1 00:00:00,440 --> 00:00:04,480 Speaker 1: You're with Clement Manila seven two. Let's walk for talk. 2 00:00:04,640 --> 00:00:06,840 Speaker 2: So last week we started a new series on the 3 00:00:06,880 --> 00:00:12,160 Speaker 2: show we did every Monday, just after the ten thirty headlines, 4 00:00:12,200 --> 00:00:16,560 Speaker 2: where we look at multilateral institutions. Last week we focused 5 00:00:16,560 --> 00:00:21,000 Speaker 2: on the United Nations and today we are discussing the 6 00:00:21,040 --> 00:00:23,799 Speaker 2: World Bank. And you'll pick up that a lot of 7 00:00:23,800 --> 00:00:28,280 Speaker 2: these multi lateral institutions were actually created after World War Two. 8 00:00:29,120 --> 00:00:32,479 Speaker 2: And with the Bank, I mean its original Monday it 9 00:00:32,640 --> 00:00:37,000 Speaker 2: was reconstruction and development, but over time its focus has 10 00:00:37,040 --> 00:00:42,599 Speaker 2: shifted from post water construction to poverty reduction, you developing finance, 11 00:00:42,680 --> 00:00:47,360 Speaker 2: economic reform in developing countries, and the influence of a 12 00:00:47,479 --> 00:00:51,159 Speaker 2: bank like the World Bank has always sparked debate. That's 13 00:00:51,159 --> 00:00:53,240 Speaker 2: why you've got, you know, two people on the side 14 00:00:53,280 --> 00:00:57,120 Speaker 2: of this debate. You've got those who support right initiatives 15 00:00:57,160 --> 00:00:59,600 Speaker 2: of the World Bank, and they will argue to you 16 00:00:59,680 --> 00:01:03,080 Speaker 2: that the Bank has helped lift millions out of poverty, 17 00:01:03,200 --> 00:01:08,600 Speaker 2: that helped build infrastructure, roads, schools, power stations, you name it, 18 00:01:08,720 --> 00:01:12,160 Speaker 2: especially in developing countries. And you've got others on the 19 00:01:12,160 --> 00:01:15,160 Speaker 2: other side, you know, critics who argue you'd often you know, 20 00:01:15,240 --> 00:01:18,839 Speaker 2: the loans or funds coming from the World Bank often 21 00:01:18,880 --> 00:01:23,880 Speaker 2: come with strings attached, right, with policy conditions that reshape 22 00:01:23,920 --> 00:01:28,800 Speaker 2: the national economies and sometimes even deep in inequality. What 23 00:01:28,959 --> 00:01:31,840 Speaker 2: have been your observations of the World Bank. You can 24 00:01:31,880 --> 00:01:33,680 Speaker 2: call us or send us a what'sup voice note, But 25 00:01:33,800 --> 00:01:38,040 Speaker 2: someone who knows more about this institution is Professor Patrick Bond. 26 00:01:38,160 --> 00:01:40,840 Speaker 2: We've invited him to come chet to us more about 27 00:01:41,200 --> 00:01:45,679 Speaker 2: the World Bank organization. He's the political economist and professor 28 00:01:45,720 --> 00:01:49,080 Speaker 2: at uj's Department of Sociology. Professor Bond, thank you for 29 00:01:49,120 --> 00:01:50,680 Speaker 2: making time for us, Good morning. 30 00:01:51,320 --> 00:01:54,120 Speaker 3: For breaking climate and to your listeners. 31 00:01:54,440 --> 00:01:56,400 Speaker 1: Yeah, let's start at the beginning. 32 00:01:57,040 --> 00:02:02,280 Speaker 2: What necessitated the established bachmond of the World Bank? 33 00:02:03,160 --> 00:02:05,960 Speaker 1: What are its origins and the original purpose? 