From rob@milan.essential.org Wed, 4 Oct 2000 11:53:38 -0400 (EDT) Date: Wed, 4 Oct 2000 11:53:38 -0400 (EDT) From: Robert Weissman rob@milan.essential.org Subject: [stop-imf] IMF to Indonesia: Cut wages IMF URGES INDONESIA TO CUT SUBSIDIES, WAGE BILL. The IMF, leading an international bail-out of Indonesia, today said a cut in subsidies and the civil service wage bill and sales of seized assets were key to cutting the country's substantial budget deficit, reports Reuters. The draft budget for next year announced two days ago assumes a deficit of just over $5.91 billion, or 3.7 percent of GDP. "These subsidies amount to about as much as the entire international support Indonesia gets for its budget," IMF Asia-Pacific Deputy Director Anoop Singh is quoted as saying in Jakarta. "Therefore, there is a clear case where efficiency can be improved" One of the biggest subsidies is for fuel, for which Indonesians pay far below the world price. But because of the social sensitivities during the economic downturn the government has been reluctant to cut. Indonesia did finally raise fuel prices by 12 percent last weekend and as expected there were protests but far more subdued than many had predicted. Meanwhile, Antara reports that the IFC has denied a report that it would guarantee the issuance of government bonds in the international market next year, an IFC senior officer said. IFC representative in Indonesia Amitava Banerjee told press in Jakarta that there was no agreement between IFC and the Indonesian government on the issue. Indonesia meets its major donors in Japan this month when it is expected to ask for close to $5 billion in fresh aid, Reuters notes. The run-up to the meeting has been clouded by international anger over Indonesia's failure to rein in pro-Jakarta militiamen who last month killed three foreign UN aid workers in West Timor, the story notes. The US and the World Bank have both warned Jakarta that aid could be at risk if the militiamen were not disarmed and brought under control. Indonesia's defense minister Mohammad Mahfud on Wednesday blamed the slow pace of disarming the militias in West Timor on poor equipment, psychological issues, and possible sabotage attempts by "outside" elements, AFP reports. But he insisted the Indonesian government was confronting all the difficulties, and appealed to the international community to "let Indonesia deal with these problems with its own methods first." The news comes as Reuters reports that Indonesian police have arrested notorious pro-Jakarta Timorese militia leader Eurico Guterres on weapons offences, national police chief General Suroyo Bimantoro said today. The arrest might go a little way to placating international criticism of Indonesia for failing to disband the militias, who laid waste to East Timor after it voted for independence last year, the story. In a Washington Post (p.A33) op-ed, Bishop Carlos Ximenes Belo says that international peacekeepers should remove the militias, or better yet, the US should insist that the militias withdraw from East Timor on their own. 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. For more news go to http://www.worldbank.org/news To subscribe go to http://www.worldbank.org/devnews To unsubscribe send a blank email to leave-devnews-31261K@lists.worldbank.org --- You are currently subscribed to devnews as: rob@essential.org To unsubscribe send a blank email to leave-devnews-31261K@lists.worldbank.org From rob@milan.essential.org Fri, 6 Oct 2000 14:37:29 -0400 (EDT) Date: Fri, 6 Oct 2000 14:37:29 -0400 (EDT) From: Robert Weissman rob@milan.essential.org Subject: [stop-imf] Brazil referendum on debt cancellation LIFE ABOVE DEBT! MARCOS ARRUDA - SANDRA QUINTELA/ PACS-BRAZIL NETWORK ---------------- Brazil's National Plebiscite on the External Debt Jubilee 2000 Campaign for a debt-free millennium The Plebiscite confirms: life before debt! More than 5 million Brazilian men and women took part in the National Plebiscite on the External Debt. This was an unprecedented step in Brazil's history: a voluntary plebiscite, organized by civil society and held credibly and transparently throughout the country, involving some 100,000 volunteers from churches, social movements, political parties, professional associations and government bodi= es. Rarely in our history has such a diverse range of actors come together in common cause like this. The campaign to nationalize Brazil's oil in the 50s was one example. The Grassroots Reform movement in the 60s was another. So were the amnesty campaign in the 70s, the campaign for direct presidential elections in the 80s and the movement to impeach former president, Fernando Collor, in the 90s. And that is how things are in the National Plebiscite on the External Debt, which sounded public opinion on three questions: Should the Brazilian government maintain the present agreement with the International Monetary Fund? Should Brazil go on paying the external debt without holding a public audit of the debt, as called for by the 1988 Constitution? Should the federal, state and municipal governments go on using a large part of the public budget to pay the internal debt to speculators? More than 90% of voters responded "No" to each one of these questions. The Plebiscite's success thus goes far beyond the strong turnout. We achieved four major aims: =B7=09The subject of the debts, across which a veil had been drawn, is once again part of national public debate. =B7=09The Plebiscite performed an important task of political education. =B7=09Millions of people expressed an opinion on some of the causes of the grave economic and social crisis affecting Brazil: the policy of indebtedness and the IMF agreement. =B7=09The Plebiscite contributed to a world campaign that questions the mechanisms and organizations of the international financial system, and is building solidarity with the heavily-indebted poor countries. The Plebiscite accomplished its aims in spite of the stance taken by the great majority of the media. Instead of informing public opinion, these opted to combat the Plebiscite, to misrepresent its aims, and to deny its organizers coverage. For its part, the federal government launched crude attacks on the initiative, pressured the sponsor organizations and blackmailed civil society with false information nurtured by obscurantist prejudice against any ideas at odds with the official position. They do not want society to debate these matters, because they know that from the debate alternatives will arise.=20 This attitude is revealing of a characteristic more and more in evidence in the economic model introduced in Brazil: for all its support in the media, in business and financial circles, and among so-called "opinion leaders", the model will not stand up to controversy in a climate of freely expressed ideas. The spokesmen of the "neoliberal one-truth" consider any and all criticism as "threatening" and "destabilizing"; they argue that everyone should support the canons of neo-liberal policy in one great "national pact" which will uphold the rights of the elites in detriment to the rights of the majority. For the last decade Brazil has adopted this economic orientation based on external dependence and indebtedness, and sustained by blackmail according to which any interruption of capital inflows will precipitate collapse. Ironically, the international agencies feel that Brazil represents greater risk for foreign investors than Colombia. It is not initiatives like the Plebiscite that place the country in jeopardy, but rather the financialization of the economy, which subjects it to the "humours" of international banking. In recent years, several countries have refused IMF and World Bank prescriptions, which are being criticized even by sectors within these same international institutions. The external debt is an extremely serious problem, even though the present government, just like the military government of the 70s, prefers to present our debt as "credit". The debt - in the words of official spokesmen - is being "perfectly administered" thanks to a policy of high interest rates, galloping trade liberalization, privatization of public enterprises and increasingly precarious labour relations. In other words, we are in a situation of social moratorium, expressed as an enormous default on all commitments to education, health, the value of the minimum wage, decent pensions, the right to employment, agrarian reform, the indigenous peoples' rights and the other rights and constitutional guarantees of the majority of our people. In the course of the 90s, the problem of indebtedness was aggravated by massive growth in private external debt. A large number of major entrepreneurs swapped debt contracted abroad at low rates of interest for internal debt bonds yielding stratospheric rates of interest. In short, a large part of the private debt was nationalized. The mushrooming internal public debt is thus linked to this process of financial speculation which is hampering economic growth. For all these reasons, the Plebiscite has come at the right time, in the right place, and with the right focus. The Plebiscite is focussed so as to criticize the economic model applied in Brazil. When called on to express an opinion on the debts and the IMF agreement, a considerable portion of the public took a position on matters that the government prefers to reserve to its specialists. The Plebiscite made it clear that indebtedness is not a technical matter to be debated exclusively by the theoreticians of economics and finance. The technical decisions result from political options which, in the last analysis, mean either paying the financial debts or paying the social debts= =2E The Plebiscite also made it clear that a just cause, capable of mobilizing popular organizations and, above all, millions of anonymous men and women citizens, does not require enormous financial backing. In material terms, we ran a modest campaign without the benefit of channels on a scale appropriate to an undertaking of this scope. What it lacked in apparatus, though, was offset by tens of thousands of volunteers, even in areas remote from the big towns, who spontaneously and enthusiastically organized debates, produced their own publicity materials, printed voting cards and arranged ballot boxes. For the organizations working to bring about the National Plebiscite on the External Debt, the social debts come before the financial debts. Our national priority must be to guarantee decent work, land, housing, education, health, wages and pensions for our people. It was precisely the discussion over the social and environmental debts, their causes and the means to pay them that brought into question the IMF agreement, external indebtedness and internal indebtedness. In 1998, the symposium "External debt, implications and prospects" was held in Brasilia at the initiative of the Christian churches. This drew on and updated the wealth of experience accumulated in mobilizations against the debts in the 70s and 80s. The following year, 2,000 people, including representatives from 14 countries and numerous social and political movements, took part in the "Tribunal on the External Debt" in Rio de Janeiro. The Tribunal handed down a "Verdict" condemning the debts and pronounced in favour of engagement in the international mobilization to cancel them, in which we now participate through the Jubilee South campaign. Finally, in 2000, we held the National Plebiscite on the External Debt. The Plebiscite was not limited to saying "No" to the debt, "No" to speculation and "No" to the IMF agreement. The Plebiscite also represents a "Yes" to a different model of economy, one of whose fundamental values is to promote life. Our economy and our society cannot be left to depend on attracting foreign capital. The bases of the present model make indebtedness synonymous with domination= =2E Either we change this situation or we continue to watch the greater part of our society fall victim to social crisis, unemployment, low wages, lack of public services, violence and all the other ills we know so well. It comes as no surprise that the lords of the debt, many of them Brazilian, decry us as "defaulters" and threaten us with retaliation. Look at history: the colonizers said Independence was the road to chaos. The slave owners said Abolition would bankrupt Brazil's economy. The imperial powers, like England last century and the United States today, have always boasted that, for the colonies to develop, their only course was to submit to the metropolis. The big land owners have always said land reform will lead to bankruptcy. Those responsible for environmental devastation, very often financed by external credit, say it is the inevitable price of "progress". In the case of the debt, the discourse is repeated. Not that that leaves us any better off. So nothing could be fairer, more natural, more necessary or more urgent than to break the chains that bind us. The external debt is in large measure illegal, immoral and has already been paid several times over. Nonetheless, it goes on growing and goes on being paid, as if the aim was to turn Brazil into a heavily-indebted poor country= =2E The external and internal debts are mechanisms that concentrate income, wealth and power in the hands of minority - but powerful - groups in our society. External and internal indebtedness are neither natural phenomena, nor are they acceptable. They are produced deliberately by social sectors that benefit from them. They only continue to exist because society as a whole, consciously or unconsciously, allows them to. We are continuing to mobilize, now for an Audit of the Debt and an Official Plebiscite, as well as in formulating an alternative model of economic and social development and in Brazil's participation in the international Jubilee South campaign. The deeper meaning of the National Plebiscite on the External Debt, held symbolically in the week when Brazil commemorates its independence, is to draw up an indictment of the exploitation to which the greater part of our people is subjected. May this cry be heard in all the corners of Brazil and the world, and may it find fresh vigour in the continuing fight for a Brazil with equality, democracy and life. Life before the Debt! Brasilia/DF, September 13, 2000. The promoter organizations of the National Plebiscite on the External Debt ------------------ SEMI-FINAL RESULTS OF THE BRAZILIAN PLEBISCITE (20/Sep/00) 6.030.329 people voted, or 5,7% of all Brazilian voters (data from the Electoral Supreme Court for 1998) Question 1: Should the Brazilian government maintain the present agreement with the International Monetary Fund? 5.646.862 answered NO, 280.442 answered YES, 76.574 voted blank and 26.451 voted null. Question 2: Should Brazil go on paying the external debt without holding a public audit of the debt, as called for by the 1988 Constitution? 5.765.954 answered NO, 182.462 answered YES, 57.954 voted blank and 23.959 voted null. Question 3: Should the federal, state and municipal governments go on using a large part of the public budget to pay the internal debt to speculators? 5.768.563 answered NO, 158.995 answered YES, 80.481 voted blank and 22.290 voted null. LIFE ABOVE DEBT! FOR A DEBT-FREE MILLENIUM! Translated from Portuguese by Peter Lenny for PACS-REDE BRASIL Marcos Arruda - PACS Rua Joaquim Silva 56 - 8o. 20241-110 Rio de Janeiro Tel. (5521) 252 0366 - fax 232 6306 pacs@ax.apc.org www.alternex.com.br/~pacs From rob@milan.essential.org Mon, 9 Oct 2000 12:18:49 -0400 (EDT) Date: Mon, 9 Oct 2000 12:18:49 -0400 (EDT) From: Robert Weissman rob@milan.essential.org Subject: [stop-imf] Urgent: Save user fee ban, avert SAP conditions on debt relief We have learned that the landmark amendment passed by the U.S. House of Representatives earlier this year to withhold U.S. funds from the IMF and World Bank unless they eliminate required "user fees" for primary health and education programs may be in danger. Negotiations are now underway to reconcile the House bill (with the amendment) with the Senate bill (which does not have it). We need to send a clear signal that Democrats in the House support the amendment, and that they oppose harmful new conditions on debt relief being suggested by Republicans. The letter below is being circulated by Rep. Dennis Kucinich. It is addressed to the two most influential House Democrats in determining the fate of the Foreign Operations appropriations bill. If you are in the U.S. or are a U.S. citizen and your Representative is a Democrat or Independent, PLEASE CALL YOUR REPRESENTATIVE ON TUESDAY (October 10) to urge her/him to sign on to this letter. It may mean the difference in providing health care and education for people in Africa, Asia, the Caribbean, and Latin America, and in preventing debt relief from becoming another tool for advancing the neoliberal "free trade" agenda. THE CAPITOL SWITCHBOARD (for all Representatives and Senators) IS 202/224-3121. Tell the staffer you speak to that they may communicate their sign-ons to Jaron Bourke in Rep. Kucinich's office at 225-5871. Thanks! 50 Years Is Enough Network =============================== LETTER FROM HOUSE DEMOCRATS Honorable David Obey Honorable Nancy Pelosi Dear Rep. Obey and Rep. Pelosi: We write to you concerning a matter of urgent concern: attempts in conference negotiations to link debt relief to inappropriate and harmful structural adjustment conditions on the world's poorest countries. We believe that U.S. legislation on debt relief must be consistent with the program's aims: to relieve the burden of the world's most impoverished people. We ask that you, as the leading Democratic negotiators, strongly *oppose* efforts to require rapid trade liberalization as a prerequisite for bilateral or multilateral debt relief in the current fiscal year. Further, we ask that you strongly *support* provisions in the House Foreign Operations bill that do support reforms of the international financial institutions to make them more transparent, to clarify and separate their roles, to keep them within their mandates, and to permit developing countries to guarantee investments in basic health care and education. Specifically, we strongly urge you to maintain Section 588 in the final bill submitted to the President. It is essential to use Congress' leverage to prevent international financial institutions from imposing or encouraging "user fees" on primary health care and education. In this way, we can fulfill the United States' pledge to provide meaningful debt relief to the world's poorest countries. Sincerely, From rob@milan.essential.org Mon, 9 Oct 2000 15:03:28 -0400 (EDT) Date: Mon, 9 Oct 2000 15:03:28 -0400 (EDT) From: Robert Weissman rob@milan.essential.org Subject: [stop-imf] London Observer: DR BANKENSTEIN'S MONSTERS: THE WORLD BANK, THE IMF AND THE ALIENS WHO ATE ECUADOR >DR BANKENSTEIN'S MONSTERS: >THE WORLD BANK, THE IMF AND THE ALIENS WHO ATE ECUADOR > >INSIDE CORPORATE AMERICA >by Gregory Palast > >The Observer, London >Sunday, 8 October 2000 > > So call me a liar. I was standing in front of the New York Hilton Hotel >a couple weeks ago when the limousine carrying International Monetary Fund >Director Horst Kohler zoomed by, hit a bump and out flew a report, "Ecuador >Interim Country Assistance Strategy" marked, "CONFIDENTIAL NOT FOR >DISTRIBUTION". You suspect that's not how I got this document, but you can >trust me that it contains the answer to a very puzzling question. > Inside the Hilton, Professor Anthony Giddens explained to an earnest >crowd of London School of Economics alumni that, "Globalization is a FACT, >and it is driven by the communications revolution." > Wow. That was an eye-opener. The screeching green-haired freakers >outside the hotel demonstrating against the IMF have it all wrong. >Globalization, Giddens seems to say, is all about giving every villager in >the Andes a Nokia internet-capable mobile phone. What puzzled me is why >anyone would protest this happy march into the globalized future. > So I thumbed through my purloined IMF Strategy for Ecuador looking for a >chapter on connecting Ecuador's schools to the world wide web. Instead, I >found a secret schedule. By November 1 this year, it says, Ecuador's >government is ordered to raise the price of cooking gas by 80%. Also, the >government must eliminate 26,000 jobs and cut real wages for the remaining >workers by 50% in four steps on months specified by the IMF. By July, >Ecuador will begin to transfer ownership of its biggest water system to >foreign operators and grant British Petroleum's ARCO unit rights to build >and >own an oil pipeline over the Andes. > That's for starters. In all, the IMF's 167 detailed loan conditions >look >less like an Assistance Plan and more like a blueprint for a financial coup >d'etat. > The IMF would counter that it has no choice. After all, Ecuador is flat >busted, thanks to the implosion of the nation's commercial banks. But how >did Ecuador, an OPEC member with resources to spare, end up in such a >pickle? > For that, we have to turn back to 1983, when the IMF forced Ecuador's >government to take over the soured private debts of Ecuador's elite owed to >foreign banks. For this bail-out of US and local financiers, Ecuador's >government borrowed $1.5 billion. > For Ecuador to pay back this loan, the IMF dictated price hikes in >electricity and other necessities. And when that didn't drain off enough >cash, yet another Assistance Plan required the state to eliminate 120,000 >workers. > Furthermore, while trying to pay down the mountain of IMF obligations, >Ecuador foolishly "liberalized" its tiny financial market, cutting local >banks loose from government controls and letting private debt and interest >rates explode. Who pushed Ecuador into this nutty romp with free-market >banking? Hint: the initials are I-M-F =E2?" which made bank liberalization a >condition of another berserker Assistance Plan. The facts of this nasty >little history come from an internal IMF report marked, "Please do not >cite." > Pretend I didn't. > The IMF and its sidekick the World Bank have lent a sticky >helping hand to scores of nations. Take Tanzania. Today, in that African >state, 1.4 million people are getting ready to die. They are the 8% of the >nation's population with the AIDS virus. The IMF and World Bank have come >to the rescue with a brilliant neo-liberal solution: require Tanzania to >charge for hospital visits, previously free. Since the Banks imposed this >requirement, the number of patients treated in Dar Es Salaam's three big >public hospitals has dropped by 53%. The Banks' cures must be working. > The IMF-World Bank also ordered Tanzania to charge fees for school >attendance. Now, the Banks express surprise that school enrollment has >dropped from 80% to 66%. > Altogether the Bank and IMF have 157 helpful suggestions for Tanzania. >This April, the Tanzanian government secretly agreed to adopt them all. It >was sign or starve. No developing nation can borrow hard currency without >IMF blessing (except China, whose output grows at 5.0% per year by >studiously >following the reverse of IMF policies). > The IMF and World Bank have effectively controlled Tanzania's >economy since 1985. Admittedly, when the Banks took charge they found a >socialist nation mired in poverty, disease and debt. The Banks' neo-liberal >experts wasted no time in cutting trade barriers, limiting government >subsidies and selling off state industries. The Bank's shadow governors >worked wonders. According to Bank-watcher Nancy Alexander of Globalization >Challenge Initiative (Washington), in just 15 years, Tanzania's GDP has >dropped from $309 to $210 per capita, the literacy rate is falling, and the >rate of abject poverty has jumped to 51% of the population. > Yet, despite this neo-liberal effort, the World Bank has failed to win >the hearts and minds of Tanzanians to its free market game plan. In June, >the Bank reported in frustration,"One legacy of socialism is that most >people >continue to believe the State has a fundamental role in promoting >development >and providing social services." > The World Bank and IMF were born in 1944 with simple, laudable >mandates =E2?" >to fund post-war reconstruction and development projects (the World Bank) >and >lend bank hard currency to nations skint by temporary balance-of-payments >deficits (the IMF). > Then, beginning 1980, the Banks seem to take on an alien form. In the >early 1980s, Third World nations, hemorrhaging after the five-fold increases >in oil prices and a like jump in dollar interest payments, brought their >begging bowls to the IMF and World Bank. But instead of debt relief, they >received Structural Assistance Plans listing an average of 114 >"conditionalities" in return for capital. While the particulars varied >nation to nation, in every case, the roll-over of debts dangled from edicts >to remove trade barriers, sell national assets to foreign investors, slash >social spending and make labour "flexible" (read, =E2?