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Seattle II?

International | Policymakers and street protesters want no more lending as usual from the IMF and World Bank

Issue: "Court in the balance," April 1, 2000

in Washington - Every Tuesday evening, protest organizers meet in Washington, D.C., mobilizing a follow-up to street demonstrations that disabled the World Trade Organization meeting in Seattle late last year. Their goal: to break up this month's meeting of the International Monetary Fund and the World Bank, without breaking any glass. Political conservatives have long complained about the two organizations, but now liberals are the ones making the most noise. The activists-a loose coalition of environmentalists, religious groups, labor unions, students, anarchists, and others-are targeting the April 16-17 joint sessions of the IMF and World Bank, to be held in Washington, where finance ministers, central bank governors, and other officials from 182 nations will be in attendance. They contend the international finance agencies have deepened poverty in poor countries through ill-conceived economic policies. As independent world bodies, the IMF and World Bank have escaped accountability too long, they say. And they believe momentum is on their side after the effective crippling of December's meeting of the WTO in Seattle. Tens of thousands of protesters shut down the city and blocked international delegates from reaching the WTO meeting hall. The protests also caused $2.5 million in damages; 600 people were arrested and over 70 were injured. Graylan Hagler, a minister at the Plymouth Congregation of the United Church of Christ in Washington and a protest planner, predicted that the groups would avoid street-level mayhem. "We are committed to nonviolence, but we hope the police are equally committed to protecting the rights of free speech," he told reporters. The groups are operating under the banner Mobilization for Global Justice. Liberal mainline church groups, leftist environmental and social organizations like Global Exchange and Public Citizen, along with student activist campaigns and the AFL-CIO and other unions, are all part of the planned events. A corollary advocacy group, Jubilee 2000, is planning its own protest during the week prior to the IMF/World Bank gathering. Jubilee 2000 is pushing both agencies (as well as wealthy, developed countries) to cancel all overseas debt of poor countries. It will mark "Jubilee Sunday" April 9 with special church services and demonstrations. Other groups have their own activities planned as well. The AFL-CIO plans a demonstration April 12, also protesting China's entry into the WTO and U.S.-China trade policy. Njoki Njoroge Njehu, who directs 50 Years Is Enough, a group that wants to abolish the IMF and World Bank, summed up the feeling of all the protest groups: "The rules about the global economy are being made without the voices of regular people." Time was when conservatives were the only ones making these kinds of arguments. When Sen. Jesse Helms and other conservatives complained nearly two decades ago that both the IMF and World Bank lacked sufficient accountability mechanisms, squandered U.S. funds, and imposed lending programs that were a long-term bust for poor countries, they were branded as extremists who opposed Third World betterment. Now the blistering comes from both sides. Liberal consumer activist Ralph Nader said, "The IMF rides roughshod over borrower countries in the Third World, making a mockery of attempts to democratically determine macroeconomic policy in those nations." Rep. Ron Paul (R-Texas), who has run for president as a Libertarian, called the IMF "an anachronistic relic." The left and the right are together in their criticism, but they are far apart on how to reform international trade. Jubilee 2000 proponents have twisted a biblical remedy to serve liberal social goals. They admit that their platform does not address ways to encourage fiscal responsibility-as conservatives insist upon-in countries overburdened with debt. Conservative demands about the preservation of U.S. interests (given that the United States already foots more than 18 percent of the IMF bill, at $517 per American family per year) is also a low-ranking priority for most of the special-interest groups. But both protest-movement types and political conservatives saw their gripes about global lenders reinforced by results of a bipartisan report ordered by Congress over a year ago. The bipartisan panel, which reported its findings to Congress and the Treasury Department earlier this month, said the IMF and the World Bank, along with five other international loan institutions, were in serious need of overhaul. In a global economy, it said the agencies (founded in 1944) had outlasted their premise, based in Depression-era experience that suggested the private sector could not provide enough capital to fund major development in poor countries. "The economic environment in which the founders expected the IMF and the [World] Bank to function no longer exists," the report states. The panel recommends that both institutions "focus on an important, but limited, set of objectives" and "change their operations to reduce opportunities for corruption in recipient countries." To do that, the panel suggests radical reforms: The IMF should extend only short-term credits, and lend to fewer countries; the World Bank should change its name to the "World Development Agency," which would reflect more accurately its role as a social-service conduit in poor countries. Most surprisingly, the panel unanimously recommended that the IMF "write off in entirety all claims against heavily indebted poor countries." Debt relief and cancellation for the 38 countries cited as "heavily indebted poor countries" is a key provision sought by both the Mobilization for Global Justice and Jubilee 2000. But the congressional panel did not make the recommendation carte blanche, as those groups propose. Debt relief should be accompanied by "sound economic and development strategies," said panel chief of staff Jerry O'Driscoll. "The report does not flesh that out because there was not 100 percent agreement on what those strategies should be. If you simply forgive the debt and the countries do not change, they will simply take on more debt and you will not have changed anything." Change based on U.S. recommendations is not certain, either. The United States has 18 percent of the votes at the IMF and the World Bank, enough to have a voice, but not enough to compel everyone to listen. Congress had hearings planned on the report last week but was divided on what to do. House Democratic leader Richard Gephardt called the report's recommendations a "slash and burn" approach to reform that would devastate both agencies. Republican Leader Dick Armey said the recommendations should turn the IMF around. "No longer will the IMF offer overly ambitious schemes to redesign entire economies," Mr. Armey said. "No longer will it impose Herbert Hoover-style austerity plans on countries in trouble. And no longer will the IMF bail out the bankrupt on the backs of the poor." A test of how far the international lending institutions are willing to bend on their own is in Mozambique. With hundreds dead and nearly a million people left homeless from the country's devastating recent floods, prospering nations-including the United States, Great Britain, Germany, Spain, Portugal, and Belgium-have already pledged to cancel part or all of the debt owed them by Mozambique. A meeting of finance ministers and officials from agencies like the IMF and World Bank was scheduled in Paris in late March to determine if more debt forgiveness can be extended. Mozambique is already on the IMF's list of heavily indebted poor countries.

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Mindy Belz
Mindy Belz

Mindy travels to the far corners of the globe as the editor of WORLD and lives with her family in the mountains of western North Carolina. Follow Mindy on Twitter @mcbelz.

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