across innovative networks. (p. 7) Multilateralism within 2030 agenda for sustainable development There is a common understanding that the 2030 Agenda for Sustainable Devel­ opment, also known as Agenda 2030, or rather the SDGs, has become a cornerstone of the current global development discourse. Unlike their predecessors, the Millennium Development Goals (MDGs), the SDGs are more ambitious, broad, and encompassing and are seen to offer a new platform for renewed thinking for a new type of multilateralism. Not only does Agenda 2030 offer a complex roadmap towards driving economic, human, and social development, ranging from poverty eradication to climate change action, but its universal approach to dealing with complex issues requires all countries – developing and developed alike – to have committed to reach these goals. So obvious is the fact that the issues covered in the Sustainable Development Goals (SDGs) require greater collaboration, coordination, and commitment and yet, the current global multilateral aid architecture dictates a different trajectory. A principled and effective multilateral system offers a unique platform to tackle global and local challenges that appear to grow in scale and complexity, including protracted humanitarian crises, widening inequality, and the increasing frequency and intensity of climate change-induced disasters. If we consider multilateralism as a collective and cooperative action by states where and when necessary, in cooperation with non-state actors, to deal with common challenges and problems when these are best managed collectively at the international level, then there is a good reason to think that the current multilateral set up cannot be regarded as in crisis. One area that challenges this ‘crisis’ issue is the current 2030 Agenda for Sustainable Development to which all multilateral institutions have committed themselves to address global development challenges. Looking at these Sustainable Development Goals, the current multilateral aid architecture, and the post-development thinking, leaves one with a feeling of disillusionment as to how, given the pace of nationalism and the behaviour of critical development players in the multilateral set up, SDGs can be achieved.

Competing multilateralisms 243 We want to agree with Moreland (2019) who observes one key issue, which has constantly emerged throughout the volume – that of the behaviour of United States. It is no secret that the United States has played a … key role in creating and, largely, upholding the multilateral order, it is not surprising that considerable international concern over multilateralism’s future has been framed, explicitly or implicitly, around changing U.S. rhetoric and policy under the Trump administration. (p. 4) What is of significance in analysing how the SDGs can be attained, is what Le Drian and Maas (2019) lamented about: ‘unfortunately, it can no longer be taken for granted that an international rules-based system is seen by all as the best guarantor of our security and prosperity’. These sentiments not only question how shaky multilateralism is, it further interrogates the instability of the multilateral aid architecture given the new players entering centre stage. Jayasinghe, Selvanathan, and Selvanathan (in Chapter 7) have aptly offered sufficient evidence to argue the case for reframing development aid architecture. They note, for example, that emerging donors such as China have a different approach in their policy posture to their recipients. High among them is a policy on ‘non-interference’ in domestic affairs (Makuwira, 2011; Mawdsley, 2012; Zeitz, 2015). For example, conditionalities related to peace, safety and security, human rights, and good governance have been, up until now, common features of traditional donors and often receive high priority when making aid disbursement decisions (Chauvet, 2003; Whitfield and Fraser, 2000). The reason why countries like China, India, and other emerging donors have made inroads in providing hope for the achievement of the SDGs is their flexibility to overlook such tight and prohibitive conditions to development progress. While there is a counter-argument that the approaches taken by non-traditional donors mostly with ‘no strings attached’ jeopardises the achievements of the recipient country’s progress towards economic and political reforms – such as safety and security, good governance, and human right initiatives (see Kragelund, 2010) – these observations outweigh what is witnessed in the countries where traditional donors have made significant gains in achieving SDGs. Conditionalities As earlier noted by Chitenderu and Ncwadi (in Chapter 9) and Makuwira (in Chapter 6), the issues of transparency of public policies, as well as conditions attached to loans, have been the main criticisms levelled against the Bretton Woods institutions. At a time when developing countries are grappling with issues of poverty, such conditions have had far-reaching implications on the desired development trajectories of developing countries. Countries receiving aid from multilateral development institutions are required to privatise state-owned enterprises, maintain low inflation, reduce the size of government