~crush your unions'). > Some say the radical and vicious change in the Banks in 1980 >resulted from Ronald Reagan's election that year as President, the >quickening >of Mrs Thatcher's powers and the beginning of the neo-liberal ascendency in >policy. (My own information is that the IMF and World Bank were taken over >by >a space alien named Larry. It's obvious that "Larry" Summers, once World >Bank chief economist, now US Treasury Secretary, is in reality a platoon of >extra terrestrials sent here to turn much of the human race into a source of >cheap protein. But I digress.) > So what have The Aliens accomplished with their Structural >Assistance free-market prescriptions? An article by Samuel Britten in last >week's Financial Times declared that the new world capital markets and free >trade have, "brought about an unprecedented increase in world living >standards." Britten cites the huge growth in GDP per capita, life >expectancy and literacy in the less developed world from 1950 to 1995. > Now hold on a minute. Until 1980, virtually every nation in his survey >was either socialist or welfare statist. They were developing on the >"Import >Substitution Model," by which locally-owned industry built through >government >investment and high tariffs, anathema to the neoliberals. In those dark ages >of increasing national government control and ownership (1960-1980), per >capita income grew 73% in Latin America and 34% in Africa. By comparison, >since 1980, Latin American growth has come to a virtual halt, growing by >less >than 6% over 20 years =E2?" and African incomes have DECLINED by 23%. > Now let's count the corpses. From 1950 to 1980, socialist and >statist welfare policies added more than a decade of life expectancy to >virtually every nation on the planet. From 1980 to today, life under >Structural Assistance has gotten brutish and shorter. Since 1985, the >total >number of illiterate people has risen and life expectancy is falling in >fifteen African nations =E2?" which Britten attributes to "bad luck, [not] the >international economic system." In the former Soviet states, where IMF and >World Bank shock plans hold sway, life expectancy has fallen off a cliff =E2?" >adding 1.4 million a year to the death rate in Russia alone. > Admittedly, the World Bank and IMF are reforming. No longer do >they issue the dreaded "Structural Assistance Plans." They now call them, >"Poverty Reduction Strategies.". Doesn't that make you feel better? > Recently, the Banks reviewed the fruits of globalization. In its April >"World Outlook" report, the IMF admitted that, "in the recent decades, >nearly >one-fifth of the world population have regressed. This is arguably," the >Bank >concedes, "one of the greatest economic failures of the 20th Century." > And that, Professor Giddens, is a fact. > >GREGORY.PALAST@GUARDIAN.CO.UK > >Gregory Palast >USA TEL: 1.631.765.6171 >UK Mobile 0794.408.1245 >The OBSERVER >Guardian Newspapers >119 Farringdon Road, London EC1R 3ER >Observer Business Desk (London): 020.7239.9512 >gregory.palast@guardian.co.uk From rob@milan.essential.org Mon, 9 Oct 2000 16:09:58 -0400 (EDT) Date: Mon, 9 Oct 2000 16:09:58 -0400 (EDT) From: Robert Weissman rob@milan.essential.org Subject: [stop-imf] Prague: a view from the inside (fwd) MANILA, PHILIPPINES | Monday, October 9, 2000 A World Bank economist's odyssey in Kafka's Prague By ANTONIO ANDRADE (Columnist Walden Bello met an old contact from the World Bank during the World Bank-IMF joint annual meetings in Prague, Czech Republic, on Sept. 26 to 28. The following is his account of the events that unfolded around him during that fateful conference. Antonio Andrade is not his real name.) Coming into Prague was impressive because they had the system all set up. Right at the airport, you were accredited. As soon as you stepped out of the plane, you were fast-tracked out of customs. Everything was so systematic. Everybody got into fast track. And you got escorts. As you know, they closed all universities that week. And one reason was to get students to act as escorts and guides to delegates. For the whole week. Very good-looking escorts. Extremely good looking. In fact, I dated one of them later. I have to say that my impression was there was no inkling -- at least among the people I was in touch with -- what was going to come. In fact, the dominant reaction from IMF-WB delegates was that the police were overreacting. I got there Saturday the 23rd. On the 24th and 25th, nothing was happening. Lots of activities, but everybody still felt nothing would happen. I think among the delegates and among the private bankers no one was really expecting anything to happen that coming Tuesday. The debate between (James) Wolfensohn, (Horst) Koehler and the NGOs that President (Vaclav) Havel organized on the 23rd was not well publicized. People I was with had not heard about it. There was a daily schedule called "Emerging Markets," and it was listed there, but it wasn't played up. Only those like me, who had been tipped off before coming to Prague, understood its significance. I told my boss I wanted to attend, but he said there were more urgent things to pay attention to. Anyway, Saturday and Sunday were so uneventful that everybody felt it would stay this way throughout. Really calm. KAFKAESQUE TUESDAY Then all of a sudden, you had this very dramatic turn of events on Tuesday. Tuesday was the opening day. On Monday, the security system warned something might happen the following day. But even when the security system started issuing flyers to the delegation rooms, no one believed it. We were warned by the flyers that if we were going to the Congress Center on Tuesday, we would have to be prepared to stay there for a while because a protest could lock in delegates at the Center. But even then I had the sense that no one took that seriously. And I believe that because everybody came to the opening ceremonies the next day. Had it been taken seriously, some people would probably not have shown up. I saw ex-World Bank presidents there coming in with their spouses and big-time private bankers, and nobody, it seems, had taken the warnings seriously. Then close to noon, all of a sudden you had this announcement that the transport system was shutting down. Usually you had these shuttle services between the Congress Center to the hotels every 15 minutes, but all of a sudden these services were shut down. The bridge leading to the main entrance was blocked, and the two other entrances to the Congress Center were also blocked by riot police, who were now very visible at the center. But the action was still taking place at quite a distance from the Center. In any case, we couldn't leave. One incident was reported. A young delegate from the Japanese government wanted to go out and he just stepped out and tried to go through one of the side openings. They said he was beaten up and sent to the hospital. All of us were warned not to transit in and out, not to even attempt to walk out. There was no clear sign or indication of what would happen next. I saw ex-World Bank presidents walking around not knowing what to do. I asked one former president how he was doing, and he told me that his wife had managed to skip coming to the Center by joining the Prague tour, but he was left behind. He didn't know what was happening. When I told him about the protests, he became totally disoriented. In any event, what was happening was everyone was waiting to get out. They had long run out of numbers in the program. At around 7:30 p.m., there was a sudden oral announcement. Everybody should go straight to the metro. The metro had been stopped all day. Now, they told us that the metro had been opened and we all had to go, quickly. What happened was they got this special train to get the delegates to the very last station on the line, where buses were waiting to take the delegates to the reception at the exhibition hall. We were brought in to this big exhibition hall -- I don't know what you call it. But when we got there, we were surprised to see that the protesters were already there. This big exhibition hall was supposed to be secure, but to our great surprise the protesters had beaten us to the place. And the authorities had not planned for this. When the reception was over, they just wanted to disperse all the delegates, so they ended up bussing us to different parts of Prague, where we were left to our own devices. Many of the people with me were really, really worried, but I was having fun. We finally got to our hotels around midnight. But we still had not known the extent of the protests, and, of course, once everyone got to the hotel, everyone tuned into CNN and that's when we learned about McDonald's being trashed. PLEASURE OR PAIN? I was staying at the Renaissance near the Old Town. I had this friend who was staying at the Hilton about 10 minutes away who was still with me, and I just wanted to make sure he got to his hotel safely. So I took off my suit and got into my jeans and more comfortable wear. But he was still in this suit and had this bag with a big IMF logo. While we were walking to his hotel which was 10 minutes away, we met a group of French protesters who started harassing us. Actually if I was actually threatened with physical harm, I would have called out your name and screamed: "I'm a friend of one of your leaders!" I was ready to do that. The guy I was with comes from a Third World country, but I told him that saying that you're Third World wouldn't work -- not with your IMF badge. Fortunately, there was a restaurant nearby and I shoved him inside. We had a couple of beers and waited till the French protesters went away and we snuck out. On the way back from his hotel, I ran into another problem. Two prostitutes sidled up to me, and the one to the right of me started rubbing my buttocks. I guess they knew I was a delegate. I don't think they were Czechs. They looked like Italians. Maybe they came in with the Italian protesters, since we heard that the Czech security had driven most of the regular prostitutes out of the city. So that evening, it was a question of who got to the delegates first, the prostitutes or the protesters. If you were lucky, you got pleasure. If you were unlucky, you got pain. In any case, we never got to the price. I ran away: who knows, they might have been protesters in disguise! The following day, very few people went to the Congress Center. Most stayed away. They just stayed in their hotel rooms. They didn't even want to go out. But those who did went out in their suits. I couldn't figure that out. Those of us who were brave enough to go to the Center had to go by a completely different route. Our bus stayed at the back of a tram and it followed this all the way. This was fine with me because I hadn't seen the sites of Prague, and the city was beautiful. At the conference center, I got to talking to the student guides. They really didn't know what was happening. These kids actually didn't know who to side with -- the protesters or the delegates? They just wished the whole thing would end. By the way, I noted this attitude even with the police. Whenever I asked the police for directions, they very seldom answered me. I had a sense that they were just as wary of the delegates as they were of the protesters. I think one personal dilemma that both the students and the police had was that they were too young to have experienced the protests of late 1980s and didn't know what to do about it. As you know, the meeting got cut by a day. During the press conference the next day, they denied the protests were the reason. They actually said the reason was that things had run so efficiently that they were able to compress everything into two days. The press laughed at this. END OF THE AFFAIR The real conclusion was the press conference the following day, the 28th. At this press conference, both Wolfensohn and Koehler were there to field questions. There was a corps of press reporters keen to pounce on them. The questions from the first were quite pointed. Ranging from very specific to very basic. For instance, one reporter from India told Wolfensohn and Koehler they had been accused of causing so much misery in the Third World and asked what did they have to say about that. Wolfensohn said, "I don't think I am responsible for all that, and if you think so, you're misinformed." But the whole conference was dominated by questions about the protest and not issues. Which means -- at least from my perspective -- that the objective of the protests had been achieved. They had really distracted the proceedings. A number of the press people said the annual meeting was obsolete and out of control and what did the IMF and WB want to do about this? Wolfensohn responded that although they could have virtual meetings, the personal interaction was still quite important. So, the Bank would actually continue to have annual meetings. Wolfensohn and Koehler insisted they had "gotten through" to the NGOs and pictured the Saturday debate at Prague Castle as a big success for them. On the other hand, from my experience watching Wolfensohn for several years, he appeared to be very tired. It seems he had run out of things to say and even his statements to the press were very uninspired. He didn't look like the "Elvis" Bono described him to be. He appeared to be much less enthusiastic. He was repeating many of the old formulas. Maybe the futility of it all had finally gotten to him. As for Koehler, he was upbeat and very light. No, light is not the word. He appeared to be very naive, that's what I want to say. I don't think it's just his lack of mastery of English. He was talking like a college student about the issues, repeating the same line about him not being a banker but somebody with a heart. Both of them said the violence had come from a very, very small minority, and that the majority of the protesters were really there because they had something to say. And there were a lot of legitimate arguments being made by them. And that the WB and the IMF would now pay greater focus to their concerns. It was very difficult for me to distinguish between reality and rhetoric because all the time Wolfensohn was playing with his watch. From my vantage point, in the end, the agenda had been taken over by the protesters. I think Prague created quite an impression with the World Bank-IMF bureaucracy, although this is a much more entrenched bureaucracy than the WTO. I sensed that after Prague, the words of civil society will be taken much more seriously, but whether this will mean real dialogue we still have to find out. THE DESERT BECKONS The next two annual meetings will be in Washington and the third one will be in Dubai. And the head of the Dubai organizing committee said the temperature would be higher in Dubai than in Prague! He was saying basically that prior to the Prague proceedings, he didn't foresee problems in Dubai, but after this, there has to be some rethinking. So it's three years away, but the impact is already there. I have a feeling that when the WB-IMF bureaucracy assesses Prague they will wind down the annual meetings. Because their only function is for governors to deliver their speeches, and more and more governors now simply submit written speeches. So, I think more and more they will turn it into a virtual meeting. And they will probably try to separate the unofficial events from the official meeting. Because what is most significant about these meetings are the informal business parties. There were at least 15 lavish parties given by the commercial banks for the delegates. Very, very lavish. For many delegates, those were the prime events of the conference. The actual official functions were just pro forma. If I were a protester, by the way, I would have gone to these venues because they were not secured at all. These were the events that everyone went to in the evenings. These were very open venues. And they were listed in the schedule. Now, that would really have stopped the real business of the conference. | (c) BusinessWorld Publishing Corporation. ALL RIGHTS RESERVED. From rob@milan.essential.org Mon, 9 Oct 2000 19:32:07 -0400 (EDT) Date: Mon, 9 Oct 2000 19:32:07 -0400 (EDT) From: Robert Weissman rob@milan.essential.org Subject: [stop-imf] Urgent Action: Call now to save user fee ban Dear Friends: Forgive the redundancy of this message, but we are in the midst of a critical fight to preserve language in an appropriations bill that would prevent the IMF and World Bank from carrying out one of their crueler and stupider policies -- requiring poor countries to charge children and adults for access to basic education and healthcare services. Whether the people in the United States on this list make calls pursuant to the alert below could play an important role in determining the outcome of this fight. We've already won the first round, with inclusion by the House of Representatives of the amendment in their foreign operations appropriations bill. Now we have to make sure that the Treasury Department does not successfully maneuver to eliminate the amendment. For those in the US with a Democratic representative in the House, please take a couple minutes to call your member of Congress. Robert Weissman Essential Information P.O. Box 19405, Washington, DC 20036, USA Tel: 1-202-387-8030 Fax: 1-202-234-5176 www.essential.org ---------- Forwarded message ---------- Date: Mon, 9 Oct 2000 12:18:49 -0400 (EDT) From: Robert Weissman To: stop-imf@lists.essential.org Subject: Urgent: Save user fee ban, avert SAP conditions on debt relief We have learned that the landmark amendment passed by the U.S. House of Representatives earlier this year to withhold U.S. funds from the IMF and World Bank unless they eliminate required "user fees" for primary health and education programs may be in danger. Negotiations are now underway to reconcile the House bill (with the amendment) with the Senate bill (which does not have it). We need to send a clear signal that Democrats in the House support the amendment, and that they oppose harmful new conditions on debt relief being suggested by Republicans. The letter below is being circulated by Rep. Dennis Kucinich. It is addressed to the two most influential House Democrats in determining the fate of the Foreign Operations appropriations bill. If you are in the U.S. or are a U.S. citizen and your Representative is a Democrat or Independent, PLEASE CALL YOUR REPRESENTATIVE ON TUESDAY (October 10) to urge her/him to sign on to this letter. It may mean the difference in providing health care and education for people in Africa, Asia, the Caribbean, and Latin America, and in preventing debt relief from becoming another tool for advancing the neoliberal "free trade" agenda. THE CAPITOL SWITCHBOARD (for all Representatives and Senators) IS 202/224-3121. Tell the staffer you speak to that they may communicate their sign-ons to Jaron Bourke in Rep. Kucinich's office at 225-5871. Thanks! 50 Years Is Enough Network =============================== LETTER FROM HOUSE DEMOCRATS Honorable David Obey Honorable Nancy Pelosi Dear Rep. Obey and Rep. Pelosi: We write to you concerning a matter of urgent concern: attempts in conference negotiations to link debt relief to inappropriate and harmful structural adjustment conditions on the world's poorest countries. We believe that U.S. legislation on debt relief must be consistent with the program's aims: to relieve the burden of the world's most impoverished people. We ask that you, as the leading Democratic negotiators, strongly *oppose* efforts to require rapid trade liberalization as a prerequisite for bilateral or multilateral debt relief in the current fiscal year. Further, we ask that you strongly *support* provisions in the House Foreign Operations bill that do support reforms of the international financial institutions to make them more transparent, to clarify and separate their roles, to keep them within their mandates, and to permit developing countries to guarantee investments in basic health care and education. Specifically, we strongly urge you to maintain Section 588 in the final bill submitted to the President. It is essential to use Congress' leverage to prevent international financial institutions from imposing or encouraging "user fees" on primary health care and education. In this way, we can fulfill the United States' pledge to provide meaningful debt relief to the world's poorest countries. Sincerely, From rob@milan.essential.org Tue, 10 Oct 2000 18:50:53 -0400 (EDT) Date: Tue, 10 Oct 2000 18:50:53 -0400 (EDT) From: Robert Weissman rob@milan.essential.org Subject: [stop-imf] Extravagant Evil and the I.M.F. - The New York Times The New York Times October 8, 2000 Book Review: "In the Footsteps of Mr. Kurtz" Extravagant Evil and the I.M.F. By Alan Cowell LONDON -- First Seattle, then Prague. The recurrent images of clashes between hooded demonstrators and police officers defending the barons of global capitalism have become a powerful motif for the protests and preoccupations of a new millennium. At first blush, the demonstrators' rage may bewilder many Westerners. After all, whether the body under assault is the World Trade Organization, the International Monetary Fund or the World Bank, the institutions' stated aims are surely laudable: liberalized trade, economic rescue and development. But the protests - seizing on targets as disparate as finance ministers' gatherings and McDonald's outlets - have touched a raw nerve at a time when the gap between rich and poor is widening, when many poor countries labor under unpayable debt inherited from the politically driven international lending of the cold war and when trade, for many, means little more than an uneven exchange of expensive Western goods for cheap commodities. Nowhere are these issues more evident than in Africa. And as Michela Wrong's "In the Footsteps of Mr. Kurtz" (Fourth Estate) appears to suggest, no single African country has taken the bizarre interface of ill- fated international lending and corrupt politics to the same extremes as Congo, the former Zaire. As the title suggests, this is not a "business" book or a dry academic study. It is a journalist's fast-paced account of the final years of the regime of the late President Mobutu Sese Seko, whose blend of greed, corruption and hunger for power fascinated generations of reporters from his rise to power in 1965 to his ignominious demise in 1997. It is a book whose time is right, because it illuminates much of the current debate underlying the protests in Seattle and Prague. (Published in London, the book will be issued in the United States by HarperCollins next May.) It points an accusing finger at the readiness of the International Monetary Fund to almost encourage the errant ways of a political elite that it was avowedly rescuing from itself. And, not least for anyone who contemplates greasing the wheels of business in pursuit of a quick deal, it demonstrates the perils of corruption - a force that, in Congo's case, led directly to a national implosion. Mr. Mobutu was hardly a stranger to harsh scrutiny. No visitor to Kinshasa, the capital, in his heyday in the 1970's and 1980's could avoid the twin frisson of revulsion and bewitchment that the country inspired. Here was a dictator - as this reporter can attest - who kept caged leopards in his garden, dined off gold plates and repelled insurgents with the ready help of the United States Air Force and the French Foreign Legion, even as the African bush seemed to be reclaiming his decaying capital. Then as now, Congo drew outsiders into its heady web of bloodshed, absurdity and evil - distant massacres offset against fine restaurants patronized by the elite, the pony- tailed pianist at the Hotel Intercontinental who played "As Time Goes By" and presidential extravagance on a scale as grand as the broad sweep of the Congo River. All this imbues the rich, anecdotal tapestry in the book, starting with a description of Mr. Mobutu's henchmen fleeing the capital, carrying machine guns and Louis Vuitton luggage as rebels advanced. (The absence of the pianist in May 1997, Ms. Wrong says, signaled that the end was nigh for Mr. Mobutu.) But Ms. Wrong takes the debate much further with her keen understanding of where, exactly, the Mobutu regime was coming from as the ultimate heir to a Belgian colonial administration founded on the awesome chutzpah of King Leopold II, who in the 19th century simply took over the Congo - a country the size of western Europe - as a personal fief. Ms. Wrong, who covered the final Mobutu years for Reuters and The Financial Times, has woven her title from an allusion to Kurtz, the central figure of Joseph Conrad's "Heart of Darkness," whose dying words - "the horror, the horror" - have inspired legions of journalists and moviemakers. She is quick to point out that those words have often been presented as an indictment of African ways rather than Kurtz's own acknowledgment of his own fall from grace. "Conrad was more preoccupied with rotten Western values, the white man's inhumanity to the black man than, as is almost always assumed today, black savagery," she writes. And that brings her to the central theme. If Mr. Mobutu was the archvillain of his nation's tragedy, he was not a simple caricature, or, indeed, a man without a context. "The momentum behind Zaire's free fall was generated not by one man but by thousands of compliant collaborators, at home and abroad." This is no exculpation of Mr. Mobutu, but, in the present debate over the role of international financial institutions, it helps explain just why Congo - and many other African countries to a less dramatic degree - got into such an enormous financial mess. Indeed, it evokes a central question for the international institutions and donors of today as they contemplate the morass left over from the cold war: where is the morality in imposing yet more fiscal hardship on nations burdened by the same debts as those the "compliant collaborators" in the international community helped to create? Zaire is a particularly glaring example. But, as Ms. Wrong points out, the International Monetary Fund and the World Bank were complicit - by default at the very least - in creating this monster. From 1975 to 1997, Zaire received $9.3 billion in foreign aid, much of it at the height of the cold war and much of it from the I.M.F. and the World Bank, at a time when the United States and other Western powers were determined to keep Mr. Mobutu in their camp. Yet throughout this period - and particularly after the I.M.F. installed its own representative, Erwin Blumenthal, at Zaire's Central Bank in 1978 - those institutions knew full well that Mr. Mobutu was stripping the state coffers not just of aid income but also of receipts from Zaire's fabled riches in copper, cobalt and diamonds. Mr. Blumenthal subsequently reported ample evidence of corruption, but any effort to restrain Mr. Mobutu was thwarted by bigger geopolitical considerations. In the thinking of the time, Ms. Wrong writes, "No one wants to be the official remembered as having `lost' Zaire, Kenya, Zambia or Tanzania." Only in recent years have those same international institutions come to acknowledge that aid and other forms of assistance are inseparable from "governance issues" - meaning that there is no point in trying to help people who are, literally, helping themselves to the state's riches. But, of course, the damage has been done. Debts have piled up, but forgiveness is hard to come by, usually involving wrenching economic reforms that look for signs of macroeconomic health long before they benefit ordinary people. And, in the bulk of sub-Saharan Africa, it is the ordinary people who have become more and more destitute. Not all of their leaders were corrupt. Often enough, in nations like Zambia and Tanzania, misguided economic stewardship did almost as much damage as Mr. Mobutu's kleptocracy - the term that came to be applied to the robber regime. That, of course, is where the protesters in Seattle and Prague come into the picture, taking up the cudgels - it could be argued as uninvited champions - on behalf of those millions in many parts of Africa who have neither voice nor prospects. Ms. Wrong does not, however, oversimplify or sentimentalize the argument. Her account of Mr. Mobutu's interaction with wealth is far more nuanced, pointing out, for instance, that state corruption is an expensive business. Anyone looking for Mr. Mobutu's rumored hidden stash of looted billions, she suggests, will be disappointed: if he stole from the state, he did so in part to finance a network of complicit and equally corrupt lieutenants, ready to repay largess with loyalty. Neither is the issue made any simpler by the post-Mobutu regime of Laurent Kabila that seems a continuation of rather than a break with the history of venality. The protesters in Seattle and Prague might take note or, at least, cast a more searching look over those who lead the people that they champion. From rob@milan.essential.org Tue, 10 Oct 2000 18:52:02 -0400 (EDT) Date: Tue, 10 Oct 2000 18:52:02 -0400 (EDT) From: Robert Weissman rob@milan.essential.org Subject: [stop-imf] Bolivia in the Club of Paris (fwd) ------- Forwarded message follows ------- From: "Irene Tokarski" To: "Irene Tokarski" Subject: Bolivia in the Club of Paris Date sent: Mon, 9 Oct 2000 22:49:23 +0200 Bolivia in the Club of Paris No more structural adjustment policies in the situation of social conflict Tomorrow, 10th of October 2000, the Club of Paris of the international creditors will discuss the debt relief for Bolivia within the Enhanced HIPC Initiative. On behalf of this meeting, the Bolivian Forum Jubilee 2000 appeals urgently to the international community not to impose any more measures of structural adjustment in these moments of social conflicts and deep crisis in Bolivia. For four weeks now Bolivia is passing through a series of social conflicts in which all groups of Bolivian society are involved. The sad result is ten persons dead and 129 injured all over the country. The main cause of these social riots is the structural poverty and increasing economic crisis, which is worsening the general situation. During their annual meeting a few days ago in Prague, World Bank and International Monetary Fund insisted once again that debt relief can only be carried out along