Syndicate of International Finance Institution and Its Involvement on the Global Climate Change



The great impact as consequences of flop projects funded by loan has born repulsion on neo liberalism development model now days. An economy exploitation system which alleviated the road of capital holder on economy wealth sources in debtor countries. The condition that bore poverty situation in the third world countries and prosperity for developed industry countries today.


The debt programs and projects on creditor institution such as; IMF, World Bank, ADB, JBIC, etc. had provoked very high social cost like compulsory eviction, condemnation, destructing ecosystem and corruption. Empiric discovery on these cases said that the cost insured by a country to rehabilitate the impact arisen by those debt projects is adjustment policies of creditor structural institutions which need the capacities of creditor countries to insure it. One that becoming provision diminution, private, and economy liberation indeed worsen the people life.


An UNICEF report in 2000 showed that many structural adjustments programs of World Bank and IMF essentially responsible to the declining of health, nutrition, and education level of millions children in the third world countries. In Indonesia, structural adjustment caused the heaping debt and one of the latest countries through out the impact of economy crisis 1997-1998.


The large amount of debt burden also forced poor and developing countries to tackle extraction on their natural resources to serve debt repayment for developed countries. Moreover, the impact of climate change (flood, drought, and hurricane) caused poor countries need significant resources to rehabilitate their impacts. A report issued by OXFAM said that poor countries need at least US$ 50 billions per year for rehabilitation and shelters program toward climate change.


On the domestic phase, these correlated with government policies to increase export of raw materials such as rubber, coffee, oil palm, gas and petroleum. An action to saturate capital desires by sacrificing nature forest and the damage of agrarian areas as plantation expansion consequences on the big scale and mining exploration in all debtor countries.


Terribly, these policies seriously responded by the international finance institution by giving new debt to intensify and expand the reach of the industry products. Counted from 1992 till 2004, World Bank group had approved to fund 128 projects of fossil energy in 45 countries, including extraction, electric generator, and reformation policies of energy sector. Result of the count had been achieved that those projects contribute about 43.4 billion ton of carbon dioxide emission for world residents. Moreover, nearly half of petroleum, gas and coal projects of which funded by World Bank (and more than 80 percent of the projects for petroleum) were designed to saturate global market needs, primarily in developed countries.


In implementing the new debt projects, creditors obliged the debtor countries to perform structural adjustment agendas like private and liberation economy, such as water private agenda, liberation of gas and petroleum sector for new entry investment. Indeed all of the agendas accelerate the earth destruction process and cause the debtor countries more and more susceptible to risk disaster ecology.


Beside poor and developing countries received the erroneous impacts of neo liberalism economy policies such debt repayment in large amount, environment disaster, social conflicts, and collide human right, impoverishment and natural resources exploitation, they yet have to carry on direct impacts of global warming caused by carbon dioxide emission contribution of economy growth model

of the developed industry countries.


The idea of just and sustainable development model had been responded by creditor institutions. It will not lessen the flaws gift of those finance institution in syndicate afoul practices of debt endowment even in the middle of this addict condition to the debt fund, the functionaries of debtor countries made their government will not courage to kindle controversy with the creditors, though there are many blunders and abuse in a project (Raffer, 1999).



International Finance Institution And Neo Colonialism

Multilateral finance institution like IMF, World Bank and Asian Development Bank, are not only considered having not transparent and accountable attitude but they have been convinced as the agent of the first world countries and their main stake holder, to interfere the debtor countries, ( Rich, 1999; Stiglitz, 2002 ; Pincus and Winetrs, 2004)


The other existence of World Bank and IMF, which supported by wealthy industry countries is representing new colonialism system of world capitalism central under United Nation leading. It can be looked from their founding purposes and withdrawal policy systems which prevailed on the institution, many conditionality attached to each debt transaction applied to increase rapid of the economy  growth of developed countries such obligation to use consultant, technology and production goods of the debtor countries.