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bureaucracy, balance the budget (if not running a surplus), liberalise trade, deregulate foreign investment, deregulate capital markets, make the currency convertible, reduce corruption, and privatise pensions. While in some cases some of these conditions, like reducing corruption, is imperative, other conditions are in no way helpful in countries whose economies are still struggling to firm their institutional capacity. We fully concur with Boakye (2008), who observes that financial assistance is likely to have a positive effect in countries that have good fiscal, monetary, and trade policies. But, as this volume has shown, this should not be at the expense of wider national ambitions often inscribed in national development agendas. On this point, we dare add that it is often the very multilateral development institutions that encroach with insidious strategies disguised as ‘technical assistance’ to sway the national agenda. Given that most of the developing countries are ‘perceived’ to have a weak capacity to develop such a national development document, what is often seen is a dominant presence of foreign experts to lead the process of developing such policies, under duress of prescribed conditions which allow no room for manoeuvre. It is, therefore, suggested that these multilateral development institutions should be guided in their activities by the principles of the South–South cooperation that emphasises national sovereignty and ownership, nonconditionality, non-interference in domestic affairs, and mutual benefit (Oxfam, 2014). If there is ever a need to attach conditions or policy recommendations to the loans, these should be transparent, and the affected country must be involved in the formulating the conditions. There is one thing that must be borne in the minds of development experts, especially those from within the multilateral development institutions, that the main challenges in developing countries are poverty, inequality, and unemployment. One of the ways in which the current multilateralism can reconfigure its act, if it is to enhance development in developing countries, is to be strategic in its investment approach. Infrastructure development, while at the same time attending to broader social services, but with less strings attached to aid, could be an effective approach. It is against this background that we contend that while conditionalities may provide checks and balances in a wider development system, they have to be targeted rather than imposed in a blanket manner. Given the importance of addressing inequality and poverty reduction, the current multilateral system should direct its investments and activities towards making societies fairer and authorities more accountable to their citizenry.

Conclusion The various perspectives in the volume have provided scope and breadth that point to the reality that the increasing scale of global development challenges, and the increasing decline in support for a multilateral system that, for over 75 years, has been dominated by one major superpower in advancing its national interest, call for a complete rethink. The scrutiny with which the IMF and the World Bank are undergoing all point to the need to review whether the current

Competing multilateralisms 245 multilateralism, and indeed the development aid agenda, are strong enough in meeting the challenges of the twenty-first century. The critical question whose answer remains elusive is: are these dominant multilateral aid agencies ready for a reform agenda? The suggestions for a new trajectory are varied. In our final concluding remarks we can only appreciate these sentiments but add a few caveats to not only further the conversation but also provide lines of thought for both highlevel policy makers in the multilateral development aid system and, also, those in the praxis. For sure, theorists may have their take on these perspectives which they can further explore through research. First, we propose that henceforth, global development, as a vehicle through which poverty reduction is addressed, should be understood as a process requiring three interrelated approaches. Under this point, the perspectives in this volume, especially those by Kelly and Makuwira (in Chapter 2), do seem to point to the fact that unless the ‘agency’ of development process is fully recognised, multilateralism as an ideology and multilateral aid agencies, as instruments facilitating this ideology, will never get things right because the reality is ignored. This reality is that multilateralism and its attendant processes cannot bypass the ownership of what makes development real – ‘putting people first’ (Chambers, 1997). Second, while the global community has been calling for an increase in aid provision, through multilateral agencies, the reality today is a complete shift from meaningful multilateralism to unilateralism as currently witnessed through Trump’s foreign policy shift and the UK’s Brexit movement. This right-wing populist influence has its own implications. What that means is what Dambisa Moyo (2009) has argued in her book, Dead Aid: Why aid is not working and how there is a better way for Africa. In this book she asks a very crucial question: ‘What if, one by one, African countries each received a phone call, telling them that in exactly five years the aid taps would be shut off – permanently?’ (Moyo, 2009, p. xi). In her own words, she challenges her readers that quite obviously life will have to go on, and the African governments will have to find alternative means to finance their development agendas. How? It is our conviction that the time has come when development financing should go beyond just having money which eventually is mismanaged, misplaced, and offers no solution to the real issues on the ground. As such any act that propagates dependency in the financing of development programmes must be stopped. Allow countries to offer new avenues for accountability to the little resources mustered through multilateral as well as bilateral cooperation. Third, multilateralism has not enhanced trade. The World Trade Organisation has been one of the institutions under the spotlight of global criticism. Africa is a typical example where regional trade deals are very low. This has not been helpful in closing the inequality gap between and among developing nations. At least with the new emerging multilateral donors like the BRICS, there may be a way to chart a new way to enhance trade deals within the socalled ‘South–South’ cooperation. In Moyo’s (2009) argument, this is to try and phase out reliance on aid.

