Development finance used to be simple. Development banks lent to ‘developing’ countries, using loan conditionalities that precisely stopped those countries from developing, to do big, unpleasant, socially damaging projects, and it was our job as activists to stop them. And how we complained, about project standards and disclosure policies and EIAs. Well, to quote the great theorist of contemporary globalisation, Phil Collins, you don’t know what you’ve got till you lose it.

Development is being privatised. In 2000, 90% of global MDB lending went to the public sector and only 10% to the private. By 2007, the proportions were 30/60 and heading rapidly for complete inversion. The main motors for this shift, the IFC and EIB, who lend almost exclusively to the private sector, respectively quintupled and tripled their lending volumes over the last decade.

There are three main reasons for this. One is donors are keen to leverage scarce (somehow they are always ‘scarce’ in good times as well as bad, aren’t they?) public funds with private for greater ‘aid effectiveness’. Of course, one of the real measures of ‘aid effectiveness’ is how much it benefits Western donors, and the second reason is that MDBs are becoming ever more overt about supporting our self-interest. The EIB, IFC and other MDBs are tied up in a vast new array of proposed energy megaprojects designed to bring African and Asian oil, gas, electricity and solar power thousands of miles to Europe, with minimal benefit to local peoples. Local governments won’t pay for these projects if they (as usual) don’t benefit their economies, or they want too much control over their own resources, so the banks take them private.

But the third reason is the most important: the ideology of the market. For the last thirty years, politicians and development flacks, brainwashed by market fundamentalism to an extent the most slavish Stalinist apparatchik would find embarrassing, have relentless pushed a privatisation/deregulation/liberalisation agenda. They have systematically starved public institutions of both funding and credibility, until in their own minds they have stripped away the public option entirely and have no choice but to turn to the private.

And not just any private: the financial sector. 50% of the IFC’s investments last year were in either global loans—complex, untraceable investments into chains of intermediary banks who often sit on the money to patch up holes on their own balance sheets—or private equity funds—mobilisers of capital for maximum short term returns (asset stripping, to be honest about it) not just with no interest in development but actively hostile to it. 75% of EIB investments in Africa in 2009 were in the same financial sectors.

These are public development bodies, investing not even in profit-driven private projects but in the next step: financialisation and derivatives, private equity speculators and unaccountable bankers, the very tools that brought about the financial crisis two years ago. The people that brought you global meltdown and public austerity in the West are now doing it to poor countries, with what remains of our money. Complaining about safeguards policies won’t do it any more, folks. We are in a war of position (Gramsci, though I’m sure Phil Collins uses the term often), and our position has totally changed. The financialisation of development requires us to change our approach, our research, our tactics and strategy. Up for it? We are. Get in touch.