The nasty level of world people welfare today, it would be properly said that debt endowment during this time is only an instrument to exploit and expand neoliberal capitalism through out the world. On these purposes the creditor countries expedite their interfere on the debtor countries by perpetuating “servant” regimes, these puppet regimes work to bear policies that appropriate with the desires of developed countries; the main stake holders of international finance institution along with United Nation.


International Finance Institution and Climate Destruction


Debt Mining

Lately the glowing issues of climate change require every country in the world to device policy on mitigation of green house emission from its energy sector. Yet thing that needs noticing is the global warming was not detached from international finance institution like World Bank and IMF which have operated over decades to fund projects that caused deforestation and utilizing of fossil energy as the biggest contributor on global warming. It will be very ironic if today the International finance institution acts as if they are the savior of the environment by stimulating initiative to surmount global warming, due to over years they have supported global climate destruction projects by their debt endowment to corporation and developing countries.


On annual report of international financial corporation (IFC) 2007 said that World Bank allotted debt on private sector loan over US$ 645 million to gas and petroleum corporation. This amount increase 40 percent compared with 2006. Besides, it commitment to fund private corporation operated on energy sector in 2006 increased from US$ 2.8 billion to US$ 4.4 billion, gas and petroleum sector and generator energy acquired more portion with 77 percent of total commitment while energy sector only acquire 5 percent.


It is apparent that IFC included in World Bank Group which have encouraged the occurrence of global warming through the private sector loan to fund natural resources extraction primarily fossil energy that caused carbon emission increment.



World Bank Group Extractive Industries Projects FY05 & FY06

(million US$)





% change



All Extractives

Fossil Fuels

All Extractives

Fossil Fuels

All Extractives

Fossil Fuels

World Bank
























World Bank









Sources: IFC report 2007



It has been an finance increment to fund extractive industry projects in the amount of 60 percent of what IFC bestowed to multinational corporation, whereas projects for fuel extraction increased in 66 percent. World Bank Group particularly IFC prefer to fund the multinational corporation operated on gas and petroleum extraction, in another word

The World Bank preferred to apply business as usual on their frame works.

This indicates that World Bank will ignore sustainable development factor unless they obtain lots of profit.


Plundering Natural Resources of Indonesia

To pay the compensation of bail-out in amount of US$ 43 billion in 1997, Indonesia must reattempt the equilibrium of payment scales and implement policy reformation especially in public sector hooked with provision diminution, private on government business corporation (BUMN), and private role expansion. Several generic recipe packages of IMF and World Bank packed in Letter of Intent (LoI) obligatory implemented in government policies.  


Through LoI between Indonesian government and IMF caused escalation of natural resources extraction particularly on timber and oil palm production area. It were caused by there are many items of LoI agreement that require the government to increase acquirement through export escalation especially on wood; on point 37th of LoI concerns about requiring the government to subtract export tribute on intact and processed timber, rattan and mineral up to 30 percent maximum on April 15th 1998 and 10 percent on December 2000.


Besides, IMF also required commuting   export obstacle on palm oil with 40 percent tribute. The amount of tribute will anew revised regularly to enable subtraction implemented according to market price and exchange percentage. The amount of tribute will decline up to 10 percent on December 1999. While on point 39th of LoI agreement concerns about compelling the government to reopen the gate of foreign investment it is proved by the government omitting obstacle of foreign investment on oil palm plantation on February 1998. Not only that, through the structural adjustment programmed of World Bank and Asian Development Bank have also loaned that hooked with resources management. The world for instance urges to liberate water resources management through loan in amount of US$ 300 million to water resources structural adjustment loan (WATSAL) program.