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Fourth, unless the leadership issue within the World Bank and IMF, to consider a leader outside Euro-America, changes, the power dynamics will continue to play into the hands of the ‘northern power base’. This means that an attempt should be made to devolve the World Bank and IMF’s political base to an ‘outsider’. Not only will this move help to bring confidence to the members but it will also allow distant voices to be heard. However, there is one big danger: given the behaviour of US foreign policy, this may legitimise increased abandonment of financing of the Bank and the Fund. Fifth, while multilateralism and multilateral aid agencies work under the guise of common interest, it has to be acknowledged that they have competing interests in the financing of development programmes. More effective coordination between and among multilateral donor agencies both at the country and project level is very important. This is in order to reduce transaction costs for recipient countries and to leverage the comparative advantage, especially in fragile contexts where the presence of donors is crucial. Given the scale of infrastructure development across the developing world and the importance of such projects to non-infrastructure development projects, infrastructure plays a key role in enhancing national development. Key to this coordination is to find a middle ground on how pooling the funding of bilateral donors and co-financing arrangements can foster positive impact and reduce the fragmentation of external financing, the proliferation of small projects, and the high transaction costs to government. Sixth, the effectiveness of multilateral aid agencies will be measured not only because of the volume of the channel to development assistance. Rather, as Jakupec and Kelly (2016) have argued, it is to ‘provide evidence-based effectiveness of development expenditure. Twin pillars of fiscal pressure on governments, and a significant and public debate about effectiveness of aid, drive this’ (p. 12). Part of the multilateral reform process is to increase fiscal discipline and, by inference, transparency and accountability. The power of evidence is that it offers decision makers to make right decisions that are informed by empirical evidence. This is lacking in most development programmes. To conclude, in this chapter, we have provided a number of issues which we believe need further investigation and be subject to a thorough scholarly discussion. The overarching context for such discussions, we believe, needs to be delineated within an epistemic framework which acknowledges that multilateralism in development aid may have narrowed the gap between the peoples and nations: some have benefited, and others have been disadvantaged. Indeed, satisfaction with neoliberal multilateralism in the development aid arena varies widely between the multilateral donors and aid recipient countries. The former have the tendency to downgrade the potential social, political, cultural, and economic cost of their development aid conditionalities, the latter are suspicious and critical of the benefits arising from the multilateral aid conditionalities. Contributors have shown that the debate concerning multilateral development aid impact is intensifying, but without a realistic solution being advanced by the neoliberal multilateral development banks. More specifically there is a scarcity of solutions offered by multilateral development banks to the above-mentioned issues,

Competing multilateralisms 247 namely: (1) poverty reduction; (2) a shift from meaningful multilateralism to unilateralism; (3) enhancing trade deals within the so-called ‘South–South’ cooperation; (4) the northern power base within the World Bank and the IMF; (5) competing interests in the financing of development programmes; and (6) measuring effectiveness of multilateral aid agencies. These issues have been addressed by the contributors. In analysing the overall contribution of this volume, we primarily applied hegemonic theory (Schmidt 2018) to provide an epistemic underpinning through which one can reach an understanding of multilateralism in development aid. Challenges to US hegemony, in world politics, in the multilateral institutions that have until recently driven the multilateral development system, and thus, in development theory, policy, and practice are clear, the impacts are less clear. However, the potential for a shift in USA hegemony in a multipolar world raises a very clear potential for fundamental shifts in multilateralism itself. Thus, within the multilateral development system, a shift that may very well be both overdue, and an absolute necessity, in an era of rising inequality and the failures of neoliberal capitalism is needed in order to provide a mechanism which ensures social justice, equity, and sustainable human development.

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Competing multilateralisms 249 Zeitz, A. O. (2015) The Changing International Political Economy of Development Assistance: The Ghanaian Case. Global Economic Governance Programme Working Paper 104. University of Oxford. Zoellick, R. (2010) The End of the Third World? Modernizing Multilateralism for a MultipolarWorld.https://openknowledge.worldbank.org/bitstream/handle/10986/29639/124460WP-Zoellick-4-14-2010-ENGLISH-End-of-the-Third-World PUBLIC.pdf?sequence=1& isAllowed=y [Accessed 25 November 2019].

