[stop-imf] WBank's Development News Wednesday, April 19, 2000 (fwd)

[Robert Weissman]

This summary is prepared by the External Affairs Department of the World
Bank. All material is taken directly from published and copyright wire
service stories and newspaper articles.

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Headlines for Wednesday, April 19, 2000:
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 - ANNAN BLASTS 'SHAMEFUL' IMBALANCE IN GLOBALIZATION.
 - IMF, WORLD BANK WRAP UP SPRING MEETINGS.
 - POVERTY REDUCTION AND DEBT RELIEF TOP FUND AGENDA.
 - WORLD BANK TO LIFT SANCTIONS AGAINST LOANS TO INDIA.
 - LOANS FOR NORTH KOREA POSSIBLE, SAYS IMF OFFICIAL.
 - Also in this edition:  NEPAL PLEADS FOR GENEROSITY, QUICK PAYMENT BY
AID
 DONORS.  SOUTH AFRICAN PRESIDENT ADDS TO AIDS CONTROVERSY.
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ANNAN BLASTS 'SHAMEFUL' IMBALANCE IN GLOBALIZATION.

UN Secretary-General Kofi Annan told finance ministers and diplomats
yesterday it was "shameful and unacceptable" that most people are excluded
from the benefits of globalization and new technology, Reuters reports. =20
"I think we all recognize our duty to change this state of affairs, and
more importantly our interest in doing so," he said.

Annan was addressing an annual session of the UN Economic and Social
Council attended by ministers and other financial experts who had taken
part in meetings in Washington of the World Bank and the IMF, says the
story, noting that on Sunday and Monday, demonstrators opposed to World
Bank and IMF policies took to the streets of the capital in an effort to
disrupt the meetings.

Annan said he started from the proposition that, "in an age when
globalization and new technology are bringing hitherto unimaginable
benefits to one part of humankind, it is shameful and unacceptable that
another part-and by most reckonings the larger part-remains excluded from
those benefits," subjected to a life of grinding poverty often accompanied
by malnutrition and disease.

Alluding to the street protests in Washington, Annan spoke of the "ongoing
vehemence with which people are debating the merits and de-merits of
globalization, making demands on our organizations and telling us that we
must do more, and do it better."

Agence France-Presse also reports on Annan's remarks.
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IMF, WORLD BANK WRAP UP SPRING MEETINGS. The World Bank and the IMF wound
up their spring meetings with a reaffirmation of their policies and their
role in tackling financial crises and world poverty, reports the
Australian Financial Review.  As the tumult of protesters died down, the
Development Committee renewed its pledge to speed up debt relief for poor
countries and support to fight AIDS.

Le Monde (France, p.6) notes that the Bank and the Fund on Monday
announced the creation of a joint implementation committee to coordinate
the two institutions' work on debt relief and poverty reduction.  Better
coordination had been urged by the institutions' member countries, notes
the story, quoting a critique by US Treasury Secretary Lawrence Summers of
"unrealistic objectives" and the "too-frequent cases in which there is a
gap between policy and results on the ground."

On trade, attempts to show that poor countries would benefit from more
open world markets ran into difficulties, the Financial Times (p.6)
reports.  There was a strong expression of commitment to the ending of
quotas and duties on the poorest countries' exports to the developed
world, but it was reported that both the US and Japan had expressed
reservations about discussing specific proposals for offering unrestricted
access to rich country markets.

It is not that there is not progress being made at all, says the story. =20
The meetings gave fresh momentum to the spread of standards for
transparency in countries' publication of economic and financial
information, and in codes of conduct for economic policy.  These standards
are now being adopted quite speedily around the world.

World Bank President James Wolfensohn also said access to markets was a
crucial aspect of development, notes the story.  "It makes absolutely no
sense to seek to bring about the development of developing countries, to
allow them to build their capacities and their production of goods and
services and then deny them a market on which they can sell them."