with structural adjustment programs. However, if the international community by the means of their multilateral organisms imposes further measures in Bolivia like the absolute restriction of budget deficit that will mean less public expenses, more unemployment, even more poverty, more social inequality, more conflicts and even more loss of lives. We make an urgent call to all bilateral creditors of Bolivia to cancel right now and immediately all external debt in order to allow an effective struggle against poverty under the strict social control that was proposed by the organisations of the Forum Jubilee 2000 and approved in the National Dialogue. If the real goal of Enhanced HIPC is to reduce poverty in the heavily indebted poor countries, the debt relief must not depend anymore on conditions that create even more conflicts and social inequality. We ask all national and international organisations, most of all those which fought for the debt relief, to support and circulate this appeal, that is born out of the concern for peace in Bolivia. La Paz, 9th October 00 Irene Tokarski Foro Jubileo 2000 Conferencia Episcopal Boliviana Cas. 8777, Tel. 00591-2-318649, -323525 (fax), La Paz, Bolivia Cel. 00591-1537633 www.jubileo.ucb.edu.bo From rob@milan.essential.org Wed, 11 Oct 2000 11:01:17 -0400 (EDT) Date: Wed, 11 Oct 2000 11:01:17 -0400 (EDT) From: Robert Weissman rob@milan.essential.org Subject: [stop-imf] Emergency sign-on (24 hours): urge US to support ban on IMF/WB user fees ANOTHER ALERT FROM 50 YEARS IS ENOUGH. YOUR ORGANIZATIONAL SIGN-ON NEEDED NOW! Thanks to all of you who responded to our alert to call members of Congress! We've been hearing about the calls all day. It looks, however, like there is more work to be done to try to save the ban on IMF/WB user fees. We need as many ORGANIZATIONS as possible to sign onto the following letter to Larry Summers (which will also be shared with members of Congress, including Republicans, who are key in this process). And we need them fast. If your organization can sign on to the letter below, please reply to as soon as possible. We need to have the letter in "sendable" shape by the end of the day Wednesday, Oct. 11 (5:30 pm Eastern US time). We really need to demonstrate to Treasury and Congress that there are a large number of serious organizations who oppose user fees! Please include the full name of your organization and city and state (or country if non-US). Thanks again, Soren Ambrose 50 Years Is Enough Network Washington, DC USA ======================= 11 October 2000 To Lawrence Summers, Secretary of the Treasury Dear Secretary Summers: We write to you at a crucial moment to urge you to support an important provision of the House Foreign Operations appropriations bill concerning "user fees" in IMF and World Bank programs. This bill will soon be submitted to a conference committee for reconciliation with the Senate version, and the Treasury Department's advice will be a significant factor in their negotiations. User fees for primary health and education remain a component of many IMF and World Bank structural adjustment programs, of some HIPC debt relief agreements, and of many World Bank health and education sector loans. The evidence from the countries of Africa, Latin America, and Asia demonstrates that these fees have had a catastrophic impact on the capacity of the world's most impoverished people to obtain health care and send their children, especially girls, to school. We strongly believe that moves to eliminate these fees are needed to realize the promise of debt relief: to relieve the heavy burdens on the world's poor and increase their access to education and health services. Section 588 of the House's legislation requires that the IMF and World Bank certify that none of their programs include requirements for user fees (also known as "cost recovery," "community financing" and "cost sharing"). We urge you to ensure that the strongest possible language opposing user fees and service charges for primary education and primary health care is included in the final bill so that user fees for essential services will be eliminated as soon as possible. We also urge that you publicly express to the Bank and Fund and their member governments U.S. opposition to including user fees for basic services, and that the Treasury Department report to Congress on progress made in eliminating these fees. This use of the United States's considerable influence will be essential if debt relief for the world's poor countries is to have its greatest impact. Thank you for your consideration of how our government's actions can help eliminate these barriers to people meeting their most basic needs. Sincerely, cc: Congressional conferees on Foreign Operations appropriation legislation From rob@milan.essential.org Wed, 11 Oct 2000 11:24:00 -0400 (EDT) Date: Wed, 11 Oct 2000 11:24:00 -0400 (EDT) From: Robert Weissman rob@milan.essential.org Subject: [stop-imf] More loans from CGI? Indon expert questions motivation This is more important thinking from Indonesia about the appropriate purpose and role of foreign borrowing for developing countries. Robert Weissman Essential Information P.O. Box 19405, Washington, DC 20036, USA Tel: 1-202-387-8030 Fax: 1-202-234-5176 www.essential.org Jakarta Post October 11, 2000 Opinion Expert questions motivation to seek more loans from CGI Indonesia will meet the Consultative Group on Indonesia (CGI) in Tokyo on Oct. 17-18, to negotiate a loan of about Rp 20 trillion. Some see the loan as unnecessary, believing Indonesia can still meet the demands of the statebudget without it. One of them is economist Revrisond Baswir of Yogyakarta-based Gadjah Mada University, also director of the Institute of Developmentand Economic Analysis (IDEA). He shared his view with The Jakarta Post recently. Question: Why do you say Indonesia does not need the CGI loan? Answer: We have always been given the argument that we need loans, without which we cannot go on with our lives. But do we really need it? Frankly speaking, financially, we don't need the loan. I can say this because I've made some calculations based on the 2001 state budget. If we are not as conservative as the government in making assumptions of both the oil price and the rupiah's value, we do have the money we need to fund the budget. The government, for example, has set the oil price in the state budget atUS $ 17-22 per barrel although the market price is US$ 37 per barrel. For the rupiah's value the government set a value of Rp 7,300 per US dollar when the market rate is Rp 8,700. Suppose we set the oil price at US$ 25 per barrel and the rupiah's value at Rp 8,000 per US dollar, we would then have about Rp 29 trillion from oilexports (1,460 x US$25 x Rp 8,000). The government's calculation in this case is only Rp 17 trillion. There is a difference of Rp 12 trillion. Secondly, I also found in the state budget a bizarre allocation called "other routine expenses." We certainly do not need such an entry, as all necessary expenses have been budgeted in other items. Therefore, if we removed this item from the budget, which is Rp 9.3 trillion, then add it to the windfall profit we are getting from the oil export of some Rp 12 trillion, we would get Rp 21.3 trillion. This certainly can cover the loan we wish to get from the CGI. That's why I wonder what the government's motivation might be in seeking the loan. What do you think that might be? The government wants the loan to pay down foreign debt. To do so, we needforeign exchange of at least US$ 3 billion a year to pay for the interest alone. If we pay it with our own export earnings, our foreign exchange reserve will be reduced. In this case, the loan would save the reserve. If this should be the case, what are the consequences? It implies that we actually live on debt. That also means that we are burdening our next generations with debt. For whatever reasons, (we are) piling up debts, which must be repaid some day. In this case, we are just gambling our future away. It's not a solution. It's only delaying problems. We have been heavily burdened by huge debts. We have a total foreign public and private debt of some US$ 140 billion or nearly Rp 1,200 trillion, in which some US$ 75 billion or about Rp 600 trillion are public debt (that of government and state-owned enterprises.) Domestic debt, says the BLBI, has reached an amount of some Rp 630 trillion. It makes a total foreign and domestic public debt of about Rp 1,230 trillion. Things have become more complicated these days, as the government tends to take unreasonable steps in dealing with private sectors debt, through, for example, re-capitalization and bailout. It's like transferring private debt onto the public debt. Now we cannot even pay back the installments of about US$ 2 billion a year. We have been unable to do so for three consecutive years. It's therefore quite obvious that we are unable to service our debts. Whythen look for more? Suggested solutions? We could try to save our exchange reserve, especially from the import sector by, for example, applying high taxation for luxurious imported goods. We could also collect all the foreign exchange we have from private savings belonging to Indonesians, especially the national elite and speculators, to pay for the debt. Such a step has succeeded in other countries such as Thailand and South Korea. I'm quite sure that there are many speculators and other Indonesians who hoard foreign exchange. Gold is also good for the purpose because we can convert it into foreign exchange. Is this possible under the present circumstances? I admit that it would certainly be difficult for us to do so at this time, especially because we are not only experiencing economic crisis but also that of political, social, and most of all with people's trust. That'swhy I strongly suggest that the government try its best to propose a debt relief to the creditor countries, (to campaign for) at least 30 percent reduction. Several Asian countries including Laos, Vietnam, and Cambodia have received such a reduction. About 20 other countries in Africa also receivedthe same thing. Given the amount of its debt, Indonesia certainly deserves such a reduction although it has yet to be categorized as a heavily indebted poor country. We have a good argument in this case. That is, we have just been freed from a corrupt regime and some 30 percent of the Indonesian foreign debt, as also acknowledged by the World Bank, went to corruptors. This is what iscalled odious debt. This amount deserves to be reduced because people couldnot be considered responsible for a debt that was taken by corruptors. Indonesian NGOs, including IDEA, have for years struggled for this relief. The response so far is very promising. France, for example, said inApril that should development in Indonesia be already on the right track, it was ready to form an international solidarity to cut off a part of the Indonesian debt. The U.S., too, has stated its readiness to write off Indonesian bilateraldebt through what is called debt for environmental swept mechanism. The debt is not big, only about US$ 2 million, but it would certainly reduce the government's task in repaying the debt. Even in Japan, which has a regulation forbidding the government to make such a debt reduction, the opposition parties we lobbied have said they would try their best for such a reduction. Unfortunately, our government does not do the same thing, making it difficult for us to explain to the creditor countries why we ask for such areduction. In fact, they (creditor countries) will not give such a reduction unless the government proposes an official request for the reduction. Have you informed the government of the NGOs' campaign for debt relief? Yes, we have done it many times. The response is (always) they (the government) wanted to meet us (NGOs). This year, for example, Coordinating Minister of Economy Rizal Ramli invited us to a government-NGOs consultation forum held in Jakarta on Oct. 6, (which was) meant as a preparation for the CGI meeting in Tokyo. Some 37NGOs were invited, three from Yogyakarta including IDEA, one from Bogor, the rest from Jakarta. What concerned us most was that we were invited but were not given enoughtime (to prepare for the meeting) and information (about the meeting and the loan to be received). What was more interesting was that, according to the schedule we received, the dialog was only scheduled for an hour. What could we discuss in an hour with 37 different NGOs attending the meeting? It's ridiculous. That's why we, the three NGOs in Yogyakarta, refused to attend the forum.We're afraid that the forum is only held to seek legitimacy because the CGIasked that it be held. (Sri Wahyuni) From rob@milan.essential.org Wed, 11 Oct 2000 13:11:28 -0400 (EDT) Date: Wed, 11 Oct 2000 13:11:28 -0400 (EDT) From: Robert Weissman rob@milan.essential.org Subject: [stop-imf] Focus on Trade: Postcards from Prague FOCUS ON TRADE Number 55, October 2000 Focus-on-Trade is a regular electronic bulletin providing updates and analysis of trends in regional and world trade and finance, with an emphasis on analysis of these trends from an integrative, interdisciplinary viewpoint that is sensitive not only to economic issues, but also to ecological, political, gender and social issues. Your contributions and comments are welcome. Please contact us c/o CUSRI, Wisit Prachuabmoh Building, Chulalongkorn University, Bangkok 10330 Thailand. Tel: (66 2) 218 7363/7364/7365, Fax: (66 2) 255 9976, E-Mail: admin@focusweb.org, Website: http://focusweb.org. Focus on the Global South is an autonomous programme of policy research and action of the Chulalongkorn University Social Research Institute (CUSRI) based in Bangkok. IN THIS ISSUE: Postcards from Prague With friends like this, who needs enemies=20 by Nicola Bullard A World Bank Staffer=92s Odyssey in Kafka=92s Prague The Prague Castle Debate: A Few Questions for Mr=20 Wolfensohn and Mr Kohler by Walden Bello Tough Crowd for IMF, World Bank Leaders in Prague=20 by Steven Pearlstein, Washington Post=20 With friends like this, who needs enemies by Nicola Bullard Hard on the heels of a tough week defending the World Bank against charges that its policies create poverty and promote the interests of corporate capitalism, James Wolfensohn probably had mixed feelings when he turned to page 9 of the International Herald Tribune and saw oil-giant Exxon Mobil declare its support for the Bank (5 October). In a quarter page ad, distinguished only by its lack of design pizzazz, the largest petroleum refining company in the world (and, incidentally, not a member of OPEC whose members have been villainised for keeping oil prices high despite the fact that 58 per cent of global oil production comes from non-OPEC members) quotes the World Bank report "Growth is Good for the Poor" (1) to justify its activities in the Third World. Exxon Mobil we are told, in simple sans serif language, is =93on the side o= f the tide=94 by which they mean that the rising tide of growth =93lifts all boats=94. However, they do not accept the simplistic view that growth per s= e is the silver bullet. No, we are told, what makes the difference is health, education and strong institutions. And if that is not enough to make you glow with gratitude that the third highest earning company in the world cares about the poor, they bring out the violins and push their implied corporate good housekeeping appeal to the limit. =93One direct beneficiary of growth,=94 they assert, =93is children.=94 To prove the poin= t, there is a fabulously simplistic graph showing the dramatic drop in working children as national income rises. Of course, advertising specialises in simplification, but the message clear: Exxon Mobil though its association with the World Bank is a concerned and caring company. What the advertisement doesn't say is that Exxon Mobil is also the major shareholder and principal operator of the controversial Chad Cameroon pipeline. No doubt the children of Chad and Cameroon -- where, respectively, 10 and 27 per cent are in secondary school (World Development Indicators, 2000) -- will benefit enormously from the corporate taxes of Exxon Mobil, whose 1999 end-of-year profit was US $7.91 billion and whose head office is located in Irving, Texas. Meanwhile, the governments of Chad and Cameroon have signed on to $100 million in non-concessional loans with the World Bank and the European Investment Bank simply for the privilege of being a =93partner=94 in the $3.5 billion venture. Let=92s hope oil prices stay up. But aside from rich and powerful corporate buddies like Exxon=20 Mobil, Mr Wolfensohn was hard-pressed to find friends during the=20 World Bank IMF annual meetings in Prague. Prague Castle or the Land of Oz? In what should have been a public relations coup for the Bank and the=20 Fund, the Czech Republic=92s playwright dissident turned president=20 Vaclav Havel invited the critics and the defenders to share a platform=20 at the Prague Castle (see stories below by Walden Bello and Steven=20 Pearlstein).=20 The critics were in top form, but didn=92t say anything that either=20 Wolfensohn and the IMF=92s new managing director Horst Koehler=20 have not already heard a thousand times. Yet they had no comeback.=20 The best Wolfensohn could do was clamber up to the moral high=20 ground and reassure us that he =93has a heart.=94 =93When we go to work in the morning,=94 he said, =93we think that we are= =20 fighting poverty. We do not think that we are responsible for 3 billion=20 people living under $2 a day.=94=20 Wolfensohn also tried to deflect blame by claiming to be =93just a civil=20 servant.=94 He was, admittedly, handed this excuse on a platter by Ann=20 Pettifor of Jubilee 2000 UK when she commented that the real=20 villains, the G7, were not on the podium. But Wolfensohn, who three=20 years ago was claiming personal victory for the transformation of the=20 Bank and is paid in excess of US $360,000 tax free for the pleasure,=20 cannot sidestep his responsibilities or deny his real power so easily. =20 Mr Koehler was no better, but managed =96 probably unwittingly =96 to=20 make a dig at Wolfensohn by saying =93I, too, have a heart," he siad,=20 "but I also have to use my brain to find solutions.=94 (Images of=20 Dorothy swinging down the Yellow Brick Road with this pair as the=20 Tin Man and Straw Man singing =93If I only had a heart, if I only had a=20 brain=94 were irresistible.)=20 After a lot of filler about having spent the first four months on the job= =20 =93listening=94 Koehler=92s thoughtful contribution to the debate was=20 =93Democracy and market oriented policies are the best way to go.=94=20 Although the critics felt victorious, their assessment was vindicated the= =20 next day by the Washington Post=92s report of the debate =93Tough=20 Crowd for IMF, World Bank Leaders in Prague=94 (see below). And in=20 one of life=92s sweet ironies, an IMF staffer was seen at the gates of the= =20 Castle pleading with officials for the Post=92s journalist Steven Pearlstei= n=20 to be allowed in, even though his name was not on the list. =93It is=20 terribly important that the Washington Post cover this event,=94 said the= =20 man from the IMF. Quite so. Inside the meetings, the Bank also had a heavy time of it. Of course,=20 the demonstration =96 before, during and after =96 dominated press=20 conferences, but some disquiet about the Bank=92s expansionist=20 approach also floated to the surface. The Development Committee (the joint ministerial committee of the=20 board of governors of the Bank and the Fund) tugged on the Bank=92s=20 leash, warning that it should =93clarify its agenda=94 and set out key=20 criteria for the Bank=92s involvement in =93global public goods.=94 The G24= =20 was far more critical =96 both of the Bank and of the Bank=92s openness=20 to civil society. Amongst a litany of pointed criticisms, the ministers=20 expressed their concern about the =93ever-mounting political pressures=20 and non-economic considerations that are interfering with the process=20 of approval and implementation of the BWI=92s program and projects.=94=20 But they were also critical of the imbalances that exist in the system,=20 noting the =93application of codes and standards to be highly=20 asymmetric=94 and calling for =93equitable procedures for debt settlement.= =94 And of course the Bank and the Fund would have found few friends=20 amongst the 12,000 activists who joined the overwhelmingly peaceful=20 and festive protest. The convention centre was effectively under siege=20 for six hours and caused such disquiet that the meeting closed one day=20 early. The Bank=92s vice president for external relations Mats Carlsson=20 admitted as much when he explained the early closing to Reuters=20 television, =93We are having a consensus on many of the development=20 issues, but it probably is also prompted by the demonstrations=20 yesterday.=94=20 A curse on all your houses The Bank is also losing support from the establishment press, which=20 formerly championed their neo-liberal rigour and is now clearly=20 contemptuous of what they regard as Wolfensohn=92s woolly=20 =93concessions=94 to the protestors. The post-Prague Financial Times editorial put a =93curse on all your=20 houses=94 when it attacked in one blistering breath (which had all the=20 markings of the splenetic NGO-bashing Martin Wolf) the=20 demonstrators, the Bank and the Third World elites. On the demonstrators, the editorial hysterically asked, =93how is anyone=20 to deal constructively with people who believe that throwing stones is=20 the answer to world poverty.=94 It then lay all the blame for poverty at=20 the feet of =93predatory, indifferent or incompetent elites of the countrie= s=20 where most of the world=92s poor live.=94 (This does beg the question:=20 would the FT support stone throwing at Third World Leaders?)=20 But they keep the true venom for the Bank. After quoting Wolfensohn=20 on poverty, =93[it] is also about lack of voice, lack of representation, it= =20 is about vulnerability to abuse, its is about violence against women and=20 fear of crime. It is about lack of self-esteem=94 the FT imperiously=20 concludes: =93A development institution that believes that poverty is=20 about all this will collapse under its imperial overstretch.=94=20 The Economist was only slightly kinder, noting in a review of the=20 World Bank=92s latest pro-growth publication The Quality of Growth=20 that the Bank=92s central (and in their view correct) development=20 message is getting =93blurred=94 because it is =93bowing to the forces of r= ich- country NGOs and=85 and rich-country governments who care more=20 about seeming enlightened than about doing what is right.=94 Notwithstanding that both the Financial Times and The Economist=20 are clearly incapable of engaging in a sensible discussion about what=20 the critics of the Bank and the Fund are saying and apparently have=20 not even noticed that hundreds of thousands of Zambians, Bolivians=20 and Nigerians agree with the =93uncivilised=94 elements of civil society (2= ),=20 it is heart warming to see them turn on their own children.=20 I was only following orders Wolfensohn's transformation from the Man who Changed the Bank,=20 to a mere functionnaire is not convincing. While he fell short of saying=20 "I was only following orders," he did attempt to paint himself as the=20 well-intentioned man of conscience, trapped between mendacious and=20 corrupt governments, the all-powerful G7, carping NGOs and the=20 world=92s ever growing masses of poor, unemployed and endangered=20 humans.=20 The truth is that the Bank raises 80 per cent of its funds on the private= =20 capital markets and while politics demands that NGOs be mollified,=20 that Third World governments are accommodated and that the poor=20 are, at least, acknowledged, at the end of the day it must be=20 comforting to know that Exxon Mobil is still on your side.=20 (1) The Centre for Economic Policy Research has produced a critique=20 of this report. The full report, "Globalization May Be Good For the=20 Poor-- But are World Bank and IMF Policies Good for Growth?" is=20 available at www.cepr.net , along with the executive summary.=20 (2) The World Development Movement has compiled an invaluable=20 report =93States of Unrest: Resistance to IMF Policies in Poor=20 Countries=94. For full text of report click:=20 http://www.wdm.org.uk/cambriefs/DEBT/unrest.htm (3) The World Bank Bonds Boycott is taking the US by storm.=20 For more information contact Neil Watkins=20 neil@econjustice.net=20 World Bank bonds boycott campaign Center for Economic Justice,=20 1830 Connecticut Ave., NW, Washington, DC 20009.=20 Tel: (202) 299-0020 Fax: (202) 299-0021=20 Web:www.worldbankboycott.org To stay updated on the World Bank bonds boycott, join the listserve: Send blank e-mail to Website=20 A World Bank Staffer=92s Odyssey in Kafka=92s Prague (The following is an insider=92s blow-by-blow account of the World=20 Bank-IMF Annual Meeting in Prague on Dec. 26-28, 2000. The=20 author, a senior World Bank staff member who is a long-time contact=20 of Focus on the Global South, requested anonymity for obvious=20 reasons.) Coming into Prague was impressive because they had the system all=20 set up. Right at the airport you were accredited. As soon as you=20 stepped out of the plane, you were fast-tracked out of customs.=20 Everything was so systematic. Everybody got into fast track. And=20 you got escorts. As you know, they closed all universities that week.=20 And one reason was to get students to act as escorts and guides to=20 delegates. For the whole week. Very good looking escorts. =20 Extremely good looking. In fact, I dated one of them later. Deceptive Calm I have to say that my impression was there was no inkling at least=20 among the people I was in touch with of what was going to come. In=20 fact, the dominant reaction from IMF-WB delegates was that the=20 police were overreacting. I got there Saturday the 23rd,. On the 24th=20 and 25th, nothing was happening. Lots of activities but everybody still=20 felt nothing would happen. I think among the delegates and among=20 the private bankers no one was really expecting anything to happen=20 that coming Tuesday. The debate between [James] Wolfensohn,=20 [Horst] Koehler, and the NGO=92s that President [Vaclav] Havel=20 organized on the 23rd was not well publicized. People I was with had=20 not heard about it. There was a daily schedule called =93Emerging=20 Markets,=94 and it was listed there, but it wasn=92t played up. Only those= =20 like me, who had been tipped off before coming to Prague,=20 understood its significance. I told my boss I wanted to attend, but he=20 said there were more urgent things to pay attention to. Anyway,=20 Saturday and Sunday were so uneventful that everybody felt it would=20 stay this way throughout. Really calm.