Index

accountability 89, 140–1, 154 Afghanistan: aid flows to 98–9; and China 97–106; shifts in aid to 104–5 Africa 18–19, 22–4, 46–60, 62–74, 138, 182, 231, 245; and China 96, 208; and civil society 81, 86–7; and SAPs 25 Africa rising 56 aid effectiveness 94–5, 97 Asian Development Bank (ADB) 11, 114; and AIIB 39, 125, 145, 147–8, 150, 153, 156; critique 153–5; geopolitics 149; and infrastructure investment 145; and normative development 149; overview; 145–6; subscribed capital 125, 151 Asian Infrastructure Investment Bank (AIIB) 2, 4, 6, 8, 12; and Australia; 38; and China; 40; critique of 153–6; geopolitics and India 153, 149; overview 147; subscribed capital 151; and World Bank 38 Australia 31, 34, 72, 150–1; and populism 36–9 Bandung Conference 58 Bangladesh 95, 97–105, 123, 154 Bank of Latin America (CAF) see Development Bank of Latin America Beijing Consensus 1, 5, 6–7, 71–2, 113, 117–18, 126–7, 197–8, 204–6, 237, 240; definition 4 Belt and Road Initiative (BRI) 156, 197 bilateral 14, 41, 93, 95, 97, 199, 101, 153, 201–2, 225, 245–6 Brazil 71–2, 93, 113, 122, 132–4, 137, 178–82, 187–8 Brazilian National Development Bank (BNDES) 137 Bretton Woods 1, 31–4, 39–43, 47, 51, 63, 66–71, 79, 185, 195–6, 209–10, 216–17,

219–20, 228; institutions 134–5, 140; and multilateralism 2–3; and origin 13–16; and Washington consensus 5–8, 184, 196–9, 204–8, 237, 239 Brexit 31, 36, 42, 215, 222, 237, 245 BRI see Belt and Road initaitve; One Belt One Road BRIC 133 BRICS (Brazil, Russia, India, China, South Africa) 15, 72, 113, 132–4, 139, 142, 172, 178, 180–1, 185, 188–9, 241; bank 2, 39–40, 71, 133–4, 191; capacity of 137; development agenda 182–3, 190; economies 134, 136; economic block 56; multilaterals 73–4; scholarship of 179; summit 186–7 CAF see Development Bank of Latin America capitalism 35, 57, 215; free market 220; global 41, 189, 219; internationalisation of 23; mercantile 24; neoliberal 6, 9, 165, 216, 222, 229, 237 Caribbean Development Bank 152 Chicago School 34 China Development Bank (CDB) 138, 152 Chinese Development Assistance (CDA) 93, 100, 102, 106 civil society 19, 22, 65, 78, 80–6, 88–9, 156, 179, 180, 184, 186, 191, 219, 223 Civil Society Organisations (CSOs) 79–80, 82–4, 88, 153 Cold War 19, 48, 195, 198–201, 207–9, 217, 221, 228, 239; and foreign aid 201; and Keynesianismn 203; post 206, 227, 241; new 197 colonialism 7, 24, 27, 50–9, 64, 178; neocolonialism 50, 57, 59, 64 coloniality 52, 55, 57–9

Index COMINFORM 200 conditionalities 3, 5–7, 18, 68, 72, 85, 94, 183, 195, 205–6, 237, 243–4, 246 conflict 21–2, 50, 100, 199–200, 217, 225 decolonisation 19, 46, 50, 54, 58, 72 democracry 8, 25, 39, 46, 48, 182, 227, 230 Denmark 146–7 dependency theory see development theory ‘Developing Asia’ 145, 155, 156 Development Bank of Latin America (CAF) 113–14, 120–3, 126, 136 development discourse 20–1, 24–5, 58, 83, 145, 160, 172, 236 development theory see theories of development developmentalism 46–7, 118 Dexter White, H. 16, 31, 115, 217 East African Development Bank (EADB) 152 Easterly, W. 20, 52, 84 Eastern and Southern African Trade and Development Bank (ESATDB) 152 environment 17, 20, 74, 136, 154, 160–2, 171, 191 Environmental Impact Assessments (EIA), 154 Escobar, A. 46, 53, 55, 148, 219 Escobar, P. 178, 187, 191 Eurafrica project 46 European Bank for Reconstruction and Development (EBRD) 152 European Commission (EC) 53 European Economic Community (EEC) 49–50 Financing Infrastructure 118, 152 Free market 5–8, 34–5, 67, 215, 220 Friedman, M. 2, 4, 116, 204 GATT see General Agreement on Tariffs and Trade gender 2, 140, 146 General Agreement on Tariffs and Trade (GATT) 33, 195 Global Financial Crisis (GFC) 2, 3, 32, 34–5, 38, 40–2, 205 Globalisation 3, 5, 25, 34–6, 40–2, 55, 81, 187, 189, 206, 215, 220; antiglobalisation 87 Gramsci, A. 65 Greater Mekong Subregion (GMS) 149