34 00:02:07,080 --> 00:02:10,240 Speaker 3: The original purpose, as you said, is to make project loans, 35 00:02:10,560 --> 00:02:13,720 Speaker 3: that is reconstruction and development. And as you've said, then 36 00:02:13,840 --> 00:02:17,519 Speaker 3: they branched out into broader structural adjustment loans in the 37 00:02:17,600 --> 00:02:20,280 Speaker 3: nineteen eighties. But back in nineteen forty four, we have 38 00:02:20,360 --> 00:02:23,800 Speaker 3: some fingerprints that we should identify those of Jan Smuts 39 00:02:23,800 --> 00:02:27,799 Speaker 3: because a man called John Leynard Keynes was representing all 40 00:02:27,840 --> 00:02:31,080 Speaker 3: of the debtor countries at the big negotiations called Bretton 41 00:02:31,240 --> 00:02:35,240 Speaker 3: Woods that was in New Hampshire, not Washington Hotel. And 42 00:02:36,240 --> 00:02:40,359 Speaker 3: John nay Kin thought his old friend from nineteen nineteen, 43 00:02:40,840 --> 00:02:44,320 Speaker 3: the version treaty they got together, his old friend Jan Smuts, 44 00:02:44,320 --> 00:02:48,360 Speaker 3: would side with the debtorts. But instead, because South Africa 45 00:02:48,400 --> 00:02:52,720 Speaker 3: had half the world's gold here underneath us in Johannesberger 46 00:02:52,840 --> 00:02:55,440 Speaker 3: radius of a couple of hundred k well we found 47 00:02:55,480 --> 00:02:58,000 Speaker 3: it at the time, let's say, white South Africans found 48 00:02:58,000 --> 00:03:01,200 Speaker 3: it more amenable to be a sub power with the 49 00:03:01,200 --> 00:03:05,760 Speaker 3: imperial US that basically put together this World Bank in 50 00:03:05,800 --> 00:03:09,639 Speaker 3: a manner, especially the International Monetary Fund, the sister institution 51 00:03:09,919 --> 00:03:13,360 Speaker 3: that went against the interests of the debtors written and 52 00:03:13,480 --> 00:03:16,000 Speaker 3: the commonwealths and all the other countries that had gone 53 00:03:16,000 --> 00:03:19,040 Speaker 3: into debt during World War two. And instead South Africa 54 00:03:19,120 --> 00:03:21,440 Speaker 3: cited because the other half of the world's gold was 55 00:03:21,440 --> 00:03:24,480 Speaker 3: in the Fort Knox, Kentucky, the US that centralized it 56 00:03:24,520 --> 00:03:27,680 Speaker 3: during World War two. So that's why even our foreign 57 00:03:27,680 --> 00:03:32,120 Speaker 3: minister in twenty ten, Maita in Kwanamashabami, she was so 58 00:03:32,200 --> 00:03:35,080 Speaker 3: critical of the way that South Africa helped for white 59 00:03:35,320 --> 00:03:39,200 Speaker 3: power for the gold industry to essentially put the US 60 00:03:39,280 --> 00:03:40,760 Speaker 3: dollar at the center of the World and that's the 61 00:03:40,840 --> 00:03:43,720 Speaker 3: Bretton Wood's fingerprint. I think we have to acknowledge and say, yeah, 62 00:03:43,840 --> 00:03:46,720 Speaker 3: that was quite in a short mistake because the US 63 00:03:46,720 --> 00:03:49,160 Speaker 3: of course has abused it. And of course the World Bank, 64 00:03:49,560 --> 00:03:51,880 Speaker 3: even though it was doing regular loans at the time. 65 00:03:52,440 --> 00:03:55,840 Speaker 3: South Africa was the second major country after Columbia to 66 00:03:55,880 --> 00:03:58,480 Speaker 3: get World Bank loans. And it was racist. It was 67 00:03:58,520 --> 00:04:01,960 Speaker 3: for ESCOM, it was for and those were under conditions 68 00:04:01,960 --> 00:04:05,480 Speaker 3: of a partaid where transnet was really taking migrant workers 69 00:04:05,520 --> 00:04:08,080 Speaker 3: into the cities and farms of fuels and lines, but 70 00:04:08,240 --> 00:04:11,520 Speaker 3: especially es COM building huge coal five power plants. But 71 00:04:11,640 --> 00:04:15,839 Speaker 3: how many black people getting access to World Bank financing? None? 72 00:04:15,920 --> 00:04:19,080 Speaker 3: Because ESCOM was a racist institution. And that's one of 73 00:04:19,080 --> 00:04:21,640 Speaker 3: the most interesting problems. How do you go back and 74 00:04:21,680 --> 00:04:24,040 Speaker 3: do some reparations move as the World Bank? Many times 75 00:04:24,040 --> 00:04:26,240 Speaker 3: of course they say no, we don't know anything for 76 00:04:26,680 --> 00:04:29,279 Speaker 3: profiting from the partaid loans. 