=20 A Kafkaesque Tuesday Then all of a sudden you had this very dramatic turn of events on=20 Tuesday. Tuesday was the opening day. On Monday, the security=20 system warned that something might happen the following day. But=20 even when the security system started issuing flyers to the delegation=20 rooms, no one believed it. We were warned by the flyers that if we=20 were going to the Congress Center on Tuesday, we would have to be=20 prepared to stay there for a while because a protest could lock in=20 delegates at the Center. But even then I had the sense that no one=20 took that seriously. And I believe that because everybody came to=20 the opening ceremonies the next day. Had it been taken seriously,=20 some people would probably not have shown up. I saw ex-World=20 Bank presidents there coming in with their spouses and big time=20 private bankers, and nobody it seems had taken these warnings=20 seriously. Then close to noon, all of a sudden you had this announcement that=20 the transport system was shutting down. Usually you had these shuttle=20 services between the Congress Center to the hotels every 15 minutes,=20 but all of a sudden these services were shut down. The bridge leading=20 to the main entrance was blocked, and the two other entrances to the=20 Congress Center were also blocked by riot police, who were now=20 very visibly at the center. But the action was still taking place at quite= =20 a distance from the Center. In any case, we couldn=92t leave. One=20 incident was reported. A young delegate from the Japanese=20 government wanted to go out and he just stepped out and tried to go=20 through one of the side openings. They said he was beaten up and=20 sent to the hospital. All of us were warned not to transit in and out,=20 not to even attempt to walk out. =20 There was no clear sign or indication of what would happen next. I=20 saw ex-World Bank presidents walking around not knowing what to=20 do. I asked one former president how he was doing, and he told me=20 that his wife had managed to skip coming to the Center by joining the=20 Prague tour but he was left behind. He didn=92t know what was=20 happening. When I told him about the protests, he became totally=20 disoriented.=20 In any event what was happening was everyone was waiting to get=20 out. They had long run out of numbers in the program. At around=20 7:30 p.m., there was a sudden oral announcement. Everybody should=20 go straight to the metro. The metro had been stopped all day. Now,=20 they told us that the metro had been opened and we all had to go,=20 quickly. What happened was they got this special train to get the=20 delegates to the very last station on the line, where buses were waiting=20 to take the delegates to the reception at the exhibition hall. We were=20 brought in to this big exhibition hall--I don=92t know what you call it. Bu= t=20 when we got there, we were surprised to see that the protesters were=20 already there. This big exhibition hall was supposed to be secure but=20 to our great surprise the protesters had beaten us to the place. And=20 the authorities had not planned for this. When the reception was over,=20 they just wanted to disperse all the delegates, so they ended up=20 bussing us to different parts of Prague, where we were left to our own=20 devices. Many of the people with me were really, really worried, but=20 I was having fun. We finally got to our hotels around 12 midnight. But=20 we still had not known the extent of the protests, and of course once=20 everyone got to the hotel, everyone tuned into CNN and that=92s when=20 we learned about McDonald=92s being trashed. Pleasure or Pain? I was staying at the Renaissance near the Old Town. I had this friend=20 who was staying at the Hilton about 10 minutes away who was still=20 with me, and I just wanted to make sure he got to his hotel safely. So=20 I took off my suit and got into my jeans and more comfortable wear.=20 But he was still in this suit and had this bag with a big IMF logo. =20 While we were walking to his hotel which was 10 minutes away, we=20 met a group of French protesters who started harassing us. Actually if=20 I was actually threatened with physical harm, I would have called out=20 your name and screamed I=92m a friend of one of your leaders. I was=20 ready to do that.. The guy I was with comes from a Third World=20 country, but I told him that saying that you=92re Third World wouldn=92t=20 work, not with your IMF badge. Fortunately, there was a restaurant=20 nearby and I shoved him inside. We had a couple of beers and=20 waited till the French protesters went away and we snuck out.=20 On the way back from his hotel, I ran into another problem. Two=20 prostitutes sidled up to me, and the one to the right of me started=20 rubbing my buttocks. I guess they knew I was a delegate. I don=92t=20 think they were Czechs. They looked like Italians. Maybe they came=20 in with the Italian protesters, since we heard that the Czech security=20 had driven most of the regular prostitutes out of the city. So that=20 evening, it was a question of who got to the delegates first, the=20 prostitutes or the protesters. If you were lucky, you got pleasure. If=20 you were unlucky, you got pain. In any case, we never got to the=20 price. I ran away: who knows, they might have been protesters in=20 disguise! Whose Side Are You on? The following day, very few people went to the Congress Center. =20 Most stayed away. They just stayed in their hotel rooms. They didn=92t=20 even want to go out. But those who did still went out in their suits. I= =20 couldn=92t figure that out. Those of us who were brave enough to go to=20 the Center had to go by a completely different route. Our bus stayed=20 at the back of a tram and it followed this all the way. This was fine=20 with me because I hadn=92t seen the sites of Prague, and the city was=20 beautiful. At the conference center, I got to talking to the student=20 guides. They really didn=92t know what was happening. These kids=20 actually didn=92t know who to side with - the protesters or the=20 delegates? They just wished the whole thing would end. By the way, I=20 noted this attitude even with the police. Whenever I asked the police=20 for directions, they very seldom answered me. I had a sense that they=20 were just as wary of the delegates as they were of the protesters. I=20 think one personal dilemma that both the students and the police had=20 was that they were too young to have experienced the protests of late=20 eighties and didn=92t know what to do about it.=20 As you know, the meeting got cut by a day. During the press=20 conference the next day, they denied that the protests were the=20 reason. They actually said the reason was that things had run so=20 efficiently that they were able to compress everything into two days.=20 The press laughed at this. End of the Affair The real conclusion was the press conference the following day, the=20 28th. At this press conference, both Wolfensohn and Koehler were=20 there to field questions and answers. There was a corps of press=20 reporters keen to pounce on them. The questions from the first were=20 quite pointed. Ranging from very specific to very basic. For instance=20 one reporter from India asked Wolfensohn and Koehler that they had=20 been accused of causing so much misery in the Third World and what=20 did they have to say about that. Wolfensohn said, I don=92t think I am=20 responsible for all that, and if you think so, you=92re misinformed. But= =20 the whole conference was dominated by questions about the protest=20 and not issues. Which means, at least from my perspective, that the=20 objective of the protests had been achieved. They had really=20 distracted the proceedings.=20 A number of the press people said the annual meeting was obsolete=20 and out of control and what did the IMF and WB want to do about=20 this. Wolfensohn responded that although they could have virtual=20 meetings, the personal interaction was still quite important. So that the= =20 Bank would actually continue to have annual meetings. Wolfensohn=20 and Koehler insisted that they had =93gotten through=94 to the NGO=92s and= =20 pictured the Saturday debate at Prague Castle as a big success for=20 them. On the other hand, from my experience watching Wolfensohn=20 for several years, he appeared to be very tired. It seems he had run=20 out of things to say and even his statements to the press were very=20 uninspired. He didn=92t look like the =93Elvis=94 Bono described him to be.= =20 He appeared to be much less enthusiastic. He was repeating many of=20 the old formulas. Maybe the futility of it all had finally gotten to him. = =20 As for Koehler, he was upbeat and very light. No, light is not the=20 word. He appeared to be very na=EFve, that=92s what I want to say. I=20 don=92t think it=92s just his lack of mastery of English. He was talking li= ke=20 a college student about the issues, repeating the same line about him=20 not being a banker but somebody with a heart. Both of them said that=20 the violence had come from a very, very small minority, and that the=20 majority of the protesters were really there because they had=20 something to say. And there were a lot of legitimate arguments being=20 made by them. And that the WB and the IMF would now pay greater=20 focus to their concerns. It was very difficult for me to distinguish=20 between reality and rhetoric because all the time Wolfensohn was=20 playing with his watch.=20 >From my vantage point, in the end, the agenda had been taken over=20 by the protesters. I think Prague created quite an impression with the=20 World Bank-IMF bureaucracy, although this is a much more=20 entrenched bureaucracy than the WTO. I sensed that after Prague, =20 the words of civil society will be taken much more seriously, but=20 whether this will mean real dialogue we still have to find out. The Desert Beckons The next two annual meetings will be in Washington and the third one=20 will be in Dubai. And the head of the Dubai organizing committee said=20 that the temperature would be higher in Dubai than in Prague! He=20 was saying basically that prior to the Prague proceedings, he didn=92t=20 foresee problems in Dubai, but after this, there has to be some=20 rethinking. So it=92s three years away but the impact is already there. I= =20 have a feeling that when the WB-IMF bureaucracy assesses Prague=20 they will wind down the annual meetings. Because their only function=20 is for governors to deliver their speeches, and more and more=20 governors now simply submit written speeches. So I think more and=20 more they will turn it into a virtual meeting.=20 And they will probably try to separate the unofficial events from the=20 official meeting. Because what is most significant about these meetings=20 are the informal business parties. There were at least 15 lavish parties=20 given by the commercial banks for the delegates. Very, very lavish. =20 For many delegates, those were the prime events of the conference.=20 The actual official functions were just pro forma. If I were a=20 protester, by the way, I would have gone to these venues because=20 they were not secured at all. These were the events that everyone=20 went to in the evenings. These were very open venues. And they were=20 listed in the schedule. Now, that would really have stopped the real=20 business of the conference.=20 The Prague Castle Debate: A Few Questions for Mr. Wolfensohn and Mr. Kohler by Walden Bello On September 23, 2000, President Vaclav Havel of the Czech=20 Republic hosted an historic debate between the heads of the Bretton=20 Woods institutions and their civil society critics. The event took place= =20 at the historic Prague Castle=97immortalized in Franz Kafka=92s allegoric= =20 tale The Castle=97a few days before the World Bank-IMF annual=20 meeting in the Czech capital. Attended by about 300 invited guests=20 from governments, the multilateral institutions, the academy, and civil=20 society, the event quickly turned into a heated exchange. The=20 Washington Post reported that =93although [the NGO=92s ] complaints=20 have been heard before, they rarely have been delivered in a setting at=20 once so intimate and so public. And not surprisingly, Wolfensohn and=20 Koehler took it all a bit personally.=94 On one side were Horst Kohler,=20 IMF managing director, World Bank President James Wolfensohn,=20 George Soros, the financier, and Trevor Manuel, South Africa=92s=20 finance minister. On the other side were Katrina Liskova, a=20 representative of militant Czech NGO=92s, Ann Pettifor, head of Jubilee=20 2000 in the United Kingdom, and Walden Bello, executive director of=20 Focus on the Global South. The debate was chaired by Mary=20 Robinson, the United Nations Human Rights Commissioner and=20 former President of Ireland. The following is an edited composite version of the Focus director=92s=20 two lengthy interventions during the debate. Data presented by Bello=20 to support his points were taken from a variety of publications and=20 reports.=20 I would like, first of all, to thank President Havel for staging this=20 debate today, and President Robinson for chairing it. I never thought I would be seating so close to Jim Wolfensohn. I=20 guess this is what you call combat in close quarters. The International Monetary Fund and the World Bank have avoided a=20 real debate with their critics in civil society for a long time. Today, th= e=20 representatives of these two institutions are here, partly because of=20 President Havel=92s moral suasion, partly because they realize that, with= =20 their two institutions suffering an unparalleled crisis of legitimacy=97the= =20 worst in their 56-year history, in fact=97the old strategy of denial and=20 non-confrontation no longer works. In this brief presentation, let me tackle four myths propagated by the=20 Bank and the Fund, and end with questions to Mr. Kohler and Mr.=20 Wolfensohn: Myth No. 1: The World Bank and IMF are proponents of =93good=20 governance.=94 Fact: For the greater part of the last 30 years, the Fund and the Bank=20 have been intimately associated with very corrupt governments and=20 human rights violators. What did the Brazilian military dictatorship,=20 Ferdinand Marcos, Gen. Pinochet, the PRI government in Mexico,=20 and the Suharto regime have in common? They were all governments or heads of governments that were=20 designated by the World Bank as =93countries of concentration=94--that=20 is, countries to which the flow of Bank resources was greater than to=20 other countries of similar size and income. Over the last 30 years, over $30 billion in World Bank funds found its=20 way to the Suharto dictatorship. According to several reports,=20 including a World Bank internal report in 1999, the Bank tolerated=20 corruption, accorded factual status to false government statistics, =20 legitimized the dictatorship by passing it off as a model for other=20 countries, and was complacent about the state of human rights and the=20 economy. This happened under your watch, Mr. Wolfensohn, and=20 the people of Indonesia will never forgive the Bank. Myth No. 2: The IMF and the World Bank are concerned with the=20 degradation of the environment. Fact: Again and again, studies of the impact of IMF-World Bank=20 structural adjustment programs have shown that, by institutionalizing=20 stagnation and high poverty levels, they have been among the biggest=20 contributors to environmental degradation in developing countries. In=20 my country, the Philippines, for instance, so deep was the crisis =20 triggered in the mid-1980=92s by structural adjustment in both the=20 countryside and the cities that the population flow shifted away from=20 the cities to open access forests, watersheds, and artisanal fisheries,=20 severely destabilizing them in the process. Studies show that by the=20 early nineties, the top 15 Third World debtors--all of which were=20 subjected to structural adjustment--had tripled the rate of the=20 exploitation of their forests since the late 1970s, a phenomenon that=20 was undoubtedly caused by the adjustment program=92s pushing=20 countries to rapidly increase their export earnings to pay off the=20 foreign debt.=20 It is not sensitivity to the environment that is demonstrated by Mr.=20 Wolfensohn and the World Bank management=92s unyielding support=20 for the Chad-Cameroon Pipeline, which will seriously damage=20 ecologically sensitive rainforests like Cameroon=92s Atlantic Littoral=20 Forest. It is not concern for the environment that was revealed by=20 the World Bank=92s violation of its own rules on environmental=20 assessment, involuntary resettlement, indigenous peoples, and=20 environmental assessment in its failed attempt to push through the=20 China Western Poverty Project that would have transformed an arid=20 ecosystem supporting Tibetan and Mongolian sheepherders into land=20 for settled agriculture for Chinese migrants. A look at the Bank=92s loan portfolio would reveal the reality behind the= =20 rhetoric: loans for the environment as a total of the Bank=92s total loan= =20 portfolio declined from 3.6 per cent in FY 1994 to 1.02 per cent in=20 1998; funds allocated to environmental projects declined by 32.7 per=20 cent between 1998 and 1999; and more than half of all lending by the=20 World Bank=92s private sector divisions in 1998 was for=20 environmentally harmful projects like mining, roads, and power. Indeed, so marginalized is the Bank=92s environmental staff within the=20 bureaucracy that Herman Daly, the distinguished ecological=20 economist, left the Bank staff because he felt he and other in-house=20 environmentalists were having very little impact on Bank policy. Myth No. 3: The Fund and the Bank are dedicated to combating=20 poverty. Fact: The opposite is true: the IMF and the Bank are central to=20 creating poverty. Structural adjustment programs imposed on over 90 developing and=20 transition economies in the last 20 years have institutionalized=20 economic stagnation, increased poverty, and exacerbated inequality in=20 these areas. A recent World Bank study, in fact, admits that poverty=20 worsened in the 1990=92s in Eastern Europe, Subsaharan Africa, Latin=20 America and the Caribbean, and South Asia=97all regions which have=20 come under the sway of World Bank-IMF adjustment programs. =20 Indeed, so bad was the record of adjustment programs that the IMF=20 renamed the Extended Structural Adjustment Facility (ESAF) the=20 Poverty Reduction and Growth Facility during the World Bank-IMF=20 meeting in September 1999. So devoid of success was the structural=20 adjustment approach that Larry Summers, the US Treasury=20 Secretary, who, as chief economist of the Bank in the early 1990=92s,=20 was a partisan of adjusment, admitted to the US Congress last year=20 that it was time to shelve the =93IMF-centered=94 macroeconomic=20 approach because it just was not working. Recently, the IMF has been busy creating poverty in East Asia. =20 There is now a consensus that the harsh program of high interest rates=20 and budget cutbacks imposed by the Fund turned an economic crisis=20 into a full-blown recession that saw negative growth rates in Thailand,=20 Indonesia, and South Korea accompanied by a sharp rise in=20 unemployment and the poverty rate. At least 1 million people fell into=20 poverty in Thailand and 21 million in Indonesia. In Korea, the trend=20 of declining poverty rates between 1975 and 1995 was sharply=20 reversed in 1998, and the recession led to a suicide rate in 1998 that=20 was 59.4 higher than in 1997. As for the World Bank, the truth about Mr. Wolfensohn=92s crusade to=20 end global poverty was revealed by the findings of the bipartisan=20 Meltzer Commission mandated by the US Congress to look at the=20 record of the Bretton Woods institutions: 70 per cent of the Bank=92s=20 non-grant lending is concentrated in 11 countries, with 145 other=20 member countries left to scramble for the remaining 30 per cent; 80=20 per cent of the Bank=92s resources are devoted not to the poorest=20 developing countries but to the better off countries that have positive=20 credit ratings and can raise their funds in private capital markets; the=20 failure rate of Bank projects is 65-70 per cent in the poorest countries=20 and 55-60 per cent in all developing countries. So why does the Bank continue to pontificate about going about its=20 =93noble mission=94 to end poverty? Because it has learned from Joseph=20 Goebbels that a lie repeated often enough eventually attains the status=20 of truth. Myth No. 4. The Fund and the World Bank are actively soliciting the=20 help of civil society. The truth is that the World Bank and IMF are mainly interested in=20 using civil society to legitimize their unchanged approaches via=20 consultations that are really monologues. The Bank and the Fund are=20 more interested in splitting civil society opposition to their projects,=20 and they do this by branding some civil society groups as =93reasonable=20 NGO=92s=94 and their more militant critics as =93unreasonable NGO=92s=94=20 interested only in =93closing down discussion.=94 Certainly, dialogue with= =20 NGO=92s was not the intent of Mr.Wolfensohn when he avoided debate=20 on the merits and demerits of the Chad Cameroon Pipeline in favor of=20 a strategy of name-calling by branding opponents of the project as the=20 =93Berkeley Mafia.=94 Let me end by addressing the question: Are the Fund and the Bank=20 capable of reform? I think we will know the answer from Mr. Kohler=20 and Mr. Wolfensohn=92s answers to the following questions: - Mr. Kohler, do you propose to give greater decisionmaking power=20 in the IMF Board to the developing countries? Will you do this by=20 diluting the voting power of the United States and the European Union=20 countries that now dominate the board? - Mr. Kohler, will you propose ending the medieval and non- transparent practice of the IMF always being headed by a European? - Mr. Wolfensohn, will you advocate doing away with the equally=20 medieval and non-transparent tradition of always having an American=20 head the World Bank? I would like to remind the audience that had=20 Mr. Wolfensohn not given up his Australian citizenship to become an=20 American, he would never have become head of the Bank. - Mr. Wolfensohn, why did you not stand by your chief economist=20 Joe Stiglitz and allow that powerful voice of reform to be pushed out=20 of his staff position and later from his advisory role by influential=20 conservative forces both within and without the Bank? - Mr. Wolfensohn, what about Ravi Kanbur, who headed the World=20 Development Report Project? Why did you not stand by this=20 advocate of reform and allow the conservative forces in the Bank to=20 stonewall him and leave him no other option but resignation? So far, what we have been told here today is that Mr. Wolfensohn=20 feels good about going to work everyday and that Mr. Kohler also=20 has a heart. This frothy stuff is not the response that we in civil societ= y=20 are looking for today. We want hard answers to hard questions. =20 Please. Tough Crowd for IMF, World Bank Leaders in Prague=20 by Steven Pearlstein Washington Post=20 PRAGUE, Sept. 23 =96=96 Although he has been a head of state for=20 more than a decade now, Vaclav Havel still has the instincts of the=20 playwright he once was, for creating great political theater. This morning, Havel set his latest play on the grounds of Prague=20 Castle in a building constructed by the Habsburgs for playing=20 badminton. There, with Havel looking on, the heads of the=20 International Monetary Fund and the World Bank--in Prague for their=20 semiannual meetings--heard directly from critics who accused them of=20 coddling tyrants, despoiling the environment and spreading poverty. "Yes, Mr. Wolfensohn, under your watch you helped to legitimize the=20 Suharto dictatorship [of Indonesia], and that is something the world=20 will never forgive," said Walden Bello, a Philippine scientist and=20 human-rights activist, addressing World Bank President James=20 Wolfensohn, who was sitting beside him. Minutes before, Katrina Liskora, a Czech student, told Horst=20 Koehler, the German who is head of the IMF, that if the World Bank=20 and IMF had applied their current economic policies to Europe after=20 World War II, "we'd still be living with food rationing today." And by the end of the 90-minute session, the chairman of Friends of=20 the Earth International told Wolfensohn that he and his colleagues--in=20 their enthusiasm for building dams in Third World countries--were=20 personally responsible for killing 400 people and displacing 10 million=20 more. Although these complaints have been heard before, they rarely have=20 been delivered in a setting at once so intimate and so public. And not=20 surprisingly, Wolfensohn and Koehler took it all a bit personally. "I must say that when we go to work every day, we have a rather=20 different view of what we do," replied Wolfensohn, a former=20 investment banker with a long history of philanthropy and civic=20 activism. "We don't think we're responsible for the fact that there's=20 global warming or that there are 3 billion people who live on less than=20 $2 a day. We're not a world government." "I have a heart, but I also must use my brain to find solutions," said=20 Koehler at another point, making clear that his view that economic=20 policy requires more than just empathy. Surprisingly, it was Ann Pettifor, an advocate for Third World debt=20 relief, who delivered the most spirited defense of the international=20 bankers, albeit a left-handed one. Her point was that it was really=20 U.S. Treasury Secretary Lawrence H. Summers and the European=20 finance ministers who effectively set the rules of global capitalism. After the formal presentations, the actors left the stage and continued=20 their dialogue while strolling the shaded grounds of the castle.