[stop-imf] More structural adjustment criticism from Stiglitz

[Robert Weissman]

World Bank Dissenter Sticks to His Guns

                    On Eve of Davos Forum, Departing Official Chides Russia
                    and IMF


                    By Alan Friedman 
		International Herald Tribune, 126/00

                    ROME - The outgoing chief economist of the World Bank
has not relented
                    from his criticism of the international financial
community, which he accuses
                    of excluding poor countries from the decision-making
process.

                    The economist, Joseph Stiglitz, also restated his
disapproval of Russia's
                    privatization program, saying the system encourages
''asset stripping'' that
                    has seen ''billions and billions of dollars'' taken out
of the country.

                    Mr. Stiglitz, who announced his resignation
unexpectedly late last year after
                    a string of public statements at odds with both the
International Monetary
                    Fund and the economic policies of the Clinton
administration, spoke by
                    telephone to the International Herald Tribune as he was
preparing to attend
                    the annual meetings of the World Economic Forum in
Davos, Switzerland.

                    The Davos gathering, scheduled to begin Thursday, is to
be his last public
                    appearance as a World Bank official before leaving his
post Feb. 1.

                    The world's poor countries, Mr. Stiglitz said, are
being denied a seat at the
                    table where key international economic decisions are
made even if those
                    decisions hurt them. 

                    As for Russia, Mr. Stiglitz said that privatization had
gone ahead without a
                    sufficient legal framework. As a result, he said,
''rather than providing
                    incentives for wealth creation, there have been
incentives for asset
                    stripping.''

                    ''Providing free capital mobility,'' he said, ''has
been an open invitation for
                    people to take out billions, in fact billions and
billions, of dollars out of the
                    country.''

                    Asked why he was leaving the World Bank, Mr. Stiglitz,
56, said that he
                    believed he could make ''a more effective
contribution'' from a position
                    outside the bank. In an interview with The New York
Times late last year,
                    Mr. Stiglitz said that he wished to speak out publicly
on a variety of issues
                    and felt he could not do so from inside the bank.

                    ''Rather than muzzle myself, or be muzzled, I decided
to leave,'' Mr. Stiglitz
                    said at the time.

                    In the interview with the International Herald Tribune,
Mr. Stiglitz cited in
                    particular his concern about whether the interests of
poor countries had
                    been ''adequately represented in a lot of the
international fora.''

                    Commenting on the way the IMF and other institutions
handled the Asian
                    financial crisis of 1997-1998, Mr. Stiglitz said that
''decisions were made in
                    the last crisis that really adversely affected working
people, small
                    businesses.'' 

                    He said that many people were thrown out of jobs ''even
though it was
                    international financial markets that were at the root
of the problem.'' 

                    ''It was small businesses that faced interest rates
that put them into
                    bankruptcy, in some countries more than 50 percent of
the firms being put
                    into bankruptcy,'' Mr. Stiglitz said. ''Yet these
people whose interests were
                    vitally at stake did not have a seat at the table when
those important
                    decisions were made.''

                    Mr. Stiglitz said that one of the challenges for the
international financial
                    community was ''to establish a framework in which
economic policies are
                    made which affect everybody,'' and to make sure that
all those affected
                    ''can have a voice in those policies.'' 

                    The willingness of Mr. Stiglitz to criticize financial
markets, and to even
                    suggest that limited government intervention could be
positive, puts him at
                    odds with the Washington policy consensus led by the
IMF and the
                    Treasury. 

                    Despite his decision to leave the World Bank, Mr.
Stiglitz maintains cordial
                    relations with James Wolfensohn, the World Bank
president. Mr.
                    Wolfensohn is widely regarded as a champion of the
poor, but he has
                    couched his views in more diplomatic terms than those
used by his
                    outspoken chief economist. 

                    Mr. Stiglitz said that he would spend a few months at
the Brookings
                    Institution, a Washington research group favored by
former Democratic
                    officials, before returning in the autumn to Stanford
University. He took
                    leave from Stanford seven years ago to serve as
chairman of President Bill
                    Clinton's Council of Economic Advisers, a post he held
for four years
                    before moving to the World Bank in 1997.

                    Explaining his concerns about Russia, Mr. Stiglitz said
the West assumed
                    that a rules-based legal and financial infrastructure
would emerge
                    ''spontaneously'' and ''that all we needed to do was
privatize.'' 

                    But he said that ''privatization by itself has not been
a guarantee for
                    success.'' Rather than becoming wealthier, he said,
Russia has become
                    poorer.

                    Mr. Stiglitz is clearly unrepentant for his
outspokenness, even though some
                    of his comments about Russia were criticized by Mr.
Wolfensohn last year
                    as being ''not wholly correct.''

                    Protest to Proceed

                    A group opposing the World Trade Organization said
Wednesday that it
                    would go ahead with a demonstration on Saturday against
the World
                    Economic Forum at Davos, despite a municipal ban
stopping it taking place
                    that day and a request to postpone it until Sunday,
news agencies reported.

                    ''The demonstration scheduled for Saturday afternoon in
Davos will go
                    ahead, whether it is authorized or not,'' said Vera
Sommer, a spokeswoman
                    for the group. 

                    President Clinton is expected to be at a ski station
near Davos on Saturday.

                    The protesters' organizers have filed an appeal against
the municipal
                    council's ban on the demonstration. 

                    They said they would refrain from marching at the
station and will instead
                    gather in one place in the area providing they get the
go-ahead to
                    demonstrate on Saturday.

                    About 500 protesters are expected.

                    The Swiss army has been dispatched for the first time,
and a lone U.S.
                    military helicopter - a rare sight in this neutral
nation - has been hovering
                    above the mountains in a security check.

                    (AFX, Reuters)