77 00:04:29,120 --> 00:04:32,840 Speaker 2: That's quite fascinating, Professor Bond, And thanks for mentioning that. 78 00:04:33,279 --> 00:04:38,120 Speaker 2: How does this institution operate though? Like, what's the governance 79 00:04:38,160 --> 00:04:41,520 Speaker 2: structure looking like? Is their voting power? Who runs it? 80 00:04:42,520 --> 00:04:42,680 Speaker 1: Yes? 81 00:04:42,760 --> 00:04:46,560 Speaker 3: Well, the US has the presidency. They've always said this 82 00:04:46,640 --> 00:04:50,200 Speaker 3: is you know, it's like a human build sign Europeans. 83 00:04:50,360 --> 00:04:52,360 Speaker 3: Something they thought the European only sign that they took 84 00:04:52,360 --> 00:04:55,000 Speaker 3: from the beaches during a party. They put that on. 85 00:04:55,040 --> 00:04:58,240 Speaker 3: The International Monetary Fund Managing director Door so bin As 86 00:04:58,279 --> 00:05:02,880 Speaker 3: is always run by some europ and financier or e columnists, 87 00:05:02,960 --> 00:05:05,120 Speaker 3: and the World Bank is run by someone that's an 88 00:05:05,120 --> 00:05:09,000 Speaker 3: American citizenship. And at the moment it's a man born 89 00:05:09,040 --> 00:05:11,839 Speaker 3: in India. But he was the head of a MasterCard. 90 00:05:11,880 --> 00:05:15,400 Speaker 3: His name is aj Bonga. Interestingly, a dozen years ago 91 00:05:15,440 --> 00:05:19,000 Speaker 3: he got a major start in his international career by 92 00:05:19,040 --> 00:05:23,680 Speaker 3: working in Soweto to give a MasterCard credit cards there, well, 93 00:05:23,720 --> 00:05:25,919 Speaker 3: debit cards to be frank was part of the social 94 00:05:25,920 --> 00:05:28,760 Speaker 3: prad but the prominence they partnered with another World Bank 95 00:05:28,800 --> 00:05:33,040 Speaker 3: subsidiary called Cash pay Master Services. Wow did they loot 96 00:05:33,200 --> 00:05:36,760 Speaker 3: the poorest people. Seventeen million people suddenly started getting massive 97 00:05:36,800 --> 00:05:39,880 Speaker 3: debit cards. You know, six year old girls getting microfinance 98 00:05:40,000 --> 00:05:42,680 Speaker 3: and cell phone contracts and burial societ. You know, they 99 00:05:42,839 --> 00:05:45,640 Speaker 3: kind of put all these debits on so that MasterCard 100 00:05:45,680 --> 00:05:48,960 Speaker 3: would make lots of money. Cash pay Master Services CPS, 101 00:05:49,240 --> 00:05:53,279 Speaker 3: and of course they abused people so much that Black Sash, 102 00:05:53,360 --> 00:05:57,000 Speaker 3: the wonderful NGO representing the four came in and literally 103 00:05:57,400 --> 00:06:00,599 Speaker 3: pushed them into bankruptcy by saying stop that. And so 104 00:06:00,720 --> 00:06:03,720 Speaker 3: CPS died, although its parent company and that one is 105 00:06:03,760 --> 00:06:05,800 Speaker 3: still alive. But I really do blame the World Bank 106 00:06:06,120 --> 00:06:10,360 Speaker 3: for predatory finance in that particular project. There are plenty 107 00:06:10,400 --> 00:06:12,800 Speaker 3: of others we critics, you know, we don't like the 108 00:06:12,880 --> 00:06:16,560 Speaker 3: Lastuitu Islands water project, the real original corruption and the 109 00:06:16,600 --> 00:06:20,200 Speaker 3: fact that here in Johannesburg where we have water problems, 110 00:06:20,200 --> 00:06:22,719 Speaker 3: now we have World Bank loans from last November and 111 00:06:22,800 --> 00:06:25,680 Speaker 3: yet the old corruption in building the list To Islands 112 00:06:25,680 --> 00:06:28,760 Speaker 3: water project, including some of the construction companies that went 113 00:06:28,800 --> 00:06:31,560 Speaker 3: on to build the stadiums for the World Cup that 114 00:06:31,600 --> 00:06:34,800 Speaker 3: were subject to collusion. This is the kind of culture 115 00:06:34,800 --> 00:06:37,719 Speaker 3: of corruption at the World Bank. The worst case would 116 00:06:37,720 --> 00:06:40,520 Speaker 3: be the World Banks financing of Madoupi that was the 117 00:06:40,520 --> 00:06:43,160 Speaker 3: biggest man ever three point seventy five billion and we're 118 00:06:43,200 --> 00:06:46,240 Speaker 3: still paying the damage. Is anyone who was buying electricity? 