Reuters notes that former World Bank Chief Economist Joseph Stiglitz said
the protests would accelerate the process of change already under way at
the two lenders.  "Yes, things will change," he said on the sidelines of a
conference on development aid.  "The protesters...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 World Bank and the IMF both insist they have become more open and more
responsive to complaints, publishing more material on their activities,
and engaging in a dialogue with lobby groups and NGOs, says the story. =20
"There is no revolutionary change, because the revolution has already
started," said IMF media chief Thomas Dawson.

The remarks come as Reuters notes in a separate report that following the
rise in prominence of protest movements against globalization, the French
High Council for International Cooperation yesterday proposed a new
approach to development aid.  Noting that the merits of globalization were
being questioned, council president Jean-Louis Bianco said development
cooperation should not be driven by short-term interests-a departure from
traditional French cooperation in Africa.  The council called for the EU,
which it said provided more than half of all official development
assistance in the world, to speak louder and in a single voice at the IMF
and the World Bank to defend policies of greater solidarity.

Meanwhile, Nora Boustany writes on the recent protests in a Washington
Post (p. A19) column entitled "Diplomatic Dispatches," noting Charles
Josselin's remarks, France's minister delegate for cooperation and
Francophonie "I am ready to consider it good news that our civil societies
are interested in world events," he said.  "The choice to democratize this
interest has some virtues.  There is a desire for transparency that is not
yet satisfied."  But he added that the motivations animating the different
protest groups were at times contradictory and that there were
discrepancies between their claims and reality.  The Washington Post (p.
A14) also reports.

The Washington Times (p. A1) reports free speech isn't free, the District
is learning, as bills mount for the overtime pay, equipment expenses and
cleanup costs incurred by the city during a week of international
protests.  "They got applause.  Now they need the money," said Delegate
Eleanor Holms Norton, who last week joined Mayor Anthony Williams and
other DC officials in requesting $5 million in federal funds to reimburse
the department.

Meanwhile, the Washington Times (p. A10) reports many of the same
protesters who filled DC streets this week expect to demonstrate at this
summer's Republican and Democratic conventions, and the police in the
cities hosting those events, Los Angeles and Philadelphia, are getting
ready.

The Los Angeles Times (p. B8), the Washington Times (p. A12), the New York
Times (p. A12) and the Washington Post (p. B7) also report on the protests
and the affect it had on the downtown Washington area.  The FT, Le Monde,
Australian, and Times of London, also report on different dimensions of
the Spring Meetings.



COMMENTARY ON THE SPRING MEETINGS PROTESTS



Writing in the International Herald Tribune (4/18, p.8), former World Bank
executives Gautam Kaji and Percy Mistry write that in any restructuring of
the international financial institutions, there must be a real
multilateralism, not one tipped so heavily in favor of the US.  Europe now
has twice the shareholding power and weight of the US at the Fund and the
Bank.  It also provides nearly three to four times as much as the US of
the concessional resources to these institutions-resources that have the
highest real budgetary cost.

Commenting in an editorial, the South China Morning Post says the
protesters in Washington remain convinced they alone act on behalf of the
world's poorest people.  They are misguided. Economic studies confirm
trade and foreign investment are two essential needs if poorer countries,
The IMF can be criticized for failing to implement a $100 billion debt
relief program for the world's 40 poorest nations because of squabbles
among creditors. It can also be faulted for a lack of transparency, or for
inflexibility when prescribing economic cures. But it is not the ogre
critics claim it to be, any more than is the World Bank with its
anti-poverty programs.

In any case, notes the SCMP, their basic policy lines generally succeed. =
=20
In East Asia alone, export-led growth has cut the number of those living
below subsistence level to 278 million in 1998 from 452 million in 1990. =
=20
Infant mortality rates have been halved and life expectancy raised from 59
years to 68. Most of this is lost on protesters who want to scrap the
institutions rather than correct their faults. Armed with ignorance, they
rush to the barricades with proposals that would guarantee the poor stay
poor. And they are helped by selfish allies, such as protectionist US
labor unions which oppose trade agreements with the poorest African
countries. Those who live in poverty deserve better lives. But for the
sake of realistic opportunities, they also deserve better friends.