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Green Growth 163 Hayek, F.A. 2, 4, 13, 32–4, 41–2, 116, 204 hegemony 82, 237–8; dismantling of 228; ‘dollar hegemony’ 185; Gramscian 63–6, 188; neoliberal 27, 216; United States 8, 48, 57, 186, 190, 206, 218; of World Bank and IMF 3, 178, 208 Highly Indebted Poor Country (HIPC) 63, 69, 87, 88, 226 humanitarian 49, 83, 93, 188, 218, 221, 224, 226, 242 immigration 36–8 imperialism 2, 23, 26, 47, 51, 55, 58, 180– 1, 187 Indian Export-Import Bank (EXIMINDIA) 138 indigenous 54, 154, 162, 205, 56, 117–18, 139, 220–1 industrailisation 56, 117–18, 139, 220–1 inequality 22, 27, 34, 50, 79, 215, 222 institutional theory 32, 40 Inter-American Development Bank (IADB) 6, 121, 152 International Financial Institutions (IFIs) 19, 26, 66, 134–5 International Monetary Fund 27, 31, 78, 133–4, 195–6, 240–1; and civil society 84, 86–7; critique 5, 35, 69, 71, 85; hegemony 3, 8, 17, 64, 67, 132; purpose of; 32, 66–7; and Structural Adjustment Programmes 18, 54, 69 Islamic Development Bank (IsDB) 113, 123–5 Japan 39–40, 93, 134, 146, 150, 153, 182, 197, 217, 219–20 Keynes, J.M. economics 16, 31, 33, 41–2, 79, 114–15, 217 Keynesianism 2, 33–4, 203 Latin America 18, 25, 26, 34, 53, 58, 80–1, 87, 119–22, 219 macroeconomics 17, 35, 94, 116, 239 Malawi 70 Marshall Plan 47, 48, 66, 72, 197, 198, 200–2, 207, 210, 217–18 Marxism 21–3 Mekong 146, 149 mercantilism 7, 24, 32, 34 Mexico 34, 36, 38

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Millennium Development Goals 20, 84, 94, 96, 189, 242 Mises, L. 4 modernisation 19, 22–5, 66, 145, 147–8 Molotov Plan 197, 200–2, 207 Morgenthau, H. 15–17 multilateral development banks 3, 113, 145, 207, 236, 246 Multilateral Development System (MDS) 12, 15, 216, 223–4, 229, 231–2, 238, 247 multilateralism 2, 5, 33, 39, 78, 81, 185, 196, 216, 219, 223–4, 228; China-led210; conceptualisation of 1–2; critiques of 225; neoliberal 13, 205, 246 NDB see New Development Bank Neoliberal: agenda 7, 19, 35, 55, 79, 81; approach 25, 122; capitalism 6, 9, 165, 222, 229, 237; economics 12, 204; ideology 2–3, 5, 7–8, 57, 205, 208, 217, 222, 227 neoliberalism 6–7, 19, 116, 164, 203, 215– 16, 221–3, 229; as ideology 7, 216; post 215, 230, 232 Nepal 93, 95, 97–8, 100–2, 104–6, 125 New Development Bank (NDB) 2, 4, 39, 71, 113, 132–3, 139, 141, 183–4, 241; governance of 135; managing 135 NGO see Non Government Organisation Non Government Organisation(s) 51, 80, 83–4, 86–7, 116, 154 OBOR see One-Belt-One-Road OECD 41, 79, 95 Official Development Aid (ODA) 95, 136 One-Belt-One-Road (OBOR) 71–2, 208 Pacific 52, 145, 148, 155–6, 207–8, 210, 221 Pakistan 95, 97–106, 123, 126 Peet, E. 24–6, 161, 227 populism 12–13, 31, 178; cultural populism 42; definition of 35; left wing populism 178; right wing populism 186, 205, 227, 228 post colonial 26, 55, 57, 237 post development 26, 53, 237, 242 Post Washington Consensus 1, 66, 113, 117 poverty, reduction 19, 79–80, 87, 145, 156, 168–9, 236, 238, 244–5, 247 power 3, 22; asymetrical donor recipient 7, 9, 46, 53, 55, 57; in capitalism 21;