119 00:06:46,279 --> 00:06:49,880 Speaker 2: But is the corruption coming from the World Bank or 120 00:06:49,960 --> 00:06:54,000 Speaker 2: is it more the politicians and the people who facilitate 121 00:06:54,040 --> 00:06:56,320 Speaker 2: the loans they receive from the World Bank. 122 00:06:57,160 --> 00:07:00,920 Speaker 3: Yeah, the case against Macdoupi the biggest case corruption probably 123 00:07:00,920 --> 00:07:03,600 Speaker 3: in Africa in terms of the damage that load shedding. 124 00:07:03,680 --> 00:07:06,599 Speaker 3: The over cross over runs from sixty billion round to 125 00:07:06,600 --> 00:07:08,600 Speaker 3: two hundred and forty billion in the same for Caside. 126 00:07:08,880 --> 00:07:13,040 Speaker 3: We complain that on Hitachi bribing while according to the 127 00:07:13,400 --> 00:07:16,600 Speaker 3: Foreign Corrupt Practice as ACMAN, it was being prosecuted during 128 00:07:16,600 --> 00:07:20,000 Speaker 3: the Obama administration in the US, which Hitachi then did 129 00:07:20,160 --> 00:07:23,600 Speaker 3: a settlement and basically was guilty, and that was bribing 130 00:07:23,880 --> 00:07:26,720 Speaker 3: the African National Congress through Vali Mussa who was the 131 00:07:26,840 --> 00:07:30,520 Speaker 3: chair of ESCOMB, who got a slap on the risk 132 00:07:30,600 --> 00:07:33,320 Speaker 3: for it. It was a sort of failure to declare 133 00:07:33,400 --> 00:07:35,880 Speaker 3: conflict of interest because he was also on the A 134 00:07:35,920 --> 00:07:40,720 Speaker 3: ANDC Finance Committee. And of course Attachi saying to Chancellor House, hey, 135 00:07:40,800 --> 00:07:43,640 Speaker 3: take twenty five percent of our local ownership of our 136 00:07:44,160 --> 00:07:47,200 Speaker 3: Attachi Power African and make sure we get the contract. 137 00:07:47,280 --> 00:07:49,600 Speaker 3: So that's been well proven and unfortunately it hasn't been 138 00:07:49,600 --> 00:07:52,720 Speaker 3: prosecuted because Vondo Commissioner was a sleeep at the wheel 139 00:07:52,760 --> 00:07:55,520 Speaker 3: on that one. But you know, we definitely need to 140 00:07:55,560 --> 00:07:57,360 Speaker 3: go back and say say, World Bank, you knew about 141 00:07:57,360 --> 00:08:00,920 Speaker 3: it the THEA Business Day, you know, the establishment here 142 00:08:00,920 --> 00:08:03,640 Speaker 3: said don't make that loan. That's the biggest loan you've 143 00:08:03,680 --> 00:08:05,760 Speaker 3: ever made. And the president at the time named Robert 144 00:08:05,840 --> 00:08:08,640 Speaker 3: Zellick just ignored all of these voices, saying, if you 145 00:08:08,760 --> 00:08:13,040 Speaker 3: make this loan for Madupi and then ultimately also for Casile, 146 00:08:13,520 --> 00:08:17,200 Speaker 3: well South Africa is going to be an electricity crisis 147 00:08:16,840 --> 00:08:20,640 Speaker 3: for more than a decade. And unfortunately we were saying 148 00:08:20,680 --> 00:08:23,400 Speaker 3: that one hundred and fifty civil society groups led by 149 00:08:23,840 --> 00:08:26,920 Speaker 3: self Surban Community, Environmental Alliance and Groundwork and you were 150 00:08:26,960 --> 00:08:29,960 Speaker 3: sort of saying, don't make this loan. We need we 151 00:08:30,040 --> 00:08:33,760 Speaker 3: need more reliable energy, not coal fire to wreck the climate. 