Also commenting, Mustapha Kamil of the Business Times (Malaysia) writes
that protesters in Washington demonstrated how paradoxical the causes they
were fighting for were. The protesters said the poor countries had been
shortchanged in the developed world-led globalization, and that these
remained poor and saddled with ever-mounting debts they will never [be
rid] of. Noble causes, indeed, but will shouting in the streets and
demanding the closure of the World Bank, the IMF, or the WTO for that
matter, help?

Efforts must be concentrated instead on their reforms and on how to
properly approach globalization, says Kamil, noting that both the IMF and
the World Bank have taken meaningful steps towards helping
heavily-indebted and poor countries obtain debt relief and to look for
ways to check the spread of the dreadful AIDS disease.  They have also
indicated their willingness to adopt more open policies and not be run
like the secretive institutions they have been accused of.

Another paradox was the fact that the anti-globalization protests during
the spring meetings of the World Bank and the IMF came just as the
emerging-market economies, advised by the Bank and the Fund, were
recovering and experiencing growth again, comments Lucas Delattre of Le
Monde (France, p.1).

Washington Post (p. C13) columnist Judy Mann adds that over the last
couple of years, both the IMF and the World Bank have made major shifts in
what they are doing. Debt relief for the 42 Heavily Indebted Poor
Countries, which comprise some 700 million of the world's most desperately
poor people, is going to happen. It's being done intelligently and
incrementally with built-in safeguards to ensure that the interest saved
will go to high-priority programs in health, education and other critical
social needs.

Mann notes that the World Bank is working closely with non-governmental
organizations to help protect the environment in developing countries, to
establish schools and to foster democratic practices, health and family
planning clinics, and microenterprise institutions that lend money to
people who want to start or expand their businesses. A consensus has
emerged among the richer nations that the economic well-being of
individual families is greatly improved by educating women and girls,
because most of the money they earn goes into the well- being of their
children. Programs that keep girls in school instead of in the fields have
enjoyed growing financial support from such organizations as the World
Bank and from the U.S. Agency for International Development.

Separately, a Washington Times editorial (p. A16) opines that the World
Bank, should focus on improving levels of health care, education and
physical infrastructure through grants made to suppliers, rather than to
governments, to reduce the potential for corruption. Independent auditors
should confirm the quantity and quality of the project.

It was rare to find a protester in Washington who could directly connect
the workings of the World Bank and the IMF to the issues raised by the
"global justice" movement, writes Andrew Mills of the University of
Toronto in the Globe and Mail (Canada).  Their knowledge of the Bank and
the Fund seemed vague and superficial.  The protests had nothing to do
with global justice.  It had to do with reacting against authority.  It
was the old story of the rebel without a cause.  But in this case, the
lack of a cause was disguised as speaking out for the environment and the
impoverished.

Paul Krugman, meanwhile, notes in his New York Times column (p. A27) that
somehow nobody notices that this group [of protesters] actually represents
a small, relatively privileged minority, and that its demands would
directly harm a much larger group of even poorer people. And thus Seattle
Man maintains his comfortable sense of moral superiority.

A Washington Post (p. A26) editorial adds that the protesters gave
themselves an "A-plus" for PR when in fact they created a weak impression
and mainly managed to step on their own fuzzy message by their dubious
choice of tactics.

Also commenting on the protestors, David Frum, a fellow at the Manhattan
Institute, writes in a New York Times (p.A27) op-ed that for most of the
20th century the radical left got a better press than the far right
because the left had something positive to offer: a coherent and
compelling vision of an alternative society. Bereft of that alternative,
what remains? Only the hate, Frum says.

