April 20, 2000
Mark Weisbrot
Intellectualcapital.com, April 20, 2000
Knight-Ridder/Tribune Media Services, April 20, 2000
It’s amazing what an organized group of people can accomplish when their cause is just and they are willing to be stubborn and creative about it. Last December they knocked the wind out of the WTO in Seattle. Now this diverse and expanding movement has got the world’s two most powerful financial behemoths– the IMF and the World Bank– running scared.
The past week’s demonstrations in Washington, DC are just the beginning of the IMF and World Bank’s troubles. While they have many friends in high places, they have little support — and a lot of opposition– among the world’s people.
Leaders of the Group of 77– an organization representing countries with 80 percent of the world’s population– expressed their support for the demonstrators. They noted that “many countries have rejected the results of various policy initiatives of the World Bank and the IMF,” including crushing debt burdens, privatization of state-owned industries, and a “one-size-fits-all attitude.”
More than a decade after the end of the Cold War, there are signs that the Global South may be resuming its centuries-long struggle against the North for the right to determine how it will participate in the international economy. And there is no greater threat to that right than the IMF and the World Bank. These are undeniably colonial institutions, in which the hundreds of millions of people who lives are affected by their decisions have no voice or effective representation. They have made many people around the world very cynical about electoral democracy– for what good is the right to vote for the party of your choice in El Salvador or Russia, when the most important economic decisions are being made by foreign bureaucrats on H street in Washington?
This combination of resistance in the heart of the empire, with increasing opposition from its victims abroad, may be just what the world needs to win a new deal for the three billion people– half the planet– who now survive on less than $2 a day.
Breaking the Bank
The battle is over, the war goes on. One of the new fronts that has opened up is a grassroots campaign to boycott World Bank bonds, through which the Bank raises most of its capital. This movement is truly international, with organizations in 35 countries. In the United States, it provides a way for activists to educate their communities about what the Bank does, and also empowers them to do something about it.
Like the divestment movement that helped bring down the system of apartheid in South Africa, this campaign will bring its message to local governments, universities, churches, unions, and other institutional investors that might otherwise consider the World Bank’s bonds a safe and reasonable investment.
Friends or Foes?
The Bank and the Fund have mounted a defense, often winning support among newspaper editors and commentators who know little about their actual policies and impact. “There is no organization on earth that is doing more for the poor than we do,” James Wolfensohn, president of the World Bank, told the media last week.
Wolfensohn would be hard-pressed to defend this statement, not least because most of the Bank’s lending is dependent on the borrower meeting the IMF’s conditions. This is not just a technicality– it means that the Bank is just as responsible as the IMF is for all the social and economic destruction caused by the Fund’s commands. This includes the tens of millions of people pushed into poverty in countries such as Indonesia, Russia, and Brazil. The Fund’s policies, and the Bank’s role in enforcing them, prompted the World Bank’s chief economist, Joe Stiglitz, to resign in frustration last December.
This week Stiglitz cast his lot with the protesters, saying that they “were trying to bring to the fore a set of values that a large number of people, particularly young Americans, feel strongly about– issues that go beyond just making a living and materialism– that they care about the environment and about the poor in developing countries, and that they care about democratic processes.”
The Bank and the Fund claim that they are in favor of debt relief for the world’s poorest countries. But they have been dragging their feet so slowly that it is difficult to take them seriously. Four years after the launch of their Heavily Indebted Poor Countries initiative, only five of the 41 potentially eligible countries have met the requirements for partial debt reduction. Others will have to go through years of the Fund’s destructive “structural adjustment” programs in order to qualify for debt relief that, in many cases, will not significantly reduce their annual payments.
The protesters, along with major religious denominations from throughout the world, have demanded cancellation of the poor countries’ debt. This debt is now worth only about 10 cents on the dollar, since financial markets recognize that most of it can never be paid. So it is within the means of the IMF and World Bank to forgive this debt. But Wolfensohn refuses to consider this option, stating recently that to do so would “screw up the market” for debt. Given that the markets have already discounted the vast majority of this debt, it is not clear what he could mean. A more likely explanation is that he, along with other Fund and Bank officials, see the debt as a means to control these countries’ economic policies, and are in no hurry lose that leverage.
Meanwhile, on the home front, the latest Business Week/Harris poll shows that the American people are a lot closer to the views of the protesters than to the intellectuals who sneer at them from the op-ed pages.
When asked to describe their views on trade, only 10 percent chose “free trader.” Fifty percent chose “fair trader,” a label rarely used by anyone outside the labor or protest movement. And 37 percent chose “protectionist”– a word that is never granted a positive connotation in the press, and has probably become as discredited in mainstream opinion as “communist.” Although there were mixed feelings about globalization in general, people most often chose “protecting the environment” and “preventing the loss of US jobs” as a major priority for trade agreements– putting them very much at odds with our policy makers and trade officials.
These demonstrations are a way of helping our leaders catch up with public opinion.
