Member of the German Bundestag Deborah Düring leads the Green parliamentary working group on economic cooperation and development. Before the Spring Meetings of the World Bank and International Monetary Fund, we asked her a few questions about structural policy, Germany's role in international development, and inclusive prosperity.
Heinrich-Böll-Stiftung Washington, DC: In your first speech in the German Bundestag, you made the very succinct statement: “Development policy is structural policy.” At the global level, the World Bank and the International Monetary Fund (IMF) are important levers for structural policy. The next joint Spring Meeting of the World Bank and the IMF will be held in Washington, DC, in April 2022. What do you consider the key issues that need to be discussed regarding sustainable economic and financial policy?
Deborah Düring: We are amidst a dramatic global debt crisis. Especially since the Covid pandemic, the situation for many countries in the Global South has deteriorated dramatically. Nevertheless, we don’t yet have an adequate and sustainable answer to the debt issue. The recent debt moratorium has bought valuable time, but it hasn’t solved the problem. What we need is a structural response. This means that we need to specifically address a regulated procedure for debt restructuring. We need a process to bring all creditors, both public and private, to the table. Sovereign default proceedings must no longer be taboo. Debt puts states in a fiscal straitjacket, robbing them of much-needed flexibility to respond to crises, such as the economic and social fallout of the Covid-19 pandemic. It stalls urgently needed investments in sustainable development and transformation. In international relations, we are still observing a hierarchical power relationship between the Global North and the Global South in many areas, such as in trade policy or tax issues. As long as we fail to bring about structural changes, a sustainable and fair economic and financial policy remains out of reach.
Germany is one of the largest donors in both of these institutions. As a member of the Executive Board, it helps determine their strategic direction. How do we consistently promote our German ambitions of socio-economic transformation in the World Bank and IMF? What impetus can we provide, for example via our executive offices in these institutions?
The bank still has no consistent climate-neutral outlook. In the years between 2015 and 2020, the World Bank alone invested $7.6 billion in energy extraction, development, processing, or transportation of fossil fuels. And even though the World Bank has now stopped serving the upstream fossil business for new projects, indirect financing and out-financing of existing projects remain. Germany’s role as a major shareholder in the World Bank and IMF must be to not only push for a consistent socio-ecological transformation, but also demand it. We can no longer allow projects that do not comply with human rights and environmental standards. That’s where I think the German Federal Government must consistently vote ‘no’ in the Executive Council. To ensure that such financing projects really do get rejected, Germany would, of course, also have to lobby the other member states, especially its EU partners, for a unified climate-friendly position, since these decisions are taken by majority vote rather than by consensus. Of course, it is also important that all of the development banks’ existing sustainability strategies, climate pledges, and human rights guidelines are implemented consistently and monitored for compliance. The same applies to environmental and social impact assessments and participation mechanisms for the affected population. Sustainability and human rights compliance are neither ornamental nor tedious paperwork, but rather a basic requirement for successful cooperation.
Germany has committed to a feminist foreign and development policy. Do you think that gender issues are sufficiently embedded in the the World Bank’s and the IMF’s strategies and objectives?
At least, the World Bank has a Gender Data Portal. This is important for program planning because a lot of data is still not collected with a specific gender lens, which means that gender-specific needs and impacts etc. are not even recognized. The IMF openly admits that it is lagging behind regarding gender. It published a concept for a gender mainstreaming strategy as late as February 2022, aiming to include the category of gender in monitoring and lending. This is also meant to close the IMF’s gender data gap. If the Board adopts the strategy, it will be long overdue. People who are identified as female must not only be included always and everywhere, but above all, they must be equal actors at all levels of decision-making. This applies, of course, to the internal structures of the IMF and the World Bank as well as to the programs they support. The World Bank has also long recognized that women are essential “agents of change”, driving equitable and sustainable development. In reality, however, worldwide and all-pervasive patriarchal structures that have been entrenched for centuries continue to prevail, making it difficult to consistently implement gender justice and an intersectional feminist development policy.
Among other things, you advocate for a critical reflection on and the dismantling of “colonial structures” in the international system. One of the core criticisms of the World Bank and IMF is that voting rights are based on budget shares, which affords richer industrialized countries greater decision-making power. The leadership of these two institutions is also traditionally shared between Europe and the United States. How do you assess the need for institutional reform?
Industrialized countries wield more power within the IMF and the World Bank, allowing them to determine the organizations' policies. So-called developing and emerging countries feel the impact of these policies, as the voting share is calculated on the basis of their capital shares. So when the IMF distributed an unprecedented $650 billion in Special Drawing Rights (SDRs) last summer to mitigate the economic and social consequences of the Covid-19 pandemic, more than half of these rights went to rich countries, since the distribution was allocated according to IMF shares. As a result, the urgently needed financial boost for the Global South was far too weak. And at the same time, SDRs have provided disproportionate fiscal elbow room to rich countries that already have ample access to other sources of financing. This, once again, highlights the need for reform.
The fact that countries in the Global South have less capital at their disposal is also a consequence of colonialism and the associated power structures that are still in place today in the IMF and World Bank. In January 2016, after a long delay, the IMF implemented a voting reform. Six percent of votes were redistributed in favor of the Global South. This is only a small step, but it shows that reforms are possible as well as necessary. When it comes to awarding top posts at the World Bank and IMF, it is also always the U.S. and the Europeans who ultimately determine who gets the job. We finally need a transparent and democratic selection process that is capable of breaking up lingering colonial practices.
In an iconic scene of the Ukrainian TV series Servant of the people, starring current Ukrainian President Volodymyr Zelensky, Zelensky’s character of an unconventional president rejects an IMF loan with the words: "Go to hell!" This scene expresses the anger that is felt in certain parts of the world with what is commonly perceived as private sector-oriented, “trickle-down” reforms of the IMF and World Bank. This also raises the question of the actual quality of economic growth. What is your notion of inclusive prosperity and why is it so important right now?
Fortunately, the IMF and the World Bank abandoned the idea of measuring development and prosperity solely in terms of GDP some time ago. The fact that the “trickle-down” effect does not work has actually been known for a while now. Social inequality – within most countries and also by global comparison – has been worsening steadily for decades. Nevertheless, there are quite a few voices in politics and business who consistently ignore these findings and still uphold neoliberalism. Then there’s the question of what “prosperity” actually means. There are many alternative models of prosperity that encompass much more than just the monetary dimension. For example, the concept of “Gross National Happiness” in the country of Bhutan has garnered much attention. Or the Latin American notion of “Buen Vivir”, which stems from indigenous cosmovisions of what constitutes a “Good Life”. Or the concept of “time prosperity”, which also includes a person’s available leisure time, i.e., time outside of gainful employment and care work. Behind this is the view that prosperity does not equal working more and accumulating more money while having no time left for friends, hobbies, and so on.
I don’t even prioritize any of these particular models, the important thing is that we move out of this leftist academic niche discourse into the mainstream, and that we shift away from the growth paradigm toward a vision of prosperity as a lifestyle that satisfies needs and empowers personal fulfillment, without harming the environment, the climate, people in the Global South, or future generations.