The conditionalities in favor of liberal reforms mainly reflect not
cynical politics but growing appreciation by the leadership in the Bretton
Woods institutions of the failure of the postwar choice of contrary
strategies of development; and indeed a similar shift in thinking and
choices by the leaders of the poor countries themselves.  None of these
[arguments] find their way into the witless chanting and raving that
marked Seattle last year and Washington this week.  The complex solutions
to both the improvement of the working of the Bretton Woods institutions
and of the appropriate developmental strategies to be deployed will emerge
in the interaction of reflective ideas and lowered voices, not just from
the rich countries, but also in equal measure from the poor world for whom
the rich often pretend to speak.

Even when it cannot be accused of wanton destruction, the
anti-globalization travelling roadshow has become tiresome and tedious,
comments the New Zealand Herald in an editorial. That, of course, is the
fate of those who continue to fight battles that have long been lost.
There is no cachet in the mindless waste of time and energy, especially
when a cause has been so obviously hijacked by an amorphous coalition of
antiestablishment groups.  Moreover, these groups overlook the benefits
that globalization can bestow on countries dependent on foreign
investment. They decline to acknowledge that globalization, the antithesis
of nationalism, is a force for world peace; that the prospect of political
leaders using nationalism to control their citizens has been reduced.
Enlightened self-interest will drive nations to recognize the benefits of
global rules for investment and trade. And measures such as those being
developed by the IMF and the World Bank, if embraced by poorer countries,
will help to deliver desperately needed development finance.
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POVERTY REDUCTION AND DEBT RELIEF TOP FUND AGENDA. Leaders of the IMF have
called for faster action on expanding debt relief for poor nations,
stronger safeguards against misuse of IMF loans, and more private creditor
involvement in aiding troubled economies, reports the Australian (p.25). =
=20
Representatives of the IMF's 182 member nations discussed ways to redefine
the lender after a day in which thousands of street protesters sought to
shut down the meeting, many demanding the IMF be abolished for saddling
poor nations with debt.

While an 11-page statement from the IMF's International Monetary and
Financial Committee may not signal the "revolution" officials say is
taking place at the Fund, it reflects pressure the IMF is feeling to
change the way it supervises the world economy.  The leaders "reaffirmed
their desire that we move as rapidly as we can" in writing off debt, IMF
acting chief Stanley Fischer said following the first of two days of
meetings of the IMF and World Bank.  He also said the Fund had to ensure
anti-poverty strategies were in place so "we may make sure that the debt
relief is well used".

"It's a reaction to the calls for reform," former IMF economist Mohamed
El-Erian is quoted as saying.  The committee didn't spell out what
measures the Fund would take to expand debt relief, only suggesting it
would lower the bar for countries to qualify.  Only a handful of nations
have been given debt relief so far, notes the story, and only after they
agreed to adopt IMF-directed reforms and pledged to spend the money saved
on education, health care and other social purposes.

The news comes as the Wall Street Journal comments in an editorial that
with IMF headlines going to feckless protests, perhaps someone ought to
pause for a moment to assess how the Fund is doing on its original
mandate, to wit, promoting "international monetary cooperation, balanced
growth of international trade, and a stable system of exchange rates."

Especially so over the past few years, the IMF's currency management
advice has often compounded the problems of poor nations. The IMF's
Articles of Agreement specifically charge it with using its influence to
combat "competitive exchange depreciation," which sounds a lot like the
policy it was promoting in the devaluations that defined the 1997-98
financial crisis.  Currency instability in the Asian tigers helped push
millions of people who were starting to emerge into the middle class back
into poverty-certainly a more salient point of protest than supposed
exploitation by Nike and its like.

Also note that acting IMF Managing Director Stanley Fischer threw cold
water all over the "reform" of the IMF being touted by US Treasury
Secretary Lawrence Summers. The alleged notion is that the IMF should move
toward short-term crisis management and away from long-term development
lending.  "You will not find support among the developing country members
of the IMF for this proposal," Fischer said, adding:  "I don't see what is
accomplished by turning this over to the World Bank, taking our
macroeconomists, putting them in the World Bank and moving part of the IMF
there."

