World Bank: Shying Away from Marcos?

After eight years of unflagging support, the World Bank is having doubts about the staying power of the martial-law government of Philippines President Ferdinand Marcos.

Moreover, officials at the world's largest multilateral aid agency worry that World Bank-promoted economic policies above all, the creation of incentives for foreign investors and a phaseout of tariffs protecting domestic business-are a major cause of Marcos' "precarious" position.

This assessment has raised a larger World Bank concern: that the lending institution may be unwelcome in the Philippines if and when Marcos falls from power.

These are among the conclusions of a World Bank study recently leaked-to U.S.-based Filipino opponents of the Marcos regime. The document offers an extraordinarily candid look at how officials at the World Bank-self-styled as "apolitical" -consider the political context of the countries to which they lend money.

World Bank spokespeople attempting to downplay the 14-page study leaked in late November to the Congress Task Force of the Anti-Martial Law Coalition, term it a "think piece" that is "without official standing,' written by an outside consultant for the bank. Reliable bank sources, however, confirm that the document was prepared with the help of Philippine program personnel. The concerns of the study are reportedly to be discussed in January in Paris at the annual meeting of donor governments and multilateral aid institutions-the Consultative Group for the Philippines-as part of an effort to reevaluate Western support for the Marcos government.

"The report is both an admission that the Bank has been too closely identified with the Philippines government and that the program of export-led growth has been a failure," says Walden Bello, spokesperson for the Congress Task Force.

"Like Dr. Frankenstein, the bank now finds itself in the unenviable position of having to distance itself from, and perhaps eventually help to destroy, a creature of its own making."

The study suggests the Bank's image may be tarnished "The World Bank imprimatur on the ... program runs the risk of drawing criticism of the bank as the servant of multinational corporations and particularly of U.S. economic imperialism."

The document has drawn strong reactions from several quarters. At the Bank, its surfacing has brought serious embarrassment, and a concern for tighter security The Bank quickly released a statement regretting "the unauthorized publication of this informal report." One senior Bank official says the leaking of the document has precipitated a "locking the files syndrome."

Marcos government officials, while joining the bank in publicly dismissing the study as unimportant, are "very upset," according to one knowledgeable bank official.

In early December, soon after the document was leaked, Marcos announced his intention to lift martial law sooner than expected-a move most anti-Marcos Filipinos dismiss as a public relations stunt. European press reports have directly linked the announcement to Marcos' concerns over the Bank study.

Since Marcos' suspension of the constitution and imposition of martial law in 1972, the Philippines has emerged as a favorite client of the World Bank, receiving more than U.S.$2 billion in aid. In the 27 years preceding martial law, the World Bank loaned only $300 million to the Philippines. As a bank "country of concentration," the Philippines is slated to receive over $3 billion in new World Bank loans by 1986.

In the past year, the bank has stepped up its efforts to open up the Philippines to international market forces. Assuming a role ordinarily played by the bank's sister institution, the International Monetary Fund, the bank recently extended a $200 million "structural adjustment" loan to the Marcos government, contingent on the implementation of economic liberalization measures. Broad new measures to attract foreign investors have already been introduced, and sweeping reductions on tariffs and import quotas are to take effect in January.

The study assesses aspects of the Philippines economic program other than the liberalization measures. Citing the "almost universal perception" that income distribution is rapidly worsening, the document terms Bank-backed rural development programs "ineffective." Bank Marcos efforts to create high-growth export industries are viewed as a possibly "desperate effort" to create a "boom atmosphere."

It is the liberalization measures, however, over which the study voices its greatest concerns. This Bank/ Marcos strategy is alienating the Philippines business sector, giving a vital boost to nationalist sentiment, it asserts. Skyrocketing investments by companies such as Ford, Shell and American Can-joined by state enterprises and a privileged few local entrepreneurs who are part of the "Marcos circle"-are squeezing out the domestic business class. Newly nationalistic local entrepreneurs are "finding common grounds with the more ideologically-oriented opposition centered at the universities."

And, perhaps not surprisingly, the document appears to be promoting some anxiety on the part of the major economic beneficiaries of the Marcos/ Bank strategy-U.S. investors. More than a dozen corporations and banks, ranging from Chase Manhattan to Security Pacific, have reportedly requested copies of the study from the exile group and other news organizations in the weeks since it was leaked.