Donor Institution



US$ 1 billion

Policy reform support loan

World Bank


US$ 500 million

Policy reform support loan



World Bank


US$ 300 million

Water resources structural

adjustment loan (WATSAL)


World Bank


US$ 50 million

Land administration

project I


World Bank


US$ 60 million

Land administration

project II


World Bank


US$ 64 million

Land management policy

and development project



World Bank



US$ 400 million

Power sector restructuring





Sources : processed from various sources


Related with the effort of Green House gas emission mitigation, World Bank intensely recommend on utilizing of Carbon Capture and Storage(CCS) and Clean Coal Technology (CCT). It is shown from the investment frame work of world on clean energy and 2006 development declared that CCS and CCT projects will fully obtain finance endorsement priority. By recommending both projects it obviously defined that World Bank want to magnify its advantages by utilizing technology in developing countries. It caused by debt is also instrument for goods transaction and services particularly technology from developed to developing countries. On the other hand, the technology do not guarantee rapid mitigation of carbon

emission furthermore the projects cost are very expensive. The adaptation of both projects on the developing countries including Indonesia will more and more exacerbate this country into debt trap. Oudius and Illegitimate Debt Cancellation

Since years ago, the third world countries including Indonesia runs the risk of highly debt burden as a gift/heritage from irresponsible regime. The debt policy endowment started glowing since 1970s-1980s, compelled the International Institution to perceive the change of economy tenacity of developed countries. The increasing of petroleum price was incredible

which had made finance projects of extractive industries especially gas and petroleum in the world countries became idol for the creditors to find new reserve petroleum in outer part of OPEC members. Beside, the politic reason to block the influence of communism movement in the third world after The Cold War. Those two motifs did not hinder the creditors to endow the huge debt, in spite of “anti- communist” dictator regimes in all the third world countries, even the creditors were assumed as one of supporting power on those surviving regimes. As a consequence there are many abuses, such as

weapon purchasing for deactivating opposition power, useless projects, corruption aftermath from corporation with consultant of the creditor institution.

The worst consequence is the application of neo liberalism economy policy, which was compulsived by the creditors. This part contributes great and spacious damage because of the impacts arisen is the changenational economy system development that becomes retainer of the developed world industry countries.

Finally then, all the debt burden heaping and insured by the generation that is not certainly responsible. The data obtained from World Bank issues (Global Development Finance) 2000 showed that the prices condition of debt burden was very terrible. In 1999, the developing countries owned debt in more than US$ 100 billion. Those countries are

Argentina (US$ 147.8billion), Brazil (US$ 244.7), China US$ 154.2), Indonesia (US$ 150.1), Russia (US$ 174.9).

Meanwhile, if it is looked from debt ratio to PDB, sum of the countries in 1999 owed ratio over 100 percent are Angola (37%), Burundi (161%), Cameron (108%), Congo Democratic Republic (in 1994; 196% whereas in )1999 no data), Congo Republic (303%), Gading Beach (126%), Gabon (104%), Gambia (119%), Honduras (102%), Indonesia (113%), Jordania

(113%), Laos (185%), Madagascar (120%), Malawi (155%), Mali (124%), Mozambik (187%), Nicaragua (341%), Sudan (183%), Sudan (183%), Zambia (195%).

It needs advance step to exceed this situation. This moment is for stopping exploitation cycles on the third world by the developed countries. The old huge repayment debt and the new debt projects that disestablished ecology and contributed on climate destruction in the third world absolutely need to be stopped. Aliked with that, today the creditors support just and sustainable development by stopping all new debt schemes conformation which exacerbate people life condition in the

third world. Involvement and mitigation initiative to the climate change of creditors by admitting guilt and slaughter application of debt endowment along this time, which caused poverty and vulnerable level on disaster in debtors

countries. It will be able to be followed up by giving abolition scheme 100 percent of the third world countries debt (luar negri) with no condition. This Debt abolition is a burden that must be paid by the developed industry countries on the biggest of “Carbon Debt” produced by imbalance and injustice development model during this time.[ ]

Syndicate of International Finance Institution and Its Involvement on the Global Climate Change Reviewed by on 15 kwietnia 2009 .

  The great impact as consequences of flop projects funded by loan has born repulsion on neo liberalism development model now days. An economy exploitation system which alleviated the road of capital holder on economy wealth sources in debtor countries. The condition that bore poverty situation in the third world countries and prosperity for developed




komentarze 2

Pozostaw odpowiedź