Reading the tea leaves, we'd say the path of IMF reform is more of the
same. That is to say, employees of the IMF will continue to enjoy their
tax-free salaries and are not likely to be downsized in an economic
contraction, says the editorial.
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WORLD BANK TO LIFT SANCTIONS AGAINST LOANS TO INDIA.

The post-Pokhran sanctions imposed by the World Bank on development loans
to India will soon be lifted, Asia Pulse reports World Bank President
James Wolfensohn has said.  Indian Finance Minister Yashwant Sinha on
Monday said Wolfensohn has assured him that the projects which were
pending for almost two years as a result of the sanctions would now be
brought before the board for consideration, and that he was confident of a
positive outcome.

"The point that India has made to the World Bank management...is that in a
developing country, it is very difficult to make an artificial distinction
between basic human needs and others...We are happy that finally our point
of view is being seen and that is the reason why these projects are now
being brought back," Sinha said.

Bank sources said the latest stand of the multilateral body is the result
of a possible US initiative towards lifting of these sanctions against
India.  "When the US and its allies oppose a project, the Bank management
does not place it before the executive board because it will be defeated,"
they said, adding that since the case is now being put before the Board it
implies US approval and a favorable result.
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LOANS FOR NORTH KOREA POSSIBLE, SAYS IMF OFFICIAL. An IMF official said
yesterday impoverished North Korea could receive aid from the world body,
but first it must ask for help, reports Reuters.  The reclusive communist
nation also needed to win the backing of key IMF member states before
receiving much needed cash.

"It could be possible in the short run if there was a desire by North
Korea first of all and equally by the key donator countries, the US,
Japan, South Korea and European countries," said David T. Coe, senior
resident representative with the IMF in South Korea.  In principle, North
Korea should become a member of the IMF to qualify for the IMF's loan
program, Coe said.

If loans were made to North Korea, the IMF together with other
international organizations such as the World Bank would offer to train
North Korean officials, he noted.  South Korean President Kim Dae-jung
said last month he hoped North Korea would be able to receive financial
assistance from those international organizations as well as the IBRD.
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Also in this edition:  NEPAL PLEADS FOR GENEROSITY, QUICK PAYMENT BY AID
DONORS. SOUTH AFRICAN PRESIDENT ADDS TO AIDS CONTROVERSY. NEPAL PLEADS FOR
GENEROSITY, QUICK PAYMENT BY AID DONORS.  Nepal yesterday urged generosity
from its major aid donors and a system of rapid disbursement of aid to
help alleviate poverty, saying it needed some $2.1 billion in aid over the
next two years, AFP reports. Finance Minister Mahesh Acharya urged
representatives of donor countries and international organizations at a
World Bank-sponsored meeting in Paris to be generous in contributing to
Nepal's new Poverty Alleviation Fund aimed at aiding the poor in a country
where, he said, 42 percent of the more than 22 million population are
living below the poverty line.

Acharya pleaded for rapid disbursement of funds and "flexible
conditionalities," but in return pledged concerted reform efforts and a
strong battle against corruption by his month-old government. "The
commitment to reform ... is real and sincere," Acharya said. =20
"Maintaining law and order, promoting good governance and combating
corruption in public life are, among others the government's immediate
promises to be delivered to the people.  Without addressing these areas as
a matter of urgency, we cannot see how the state can be governed
effectively."

The meeting, due to end this afternoon, is the first donor gathering for
four years, largely because of political instability. The tiny landlocked
Himalayan kingdom has had five governments since the last meeting in 1996. =
=20
The political turmoil is also a key reason why only about half of the
billion dollars in aid pledged at the last meeting has been disbursed.

But gaining funds is not really the problem as donors have traditionally
been extremely generous, according to the World Bank.  The real issue is
how to ensure that aid funds are used efficiently to reach the poorest
residents of Nepal and achieve the government's aim of reducing the
poverty level to 10 percent within a decade.

Aid to Nepal has been higher in per capita terms than to most other south
Asian countries, but "the potential of donor assistance has not been fully
realized," the World Bank said in a report on Nepal.  "The question must
be asked whether this assistance should not have produced more results,
particularly among the disadvantaged."