152 00:08:33,880 --> 00:08:36,040 Speaker 3: We need a solar and that's the way the World 153 00:08:36,040 --> 00:08:38,440 Speaker 3: Bank should be financing. The other big question should we 154 00:08:38,600 --> 00:08:42,320 Speaker 3: be financing the foreign loans for many of the projects 155 00:08:42,360 --> 00:08:45,360 Speaker 3: like Maracana. For housing, the World Bank had one hundred 156 00:08:45,360 --> 00:08:50,280 Speaker 3: and fifty million dollars loan with basically Sero Vermoposa, then 157 00:08:50,320 --> 00:08:55,720 Speaker 3: the head of the Transmission Transformation Committee at Loman and 158 00:08:56,040 --> 00:08:59,360 Speaker 3: because they were promising fifty five hundred houses, only three 159 00:08:59,440 --> 00:09:01,640 Speaker 3: were built. But you know that was in a hard 160 00:09:01,720 --> 00:09:05,280 Speaker 3: currency loan, right, They don't need dollars to build houses. 161 00:09:05,320 --> 00:09:08,360 Speaker 3: We have our own local labor, local materials. Those are 162 00:09:08,360 --> 00:09:11,120 Speaker 3: the sorts of questions, right, high interest rates as the 163 00:09:11,200 --> 00:09:14,360 Speaker 3: round falls, lots of problems. The World Bank radly owes 164 00:09:14,440 --> 00:09:16,559 Speaker 3: us all an enormous amount. 165 00:09:16,800 --> 00:09:22,600 Speaker 2: Do wealthier countries have a more louder voice based on 166 00:09:22,760 --> 00:09:27,640 Speaker 2: the governance structure, you know? Do they will disproportionate influence 167 00:09:27,720 --> 00:09:31,360 Speaker 2: like we see in other multilateral institutions. 168 00:09:31,520 --> 00:09:36,600 Speaker 3: Exactly, and like the IMF The United States Treasury right 169 00:09:36,640 --> 00:09:39,840 Speaker 3: the Finance Ministry has been dogmatic that they want to 170 00:09:39,840 --> 00:09:42,720 Speaker 3: control more than fifteen percent of the vote and that 171 00:09:42,760 --> 00:09:45,200 Speaker 3: way they can put a veto on anything. So it's 172 00:09:45,280 --> 00:09:49,000 Speaker 3: quite interesting because there is a rise in bricks financing, 173 00:09:49,080 --> 00:09:51,840 Speaker 3: especially the IMF, but also the World Bank. And that 174 00:09:51,960 --> 00:09:55,360 Speaker 3: means that China, for example, the last time they recapitalized 175 00:09:55,400 --> 00:09:57,719 Speaker 3: about a decade ago, they got more money into the 176 00:09:57,760 --> 00:10:00,880 Speaker 3: IMF partly to deal with that huge enterprises in the 177 00:10:00,920 --> 00:10:03,160 Speaker 3: early twenty ten in two thousand and eight nine, and 178 00:10:03,520 --> 00:10:07,840 Speaker 3: that's continued. So then the bricks got more voting power, 179 00:10:07,840 --> 00:10:11,160 Speaker 3: but unfortunately they did it not to bring the US 180 00:10:11,280 --> 00:10:14,640 Speaker 3: under the fifteen percent level the veto rain, but they 181 00:10:14,640 --> 00:10:17,720 Speaker 3: did it at the expense of African countries. Nigeria lost 182 00:10:17,760 --> 00:10:21,000 Speaker 3: forty one percent, Venezuela lost forty one even South Africa 183 00:10:21,040 --> 00:10:23,959 Speaker 3: lost twenty one percent of our votes. There So, because 184 00:10:24,240 --> 00:10:26,360 Speaker 3: it's a changing, an evolving situation where we have a 185 00:10:26,400 --> 00:10:29,760 Speaker 3: new i'd say a seven imperial layer of financiers. They 186 00:10:29,760 --> 00:10:31,560 Speaker 3: say they're trying to reform, you know, the bricks. We 187 00:10:31,600 --> 00:10:35,400 Speaker 3: want to see the dollarization and new institutions and new 188 00:10:35,760 --> 00:10:38,040 Speaker 3: you know, new ways of doing business internationally. But the 189 00:10:38,040 --> 00:10:41,120 Speaker 3: harsh reality is that they're just buying into the existing system, 190 00:10:41,160 --> 00:10:43,080 Speaker 3: and in fact, i'd argue making mainly course. 