Unholy Trinity

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the unholy trinity : IMF, WORLD BANK, WTO

Text of Unholy Trinity

About the author

Richard Peet is Professor of Geography at Clark University. He grew up near Liverpool and attended the London School of Economics, the University of British Columbia and the University of California, Berkeley. His main interests include development, policy regimes, globalization, power, social theory, philosophy and Marxism. He was for many years editor of Antipode: A Radical Journal of Geography. He also co-edited Economic Geography and is now editor of Human Geography, a new journal. He is the author of twelve books, including (with Elaine Hartwick) Theories of Development (2008), (with Michael Watts) Liberation Ecologies (2004) and Geographies of Power (2007).

Praise for the first edition

This is a terrific book ... It is politically committed, theoretically sophisticated, analytically incisive, empirically rich, thoroughly engaged, and full of devastating one-liners that greatly enliven its reading. Roger Lee, Economic Geography This is a great book. David Harvey, CUNY Unholy Trinity provides an important history lesson of how the IMF, World Bank, and WTO were twisted from their original mandates to serve the interests of corporate globalization. John Cavanagh, Director, Institute for Policy Studies

UNHOLY TRINITY the IMF, World Bank and WTO Richard Peet

second edition

Zed Books

london new york

Unholy Trinity: the IMF, World Bank and WTO was first published in 2003 by Zed Books Ltd, 7 Cynthia Street, London n1 9jf, uk and Room 400, 175 Fifth Avenue, New York, ny 10010, usa

This second edition was published in 2009www.zedbooks.co.uk Copyright Richard Peet 2009 The right of Richard Peet to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act, 1988 Set in Monotype Sabon and Gill Sans Heavy by Ewan Smith, London Index: ed.emery@thefreeuniversity.net Cover designed by Rogue Four Design Printed and bound in the eu by Gutenberg Press Ltd Distributed in the usa exclusively by Palgrave Macmillan, a division of St Martins Press, llc, 175 Fifth Avenue, New York, ny 10010, usa All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying or otherwise, without the prior permission of Zed Books Ltd. A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data available

isbn 978 1 84813 251 1 hb isbn 978 1 84813 252 8 pb isbn 978 1 84813 253 5 eb

ContentsBoxes, table and figure | vi Prefaces | vii Abbreviations | ix1 2 3 4 5 6

Globalism and neoliberalism . . . . . . . 1 Bretton Woods: emergence of a global economic regime . . . . . . . . . . . 36 The International Monetary Fund . . . . 66 The World Bank . . . . . . . . . . . 127 The World Trade Organization . . . . . 178 Global financial capitalism and the crisis of governance . . . . . . . . . . . . 244 Bibliography | 261 Index | 276

Boxes, table and figure


4.1 Eight UN Millennium Development Goals and eighteen time-bound targets . . . . . . . . 166 5.1 Trade policy review by the WTO . . . . . . 200Table

2.1 Subscriptions to the IMF in the international accords . . . . . . . . . . . . . . . .Figure


6.1 Percentage of income earned by three top brackets, United States, 19132005 . . . . . 252

PrefacesPreface to the first edition

This book comes from the committed efforts of a group of faculty, graduate students and undergraduate students at Clark University, Worcester, Massachusetts. The idea was to produce a critical study of three powerful global institutions the International Monetary Fund, the World Bank and the World Trade Organization set in the historical context of a study of the Bretton Woods agreement, and in the ideological context of a critical survey of the principles of neoliberalism. The way we wrote the book went something like this. The process began with an initial survey of the three institutions by one of the student authors in summer 2000. In autumn 2000 and spring 2001 small groups of graduate and undergraduate students researched and wrote first drafts of the four main chapters (25). Between summer 2001 and autumn 2002, the senior author rewrote most of the texts contained in the drafts, composed Chapters 1 and 6, and did extensive additional research (with help from two of the graduate student authors) on all the topics covered, before delivering the manuscript to the publisher in early October 2002. The senior author is therefore responsible for the accuracy of the statements made in the book and for the opinions expressed in it. The book covers some complex ideas; however, we have tried to write in a style understandable to people who are far from being experts in this area, but wish to know much more about globalization and global institutions. At times the going gets to be difficult as we cover a lot of complicated history, and some closely argued contentious issues, quickly but densely. The reader, of course, can work through all this in any way she or he wishes, including skipping most of the boring parts to get to the good bits, usually toward the end of each chapter. But we put a huge amount of time and effort into those detailed parts, including not a few headaches, at least on the part of the senior author, and we ask that you persevere rather than throw the book down in exasperation or, worse, read it as an alternative to counting sheep. The critical conclusions that we reach are based in the histories of the institutions. Note that we do not