SOUTH AFRICAN PRESIDENT ADDS TO AIDS CONTROVERSY. South African President
Thabo Mbeki has stepped up an emotional controversy over his country's
response to AIDS, saying Africans should chart their own course on the
disease with help from, among others, scientists who dispute the
prevailing views in the West on the causes and treatment of the disease,
the Washington Post reports (p. A1)

At loggerheads for months with his own medical establishment over the
pandemic that is killing millions of South Africans, Mbeki has now raised
the dispute to the international arena with a passionate defense of his
approach to the crisis in a letter dispatched this month by diplomatic
pouch to President Clinton and other heads of state.

Avowing skepticism about the relevance of Western medical models to the
"uniquely African catastrophe" of AIDS, Mbeki wrote in the hand-addressed
letters that it "would constitute a criminal betrayal of our
responsibility to our own people" to mimic foreign approaches to treating
the disease. He insisted on South Africa's right to consult dissident
scientists who deny that the human immunodeficiency virus, or HIV, causes
AIDS. And he accused unnamed foreign critics of launching a "campaign of
intellectual intimidation and terrorism" akin to medieval book-burnings
and "the racist apartheid tyranny we opposed."

Behind the scenes, US the administration=BEalong with allies in foreign
capitals and at the World Health Organization and UN AIDS program in
Geneva=BEis trying to tamp down the rhetoric and ensure that Mbeki does not
perceive fresh insults from abroad, officials are quoted as saying.



BRIEFLY NOTED...An admission by Pakistan's new military rulers that the
former government doctored budget figures to win cash from the IMF shows
they had made a clean break from the past, Reuters reports Finance
Minister Shaukat Aziz has said, adding that he was "cautiously optimistic"
the cash-strapped country would replace a stalled $1.56 billion IMF
lending program with a new package by the end of June.

The head of a World Bank/IMF mission to Niger said on Tuesday that the
donors wanted to extend their operations in the impoverished West African
country, which returned to democratic rule at the turn of the year,
Reuters reports, quoting Theodore Ahlers as saying the Bank was involved
in various projects in Niger, especially in health, education and rural
development.

China's economy rebounded in the first quarter of the year, but the
delicate recovery could falter if government spending or demand cools
later in the year, the Wall Street Journal (p. A25) reports. GDP grew by
8.1 percent from the year-ealier quarter to $219.48 billion...Statistics
say that Korea has snapped back from the crisis: The economy grew more
than 10 percent last year and unemployment is down to 4.4 percent from a
high of 8.7 percent, the Far Eastern Economic Review reports.

Economists in Asia are raising their 2000 growth forecasts as consumers
spend more on beer, cars and travel, and companies climb aboard the
technology bandwagon, the Far Eastern Economic Review notes. Asia's
recovery last year was buoyed by strong export demand -- especially from
the United States -- which continued into the first quarter of 2000. Now
the economic recovery is broadening as domestic demand picks up speed.

On the 20th anniversary of Zimbabwe's independence, the country slipped
further into violence and division yesterday with the killing of a second
white farmer by black squatters, USA Today reports (p. 20A). At the same
time, President Robert Mugabe villified white farmers as "enemies" of the
country's independence from white rule two decades ago. The Washington
Post also reports (p. A18). . . The United Nations Food and Agriculture
Organization joined international aid agencies to appeal for help in
staving off a famine in the Horn of Africa, USA Today (p 18A) reports.

Eisuke Sakakibara, former Japanese vice finance minister for international
affairs, believes Asia should develop its own integrated debt market and a
regional currency as safeguards against future economic crises, the Wall
Street Journal reports (p. B1). In a speech to be delivered at the World
Bank headquarters in Washington today, Mr. Sakakibara says Asia should
quickly develop a liquid and efficient bond market, a regional currency
and an Asian Monetary Fund that could act as a local lender of last resort
in times of crisis.