=20 Billionaires such as George Soros mixed with backpack-carrying=20 student protesters, while South Africa's finance minister sipped wine=20 with human rights activists from Indonesia. At times it all had a surreal quality as tuxedoed waiters passed drinks=20 while occasional music was provided by roving bands of gypsy=20 fiddlers, chanting monks and a flutist strolling around with a basket=20 over his/her head. When it was all over, Havel said he was satisfied that the gathering=20 had helped civilize the dialogue between the globalizers and their=20 critics, but he had no illusion of heading off the massive street=20 demonstrations planned for Monday. "We are only in the first act," the playwright-president said. He=20 wouldn't say how he thought it would turn out. =A9 2000 The Washington Post=20 =20 Focus on the Global South (FOCUS) c/o CUSRI, Chulalongkorn University=09 Bangkok 10330 THAILAND Tel: 662 218 7363/7364/7365=09 Fax: 662 255 9976=09=09 E-mail: admin@focusweb.org Web Page http://www.focusweb.org =20 Staff email addresses: ---------------------- Walden Bello=09=09W.Bello@focusweb.org Chanida Bamford=09C.Bamford@focusweb.org Chris Adams C.adams@focusweb.org Nicola Bullard N.Bullard@focusweb.org Shalmali Guttal S.Guttal@focusweb.org Minar Pimple Minar@focusweb.org Praphai Jundee P.Jundee@focusweb.org Joy Chavez J.Chavez@focuweb.org Aileen Kwa A.Kwa@focusweb.org Marco Mezzera M.Mezzera@focusweb.org Soontaree Narkviroj Soontaree@focusweb.org Jim Charoonpatarapong Jim@focusweb.org Ranee Hassarungsee Ranee@focusweb.org Mayuree Ruechakieattikul Nok@focusweb.org Jacques-chai Chomthongdi Jacques-chai@focusweb.org ____________________________________________________ ___________________________________________________________ T O P I C A The Email You Want. http://www.topica.com/t/16 Newsletters, Tips and Discussions on Your Favorite Topics From rob@milan.essential.org Wed, 11 Oct 2000 13:49:44 -0400 (EDT) Date: Wed, 11 Oct 2000 13:49:44 -0400 (EDT) From: Robert Weissman rob@milan.essential.org Subject: [stop-imf] AFL-CIO letter to the Treasury Department Against User Fees October 11, 2000 Timothy Geithner Under Secretary for International Affairs U.S. Treasury Department 1500 Pennsylvania Avenue, N.W. Washington, D.C. 20220 Dear Under Secretary Geithner: The AFL-CIO strongly supports deep debt relief for developing countries. We have worked closely with Jubilee 2000, the Congress, and the Administration to secure full funding for the U.S. portion of the enhanced HIPC debt relief initiative this year. I believe we are close to achieving our goal, and we appreciate the hard work you and your colleagues have done to make debt relief a reality. But debt relief will not effectively promote growth and reduce poverty in developing countries if its receipt is conditioned on the adoption of policies that stunt development and harm the poor. The IMF and the World Bank currently require some borrowing countries, including HIPC countries, to impose or expand user fees on primary education and health care as a condition for receiving loans and relief. Research has shown that these user fees provide little revenue for developing country governments and impose long-term costs on school attendance and basic health. Whether these fees are called by a different name - such as "cost sharing"or "community financing" - or combined with exemption programs for some service users, the result is too often the same: the poor simply do not receive the basic services they need, children do not go to school, and poor families are turned away from hospitals and clinics. The World Bank's own Operations and Evaluation Department and its most recent World Development Report have recognized the limited utility of exemption programs in mitigating the harm caused by these user fees. Even World Bank President James Wolfensohn has recognized the need to reform the World Bank's policy on user fees. The United States government must use this opportunity to stand up on the right side of this issue. The IMF and World Bank should not condition one dollar of debt relief or development financing on the creation, expansion, or continuation of a user fee program by a borrowing country. No loan agreement, decision point document, or poverty reduction strategy paper should contain such a requirement, and the United States must make it clear to the Bank and the Fund that future support for these initiatives will depend on the institutions' assurances that users fees have been eliminated. Of course, the U.S. Executive Directors must also be instructed to vote against any program or document that includes user fees. Finally, the Treasury Department must report to Congress each year on progress made in eliminating user fees, and the voting record of the U.S. Executive Directors in this regard. Ending the imposition of user fees by the IMF and the World Bank will help ensure that debt relief and development financing are not only more generous, but also more effective. We look forward to working with you and the Congress to reach a consensus on this important issue. Sincerely, David A. Smith, Director Department of Public Policy From rob@milan.essential.org Thu, 12 Oct 2000 15:10:14 -0400 (EDT) Date: Thu, 12 Oct 2000 15:10:14 -0400 (EDT) From: Robert Weissman rob@milan.essential.org Subject: [stop-imf] Final draft of letter to Summers on user fees - long list of signers > October 12, 2000 > > To Lawrence Summers, Secretary of the Treasury > > Dear Secretary Summers: > > We write to you at a crucial moment to urge you to support an important > provision of the House Foreign Operations appropriations bill concerning > "user fees" in IMF and World Bank programs. This bill will soon be > submitted to a conference committee for reconciliation with the Senate > version, and the Treasury Department's advice will be a significant factor > in their negotiations. > > User fees for primary health and education remain a component of many IMF > and World Bank structural adjustment programs, of some HIPC debt relief > agreements, and of many World Bank health and education sector loans. The > evidence from the countries of Africa, Latin America, and Asia > demonstrates that these fees have had a catastrophic impact on the > capacity of the world's most impoverished people to obtain health care and > send their children, especially girls, to school. We strongly believe > that moves to eliminate these fees are needed to realize the promise of > debt relief: to relieve the heavy burdens on the world's poor and increase > their access to education and health services. > > Section 588 of the House's legislation requires that the IMF and World > Bank certify that none of their programs include requirements for user > fees (also known as "cost recovery," "community financing" and "cost > sharing"). We urge you to ensure that the strongest possible language > opposing user fees and service charges for primary education and primary > health care is included in the final bill so that user fees for essential > services will be eliminated as soon as possible. We also urge that you > publicly express to the Bank and Fund and their member governments U.S. > opposition to including user fees for basic services, and that the > Treasury Department report to Congress on progress made in eliminating > these fees. This use of the United States's considerable influence will > be essential if debt relief for the world's poor countries is to have its > greatest impact. > > Thank you for your consideration of how our government's actions can help > eliminate these barriers to people meeting their most basic needs. > > Sincerely, > > [see list below and on succeeding pages] > > cc: Congressional conferees on Foreign Operations Appropriation > legislation > > > SIGNERS: > > RESULTS > Washington, DC > > Friends of the Earth - U.S. > Washington, DC > > Global Exchange > San Francisco, California > > > > Jubilee 2000/ USA > Washington, DC > > 50 Years Is Enough Network > Washington, DC > > Presbyterian Church USA > Washington, DC > > > Institute for Agriculture and Trade Policy > Minneapolis, Minnesota > > Alliance for Democracy > Waltham, Massachusetts > > Local 2249 International Brotherhood of Electrical Workers > Bloomington, Indiana > > Cross Cultural Networks > New York, New York > > Sacramentans for International Labor Rights > Sacramento, California > > Witness for Peace-MidAtlantic > Lewes, Delaware > > Congregation Justice Committee - Sisters of the Holy Cross > Notre Dame, Indiana > > Alliance for Justice, Medical Mission Sisters > Washington, DC > > Benedictine Sisters > Erie, Pennsylvania > > Pax Christi > St. Cloud, Minnesota > > George Washington Univ. Action Coalition and Progressive Student Union > Washington, DC > > Jesus Christ, Prince of Peace Parish - Social Justice and Peace Commission > > Clinton, Iowa > > Grassroots International > Boston, Massachusetts > > Chicago Religious Leadership Network > Chicago, Illinois > > Food First/Institute for Food and Development Policy > Oakland, California > > > U.S. Representative Al Wynn > Maryland (4th District) > > Theatre of Man, ETC > San Francisco, California > > Eighth Day Center for Justice > Chicago, Illinois > > Nicaragua Network > Washington, DC > > Economic Justice Now > Bay Area (San Francisco/Oakland/San Jose) California > > Sisters of the Holy Cross > Notre Dame, Indiana > > West African Girls Empowerment (WAGE) > Oakland, California > > New Hampshire Consumer Utility Cooperative > Warner, New Hampshire > > White River Central Labor Council > Bloomington, Indiana > > Casa Baltimore/Limay > Baltimore, Maryland > > The Ruckus Society > Berkeley, California > > Coalition Against Global Exploitation (CAGE) > Baltimore, Maryland > > InterReligious Task Force on Central America > Cleveland, Ohio > > Development GAP > Washington, DC > > Franciscans International - North America > Milwaukee, Wisconsin > > ACT UP Philadelphia > Philadelphia, Pennsylvania > > Hunger Network in Ohio > Columbus, Ohio > Mennonite Central Committee - U.S. > Washington, DC > > Center for Economic Justice > Albuquerque, New Mexico > > Houston Fellowship of Reconciliation > Houston, Texas > > Sustain the Sisala > Denver, Colorado > > Canto Grande > Utica, New York > > Holy Cross Justice Office > Notre Dame, Indiana > > South Central Indiana Jobs with Justice > Bloomington, Indiana > > Southern California Fair Trade Network > Los Angeles, California > > International Rivers Network > Berkeley, California > > Peace Coalition of Southern Illinois > Carbondale, Illinois > > Africa Faith and Justice Network > Washington, DC > > Resource Center of the Americas > Minneapolis, Minnesota > > Network in Solidarity with the People of Guatemala > Washington, DC > > International League for Peace and Freedom Mary Wood Branch > Springfield, Illinois > > Committee in Solidarity with the People of El Salvador (CISPES) > New York, New York > > Network for Environmental and Economic Responsibility - United Church of > Christ > Wheaton, Maryland > Student Environmental Action Coalition > Philadelphia, Pennsylvania > > United for a Fair Economy > Boston, Massachusetts > > International Forum on Globalization > San Francisco, California > > Boston Global Action Network > Boston, Massachusetts > > Franciscan Justice and Peace Office - > St. John the Baptist Province > Cincinnati, Ohio > > Witness for Peace > Washington, DC > > Sisters of St. Joseph > Carondelet, California > > Mobilization Against AIDS International > San Francisco, California > > Sisters of St. Joseph of Carondelet, St. Louis Province (Social Justice > Office) > St. Louis, Missouri > > Beyond Borders > Philadelphia, Pennsylvania > > Maryknoll Office for Global Concerns > Washington, DC > > Quest for Peace/Quixote Center > Hyattsville, Maryland > > Sacramento Activists for Democratic Trade > Sacramento, California > > Haiti Reborn/Quixote Center > Hyattsville, Maryland > > Homes Not Jails > Washington, DC > > Jubilee 2000 Afrika Campaign USA > Washington, DC > > Women's International League > for Peace and Freedom, US Section > Philadelphia, Pennsylvania > > Globalization Challenge Initiative > Silver Spring, Maryland > > Sisters of St. Joseph > Nazareth, Michigan > > Minnesota Fair Trade Coalition > Minneapolis, Minnesota > > NICCA > Oakland, California > > School Sisters of Notre Dame > Baltimore, Maryland > > Mission Oblates of Mary Immaculate > Washington, DC > > Committee For Academic Freedom in Africa > Portland, Maine > > Action for Community & Ecology in the Regions of Central America (ACERCA) > Burlington, Vermont > > Committee for Health Rights in the Americas > San Francisco, California > > Essential Action > Washington, DC > > BankBusters > Boston, Massachusetts > > National Women's Health Network > Washington, DC > > Pesticide Action Network North America > San Francisco, California > > Sisters of Charity of Cincinnati > Cincinnati, Ohio > > Mexico Solidarity Network > Chicago, Illinois > > > Rainforest Action Network > San Francisco, California > > Office for World Mission, Archdiocese of Mlwaukee > Milwaukee, Wisconsin > > Sisters of the Holy Names of Jesus and Mary > New York Province > > Religious Task Force on Central America and Mexico > Washington, DC > > Peace and Justice Commission - St. John the Evangelist Roman Catholic > Church, Lower Makefield, Pennsylvania > > St. Louis Jubilee 2000 International Debt Cancellation > St. Louis, Missouri > > Sisters of St. Francis > Tiffin, Ohio > > Connecticut Global Action Network > Hartford, Connecticut > > MassAction > Amherst, Massachuetts > > New England Global Action network > Worcester, Massachusetts > > Jubilee Chicago > Chicago, Illinois > > McKeever Institute of Economic Policy Analysis > Oakland, California > > Marin Interfaith Task Force on Central America > Marin County, California > > Sisters of the Holy Names USA Justice & Peace Network > Silver Spring, Maryland > > Alliance for Global Justice > Washington, DC > > Church of the Bretheren > Washington, DC > > Southern California Ecumenical Council > Pasadena, California > > Peace and Justice Task Force -Rocky Mountain Conference, United Church of > Christ > Arvada, Colorado > > Platteville Mateare Sister Communities Project > Platteville, Wisconsin > > First United Methodist Church > North Carolina > > First Baptist Church > Pittsburgh, Pennsylvania > > Denver Justice & Peace Committee > Denver, Colorado > > Campaign for Labor Rights > Washington, DC > > Nicaragua-U.S. Friendship Office > Washington, DC > > Mission San Jose Dominicans > > Shalom North America > > Sisters of Notre Dame de Namur > > Grandmothers for Peace International > > Quantum Leap 2000 > > Project Health for Leon, Nicaragua > > Counterpart International > > Safe Earth Alliance > > Jubilee 2000 USA Michigan Coalition > > Sisters of Mercy U.S. Province > > > > > International Supporters: > > Kenya Human Rights Commission > Nairobi, Kenya > > Agir ici pour un monde solidaire > Paris, France > > Fondation Danielle Mitterrand > Paris, France > > Daughters of Mumbi > Kiambu, Kenya > > SURVIE > Paris, France > > ASPAL > France > > Les Amis de la Terre (Friends of the Earth-France] > Paris, France > > Both ENDS > Amsterdam, The Netherlands > > Jesuit Centre for Theological Reflection > Lusaka, Zambia > From rob@essential.org Fri, 13 Oct 2000 08:07:20 -0700 Date: Fri, 13 Oct 2000 08:07:20 -0700 From: Robert Weissman rob@essential.org Subject: [stop-imf] [Fwd: Alert: Call White House to block user fees] This is a multi-part message in MIME format. --------------786DB96C691BF31840FC1CBF Content-Type: text/plain; charset=us-ascii; x-mac-type="54455854"; x-mac-creator="4D4F5353" Content-Transfer-Encoding: 7bit --------------786DB96C691BF31840FC1CBF Content-Type: message/rfc822 Content-Transfer-Encoding: 8bit Content-Disposition: inline Return-Path: Received: from genoa.essential.org (genoa.essential.org [216.0.124.11]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id KAA27595 for ; Fri, 13 Oct 2000 10:06:08 -0400 Received: from essential.org (pictus.essential.org [216.0.124.29]) by genoa.essential.org (8.9.3/8.9.3) with ESMTP id KAA24560 for ; Fri, 13 Oct 2000 10:06:03 -0400 Message-ID: <39E71650.72DD2926@essential.org> Date: Fri, 13 Oct 2000 07:04:00 -0700 From: Robert Weissman X-Mailer: Mozilla 4.7C-CCK-MCD {C-UDP; EBM-APPLE} (Macintosh; I; PPC) X-Accept-Language: en MIME-Version: 1.0 To: rob@essential.org Subject: Alert: Call White House to block user fees Content-Type: text/plain; charset=iso-8859-1; x-mac-type="54455854"; x-mac-creator="4D4F5353" Content-Transfer-Encoding: 8bit The final stage of the campaign to have the US Congress block the IMF and World Bank impose user fees for healthcare and basic education is upon us. So far, we've generated impressive support: the AFL-CIO has sent a strong letter opposing user fees; 120 NGOs, including Jubilee 2000 USA, signed a letter (in a 24-hour period!) encouraging the Treasury Department to allow language to stop user fees in the foreign appropriations bill; and two dozen Democratic members of the House of Representatives asked the key Democratic appropriations committee members to support the language opposing user fees. But strong forces in Treasury and elsewhere continue to oppose our efforts. With Congress out of session until Tuesday, there is time to weigh in with the White House, and tell them to stop blocking the humanitarian effort to end user fee cruelty. For those in the United States, please take two minutes to call the White House comment line at 202-456-1111. Use the message detailed in the action alert from Results which follows. Calls should be placed today (Friday the 13th) or Monday, Oct. 16. RESULTS ALERT: CALL THE WHITE HOUSE ELIMINATE WORLD BANK and IMF USER FEES Among the most painful and damaging policies imposed on poor countries by the International Monetary Fund and the World Bank are "user fees" for basic education and health care. User fees (fees to use a health clinic or attend school) have led to increased illness, suffering and death when people cannot pay for health services, and to millions of children, especially girls, not going to school because their families cannot afford to send them. Despite the fact that user fees mean millions of poor people locked out of critical basic services, user fees have been aggressively promoted by the World Bank and International Monetary Fund, and are often a condition for poor countries getting new loans and debt relief. In Zambia, a researcher witnessed the arrival of a 14 year-old boy at a hospital, suffering from acute malaria. His parents were unable to pay the registration fee of ZK300 (equivalent to 33 cents US) and the boy was turned away. Within two hours the boy was brought back dead. STATUS IN CONGRESS: The House version of the foreign aid spending bill for 2001 currently has language requiring the International Monetary Fund and World Bank to certify, by 2002, that none of their loans or debt relief agreements impose user fees on borrowing nations. The U.S. Treasury is opposed to this language. Our allies in Congress are pushing to retain strong language in the final bill to eliminate these Bnak and IMF-imposed user fees. ACTION: Please call the White House comment line, 202-456-1111. Follow prompts to get a real person. Heres the message: Please dont let Treasury block House language in the foreign aid spending bill which prohibits IMF and World Bank user fees for basic health care and education. Tell the President to please make sure that the Treasury Department agrees to binding Congressional language to eliminate World Bank and IMF user fees. You might add a personal message such as: Children and families in the worlds poorest countries have a right to health care and education. This right must not be negated by imposing user fees for these services. --------------786DB96C691BF31840FC1CBF-- From rob@essential.org Mon, 16 Oct 2000 08:21:47 -0700 Date: Mon, 16 Oct 2000 08:21:47 -0700 From: Robert Weissman rob@essential.org Subject: [stop-imf] Alert: Call White Hosue to block user fees The final stage of the campaign to have the US Congress block the IMF and World Bank impose user fees for healthcare and basic education is upon us. So far, we've generated impressive support: the AFL-CIO has sent a strong letter opposing user fees; 120 NGOs, including Jubilee 2000 USA, signed a letter (in a 24-hour period!) encouraging the Treasury Department to allow language to stop user fees in the foreign appropriations bill; and two dozen Democratic members of the House of Representatives asked the key Democratic appropriations committee members to support the language opposing user fees. But strong forces in Treasury and elsewhere continue to oppose our efforts. With Congress out of session until Tuesday, there is time to weigh in with the White House, and tell them to stop blocking the humanitarian effort to end user fee cruelty. For those in the United States, please take two minutes to call the White House comment line at 202-456-1111. Use the message detailed in the action alert from Results which follows. Calls should be placed today Monday, Oct. 16. RESULTS ALERT: CALL THE WHITE HOUSE ELIMINATE WORLD BANK and IMF USER FEES Among the most painful and damaging policies imposed on poor countries by the International Monetary Fund and the World Bank are "user fees" for basic education and health care. User fees (fees to use a health clinic or attend school) have led to increased illness, suffering and death when people cannot pay for health services, and to millions of children, especially girls, not going to school because their families cannot afford to send them. Despite the fact that user fees mean millions of poor people locked out of critical basic services, user fees have been aggressively promoted by the World Bank and International Monetary Fund, and are often a condition for poor countries getting new loans and debt relief. In Zambia, a researcher witnessed the arrival of a 14 year-old boy at a hospital, suffering from acute malaria. His parents were unable to pay the registration fee of ZK300 (equivalent to 33 cents US) and the boy was turned away. Within two hours the boy was brought back dead. STATUS IN CONGRESS: The House version of the foreign aid spending bill for 2001 currently has language requiring the International Monetary Fund and World Bank to certify, by 2002, that none of their loans or debt relief agreements impose user fees on borrowing nations. The U.S. Treasury is opposed to this language. Our allies in Congress are pushing to retain strong language in the final bill to eliminate these Bnak and IMF-imposed user fees. ACTION: Please call the White House comment line, 202-456-1111. Follow prompts to get a real person. Heres the message: Please dont let Treasury block House language in the foreign aid spending bill which prohibits IMF and World Bank user fees for basic health care and education. Tell the President to please make sure that the Treasury Department agrees to binding Congressional language to eliminate World Bank and IMF user fees. You might add a personal message such as: Children and families in the worlds poorest countries have a right to health care and education. This right must not be negated by imposing user fees for these services. From rob@essential.org Mon, 16 Oct 2000 11:57:44 -0700 Date: Mon, 16 Oct 2000 11:57:44 -0700 From: Robert Weissman rob@essential.org Subject: [stop-imf] Fischer on Latin America This is a multi-part message in MIME format. --------------61B16BC4C0D09D972A6D6CDF Content-Type: text/plain; charset=us-ascii; x-mac-type="54455854"; x-mac-creator="4D4F5353" Content-Transfer-Encoding: 7bit --------------61B16BC4C0D09D972A6D6CDF Content-Type: message/rfc822 Content-Transfer-Encoding: 7bit Content-Disposition: inline Return-Path: Received: from genoa.essential.org (genoa.essential.org [216.0.124.11]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id JAA27380 for ; Fri, 13 Oct 2000 09:55:36 -0400 Received: from essential.org (pictus.essential.org [216.0.124.29]) by genoa.essential.org (8.9.3/8.9.3) with ESMTP id JAA24382 for ; Fri, 13 Oct 2000 09:55:32 -0400 Message-ID: <39E713D8.D48AB405@essential.org> Date: Fri, 13 Oct 2000 06:53:29 -0700 From: Robert Weissman X-Mailer: Mozilla 4.7C-CCK-MCD {C-UDP; EBM-APPLE} (Macintosh; I; PPC) X-Accept-Language: en MIME-Version: 1.0 To: rob@essential.org Subject: Fischer on Latin America Content-Type: text/plain; charset=us-ascii; x-mac-type="54455854"; x-mac-creator="4D4F5353" Content-Transfer-Encoding: 7bit Latin America 2000 Stanley Fischer First Deputy Managing Director International Monetary Fund Given at the LACEA 2000 Conference Rio de Janeiro, October 12, 2000 Introduction It is a pleasure to have been invited to talk today on Latin America, at this fifth LACEA annual conference. The success of the annual LACEA conference is evident from the program and attendance at this event, and I would like to congratulate the founders - among them Guillermo Calvo, Ricardo Hausmann, and Nora Lustig - and the officers of LACEA for their initiative in developing this event, and for the success it has so rapidly become. It is an extra pleasure that this conference takes place in Rio, at a time when the recovery of the Brazilian economy proceeds apace, and when it is once again possible to look to the longer-term growth of Brazil. It is also a time of marked differences in economic performance among Latin American economies, which implies that the economic situation in the region is even more than usually interesting - and which means that there are many opportunities for interesting applied research work of the type LACEA supports. Comparative advantage suggests that I should talk about policy issues, and that is the task the organizers assigned me: to discuss policy challenges for the twenty-first century. As the old saying goes, it is difficult to make predictions, especially about the future. So I will focus on the current situation and some of its difficulties, and then discuss the key challenges facing Latin American countries. I will start by describing the global environment, including emerging market trends for Latin America; then turn to economic developments in the region; and finally discuss longer-term economic and political economy issues. I. The global environment After the storms of 1994-1999, the current global economic environment for Latin America and other emerging market countries looks unusually calm. There was a period of uncertainty in the spring over the strength of US growth and the outlook for interest rates, and recent increases in oil prices have caused concerns about the outlook for 2001, but the basic outlook remains favorable. The US appears to be heading for a soft landing, growth has picked up in Europe, and recovery also seems slowly to be taking hold in Japan. In the WEO, whose forecasts are now over a month old, we expected the world economy to grow 4.7 per cent this year and 4.2 per cent in 2001 - the best performance for more than a decade. Both those forecasts would be shaded down a bit now, especially that for 2001, largely on the basis of higher oil prices, and some signs of a reduction of growth momentum in Europe. Sustained higher oil prices, say prices higher by five dollars than those assumed in the WEO (which were $26 for 2000, declining thereafter), would reduce world growth by about 0.4 percentage points. World trade is also expected to grow healthily, by 10 per cent this year and almost 8 per cent next year. Continued strong demand from the US - the principal industrialized country trading partner for most Latin American nations - is making an important contribution. Latin America as a whole has gained from recent developments in commodity prices, although the impact varies greatly from country to country, especially as between oil importers and exporters. Copper and wheat prices have risen by about 25 per cent, while coffee and corn prices have fallen. The overall effect has been an improvement in Latin America's terms of trade of around 5 per cent. Emerging market trends The signs of a gradual slowing of growth in the US to more sustainable levels, and the associated easing of interest rate jitters, have contributed also to a more benign environment in the capital markets. Latin American bond issuance rebounded strongly after the spring, topping $7bn a month in July and August. The $45bn issued so far this year is well ahead of the $35bn total for 1999. Within this total, a number of small countries, for example Uruguay, have managed to launch successful issues. However, we should note that the increased volume of gross issues includes exchanges of existing debt for new titles at longer maturities and lower spreads, for example by Argentina, Brazil and Mexico, so that net flows have been smaller than gross flows. Turning to borrowing costs, the EMBI spread for Latin America has resumed a slow downward trend after spiking in the spring. In recent weeks the spread has averaged 600-650 basis points, 10 per cent above the end-1999 level, and 25 per cent above the levels recorded before the Russian crisis (but well into the Asian crisis) in August 1998. Latin American borrowers have benefited not only from the relatively benign external environment, but also from improvements in their own creditworthiness. Of the nine changes to external credit ratings reported so far this year, eight have been upgrades. Importantly, foreign direct investment has remained strong, as it did throughout the financial crises. But flows into the region are heavily dominated by Brazil. II. Economic developments in the region Taken together, the Latin American economies have picked up sharply this year and are doing much better than expected 12 to 18 months ago. Growth has been running at an annual rate of more than 4 per cent, inflation has been roughly stable and in most countries in the single digits, fiscal positions have strengthened, and current account balances have improved. (However, the improvements in Latin American current accounts have been quite modest, even for the best performing countries.) This performance, which marks a sharp change, particularly on inflation, from that of a decade ago, is testimony to the