191 00:10:43,880 --> 00:10:47,480 Speaker 2: Yeah, nine minutes, not before eleven Outlack will continue our 192 00:10:47,480 --> 00:10:51,000 Speaker 2: conversation with Professor Patrick Bond after the break. If you've 193 00:10:51,000 --> 00:10:54,040 Speaker 2: got questions yourself, you're welcome to call us. I'll send 194 00:10:54,120 --> 00:10:56,520 Speaker 2: us a watsup voice note on seven two seven two 195 00:10:56,520 --> 00:10:58,720 Speaker 2: one seven two, or maybe if you just want to 196 00:10:58,760 --> 00:11:02,480 Speaker 2: join the conversation. You've made your own observations about how 197 00:11:02,480 --> 00:11:09,800 Speaker 2: the World Bank operates. Have we benefited, have we benefited positively? Negatively? 198 00:11:10,400 --> 00:11:13,320 Speaker 2: What do you think has been the contribution of the 199 00:11:13,360 --> 00:11:16,720 Speaker 2: World Bank to countries like ours, developing countries? 200 00:11:19,040 --> 00:11:22,479 Speaker 1: The Clement Show. Let's walk, let's talk. 201 00:11:22,760 --> 00:11:26,439 Speaker 2: Seven minutes before eleven o'clock, we're speaking to Professor Patrick 202 00:11:26,559 --> 00:11:33,240 Speaker 2: Bond about the World Bank organization. We have been looking 203 00:11:34,080 --> 00:11:37,720 Speaker 2: at these multilateral institutions. Why were they formed, how have 204 00:11:37,800 --> 00:11:41,720 Speaker 2: we benefited from them? What's the governance structure like? And 205 00:11:41,760 --> 00:11:46,720 Speaker 2: one of the reforms that I needed in these multilateral institutions. 206 00:11:46,720 --> 00:11:50,000 Speaker 2: And Professor Bond speaking of the reforms, which is something 207 00:11:50,000 --> 00:11:54,640 Speaker 2: you mentioned before we went to break dedollarization has also 208 00:11:54,760 --> 00:11:58,240 Speaker 2: been really a subject of debate. You know, some countries 209 00:11:58,280 --> 00:12:00,880 Speaker 2: complain that when we take loans from the World Bank, 210 00:12:01,960 --> 00:12:05,320 Speaker 2: they are dollar denominated, and when you have to pay 211 00:12:05,360 --> 00:12:08,600 Speaker 2: back that loan, you spend a lot of time paying 212 00:12:08,679 --> 00:12:11,280 Speaker 2: interest before you even get to the loan itself. And 213 00:12:11,360 --> 00:12:15,440 Speaker 2: some developing countries find this to be unfair. Is that 214 00:12:15,559 --> 00:12:20,360 Speaker 2: one of the issues you know, listed in as we 215 00:12:20,480 --> 00:12:23,040 Speaker 2: discuss the reform of the World Bank and one of 216 00:12:23,120 --> 00:12:23,840 Speaker 2: the others. 217 00:12:24,480 --> 00:12:27,320 Speaker 3: It's terribly important because, of course, when we took that 218 00:12:27,480 --> 00:12:31,000 Speaker 3: loan from the World Bank from a dupe in twenty ten, 219 00:12:31,840 --> 00:12:34,880 Speaker 3: the ran to the dollar. I think our strongest point 220 00:12:34,960 --> 00:12:37,160 Speaker 3: was six point three ran to the dollar, and then 221 00:12:37,200 --> 00:12:39,680 Speaker 3: the Ran crash during the twenty tens was such bad 222 00:12:40,240 --> 00:12:43,360 Speaker 3: governance from Jacob Zuma's administration and so then it went 223 00:12:43,400 --> 00:12:45,400 Speaker 3: down as low as twenty I think we're at sixteen 224 00:12:45,440 --> 00:12:48,240 Speaker 3: point five today. But the point is that when you 225 00:12:48,320 --> 00:12:52,679 Speaker 3: take a loan out, the repayment isn't dollars, and when 226 00:12:52,720 --> 00:12:55,760 Speaker 3: your currency balls, then the effective interest rate because where 227 00:12:56,559 --> 00:12:59,000 Speaker 3: the World Bank doesn't want to take South African rands, 228 00:12:59,000 --> 00:13:01,160 Speaker 3: it doesn't want to sort of be paid in currency. 