Given the exit strategy set by President Susilo Bambang Yudhoyono (The Jakarta Post, May 6), Sri Mulyani Indrawati may, for now, be freed from Indonesia’s cruel politics after being appointed one of the managing directors of the World Bank starting next month.
In her new post, replacing the current director Juan Jose Daboub, the former Indonesian finance minister will tackle 74 economies across Latin America and the Caribbean, the Middle East and North Africa, East Asia and the Pacific.
These diverse economies sit mostly on the periphery of the global economy and have experienced volatile political-economic conditions ranging from ethnic conflicts to political revolutions.
From El Salvador and Sudan until Sri Lanka, the World Bank has been involved in post-conflict reconstruction as part of the United Nations peace operations.
Yet the bank has hitherto showed ambiguous results regarding peacebuilding efforts in these volatile
areas.
Mulyani’s new job at the bank will have to take such circumstances into account if she is to be considered successful.
Such challenges, if mismanaged, would surely mean she was able to exit from domestic cruelty here, only to head toward a more severe situation at international level.
As the English proverb says, Mulyani has to avoid “jumping from the frying pan into the fire”.
In almost every UN peace operation, together with the IMF, the World Bank has acted as an agent to supply resources and directions for the socioeconomic recovery to be implemented by new governments in civil-war-torn countries.
With its ideological mainstream of liberal peace in mind, the bank cooperated with the new elites in such countries, sometimes even dictating to them, to lay out how economic liberalization should be enhanced, a condition for building a sustainable peace.
This, at least, is exemplified by the Bosnia-Serbia Dayton Accord and the Rwandan Arusha Protocol. Poverty and unemployment caused by civil wars are to be tackled by reducing inflation, maintaining a stable currency and building credible institutions.
In fact, the Bretton Woods institution imposed conventional structural adjustment programs (SAPs) including privatization, deregulation and withdrawal of state subsidies (Paris, 2004).
These economic liberalization recipes, together with political liberalization, were expected to improve national growth.
One simple indicator of the bank’s peacebuilding measure in assessing its success is when women or female traders are back at their businesses and economic activities.
Such a thing signifies a secure environment and positive economic opportunities hence is “on the right track” toward post-conflict recovery and sustainable peace.
But, have the bank’s peacebuilding efforts found its ideal for a lasting peace? Has it created economic growth toward sustainable peace as expected?
Or has it instead eroded peace maintenance as a result of any preceding UN peacebuilding operations in the first place?
It has been found that the World Bank has become notorious in its peacebuilding efforts in civil-war-torn territories.
Roland Paris (2004) discovered that the bank’s SAPs to initiate the expected economic growth and longer term benefits had actually increased costs, politically and socially, which had even led the “war-shattered” countries to relapse into a repeated conflict.
Post-conflict countries such as Nicaragua, Guatemala, El Salvador — part of the 74 countries under Mulyani’s direction at the bank — have experienced rising unemployment and poverty instead of an improvement in welfare due to the misleading economic liberalization programs, a potential source of conflict the first time round.
In short, the bank’s economic reconstruction had actually resulted in “impoverishing growth”.
In some other parts of the world, especially in “cumulative cleavage structure” countries such as Rwanda or Sudan, also in Mulyani’s directory, such neoliberal recipes have, in fact, contributed directly to deepening the ethnic conflict.
The Hutus elites became more privileged than the already deprived Tutsis, given the economic consequences of the bank’s projects.
To this extent, instead of becoming part of the solution, the Bretton Woods institution was part of the problem.
Without a revised approach, another peacebuilding involvement by the bank in sectarian conflict-ridden countries like Sudan and Sri Lanka might simply exacerbate the high level of tension between the Arabian Muslims and the indigenous Christian Africans or between the Tamil and Sinhalese respectively.
Such dire circumstances have compelled the bank to redesign its approach in managing peacebuilding in war-torn countries.
Only in 1997 did the bank finally issue its first-ever guideline called Framework for World Bank Involvement in Post-Conflict Reconstruction, meant to be the framework for the bank to manage post-conflict countries.
Until then, the bank never differentiated post-conflict countries from those suffering from natural disasters (Flores and Nooruddin, 2009).
True, that bitter fact sounded as familiar as in the bank’s notorious economic formula: the one-size-fits-all solution.
Efforts to improve peacebuilding in the abovementioned peripheral economies have actually been done by World Bank.
In more current war-shattered territories such as Sierra Leone and East Timor, peacebuilding operations have prioritized “institutionalization before liberalization” (IBL, Paris, 2004).
Such IBL strategy has also been strengthened by forming post-conflict management agencies within the bank like the Low-Income Countries Under Stress (LICUS) Trust Fund located under the bank’s Conflict Prevention and Reconstruction Unit in 2004.
Partnership with NGOs and private sectors has also been initiated and endorsed by the World Bank, as recently exemplified by Okonjo-Iweala, another managing director for Africa, South Asia, Europe and Central Asia regions, in her speech at the Security Council debate in mid-April.
However, it is important to note that such attempts by the bank to improve and contextualize within the various localities have still not met the expected goals.
Despite abundant financial assistance and international agency involvements, including the World Bank, in the countries affected by civil conflict, they still have to grapple with insecurity, poverty and social marginalization caused by the neoliberal reconstruction programs in the first place (Bojicic-Dzelilovic, 2002).
Overall, this fact suggests that the bank’s dominant approach of (neo)liberal peacebuilding has failed to address the root causes of the conflicts.
What lessons can be learned for Mulyani? The new managing director has to be more conflict-sensitive and less reliant on her stringent neoliberal economic methods to manage countries affected by civil war.
Should she fail, Mulyani would only sustain the bank’s notoriety in peacebuilding.
The writer is director of the Institute of International Studies (IIS), Department of International Relations, Gadjah Mada University and alumnus of the Lee Kuan Yew School of Public Policy, National University of Singapore, Singapore. This is his personal opinion.