cautious macroeconomic policy management and continued commitment to structural reform in most countries in the region. However, the regional aggregates mask significant country differences. The average growth rate is pulled up by strong performances in Mexico, Chile and Brazil. The WEO forecast shows growth in Mexico slowing from 6.5 per cent this year to 4.8 per cent in 2001; for Chile growth was expected to rise from 6 percent in 2000 to 6.8 per cent in 2001; in Brazil growth was expected to rise from 4 percent this year to 4.5 per cent next year. These numbers may now be a bit optimistic on Chile. But a number of large countries - notably Argentina, Colombia and Venezuela - as well as some smaller ones, show much weaker growth. Growth in Argentina is forecast at below 2 per cent this year, rising to around 3? per cent in 2001. What causes these differences in growth performance? Mexico's strong performance is based on the consistent policies followed since the 1994-95 crisis, and the remarkable strength of its principle export market, the United States, as well as higher oil prices. Those of Brazil and Chile both reflect good economic policies pursued by countries that were hit hard by the global economic crisis only two years ago. Argentina was affected by the global crisis, by the Brazilian devaluation, and by its lack of degrees of freedom to pursue countercyclical macroeconomic policies - a result on the fiscal side of failing to reduce the deficit enough in good times to be able to increase it in a recession, and on the monetary side by the convertibility regime, which requires the real exchange rate adjustment to come through domestic deflation. The strengthening of the banking system since the tequila crisis has helped the economy withstand the current crisis. Colombia's problems have been worsened by civil strife, but it is pursuing its IMF-supported stabilization and reform program with determination, and despite the difficult circumstances, which have set back the privatization program, growth prospects for next year have been improving. Venezuela is benefiting from the high price of oil, but both macroeconomic and structural policies need significant strengthening. In short, differences in policies - in some cases policies that have been pursued over many years, differences in economic structures, differences in political conditions that both affect and reflect economic policies and structures, and differences in the impact of external conditions on the domestic economy, are responsible for the wide range of economic performance among Latin American economies. Differences in the pace of recovery have been mirrored by differences in the cost of obtaining foreign finance. Since the end of last year spreads have narrowed from 363 basis points to 338 in Mexico; they widened from 636 to 701 basis points in Brazil; and from 533 to 691 in Argentina (these are data from October 10.) The main external risks are that the price of oil could go higher, that United States and global growth could slow, and that the external financial environment would worsen. Although higher oil prices would have a net positive effect on the region, many countries would be negatively affected by the higher cost of imports, and most would be negatively affected by the decline in world growth that would be likely if there were a significant rise in energy prices. Higher oil prices could also have a potentially negative impact if the income gains they generate in oil-exporting countries weaken commitments to policy reform. The unexpected rise in oil prices has also fueled demands for trade protection and specific assistance programs in some countries. And government control over energy prices in several countries means that higher oil prices translate into a fiscal problem that is politically difficult to deal with - which makes the case for introducing automatic links between domestic and world prices of energy products. A soft landing of the United States economy, a slowing of growth closer to its potential level, which now looks likely, would result in a somewhat slower growth of exports to the United States from the region. The aggregate effect would depend on whether European and Japanese growth would rise to compensate for the slowing of United States growth. At the same time, a slowing of United States growth would likely be accompanied by some weakening of the dollar, and probably some strengthening of the Euro. Such an exchange rate change would help Argentina. Provided the dollar declined slowly, United States interest rates would probably not rise, and could even fall as growth falls back towards potential. That is, a soft landing for the United States economy would be mostly good news for several Latin American economies. A hard landing would not be good news, but that seems increasingly unlikely. I would like briefly to comment further on Argentina, Ecuador, and Brazil. Argentina's economy has been adjusting to the serious external shocks that have affected it in recent years through a decline in domestic costs and nontradable goods prices, as well as in domestic demand. This is a politically difficult adjustment process, but one that has widespread support within the country. With an improved competitive position, a current account deficit under 3? percent of GDP, the public sector deficit on a declining path and important structural reforms enacted or under way, Argentina is in a good position to resume moderate growth over the short to medium term. To realize this potential the authorities need to maintain fiscal discipline at all levels of government. But it is also time to accelerate supply-side pro-growth structural reforms, including trade liberalization (at the turn of the twentieth century, Argentina was both one of the richest countries in the world and one of the most open; as it closed up, it became relatively poorer - and that process can be reversed) deregulation of some key sectors, and the leveraging of private sector financing for infrastructure, which can raise the growth potential of the economy. Turning to Ecuador: dollarization has been working better than could reasonably have been expected. Having dollarized at a massively undervalued exchange rate, Ecuador had room for domestic wages and prices to rise. But the discipline of the dollarized system will become increasingly tight, and adjustment to changes in, say, the price of oil, will be difficult if fiscal discipline is not maintained, and if the domestic economy does not become more flexible. With oil prices high, the prospects for the balance of payments - which turned around in 1999 due to the massive recession - remain good. Growth is expected to be positive this year, and to be around 3.5 percent next year. This is good, but far from the rates required to make a decisive change in the economic situation of the people of Ecuador, and the need to continue the reform process therefore remains paramount. On Brazil: the economy is enjoying a healthy recovery. Growth is projected at 4 per cent this year; the inflation targeting regime is working well and inflation should come in near the 6 per cent target; employment is rising; the exchange rate has been reasonaby stable; interest rates are at a six-year low; and social indicators are gradually improving. Who would have expected such a favorable performance 18 months ago? Brazil's success is due to the determined pursuit of strong policies, for which the authorities deserve enormous credit: fiscal adjustment, the new flexible exchange rate-inflation targeting monetary regime, and strengthened structural reform efforts. Brazil has regained access to international capital markets. And the international support package provided in late 1998 has been largely repaid. Reserves now stand at $31bn, up from $24bn at the end of last year. But while the financial vulnerability of the economy has been reduced, and there has been a decisive turnaround in performance, Brazil's public debt, its external debt service payments, and its current account deficit all point to the need for caution. The authorities need to consolidate fiscal adjustment and press ahead with additional reforms to promote domestic saving and export competitiveness. Macroeconomic policy needs to continue to support recovery, while avoiding any risk of overheating. The Brazilian economy can grow on a sustainable basis significantly faster than it has in recent years. The extent to which that happens depends on the continuation and intensification of structural reforms. Progress so far with structural reform has been substantial, under difficult circumstances, with the reform of the social security system for private sector workers and the introduction of the fiscal responsibility law being particularly noteworthy. However, there is room for further progress. Reform legislation requires Congressional approval in a number of areas, including the regulation of private sector pension funds, social security contributions for retired civil servants, the reform of indirect taxation and the law on corporate governance. The privatization program also needs to regain momentum. Sustained high level growth requires also more investment, not only in physical capital, but also in human capital. Physical investment requires the creation of an attractive investment climate - and that has been happening. As a large economy, Brazilian trade would naturally be a smaller share of GDP than for a smaller economy - but more needs to be done for Brazil to be integrated into global markets for goods and services. Investment in human capital requires policy decisions, and the administration's emphasis on investment in education is well placed indeed. III. Longer-term issues for Latin America As Latin America contemplates the twenty first century, a number of economic issues stand out. The first is monetary arrangements. Then I will take up in turn the fiscal framework, structural reforms, and income distribution and social inclusion. Monetary arrangements As countries in Latin America have moved to flexible exchange rates, they have had to search for new monetary anchors. In Latin America, as elsewhere, inflation targeting is the regime of choice. That is obvious in Brazil, but also in Chile and Colombia. In addition, Mexico is moving towards a formal inflation targeting regime. Inflation targeting as a framework for monetary policy is an answer to many of the dilemmas of monetary policy that were wrestled with for nearly fifty years after the collapse of the gold standard. The framework is one of constrained discretion, in which the central bank is given a clearly defined goal, and the means to meet it. The framework has to be designed to take account of the two key short-run tradeoffs faced by monetary policy - between inflation and unemployment, and between inflation and the real exchange rate - and this can be done a variety of ways. Inflation targeting is not the last word on monetary policy for a country with a flexible exchange rate - nothing is ever the last word in our field, nor is it a very precise specific blueprint to be mechanically implemented. Rather it is a general approach to monetary policy, that has worked well in many countries and different circumstances. For the longer term, the question remains of what currency regimes will be adopted in Latin America, and in particular, whether there will be fewer currencies. There is already one less in Latin America than there was last year at this time. In this crisis, we have seen the benefits Brazil derived from its flexible exchange rates, and the slower adjustment in Argentina with its hard peg. But the performance of a currency regime needs to be appraised by its average behavior over a period of years, not by how well it does in dealing with one particular type of shock. I believe that over the longer run, the maintenance of a national currency for a small economy has few benefits and considerable disadvantages. Some of the disadvantages are emphasized in Ricardo Hausmann's argument that a small country with its own currency is committing the original sin. The strongest arguments in favor of a national currency are seigniorage and the easier adjustment that is possible with a flexible exchange rate when the real exchange rate has to change. These are powerful arguments, but I believe that if the Euro succeeds - and it will succeed - that we will gradually see fewer currencies. What precisely that means for Latin America, whether the use of the dollar, or the real, after a long period of stability, or a regional currency, is too far off to discern. The answer depends not only on Latin America, but also on the provisions the United States might be willing to make to encourage dollarization, for instance by finding ways to remit seigniorage to countries that adopt the dollar. Any move to a regional currency would be more likely to succeed if it were the currency for a free trade area. And the question of what sorts of trade areas, hemispheric, or Latin American, will eventually predominate, is also an open question. It is exceedingly important that trade blocs should be built by reducing internal barriers, rather than raising external ones. Fiscal frameworks A number of Latin American countries have introduced fiscal responsibility laws. By imposing statutory constraints on the operation of fiscal policy, they hope to increase credibility in the same way that adoption of central bank independence and inflation targeting has increased credibility in the monetary sphere. In Argentina, the Law on Fiscal Solvency introduced in September 1999 requires the federal government to maintain a balanced budget from 2003, and also to ensure that spending does not run ahead of economic growth. It also establishes a stabilization fund to mitigate the impact of the economic cycle on the budget. In Peru, the Law on Fiscal Prudence and Transparency enacted in December 1999 also establishes the general principle of a balanced budget and a constraint on spending growth. The rules can be waived in the event of national emergency, international crisis or a recession. It also establishes a stabilization fund. In Brazil, the Fiscal Responsibility Law approved this year requires each tier of government to maintain current balance, limit spending on personnel and keep the ratio of debt to current revenue within limits set by the Senate, on the President's proposal. Each country's legislation increases the transparency of fiscal policy, requiring public disclosure of targets and outcomes. This information has to conform to generally established accounting principles. Compliance with the rules is subject to surveillance by the legislature, helped by quasi-independent auditing offices. These laws are welcome. But the proof of the pudding is in the eating. Ultimately, investors and lenders will only be impressed by a good track record. It remains to be seen how these laws will be implemented when times get tough. Structural reforms In addition to fiscal reform, Latin America needs to consolidate or push ahead with structural reforms in a number of other areas: Further reforming labor markets to promote job creation. Liberalization is better than increasing public sector employment to generate employment. Maintaining and developing good relations with private creditors, to help guard against crises and make them easier to deal with when they cannot be avoided. Promoting good governance - including through the adoption of international standards. Strengthening financial systems. Continuing to make progress in opening trading systems and resisting recent protectionist pressures. The importance of trade policy is hard to exaggerate. Inequality and social inclusion Sound macroeconomic policies and the intensification of structural reforms are essential if countries are to grow sustainably at higher rates. To continue reforms year after year is politically difficult, and adjustment fatigue sets in from time to time. One of the saddest lessons of economic development is how quickly hard-won reform and growth achievements can be thrown away - and adjustment fatigue can thus be deadly. But adjustment fatigue is a political phenomenon, and if public support for pro-growth, pro-market policies is to be maintained, more people need to feel the benefits. This means tackling inequality. Latin America has greater income inequality than any other region in the world. The richest decile receive 40 per cent of national income, compared to less than 30 per cent in the US. More than a third of the population live below the poverty line. Income distribution improved in the 1970s, but gains were wiped out after the debt crisis. As high inflation has been tamed, structural reforms implemented and growth restored in the 1990s, middle-income groups have gained relative to rich and poor. Inequality is high in part because Latin America has been relatively vulnerable to crises, in part because of reliance on commodity exports, in part because this has not been a focus of public policy. The poor are less able to weather shocks and may be forced into actions (e.g. in education and health) that limit they and their children's long-term earning power. No-one should underestimate the political difficulty of addressing these issues, or of the inadequate state of our knowledge about how to do so. But unless economic policy in Latin America turns to this issue, growth will not be sustained. Policies to address this critical issue include: Better social safety nets Avoidance of unnecessarily abrupt macro adjustments Removing labor regulations benefiting insiders Targeted education and health care support Improved public services to allow more women to work Measures to make credit more widely available Fully-funded pension schemes to increase the pool of savings. When told that the North American wars would ruin Britain, Adam Smith replied "there is much ruin in a nation". Unfortunately, there is also much reform needed in a nation. The reform agenda is long and difficult. But some countries are well on the road to achieving sustainable growth. Growth is more likely to be sustainable if it is high quality growth. And that is the challenge for political and economic leadership in Latin America, where so much has been achieved in many countries in recent years. Thank you. 1 Views presented are those of the author and not necessarily of the IMF. I am grateful to Claudio Loser, Teresa TerTer-Minassian, and Robert Chote for their assistance. --------------61B16BC4C0D09D972A6D6CDF-- From rob@essential.org Mon, 16 Oct 2000 16:11:50 -0700 Date: Mon, 16 Oct 2000 16:11:50 -0700 From: Robert Weissman rob@essential.org Subject: [stop-imf] ACT-UP protests Bush's record on AIDS, denounces healthcare user fees This is a multi-part message in MIME format. --------------EFD7DB0B1435B81FCCBF3C20 Content-Type: text/plain; charset=us-ascii; x-mac-type="54455854"; x-mac-creator="4D4F5353" Content-Transfer-Encoding: 7bit --------------EFD7DB0B1435B81FCCBF3C20 Content-Type: message/rfc822 Content-Transfer-Encoding: 8bit Content-Disposition: inline Return-Path: Received: from genoa.essential.org (genoa.essential.org [216.0.124.11]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id KAA26074; Mon, 16 Oct 2000 10:48:03 -0400 Received: from essential.org (marcia.essential.org [216.0.124.38]) by genoa.essential.org (8.9.3/8.9.3) with ESMTP id KAA15401; Mon, 16 Oct 2000 10:48:02 -0400 Message-ID: <39EB409E.1B6AF18C@essential.org> Date: Mon, 16 Oct 2000 10:53:35 -0700 From: Marcia Carroll X-Mailer: Mozilla 4.73 [en] (Win98; U) X-Accept-Language: en MIME-Version: 1.0 To: rob@essential.org, James Love Subject: ACT-UP protests Bush's record on AIDS Content-Type: text/plain; charset=iso-8859-1 Content-Transfer-Encoding: 8bit ACT-UP protests Bush's record on AIDS By Steve Mitchell WASHINGTON, Oct 16 (Reuters Health) - Seven members of the AIDS activist organization ACT-UP were arrested as the group assembled in front of Republican National Headquarters in Washington, DC, on Friday to protest George W. Bush's record on AIDS issues. Bush's record on AIDS has been horrible, ACT-UP charged. Bush, who is governor of Texas, "cut money to HIV programs in Texas...and Texas is one of two states in which AIDS deaths did not go down last year," ACT-UP member Jen Cohn told Reuters Health. "He has not yet mentioned AIDS in his run for president," Cohn said. For approximately 2 hours, about 150 members of ACT-UP chanted anti-Bush slogans and carried posters with statements such as, "Bush: Drug company puppet. Generic AIDS drugs now." The demonstrators dumped several coffins filled with pill bottles on the steps of the Republican building, and the police arrested seven people after they handcuffed themselves together and lay down in the middle of the street. ACT-UP criticized Bush for failing to acknowledge the HIV/AIDS issue while governor of Texas. "He has had a closed door policy to the AIDS activist groups in Texas," ACT-UP member Julie Davis told Reuters Health. Bush has also refused to meet with ACT-UP since beginning his presidential campaign, she said. ACT-UP also objects to International Monetary Fund and World Bank's position on mandating "user fees" for primary healthcare and education in Africa, Asia and Latin America. "We want IMF and the World Bank to drop these mandatory user fees," Davis told Reuters Health. She noted that an effort to do away with these fees is being blocked by President Clinton and the US Treasury Department. ACT-UP also wants the US government to write off the debt of the third world countries most affected by AIDS, Davis said. Bush has refused to disclose his position on allowing third world countries to manufacture generic versions of patented pharmaceuticals, ACT-UP asserted. Because of Bush's silence on the issue, ACT-UP believes that, if elected, he will repeal a new trade policy enacted last year that allows third world countries that cannot afford anti-HIV drugs to manufacture generic versions of the drugs, Cohn told Reuters Health. After a meeting with ACT-UP, presidential candidate Al Gore reversed his position on allowing countries to manufacture their own AIDS drugs, Cohn said, pointing out that the vice president pushed for the trade policy to be passed into legislation. ACT-UP also disapproves of Bush's position on sex education. Bush wants abstinence-only sex education, which has never been shown to be effective in halting the spread of HIV, Paul Davis of ACT-UP told Reuters Health. Bush has also refused to support measures that would make condoms widely available, Davis said. The International Association of Physicians in AIDS Care (IAPAC) has been critical of both Gore and Bush. Both candidates answered an IAPAC questionnaire about their AIDS policies recently, but IAPAC concluded, "AIDS is an 'invisible issue' in the 2000 presidential campaign, with neither candidate articulating a vision or strategy for combating an epidemic labeled by the US government and the United Nations as threats to human security." The Bush campaign did not return phone calls from Reuters Health on Friday. Copyright 2000 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world. -- Marcia Carroll Multinationals Resource Center P.O. Box 19405, Washington, DC 20036 USA Email: marcia@essential.org Tel +1 202.387.8030; Fax +1 202.234.5176 --------------EFD7DB0B1435B81FCCBF3C20-- From rob@milan.essential.org Mon, 16 Oct 2000 19:33:02 -0400 (EDT) Date: Mon, 16 Oct 2000 19:33:02 -0400 (EDT) From: Robert Weissman rob@milan.essential.org Subject: [stop-imf] Indonesia: Wahid Vows To IMF to End Rice Subsidies By 2002 (fwd) Dow Jones Newswires October 16, 2000 Indonesia's Wahid Vows To End Rice Subsidies By 2002 JAKARTA -- Indonesian President Abdurrahman Wahid said Monday he had won backing from the International Monetary Fund to end domestic rice subsidies in 2002. "I already agreed with (IMF First Deputy Director) Stanley Fischer to maintain subsidies for rice prices until 2002," Wahid told reporters. Indonesia's National Logistics Board, or Bulog, sets a floor price for unhusked rice through stock retention, typically buying 10% of the national crop. Wahid said rice prices would revert to a "market mechanism" in 2002, but didn't give further details. Wahid said rice farmers, who make up the backbone of Indonesia's largely rural population, must adapt to free-market conditions by 2002 when they will lose the protection of subsidies. The IMF typically opposes subsidies as market distortions that hamper economic growth and has sought to reduce Bulog's role in setting prices and regulating food supplies. However subsidies remain highly sensitive in Indonesia and rice farmers called earlier this year for a clampdown on imports to protect domestic prices. Wahid, whose political constituency is largely rural, said current rice subsidies are aimed at protecting farmers and ensuring sufficient rural incomes. Indonesia is forecast this year to produce 32 million tons of husked rice. -By Simon Montlake, Dow Jones Newswires; 6221 3983 1277; simon.montlake@dowjones.com From rob@milan.essential.org Mon, 16 Oct 2000 19:33:36 -0400 (EDT) Date: Mon, 16 Oct 2000 19:33:36 -0400 (EDT) From: Robert Weissman rob@milan.essential.org Subject: [stop-imf] Wash, DC: Women March Against Poverty, Denounce IMF/Bank (fwd) Women March Against Poverty, Violence October 16, 2000 By DAVID HO Associated Press Writer WASHINGTON (AP) via NewsEdge Corporation - Thousands of chanting women marched on Sunday through downtown past the World Bank and the International Monetary Fund in a protest against world poverty and the mistreatment of women. Marchers, whose circular route began on the grassy Ellipse across from the White House, chanted in a cacophony of languages their support for equal rights for women and their opposition to domestic violence. Demonstrators shouted ``Shame!'' as they passed the side-by-side buildings of the IMF and the World Bank, the main lending institutions for poor countries. Activists in a major new movement against globally based economics contend the institutions' lending policies unfairly discriminate against the poor. In front of the World Bank, some women got into a shouting match with four men protesting the event with anti-gay and anti-lesbian placards. ``Submit to your husbands, you rebels,'' Ruben Israel, 36, of Los Angeles, yelled at the marchers through a bullhorn. The Washington rally, which brought women from around the world, was a culminating event of the World March of Women 2000, which began in March in Geneva. ``This march is against the champions of patriarchy that deny the human, democratic and social welfare of women,'' said Ramesh Sepehrrad, spokeswoman for the National Committee of Women for a Democratic Iran. The cheering crowd held signs supporting a range of issues such as defense of abortion rights and protests of female circumcision, or female genital mutilation. Molly Mattessich, 21, said she came from Boston out of empathy with the condition of women around the world. ``It was important for me to come, because there are so many women around the world who can't speak for themselves,'' she said. Some men joined in. Dan Nooter, 23, of Washington, D.C., spent his day volunteering at the march. ``Violence is something that men have a responsibility for ending,'' he said. ``But I'm not coming out here as a man. I'm coming out here as someone who is concerned about ending violence and poverty.'' Marchers gathered at the southern tip of the Ellipse, part of the National Mall, to prepare for the march, then returned for speeches. The rally was surrounded by tents and equipment set up for Monday's Million Family March, sponsored by