229 00:13:01,280 --> 00:13:03,560 Speaker 3: And you know what John Maynard Caines, when he was 230 00:13:03,880 --> 00:13:07,120 Speaker 3: really trying his best, is kind of British representative top 231 00:13:07,160 --> 00:13:09,600 Speaker 3: economists in the world of the time, eagen. If you're 232 00:13:09,600 --> 00:13:14,319 Speaker 3: going to set up project loans with hard currency, the dollars, 233 00:13:14,320 --> 00:13:17,440 Speaker 3: the eros, the nature that you've got export capacity that 234 00:13:17,559 --> 00:13:20,760 Speaker 3: results from the project, so that you can repay in 235 00:13:20,840 --> 00:13:24,120 Speaker 3: hard currency, you're not just sucking in a lot of 236 00:13:24,400 --> 00:13:27,520 Speaker 3: hard currency dollars and may of finance luxury imports for 237 00:13:27,640 --> 00:13:30,959 Speaker 3: the elites in the country, but you're then really squeezed. 238 00:13:31,000 --> 00:13:33,160 Speaker 3: You have to drop your currency so you can explore more. 239 00:13:33,280 --> 00:13:36,679 Speaker 3: And unfortunately that basic rule from nineteen forty four has 240 00:13:37,320 --> 00:13:40,760 Speaker 3: been lost along the way, so we get ridiculous financing 241 00:13:40,800 --> 00:13:44,200 Speaker 3: one for education, basic education loans, but you know what 242 00:13:44,400 --> 00:13:47,280 Speaker 3: is the for an input on that very very little, 243 00:13:47,440 --> 00:13:49,560 Speaker 3: And those are the sorts of things that make people think, well, 244 00:13:49,800 --> 00:13:53,360 Speaker 3: we need more local currency financing. And unfortunately the Bricks 245 00:13:53,400 --> 00:13:56,600 Speaker 3: New Development Bank, which was set up in twenty fifteen 246 00:13:56,720 --> 00:14:00,240 Speaker 3: to be an alternative, they haven't really moved. They've got 247 00:14:00,280 --> 00:14:04,120 Speaker 3: seventy three percent of their loans in dollars and Swiss 248 00:14:04,160 --> 00:14:06,920 Speaker 3: frank and euros instead of in the local currencies. They're 249 00:14:06,960 --> 00:14:10,319 Speaker 3: moving slowly. There's a president there called Dilno Recet. She 250 00:14:10,440 --> 00:14:14,080 Speaker 3: was formerly Resilved president. She's realized this is ridiculous to 251 00:14:14,160 --> 00:14:16,880 Speaker 3: be charging when most of our ex currency, the exception 252 00:14:17,000 --> 00:14:20,800 Speaker 3: being China and India are following and value and so 253 00:14:20,920 --> 00:14:23,640 Speaker 3: then the effected interest rate is too high. And as 254 00:14:23,680 --> 00:14:25,720 Speaker 3: I said, for most of our countries in Bricks we 255 00:14:25,760 --> 00:14:28,280 Speaker 3: actually don't need. For us, we've got a huge bubble 256 00:14:28,320 --> 00:14:30,920 Speaker 3: in the stock market here. We've got the highest what's 257 00:14:30,960 --> 00:14:35,080 Speaker 3: called capitalization of the shares to GDP the buffet ratio 258 00:14:35,320 --> 00:14:38,840 Speaker 3: in the world. So there's a hugely liquid financial pool 259 00:14:38,880 --> 00:14:41,760 Speaker 3: here that could be drawn on with prescribed assets and 260 00:14:42,440 --> 00:14:44,840 Speaker 3: hopefully your interest rates. If we could fight in exchange 261 00:14:44,840 --> 00:14:47,080 Speaker 3: controls and those would be ways that you could avoid 262 00:14:47,080 --> 00:14:48,840 Speaker 3: going to a World Bank or even a bricks Bank. 263 00:14:50,680 --> 00:14:52,760 Speaker 1: Okay, I get it, I get it. 264 00:14:53,160 --> 00:14:57,600 Speaker 2: So we also have these institutions that are coming up, 265 00:14:57,680 --> 00:15:00,480 Speaker 2: like I'm thinking of the New Development Bank for instance, 266 00:15:00,560 --> 00:15:06,280 Speaker 2: I mean that has been rising. Is that what developing 267 00:15:06,320 --> 00:15:11,400 Speaker 2: countries are looking to as their hope for a reformed 268 00:15:11,880 --> 00:15:16,280 Speaker 2: global financial you know, sort of institutional environment. 269 00:15:17,400 --> 00:15:20,280 Speaker 3: Unfortunately, it hasn't worked. And I take it not from 270 00:15:20,280 --> 00:15:23,360 Speaker 3: being an insider, but one of my colleagues in Brazil, 271 00:15:23,760 --> 00:15:27,920 Speaker 3: Paolo Batista Noguera, was one of the founding vice presidents. 