say based on these histories, for the reading and the discussion we engaged in tended to intensify rather than form our opinions that is, we found even more than we were indeed looking for! The main thing is, the book is best when read in its entirety. Richard Peet would like to thank Robert Molteno of Zed Books for his informed help and his patient endurance. Richard particularly thanks Elaine Hartwick, his wife, for her deep and loving support during the eighteen months of hard work that made this book possible, and for her direct help, especially in the closing days of the books completion, in editing parts of the manuscript and subjecting the ideas to critical scrutiny. He also thanks his children, Eric (aged two) and Anna (aged two months), and hopes that when they get to read this some time in the future they will understand why Daddy had to burrow in the basement when they wanted him to play not always, though! We hope that this sacrifice to the Trinity is worthwhile. leominster, ma october 2002Preface to the second edition

Things changed so much after 2002 that we had to update the book and change its emphasis in 2008. All the chapters have been significantly altered. And the concluding chapter is entirely new. The senior author did the writing and is now solely responsible for the book. Many of the ideas in the book came originally from the junior authors of the first edition: Beate Born, Mia Davis, Matthew Feinstein, Kendra Fehrer, Steve Feldman, Sahar Rahman Khan, Mazen Labban, Ciro Marcano, Kristin McArdle, Lisa Meierotto, Marion C. Schmidt, Daniel Niles, Thomas Ponniah, Guido Schwarz, Josephine Shagwert, Michael Staton, and Samuel Stratton. Their hard work and critical thinking is acknowledged with gratitude. He again thanks Elaine Hartwick, for listening, discussing, and contributing her ideas, as well as putting up with his frequent disappearances down into the depths of our basement. And we both thank our kids, Eric, now eight, and Anna, now six, for their endurance too. Eric tells me he doesnt believe in God. I advise him: dont tell anyone. leominster, ma august 2008



Bank for International Settlements Comprehensive Development Framework (World Bank) collective reserve unit Committee on Trade and Environment (of the WTO) Dispute Settlement Body (of the WTO) Dispute Settlement Understanding (of the WTO) European Economic Community Enhanced Structural Adjustment Facility (IMF) Food and Agriculture Organization (of the UN) foreign direct investment General Arrangements to Borrow (IMF) General Agreement on Trade in Services (WTO) General Agreement on Tariffs and Trade gross domestic product Heavily Indebted Poor Country Facility (IMF) International Bank for Reconstruction and Development Independent Evaluation Office (of the IMF) Institute of International Finance International Labour Organization International Monetary Fund International Monetary and Financial Committee International Textile, Garment and Leather Workers Federation International Trade Organization less developed country Liberalization of Trade in Services most favored nation New Arrangements to Borrow (IMF) North American Free Trade Agreement Narmada Bachao Andolan (Save the Narmada Campaign) non-governmental organization Organization of Petroleum Exporting Countries

Poverty Reduction and Growth Facility (IMF) Poverty Reduction Strategy Paper (IMF) structural adjustment program Structural Adjustment Participatory Review Initiative SAPRI Network special drawing right (IMF) Sovereign Debt Restructuring Mechanism Trade Policy Review Body (of the WTO) Trade Policy Review Mechanism (WTO) Agreement on Trade-Related Aspects of Investment Measures (WTO) TRIPs Agreement on Trade-Related Aspects of Intellectual Property Rights (WTO) UNCTAD United Nations Conference on Trade and Development UNICEF United Nations Childrens Fund WDM World Development Movement WHO World Health Organization WTO World Trade Organization