the Nation of Islam and the Unification Church. From rob@milan.essential.org Tue, 17 Oct 2000 15:28:29 -0400 (EDT) Date: Tue, 17 Oct 2000 15:28:29 -0400 (EDT) From: Robert Weissman rob@milan.essential.org Subject: [stop-imf] Nigeria: World Bank apologises for failure of education projects About the following story, our friend Patrick Bond offers the following comment: Here's some revolting double-talk. Why do Nigerians need a US$-denominated "credit" (not loan, hah!) for the education sector, anyhow? Robert Weissman Essential Information P.O. Box 19405, Washington, DC 20036, USA Tel: 1-202-387-8030 Fax: 1-202-234-5176 www.essential.org ------- Forwarded Message Follows ------- Nigeria: World Bank apologises for failure of education projects This Day (Nigeria), 16. October 2000 By Chuks Akunna The World Bank has tendered apologies for the failure of its educational projects in Nigeria, particularly, those it implemented between 1988 and 1990, heaping the blame for the failure at the feet of a few officials of the Federal Ministry of Education and their cronies at the bank. The development, the bank disclosed, taught it some lessons, assuring that "some fundamental changes have taken place, in the way we operate." Speaking at a zonal office between officials of the World Bank and representatives of the Universities of Benin, Uyo, Calabar in Port Harcourt, higher education specialist of the bank, Mr. William Saint said the benefits Nigerians stood to enjoy from the World Bank education package are currently being negotiated. Nigeria's educational sector would in time frog-leap, he assured. However, when confronted with some of the unsavoury details of the previous relationship with the bank, including the "dumping" of obsolete equipment in Nigeria under the 1988-90 agreement and the whopping interest rates which have followed, Saint agreed, but blamed the then military authorities for the development. All the transactions then were shrouded in secrecy as stakeholders in the educational sector were not consulted for inputs, he regretted. This time around, he stressed, "there'll be no secret documents," adding that, "we're trying to be transparent, we're trying to do better." Reacting to allegations that the cost of schooling may skyrocket as part of the World Bank conditionalities, Saint said: "At no time did we discuss on the need to increase student fees as part of the World Bank agreement or conditions or eligibility criteria," noting that, "it may be your government that has raised the question of raising student fees for its own reasons." He further drew a distinction between the previous package (loan) and the one being negotiated (credit) which he said should not be seen as being forced down the throat of Nigerians. The World Bank, he explained, is made up of the International Bank for Reconstruction and Development (IBRD) which provide loans for countries that have the abilities to repay such and the International Development Association (IDA) which finances credit to poor member-countries. The package being negotiated with the Nigerian authorities is an IDA credit which has a zero per cent interest rate and a repayment period of 30 years, Saint explained. Allaying the fears by Nigerians on the likelihood of being caught in a debt mace, the World Bank official touted the imperative for the credit which he said would help transform the Nigerian educational sector after a decade of isolation caused by military rule. While Nigeria has democracy in place and is a member of the board of governors of the 188-member financial institution, the official, however, cautioned that Nigeria's eligibility to the credit should not be considered automatic, considering the spate of allegations of corruption levelled against the country in recent times. The education expert then challenged Nigerian universities on the need to evolve what he described as strategic planning, arguing that the planned university autonomy would help boost strategic planning "since you'll have to take decisions yourselves." Unlike their counterparts in other parts of the world that have been the language of the information and telecommunications revolution, the World Bank official regretted that Nigerian universities have not been able to contribute to the revolution because of its emphasis on "solving contemporary problems with traditional methods." From rob@milan.essential.org Tue, 17 Oct 2000 15:58:31 -0400 (EDT) Date: Tue, 17 Oct 2000 15:58:31 -0400 (EDT) From: Robert Weissman rob@milan.essential.org Subject: [stop-imf] AIDS Activists Call for Debt Cancellation (fwd) AIDS activists call for debt cancellation October 16, 2000 Web posted at: 7:49 PM EDT (2349 GMT) CAIRO, Egypt (AP) -- AIDS activists from around the globe called on rich na= tions Monday to cancel the debt of poor countries ravaged by AIDS and subst= antially increase aid directed at fighting the virus and improving health c= are.=20 "The allocation of resources by the world's richest nations, including the = United States, as well as multilateral institutions such as the IMF and Wor= ld Bank has been wholly inadequate," said Jeffrey Sachs, a prominent Harvar= d economist who delivered the keynote address at a conference on AIDS and h= ealth spending.=20 The fourth annual meeting hosted by the Chicago-based International Associa= tion of Physicians in AIDS Care attracted more than 400 economists, governm= ent officials, doctors, drug manufacturers and aid group representatives=20 Sachs called on rich nations to more than double their annual funding of ef= forts to fight AIDS.=20 Other participants pleaded for the cancellation of Third World debt. They m= aintained that funds used by developing nations to pay debt could be employ= ed to drastically improve health care and fight AIDS.=20 "If we cancel (Third World) debt, the U.N. predicts we could save the lives= of 19,000 children a day, many of whom are the victims of AIDS," said Adri= an Lovett, deputy director of the Jubilee 2000 Coalition UK, a coalition fi= ghting for complete debt cancellation by the end of 2000.=20 Debt cancellation has garnered substantial public support in the West and w= as a major theme of protests in Washington and Prague earlier this year.=20 "The crisis is changing on an annual basis," said Jose Zuniga, IAPAC presid= ent and a co-chair of the conference.=20 "The past year has been good in that the G7, the World Bank, and the U.N. h= ave all promised significant increases in financial support. Now we need to= look into what to do with those resources and how to continue pushing for = more," Zuniga said.=20 The summit was the first major AIDS conference to be held in the Middle Eas= t.=20 With fewer than 2,000 cases of AIDS reported in Egypt, compared with 4 mill= ion in South Africa, Zuniga said it was important to heighten AIDS awarenes= s because "we still have an opportunity to influence the development of the= disease."=20 AIDS cases reported in North Africa and the Middle East are relatively low = -- 220,000 out of more than 40 million worldwide -- but activists have accu= sed regional governments of playing down the disease. In conservative Islam= ic countries such as Egypt, public dialogue about sexuality and AIDS is gen= erally considered taboo.=20 However, Zuniga said that Egypt had welcomed the conference with "open arms= " and Egyptian Health Minister Ismail Sallam told the delegates that Egypt = was committed to AIDS prevention and public education.=20 Copyright 2000 The Associated Press. All rights reserved. This material may= =20 From rob@essential.org Wed, 18 Oct 2000 09:17:28 -0700 Date: Wed, 18 Oct 2000 09:17:28 -0700 From: Robert Weissman rob@essential.org Subject: [stop-imf] Wash Post: World Bank, IMF destroy Mozambique's cashew nut industry In Mozambique, a Less Than Helpful Hand By Jon Jeter Washington Post Foreign Service Wednesday, October 18, 2000 ; Page A18 MANJACAZE, Mozambique ?? The cashew factory here closed three years ago, but the old man still shows up every day at 7 a.m. sharp, just as he did for 34 years. The owners left him the keys to keep an eye on things, but there's nothing to watch, really, so Moises Siuta opens a window or two, arranges the few remaining office chairs into neat rows--the secretary wouldn't stand for an untidy office--and spends a solitary first shift sitting in the half-light of a shuttered plant. A slender man with an almost courtly air, Siuta, 59, started as a driver at the factory in 1963, when Mozambique was still a Portuguese colony. He worked his way to the processing floor, where he shelled and sorted nuts, and eventually landed a management job. "I made a lot of friends here. I raised 10 kids working here. . . . We would get breaks during the day, and when we went outside it was like all the children in the village would be waiting to ask their parents for money, to buy candy and things. That always made me very proud." The memory brings a smile, but the smile dissolves as his thoughts return to the present. He takes a last drag from his cigarette. "We're all unemployed now. No one has much money to spend anymore. Manjacaze just shut down when the World Bank forced Mozambique to liberalize its [cashew export] market." This southern African country's gutted cashew-processing industry is Exhibit A in the case against the World Bank and the International Monetary Fund by critics who argue that the two global financial institutions widen poverty rather than reduce it, by using the promise of loans to force governments of developing countries to adopt policies that often favor the rich while exploiting the poor. After 16 years of civil war ended in 1992, Mozambican officials sought the World Bank's help to rebuild the shattered country. They dropped their Marxist economics of the Cold War years for the free-market policies required by the bank and the IMF. The exception was Mozambique's cashew-processing industry. With the country's cashew groves damaged by war, the government put a tax on the export of raw nuts to ensure a supply for local factories. But World Bank officials said they would not offer Mozambique loans unless the government removed the tariff. Bank officials said the tax subsidized factory workers at the expense of the peasants by preventing peasants from selling their crops overseas and thus depressing prices. Threatened with losing millions of dollars in loans, Mozambique began phasing out the tax in 1996. Four years later, the policy has almost killed off the industry. Ten of the largest cashew-processing factories--which were owned by a diverse group of mainly foreign investors--have closed. Half of the industry's 12,000 workers have lost their jobs, and another 1,500 are to be laid off when another factory closes this month. Peasants who were supposed to benefit from an opened market say the only people who have profited from liberalization are scores of new middlemen--many of them foreigners--who now roam the country buying up nuts to sell abroad. World Bank officials acknowledge they may have tried to do too much too fast. Last year, the bank allowed Mozambique to restore the export tax in part, but the industry has shown no sign of recovery. "The Mozambique case clearly shows that not only did the World Bank's policies fail to promote economic growth, they undermined it," said Robert Naiman, senior policy analyst for the Center for Economic and Policy Research in Washington. "And in this instance, they clearly forced the government to accept a policy that it neither wanted nor agreed with. This is the case where we have the smoking gun." Until floods devastated Mozambique's infrastructure this year, the country's economy had been growing at a rate of almost 10 percent annually since the end of its civil war, and U.S. and other Western diplomats have praised it as a model of what sub-Saharan Africa can achieve with free-market policies. Still, Mozambique is wrenchingly poor, and government officials had hoped to resurrect an industry that had been gravely injured by the war. The fighting forced peasant farmers to flee the countryside for years at a time. When they returned, they found their cashew trees diseased and barely able to produce enough nuts to permit the processing factories to turn a profit. Most of the factories were deserted during the war, and, with outdated equipment, few were able to match the buying power of competitors in India, Brazil or Vietnam. So the government agreed to protect factory owners while they modernized their facilities. It placed tariffs as high as 70 percent on the export of raw nuts to discourage foreign buyers from gobbling up homegrown cashews. The tariff was to decline each year until it reached 8 percent in 1999. But a 1995 study commissioned by the World Bank concluded that eliminating the tariff would drive prices up and increase peasants' earnings on cashew sales from $4 million in 1993 to nearly $70 million by 2008. The higher prices would encourage many of the country's 1 million cashew farmers to plant new trees and take better care of their old ones, increasing production. With the tariff removed, bank officials said, competition from foreign buyers would force inefficient factories to close, but the ensuing job losses would be more than offset by the dramatic rise in peasants' income and productivity. Government officials said the bank's study was irrevocably flawed, its predictions based on incorrect figures and a particularly bad harvest in the difficult season immediately following the end of the war. Moreover, Mozambican officials said, the bank overlooked unfair advantages held by India, the world leader in cashew production. India's cashew industry was heavily subsidized by the government, and it depended more on manual labor--notably of peasant children--to shell raw nuts, a system that was cheaper but exposed workers to a toxic fluid contained in cashew shells. How could Mozambique's factories possibly compete without some protection of their own? Bank officials met Mozambique's resistance with a threat to cancel more than $520 million in loans it had planned to make available over a three-year period, according to government officials here. That likely would have killed the IMF's $120 million loan package as well. "Sometimes," Prime Minister Pascoal Manuel Mocumbi told reporters at the time, "we have to accept things that are not in our interest because there is no other way out." Grudgingly, cabinet ministers and lawmakers abolished the tariff. The World Bank's regional director in Mozambique, James Coates, denies that the bank coerced government officials to go along with its proposal. "We only offer advice to these countries. It is up to them whether they accept it," he said. But Michael Weber, a professor of agricultural economics at Michigan State University who is the co-author of a study on Mozambique's cashew industry and who supports the bank's effort to liberalize it, said the bank "played hardball, no doubt about it." The World Bank has lent Mozambique nearly $2 billion over the past 15 years to hire teachers and build bridges, health clinics and aluminum smelting factories, among other things. Apart from cashews, the bank has been involved in scores of development issues without generating prominent public complaint. "The World Bank has done more good than bad in Mozambique," said Jose Antonio Justino Nhalungo, director of the Foreign Ministry. "We agree that liberalization is generally a good idea. But this was a complicated issue, and the bank believed they knew better than us how to deal with this issue, and we never had a real dialogue on the matter. They just did not want to listen to us. We did not go to Harvard, I suppose." In 1997, facing criticism from Mozambique's media and trade unions, World Bank officials commissioned a new study by the accounting firm Deloitte & Touche. That report supported Mozambique's argument that the first study was flawed and that an export tax actually increased the country's income and revenue from the cashew industry. The new report concluded that, while cashew prices had risen slightly following the tariff's removal, the benefit had gone to the new middlemen, not to Mozambique's poor farmers. Bank officials relented and agreed to an export tax of no more than 14 percent, lower than what Mozambique trade officials and lawmakers generally proposed. "We continue to believe that our policy advice was correct," Coates said. "But . . . it maybe takes more time and effort than we estimated at first. The policy was not meant to close Mozambique's factories. We are in dialogue mode more now than we were before." In Manjacaze and other rural areas, the bank's retooling is too little, too late. At the open-air market in the center of this idled village of grass huts and nameless dirt roads, business has dropped dramatically since the cashew factory closed. "No one has money to spend anymore. . . . All the vendors are hurting," said Alberto Alfonso Boma, 57, who has owned a beer stand here for almost a decade. Boma was also a cashew farmer until he quit this year. When Mozambique liberalized its cashew exports, the price of cashews jumped from about 18 cents a pound in 1994 to about 24 cents last year, according to the Michigan State University study. But the farmers in Manjacaze saw little of that, Boma said. "The farmers might get a few [pennies] more, but if you're a producer, it's not enough," he said, pouring a beer for one of the few customers he had that afternoon. "We never know what the real price is. We've got all these new faces who come and offer you one price, and then you find out that they sold it for twice that. They're the ones who are driving [luxury cars], not us." That has persuaded Boma to try his hand as a buyer. He sold his cashew trees and plans to buy raw nuts from his neighbors and sell them to the highest bidder. Boma paused for a moment, sizing up the rows of empty snack stands and the young men who amble aimlessly along the dusty streets. "I would like to see us return to the old ways of doing business before the World Bank took it upon themselves to change it," he said. "Things were much better before." 2000 The Washington Post From rob@essential.org Wed, 18 Oct 2000 10:13:11 -0700 Date: Wed, 18 Oct 2000 10:13:11 -0700 From: Robert Weissman rob@essential.org Subject: [stop-imf] Financial Times: user fees undermine education, healthcre Fees issue entangles US debt relief plan By Nancy Dunne in Washington Published: October 17 2000 19:46GMT | Last Updated: October 18 2000 00:32GMT Tanzania, granted relief from its stifling debts, last year introduced an unexpected economic "reform": user fees for primary schools. The result was an immediate decline in school attendance and earnings amounting to only half the projected revenues, according to the Evangelical Lutheran Church of Tanzania. In Zimbabwe, where user fees were levied on health services but where the impoverished were supposed to be exempt, a World Bank evaluation team found that only 20 per cent of the poor were able to obtain the necessary fee waivers. In Ghana, 77 per cent of the street children of Accra dropped out of school after user fees were imposed. The question of user fees - also called "cost sharing" and "community financing" - is now entangled with legislation to provide the US share of debt relief for the world's Heavily Indebted Poor Countries (Hipc) initiative. A Congressional amendment to force the World Bank and the International Monetary Fund to forgo user fees in health and education lending packages has now passed the US House of Representatives. It is part of legislation, still under discussion with the Senate, providing $920m over the next three years for multilateral and bilateral debt forgiveness. Dozens of groups backing debt relief - from Jubilee 2000 to Sisters of the Holy Cross at Notre Dame - are now bombarding the administration with letters demanding an end to the user fees. The AFL-CIO, the umbrella US labour organisation, has called on the US Treasury to insure "no loan agreement, decision point document or poverty reduction strategy paper should contain such a requirement [for user fees]". The World Bank and IMF contend that they do not require user fees from their poor clients. But debt relief supporters say some form of cost-sharing appears in many project documents, even in lending for debt forgiveness under the Hipc initiative. A World Bank seminar report noted in 1998 that "about 40 per cent of projects in the bank's [health, nutrition and population] portfolio and nearly 75 per cent of projects in sub-Saharan Africa included the establishment or expansion of user fees". Passage of the US contribution to Hipc is key to the future of the four-year drive to relieve the poorest countries of the debt burdens that are stifling their development. The administration has struggled to move the legislation through Congress. However, it is unenthusiastic about any legislation which would prohibit the user fees. "We believe the international institutions have a critical role to play in removing barriers to access to health and education services for the poor," one US official said. However, fees were appropriate for those who could afford them, he said. But the US Treasury does not want to see the funding of Hipc jeopardised by the controversy over user fees. Its contribution to the global Hipc initiative is already threatened by a Republican Congress increasingly critical of the international lending institutions. However, both Democrats and Republicans have supported the amendment, arguing that countries cannot work their way out of debt without an educated, healthy populace. From rob@essential.org Mon, 23 Oct 2000 09:03:11 -0700 Date: Mon, 23 Oct 2000 09:03:11 -0700 From: Robert Weissman rob@essential.org Subject: [stop-imf] South Korea: Thousands of protestors slam Asia-Europe summit Thousands of protestors slam Asia-Europe summit SEOUL, Oct 19, 2000 Thousands of protestors staged a boisterous anti-globalization rally Thursday as Asian and European leaders gathered in Seoul for a cross-continent summit. "No globalization," chanted some 4,000 students, labor leaders and civil rights activists at Soongsil University campus in southern Seoul on the eve of the third Asia-Europe Meeting (ASEM). The evening rally drew some 100 foreign activists taking part in a forum of nongovernment organizations (NGOs) held to coincide with the summit on Friday and Saturday. Tens of thousands of police, backed by helicopters and armoured riot vehicles, have been deployed throughout Seoul to stop protests. But no violence was reported. The protestors punched the air, surrounding a podium decorated with a banner reading "We Oppose Neo-liberalization and Globalization!" and a large picture depicting an angry slogan-chanting worker. Students and union activists held up placards blasting ASEM for promoting a US-led globalization movement and vowed to lead a protest march on Friday, which will be kept several kilometers from the ASEM convention center. The march will be headed by the Korean Confederation of Trade Unions (KCTU), a militant union group which has opposed sweeping economic reforms since an economic crisis forced South Korea to accept a 58-billion-dollar bailout from the International Monetary Fund (IMF) in late 1997. The protestors blasted the lending policies of international institutions such as the World Trade Organization (WTO) and the IMF for increasing the suffering of poor nations by imposing harsh repayment obligations. "Globalization is a main cause of worsening labor conditions." read a statement distributed at the rally. "Disband the international organizations soliciting neo-liberalism. Stop negotiations about free trade measures and block the WTO New Round." South Korean pressure groups have pledged there will be no repeat of the violence that dogged the WTO conference last year in Seattle, and the World Bank/IMF meetings in Prague last month. But organizers of ASEM, South Korea's biggest international event since the 1988 Olympics, are desperate to avoid violent clashes with protestors and are taking no chances with security. From Thursday, riot police sealed off all public access to within two kilometers (1.2 miles) of the sprawling ASEM site. A South Korean photographer reported seeing around 20 local student activists detained by police after trying to break through police lines. However police denied any arrests had been made. ===== Protests Outside Asia-EU Summit By JAE-SUK YOO SEOUL, South Korea, Oct 20 (AP) - Riot police battled stone-throwing protesters who wielded wooden sticks and shouted anti-globalization slogans amid demonstrations Friday during a gathering of Asian and European leaders. Some 400 protesters fought running street battles with about 1,000 police armed with yard-long batons who were blocking their march. At least three protesters were seen taken to hospital with injuries to the head and face. One protester was taken away in a police car. The protesters were among 3,000 labor, environmental and human rights activists who rallied at a major intersection to oppose the biennial summit of the Asia-Europe Meeting, or ASEM, which brought together 25 leaders of Asian and European Union leaders to discuss closer cooperation between their regions. Activists expected the Seoul meeting to strengthen economic globalization, which they claim would restrict workers' rights and widen the gap between the rich and poor nations. Anti-globalization protests disrupted the World Trade Organization meeting in Seattle last year. Violent demonstrations also marred last month's International Monetary Fund and World Bank meetings in Prague, the Czech Republic. Organizers said they planned a larger demonstration later Friday expected to draw 20,000 people. Earlier in the day, police stopped a dozen activists from marching to the convention center where the summit was held. ``Is this a country which has received a Nobel prize?'' the protesters shouted as they were aggressively pushed away by riot police, armed with helmets, shields and meter-long batons. South Korean President Kim Dae-jung, who received the Nobel Peace Prize last week for his policy of reaching out to North Korea, is the host of the third biennial summit seeking ways of strengthening political and economic cooperation. When stopped by police yards from the convention center, the labor, religious, environmental and human rights activists unfurled two large placards which read: ``No to Neoliberal Globalization'' and ``No to Structural Adjustment Program.'' ``Neoliberal'' refers to the free market economic policies adopted by many of the countries in the region. ``ASEM pursues neoliberal globalization, which is destroying the livelihood of workers, ecology and human rights,'' the protesters said in a statement. Authorities deployed 30,000 riot and plainclothes police in Seoul to safeguard the summit. Anti-terrorism police squads were seen patrolling around the convention center and hotels where the summit leaders were staying. Police also expected South Korean followers of the Falun Gong spiritual movement, which has been the target of a heavy crackdown by the Chinese government, to stage a protest during the summit due to the presence of Chinese Prime Minister Zhu Rongji. From rob@essential.org Mon, 23 Oct 2000 10:14:34 -0700 Date: Mon, 23 Oct 2000 10:14:34 -0700 From: Robert Weissman rob@essential.org Subject: [stop-imf] NYT: The IMF's heavy hand October 21, 2000 New York Times A Study Says I.M.F.'s Hand Often Heavy By JOSEPH KAHN ASHINGTON, Oct. 20 The photo captured what Kipling might have called the financial man's burden: Michel Camdessus, head of the International Monetary Fund, towered