272 00:15:27,920 --> 00:15:31,760 Speaker 3: He's exposed the internal workings and it's a really shocking 273 00:15:31,880 --> 00:15:35,240 Speaker 3: institution that even our own first vice president, who served 274 00:15:35,400 --> 00:15:37,720 Speaker 3: more than ten years, Legely Master, had worked in banks, 275 00:15:37,720 --> 00:15:40,400 Speaker 3: in the American City Bank and privatizing assets. So we're 276 00:15:40,440 --> 00:15:43,480 Speaker 3: talking about mentality of those in the Bricks Bank and 277 00:15:43,520 --> 00:15:46,720 Speaker 3: in the bricks financial districts in Johannaes for example, in 278 00:15:46,760 --> 00:15:50,640 Speaker 3: San Paulo and Shanghai, Mumbai. Most of these financial districts 279 00:15:50,680 --> 00:15:55,120 Speaker 3: have westward gazing, dollar centric bankers, and unfortunately the Bricks 280 00:15:55,160 --> 00:15:58,440 Speaker 3: Bank has done both. I think, like the World Bank, 281 00:15:59,480 --> 00:16:03,400 Speaker 3: hardcore se loans that are inappropriate because these are developmental 282 00:16:03,480 --> 00:16:06,080 Speaker 3: kinds of things that should be financed here. For example, 283 00:16:06,600 --> 00:16:10,080 Speaker 3: lots of their projects don't really have hard currency. They've 284 00:16:10,080 --> 00:16:12,720 Speaker 3: got about a dozen projects. But secondly that these are 285 00:16:12,760 --> 00:16:15,720 Speaker 3: corruption riddle projects. I mean we saw the very first 286 00:16:15,760 --> 00:16:19,760 Speaker 3: loan which Leslie Mastor admitted was full of corruption. They 287 00:16:19,760 --> 00:16:21,640 Speaker 3: had to put a halt on it. That was for 288 00:16:21,800 --> 00:16:26,120 Speaker 3: ESCON again for some of its mid twenty tens activities 289 00:16:26,160 --> 00:16:29,640 Speaker 3: with Brian Malefe then in the chair, and also one 290 00:16:29,800 --> 00:16:33,480 Speaker 3: after the other, and I've written long article it's at 291 00:16:33,520 --> 00:16:37,960 Speaker 3: the website CADTM dot org where it's a Committee for 292 00:16:37,960 --> 00:16:41,600 Speaker 3: the Abolition of Legitimate Debt website. And we've gone through 293 00:16:41,600 --> 00:16:44,000 Speaker 3: all the bank with bricks bank loans, audited them and 294 00:16:44,000 --> 00:16:46,600 Speaker 3: they're full of corruption. I think that just makes us 295 00:16:46,600 --> 00:16:49,080 Speaker 3: so disappointed that the kind of a leads that have 296 00:16:49,120 --> 00:16:52,200 Speaker 3: arisen in the bricks that much different. They can go 297 00:16:52,240 --> 00:16:55,040 Speaker 3: on ns and World Bank and they won't actually act 298 00:16:55,080 --> 00:16:58,080 Speaker 3: any different than the Western It's a great dispoint. We 299 00:16:58,520 --> 00:17:01,360 Speaker 3: haven't had a transition in this entry that really shook 300 00:17:01,440 --> 00:17:06,119 Speaker 3: up the power structure economically, Hence worse unemployment than inequality 301 00:17:06,160 --> 00:17:10,680 Speaker 3: and poverty and ecological degradation than even in nineteen ninety four. 302 00:17:11,720 --> 00:17:14,879 Speaker 2: Yeah, Professor Patrick Bond, quite interesting. I mean the common 303 00:17:14,920 --> 00:17:18,480 Speaker 2: thing from even just the two institutions we've looked at 304 00:17:18,520 --> 00:17:22,960 Speaker 2: the United Nations last week and the World Bank organization today. 305 00:17:23,000 --> 00:17:28,080 Speaker 2: You see the kind of disproportionate influence wealthier countries have, 306 00:17:28,480 --> 00:17:32,200 Speaker 2: and yeah, it's very clear that there is a need 307 00:17:32,680 --> 00:17:35,560 Speaker 2: for reform. Thanks for chatting to us. Professor Patrick Bond 308 00:17:35,600 --> 00:17:39,200 Speaker 2: is a political economist and professor at uj's Department of Sociology.