The Bretton Woods Institutions (BWIs)--the World Bank and the International Monetary Fund (IMF)--have come under increased scrutiny and criticism over the past several years. In April 2000, thousands of demonstrators took to the streets of Washington, DC, to protest against these institutions and demand change. The protests followed a scathing report by a prominent congressionally appointed panel--the Meltzer Commission--that called for drastic reforms of the World Bank and IMF. Combined with the ongoing criticism by advocacy groups from both developing and industrialized countries, these recent events have focused unprecedented attention on the BWIs.
This long-overdue scrutiny is most welcomed by the environmental community. Environmental groups have fought since the 1980s to overhaul the World Bank and IMF, urging the institutions to incorporate environmental goals, to become more open, and to change the nature of the investments they support. As the BWIs' largest shareholder, the U.S. has played a positive role in forcing them to respond to citizens' concerns. For example, the U.S. Congress conditioned the World Bank's appropriations on the institution's adoption of environmental and information disclosure policies. Congressional suasion also led to the creation of the World Bank's Inspection Panel, an independent accountability mechanism. And in 1994, Congress used the power of its purse to force more information disclosure at the IMF These efforts have yielded some successes with significant ramifications, including:
* A set of environmental policies and standards that the World Bank applies to its borrowers, that are considered de facto international environmental standards by bilateral finance agencies and corporations.
* More transparency in the operations of the BWIs and greater acknowledgement that civil society has a role to play in critiquing and shaping lending programs.
* More accountability mechanisms to promote better quality lending, such as the independent Inspection Panel at the World Bank.
Although important, these improvements have occurred at the margin of the BWIs' operations. The World Bank still provides loans for environmentally and socially harmful projects. IMF and World Bank structural adjustment loans still promote export-led growth, encouraging natural resource exploitation and endangering local communities that depend on these resources for survival. The World Bank's structural adjustment loans do not even follow the institution's environmental policies. And staff at the institutions rarely question how the structural adjustment loans they design will affect either the environment or the poor. In spite of these problems, the U. …