coloniality 54–5, 57; global balance of 71, 179–81, 96, 238–40; Gramscian analysis 178; locus of; 11, 88, 191; market power 33; military 39; in multilateral relations 14, 27, 65–6, 137, 142, 206, 227–8; political 8, 15, 54, 198, 202, 216–7; voting power; 5, 6, 123, 125, 135, 147, 150–2, 203 power sharing 230 privatisation 4, 18, 68–9, 85, 117, 204, 221, 226 protectionism 7, 32, 43, 185, 210 Ramo, J.C. 4, 117, 126, 206, 240 resilience: discourse 160, 166, 169 risk 9, 115, 125, 161, 168–70, 225 Rist, G. 48 Ruggie, J. 2, 13–14, 219 Russia 40, 72, 87, 132, 134–7, 147, 153, 155, 181, 187–91, 231, 238; see also BRICS Russian Vnesheconombank (VEB) 138 Sachs, W. 47–8 social exclusion 140 Social Impact Assessments (SIAs) 154 social justice 80–3, 181, 191, 247 social networks theory 82 solidarity 58–9, 80, 123, 179, 187, 189–90 South Africa 22, 133, 135, 138, 178, 180–3 South–South cooperation 149, 154–5, 188–9, 244–5 Southern Africa Development Bank (DBSA) 138, 183 Southern African Development Committee (SADC) 138 Soviet Union 40, 48–9 stagflation 33–4 Steiglitz, J. 5, 141, 205, 228 Structural Adjustment Programmes (SAP) 18–20, 25–6, 67–9, 86, 96, 119, 186, 229, 239 superpowers 199–200, 202 sustainabiltiy 122, 146, 163, 167, 187, 227 sustainable development 11, 121–2, 135–7, 140, 160–3, 165, 171, 182, 191, 225 technology 46, 56, 70, 135, 161, 189–91, 221 theories of development 21; decolonisation 26, 58; dependency 23, 70; Marxist 21; modernisation 22; neoliberalism 24,

Index 221; post development 26; world systems theory 180 trade 13, 16, 32–5, 38–40, 52, 68, 82, 101, 139, 141, 204, 226, 245; and CAF 122 Trans Pacific Partnership (TPP) 39 trickle down economics 25, 117, 140, 147, 156, 240 Truman, H. 21–2, 46, 200, 217, 219; and cold war 202 Trump, D. 34–6, 38; and China 37, 39, 186; and multilateralism 40, 205, 243; and right wing populism 8, 208 UN General Assembly 133 underdevelopment 18, 21, 47, 50–1, 54–6, 219 United Kingdom (UK) 6, 12, 31–2, 36, 72, 101 USA: and China Trade War 37, 38–40; and cold war 195; and globalism 15, 34; hegemony 8, 73, 178, 186, 190, 216, 219, 238; and USSR 241, 247 USSR 15, 48, 195

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Wallerstien, I. 187, 190 Washington Consensus 3–4, 55, 66, 78, 113, 116–19, 178, 204–6; and Beijing Consensus 35, 113–14, 197–8, 240; critique 5–7 White, L.C. 89 Williamson, J. 1, 116–17, 204, 240 World Bank 2, 16–7, 63, 67, 70, 78–9, 86, 97, 141, 203; and civil society 19, 84, 87; challenges 204, 206; and Cold War 203; critique 5, 6, 19, 69, 84–5, 161, 246; hegemony 3, 8, 65–6, 132; ideology shift 137; and Poverty Reducation Strategy Papers 19; purpose of 16–18, 32, 160; and Structural Adjustment Programmes 18; and sustainable development 162; and resilience 166–70; and USSR 198–9, 204 World Trade Organisation (WTO) 13, 31–8, 47, 52–3, 82, 195 Zoellick, R.B. 68