over President Suharto of Indonesia as Mr. Suharto agreed to terms for rescuing his nation from economic oblivion. That Indonesian bailout, and several others like it around the world during the emerging-market financial crisis of the late 1990's, was often criticized as the International Monetary Fund's equivalent of imperial overstretch. Now, a new study using the fund's own unpublished data suggests that the critique may have actually underestimated the fund's commandeering approach. Under heavy pressure from wealthy nations that control its policies, the fund demanded a king's ransom from Indonesia as the price for its $40 billion assistance package. Indonesia was told to raise taxes on state-owned companies; cancel 12 road, bridge and port projects; remove protections on dairy farmers; and eliminate price controls on cement part of a long list that at one point included 140 items, the study shows. The idea was to convert Mr. Suharto's Indonesia, which had a partly capitalist economy plagued by corruption, into an open, competitive and stable free market economy. Even though few mainstream economists argue with the goal, the methods are coming under new scrutiny. "I think it's clear that both the scope and the depth of the fund's conditions were excessive," said Morris Goldstein, a 25- year I.M.F. veteran who did the study. Mr. Goldstein, who is now an economist at the Institute for International Economics, has often defended the I.M.F. as an important force for global financial stability. But he said that the recent push for radical overhauls of nations that borrow money has undermined the fund's reputation and strained its competence. "They clearly strayed outside their area of expertise," Mr. Goldstein said. "If a nation is so plagued with problems that it needs to make 140 changes before it can borrow, then maybe the fund should not lend." The dispute is a technical one, but with far-reaching implications. In the last decade, the fund, not always willingly, became the primary vehicle for rich nations to export capitalism to developing countries, including heavyweights like Russia and Brazil, as well as the former Communist states of Eastern Europe and poverty- stricken nations in Africa. As its mission has expanded, its track record has not always kept pace. Some nations that received I.M.F. aid during the financial crisis have recovered quickly. But Russia and Indonesia are examples of high-profile lending efforts sodden with detailed instructions that have not, to date, led to sustained economic growth. Lending programs often intrude on areas well outside the I.M.F.'s traditional mandate, Mr. Morris's study of its records suggests. Thailand was told to remove a tax on foreigners who buy condominiums. South Korea was given a blueprint for tax reform. The list of demands on Russia at one point topped even Indonesia's, with the fund overseeing 200 changes in the way the Russian government spent money, collected taxes, managed banks and regulated the oil industry. The fear is that the I.M.F. has been acting a little like a heart surgeon who, in the middle of an operation, decides to do some work on the lungs and kidneys, too. The fund has used financial emergencies, when borrowers needed help urgently, to extract the sort of concessions that nations are often not willing to make in healthy times. If the operations worked perfectly, few would complain. But they often do not work perfectly, Mr. Morris asserted, again citing the fund's own data. Compliance with the fund's lending conditions in Indonesia was a negligible 20 percent, he estimated. The I.M.F. has had little success raising growth rates for its African clients. Those statistics may underlie a rethinking of the fund's approach by Horst Khler, a former German government official who was appointed to head the I.M.F. after Mr. Camdessus retired earlier this year. After Mr. Khler returned from visits to client nations last summer, he pronounced his aversion to some of the heavy demands made of borrowers. He said that there will be "no more Indonesias." Treasury Secretary Lawrence H. Summers has also pushed the fund to streamline its lending programs and focus more on what many economists think of as its core mission preventing financial crises from spreading. Mr. Summers recently won support from other board members at the fund to eliminate some kinds of lending and shorten the length of loans, changes that might wean the fund away from long-term micromanagement. But, as Mr. Goldstein pointed out, the pressure to use the fund as a lever to bring about changes in developing nations comes primarily from the Group of 7 wealthy nations, the United States foremost among them. The Treasury Department, which must satisfy Congressional concerns that taxpayers' money going to the I.M.F. is not squandered, insists that the fund attach many conditions to loans. It recently backed another one: making the I.M.F. a global police officer to fight money laundering. Still, Mr. Morris's study, which is being presented to a high-level meeting of government officials and private economists in Woodstock, Vt., this weekend, may reflect a new consensus that the fund should do fewer things, and do them better. Exactly which things Is trade reform essential? Must a nation fully open its capital markets to foreign investors? is still up for grabs. But the next time a leader of a nation getting I.M.F. aid affixes his signature to a lengthy contract for change, it seems unlikely that Mr. Khler will be captured on camera hovering behind him. From rob@essential.org Tue, 24 Oct 2000 09:47:22 -0700 Date: Tue, 24 Oct 2000 09:47:22 -0700 From: Robert Weissman rob@essential.org Subject: [stop-imf] Under IMF pressure, Moldova agrees to privatize tobacco and wine cos. Yet another example of the IMF/World Bank forcing a country to undertake measures that it absolutely opposes. In this case, it happens that the demanded reform is likely to increase smoking rates and therefore preventable death. Robert Weissman Moldova Agrees To Privatize Wine and Tobacco Enterprises 16 - 22 October 2000 by Maria Diaour-Antonenko MOLDAVA; Source: Transitions Online, Sunday, 10/22/00 PRAGUE--The Moldovan parliament on 19 October passed legislation privatizing wineries and tobacco enterprises by a vote of 55 to 36, with only the Communist Party voting against. The bills' previous delay caused the International Monetary Fund (IMF) and the World Bank to suspend financial and other assistance programs to the country in 1999. With the Moldovan economy largely dependent on these two industries "the decision of the parliament is one that has no other alternative," INTERLIC news agency quoted President Petru Lucinschi as saying. Carlos Elbirt, resident representative of the World Bank in Moldova, remarked that the legislature's action is "a good step toward the recovery of the Moldovan national economy." The passage of the bills should free up more than $50 million in aid that had been on hold--$35 million from the second tranche of World Bank structural adjustment funding and $15 million from the Dutch government, according to the news agency. The IMF and World Bank had insisted on the privatization of these two largest sectors of the Moldovan economy as the only way to economic reform. Given corruption in past privatizations, the majority of the Moldovan population is believed to hold negative views of the process. With this in mind, the president advised government that "The privatization of these enterprises should be transparent and serious investors should be attracted to it. The government should proceed from the priority interests of the country, its economic recovery, creating new job opportunities and raising the population['s] living standard." Communist Party leader, Vladimir Voronin, however, is far from optimistic: "Only the blind do not see that from the outset of the so-called reforms, which made Moldova one of the poorest countries in Europe and the CIS, it has been this predatory privatization that has served as a well-thought-out and well-adjusted mechanism for the monstrous, unsurpassable plunder of the people for the fabulous enrichment of a narrow group of swindlers and rogues. ... Today you have hammered the last nail in the coffin of the national economy, but your joy at this privatization is premature." The following day, the leaders of the Communist Party voted to suspend participation in the parliament's plenary sittings. From rob@essential.org Tue, 24 Oct 2000 09:51:02 -0700 Date: Tue, 24 Oct 2000 09:51:02 -0700 From: Robert Weissman rob@essential.org Subject: [stop-imf] user fees for water spur cholera outbreak in South Africa SAPA and Woza News 24/10/00 October 24, 2000 Nehawu tackles govt on cholera Durban (Sapa) - The cholera outbreak in KwaZulu-Natal, which has claimed 31 lives, could be related to the government's growth, employment and redistribution (GEAR) strategy, the National Health and Allied Workers' Union (Nehawu) said on Monday. National spokesman Moloantoa Molaba said that according to information received from a non-governmental organisation, the Rural Development Network, the GEAR strategy of cost recovery for social services required people to pay for previously free and clean water. "After the drought in 1993, the government installed communal taps in the now cholera-infected areas. The water was used by local villagers and outlying communities, and was free. "In August the department of water affairs, which is gradually phasing in the programme, gave control of the water supply to the transitional local council in these cholera areas. Soon after, they introduced the cost recovery system," Molaba said. He said rural communities couldn't afford the service and began using water from polluted streams in the densely populated area. "Barely a month without clean water, then there is a cholera outbreak. Nehawu is investigating these allegations and we hope they are not true," Molaba said. Two badly affected areas, he said, were Mgwelezane and Singisi villages in the Mpendle region. Molaba said the strategy of cost recovery for social services had been "notoriously imposed and driven by the World Bank and the International Monetary Fund". He said Nehawu challenged the department of water affairs to answer the claims. Water affairs ministry spokesman Thami Mchunu said the allegations were not true. The department will release a full statement on the issue on Tuesday, he said. The death toll reached 31 on Monday after a resident of the Reservoir Hills informal settlement near Durban died in Addington hospital. The provincial health department said 86 new cases of cholera have been reported since Sunday, taking the total number of reported cases to 3 636. Of this, 2 350 cases were reported in the lower Umfolozi area where the disease first broke out and where 15 of the fatalities were recorded. Twenty-nine of the new cases were also from the Umfolozi area. The other area of concern is at Eshowe/Nkandla, where 1 092 cases have been reported since mid-August and where 10 people hade died. Health authorities are concerned that the annual religious festival of the Shembe church outside Eshowe could contribute to the cholera outbreak due to the lack of amenities for the thousands of churchgoers who have already gathered. The provincial department of health has provided fresh water and toilet facilities as well as a swimming pool for baptisms, previously performed in a nearby river. On Monday, KwaZulu-Natal health MEC Zweli Mkhize visited the Shembe gathering with the provincial surgeon-general of the SA National Defence Force and a representative from the World Health Organisation to assess the situation. Health spokeswoman Mabel Dlamini said Mkhize was satisfied that measures taken to prevent participants from contracting the disease were adequate. Dlamini said only one of the cases reported from the area involved a Shembe church member, and he contracted the disease before arriving for the gathering. She added that the department would soon embark on an education programme to inform people about the disease in areas where it had not yet broken out. "We hope that through this we will be able to prevent the disease from spreading to these areas." There are 11 fully operational rehydration centres, open 24 hours a day, to assist affected people. Also, 96 water tankers are supplying clean water to communities. Sapa http://www.woza.co.za/sapa/oct00/cholera24.htm From rob@essential.org Wed, 25 Oct 2000 10:10:15 -0700 Date: Wed, 25 Oct 2000 10:10:15 -0700 From: Robert Weissman rob@essential.org Subject: [stop-imf] South African Minister admits: supply cuts caused cholera Beeld 25/10/00 25/10/2000 12:18 - (SA) Supply cuts caused cholera Christi van der Westhuizen Cape Town - Water supply cuts to people who were too poor to pay their accounts resulted in the outbreak of the cholera epidemic in KwaZulu-Natal the Water Affairs and Forestry Ministry admitted on Tuesday. This follows a statement by public service union Nehawu on Monday that the government's macro economic policy, Gear, could be blamed for the cholera epidemic in KwaZulu-Natal which has claimed the lives of 32 people to date. The statement comes in the wake of local government election promises by the ANC, IFP and DA of free access to basic services. Water was available free of charge in the Mpendle area in KwaZulu-Natal from the early 1980s after tap water supplies were laid on by the apartheid government after a severe drought. At the beginning of last year water supplies were extended in the area. Free water supply was however terminated as a result of cost recovery systems implemented by the local water board. Water Affairs relinquished control of water supply to the local board in the area. The department started claiming payment for water supply, Nehawu spokesperson Moloantoa Molaba said, referring to information supplied by a non-governmental organisation, Rural Development Services Network. Recovering costs for community services is a Gear strategy, infamously enforced by the World Bank and the International Monetary Fund in developing countries he added. The local residents are too poor to pay for water and had to resort to polluted river water. It is an "absolute" truth that people were too poor to pay for water resulting in the water being cut and them having to resort to river water, Water Affairs Minister Ronnie Kasrils spokesperson Thami Mchunu said on Tuesday. "The minister is battling to provide clean water free of charge because the people are too poor to pay for it. As a temporary measure he has asked the water board not to impose any fees on water supplies." The number of cholera cases reported in the area meanwhile has risen to 3 711 with 75 new cases reported on Tuesday. http://livenews.24.com/News24/Health/Health_News/0,1113,2-14-660_931135,00.html From rob@essential.org Wed, 25 Oct 2000 12:20:33 -0700 Date: Wed, 25 Oct 2000 12:20:33 -0700 From: Robert Weissman rob@essential.org Subject: [stop-imf] PRAISE FOR CONGRESSIONAL ACTION TO END IMF/WORLD BANK IMPOSITION OF USER FEES FOR BASIC HEALTHCARE AND EDUCATION For Immediate Release For more information, contact: October 25, 2000 Njoki Njehu, 50 Years is Enough, 202-544-9355 Joanne Carter, Results, 202-783-7100 PRAISE FOR CONGRESSIONAL ACTION TO END IMF/WORLD BANK IMPOSITION OF USER FEES FOR BASIC HEALTHCARE AND EDUCATION The United States will oppose the imposition in poor countries of user fees for basic healthcare and education by the International Monetary Fund and World Bank, following adoption today of the FY 2001 Foreign Operations Appropriations bill. A provision in the bill requires the United States to oppose any IMF, World Bank or regional development bank loan that includes user fees or service charges on poor people for primary education or primary health care, including prevention and treatment efforts for AIDS, malaria, tuberculosis, and infant, child and, maternal well-being in connection with the institutions lending programs. "This is the first step toward eliminating one of the most destructive components of the austerity programs the IMF and World Bank impose on most of the countries of Africa, Asia, and Latin America," said Njoki Njehu, director of the 50 Years Is Enough Network." To deny the most basic services to the world's most impoverished is what I would call sado-monetarism: submitting the very lives of the people of Africa (and elsewhere) to the whims of the market. Today the U.S. Congress has put these institutions on notice: the world knows what they are doing to the impoverished people of the world, and we will not stand for it any longer." Many of the lending programs from the IMF and World Bank impose charges -- known as user fees, cost recovery, community financing or other euphemisms -- for access to basic services. Critics say the overwhelming evidence reveals that these charges result in denials of care, and cite evidence from the World Bank that supposed exemptions from the charges for the poor routinely fail. "What's encouraging about the conference language," said Joanne Carter, legislative director at Results, a citizens' lobby that works to reduce poverty and hunger, "is that the Treasury Department will have to start taking action right away to eliminate user fees for basic health and education and will be required to report to Congress on this -- so that Congress can ensure that the intent of this language is being met. User fees can no longer be hidden away in loan agreements and policy documents. There is a strong coalition of religious, labor and development groups who are determined to see these destructive user fees eliminated and members of Congress committed to overseeing this." "Today's action shows that Congress has the ability to take effective action to reduce the destructive power of the IMF and World Bank," said Robert Naiman, senior policy analyst at the Center for Economic and Policy Research. "Legislation to require the United States to use its 'voice and vote' to change IMF and Bank policy has failed -- but the measures in today's legislation show there are real ways to limit the institutions' power." "It is time for the IMF and World Bank to end the user fee nightmare," said Robert Weissman, co-director of Essential Action, a corporate accountability group. "User fees keep children and especially girls out of school, deny care to the sick, and result in needless, preventable suffering. Until these institutions abandon these policies, user fees will remain Exhibit One in the case against the IMF and World Bank." From rob@essential.org Wed, 25 Oct 2000 14:51:14 -0700 Date: Wed, 25 Oct 2000 14:51:14 -0700 From: Robert Weissman rob@essential.org Subject: [stop-imf] Bloomberg: World Bank starts to retreat on user fees World Bank to Stop Pushing Poor to Pay for Health Care, School Washington, Oct. 25 (Bloomberg) -- The World Bank is halting its decade-old practice of encouraging borrowing governments to charge the poor for school and health services, acknowledging that those fees deprive many people of basic needs, an official said. The move comes as the bank is under pressure by the U.S. Congress, anti-poverty groups and others to make its policies more sensitive to the poor. The Congress last night agreed to compel the Clinton administration to oppose the fees, which the bank has promoted as a way to help governments balance their budgets. ``The bank has learned that barriers to access for health and education must be eliminated,'' said Eduardo Doryan, a World Bank vice president. ``We are moving in the direction'' of eliminating the imposition of fees for basic services from all lending programs, he said. The bank will also help countries find other sources of health funding after they dismantle the fees, he said. This change marks the latest policy reversal for the Washington, D.C.-based lender, as critics have complained that its advice has often ended up hurting the poor. It no longer pushes all countries to open their capital markets, and it has steadily cut back lending for mining and oil production projects, under pressure from environmentalists. The bank and its sister organization, the International Monetary Fund, have lent tens of billions of dollars to about half the world's nations. The borrowers, financially troubled developing nations, must agree to a set of conditions to balance their budgets to receive the assistance. Fiscal Targets In 1987, the World Bank recommended that borrowing governments start recovering part of the cost of financing public health services, according to a bank report. As a result, developing countries began imposing the user fees to raise more revenue for health services and meet the fiscal deficit targets set by the bank and IMF. In previous years the World Bank imposed the fees as a condition to lending, although in recent years the bank says it has only allowed their use. Education fees -- even those as low as $7 a year for schools in countries such as Tanzania -- discourage poor children, particularly girls, from attending school, while fees at health clinics keep sick people away, according to World Bank and outside research. ``All we know from experience is that user fees are a deterrent to universal education and universal health,'' said Stephen Browne, director of poverty programs at the United Nations Development Program in New York. In Uganda, where the average person earns less than $1 a day, the number of children attending school doubled immediately after $8 annual school fees were dropped in 1997, according to a bank study. Nearby Malawi, which is even poorer, had a similar result two years earlier. ``We acted with the best information available at the time,'' Doryan said. Blanket Solutions For its part, the IMF says it's not considering a ban. ``When you get into the fiscal mix, a lot of things are necessary,'' said IMF spokesman William Murray. The Clinton administration is against fees in general, although congressional advocates for last night's bill said the administration tried to block an earlier, stiffer provision. World Bank Chief Economist Nicholas Stern also says he doesn't advocate an outright ban on the charges. ``Blanket solutions are unwise,'' Stern said at a conference this week. Although the bank says it doesn't require countries to adopt the fees, the evidence from a number of loan agreements is that it at least approves of them. And in earlier projects, it compelled the fees. A 1998 internal review of the World Bank's health lending, found that three-quarters of projects in sub-Saharan Africa included the establishment or expansion of user fees. As part of its document approved by the boards of the IMF and World Bank in March, Tanzania pledged to charge for services at health clinics and dispensaries, allowing for exemptions for the poorest people. Exemptions Those exemptions divide World Bank and U.S. policy-makers from outside advocacy groups. Officials say that exemptions serve to make sure that the poor continue to get free services, while those who can pay, do. Groups opposed to the fees say that exemptions rarely work, since poor and uneducated people don't know how to maneuver through complicated systems. ``The intent of these fees was sustainability of funding, but the outcome has been exclusion,'' said Joanne Carter, who has tracked the imposition of these fees for Results, an anti-poverty group. While advocacy groups acknowledge that removing the fees won't solve the entrenched problems of poor health and low educational attainment in the world's poorest countries, they say the elimination of fees will end one high hurdle. ``What we are starting to say now is that access to basic social services is fundamental to development, and a basic human right,'' said the UN's Browne. --Mark Drajem in Washington (202) 624-1964 or mdrajem@bloomberg.net with reporting by Emily Schwartz From rob@essential.org Tue, 31 Oct 2000 09:05:30 -0800 Date: Tue, 31 Oct 2000 09:05:30 -0800 From: Robert Weissman rob@essential.org Subject: [stop-imf] Bretton Woods update available BRETTON WOODS UPDATE A bi-monthly digest of information and action on the World Bank and IMF Issue 19 now available at: www.brettonwoodsproject.org/update/19 Available in HTML and in fully formatted PDF for easy on-screen viewing and printing. Contents this issue include: * Post Prague * New global governance proposals * IMF governance and transparency moves * Bank proposes World Commission on Mining * Bank blocked on global public goods * Bank global net plans: concern grows * World Development Report gets mixed response * Policy consultations on forests, adjustment and environment * New directions for IMF? * Union complaints on Bank labour standards * Nigerian union takes IMF and Bank to court * Don't dictate policy, Turkey tells IMF * New books and reports * Little change in new IMF Indonesian programme Full contents list available online. Please inform others in your organisations and networks interested in World Bank and IMF issues. Note that you can also obtain the Update in plain text e-mail format. Send subscription-related e-mails to: subs@brettonwoodsproject.org We always welcome feedback on Update articles, and suggestions for future ones. Alex Wilks, Angela Wood Bretton Woods Project, London www.brettonwoodsproject.org ____________________________________________________________ The Bretton Woods Project works on World Bank and IMF issues with a network of non-government organisations and researchers. Hamlyn House, Macdonald Road, Archway, London N19 5PG Tel: + 44 (0)20 7561-7547 Fax: + 44 (0)20 7272 0899 www.brettonwoodsproject.org >> BRETTON WOODS UPDATE << Subscribe free to our bi-monthly digest of information and action on World Bank and IMF issues. www.brettonwoodsproject.org/sub.html subs@brettonwoodsproject.org From rob@essential.org Tue, 31 Oct 2000 10:13:37 -0800 Date: Tue, 31 Oct 2000 10:13:37 -0800 From: Robert Weissman rob@essential.org Subject: [stop-imf] 50 Years User Fee Victory: Analysis This is a multi-part message in MIME format. --------------7CC31843ECBEBC6FE657CBC4 Content-Type: text/plain; charset=us-ascii; x-mac-type="54455854"; x-mac-creator="4D4F5353" Content-Transfer-Encoding: 7bit --------------7CC31843ECBEBC6FE657CBC4 Content-Type: message/rfc822 Content-Transfer-Encoding: 7bit Content-Disposition: inline Return-Path: Received: from soleada.plevin.com (zoc-plv-brk15.zocalo.net [157.22.1.59]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id MAA25434; Tue, 31 Oct 2000 12:54:49 -0500 Received: by soleada.plevin.com (8.9.3/8.9.3) id JAA16244 for stop-wb-imf-list; Tue, 31 Oct 2000 09:36:45 -0800 (PST) X-Authentication-Warning: soleada.plevin.com: majordomo set sender to owner-stop-wb-imf@vidacom.org using -f Received: from thehub.knight-hub.com (thehub.knight-hub.com [205.177.16.3]) by soleada.plevin.com (8.9.3/8.9.3) with ESMTP id JAA16240 for ; Tue, 31 Oct 2000 09:36:42 -0800 (PST) Received: from BIGDELL.AFGJ.ORG (209-9-178-213.sdsl.cais.net [209.9.178.213]) by thehub.knight-hub.com (8.9.3/8.9.3) with ESMTP id MAA24665 for ; Tue, 31 Oct 2000 12:53:19 -0500 Posted-Date: Tue, 31 Oct 2000 12:53:19 -0500 Received: by BIGDELL with Internet Mail Service (5.5.2650.21) id ; Tue, 31 Oct 2000 12:45:19 -0500 Message-ID: From: Soren To: "'stop-wb-imf@50years.org'" Subject: (50 Years) User Fee Victory: Analysis Date: Tue, 31 Oct 2000 12:45:14 -0500 MIME-Version: 1.0 X-Mailer: Internet Mail Service (5.5.2650.21) Content-Type: text/plain; charset="iso-8859-1" Sender: owner-stop-wb-imf@vidacom.org Precedence: bulk Analysis of the User Fee Provision Passed by the U.S. Congress PLUS A Request for Information, Especially From the South Last week we posted a press release and a news story on the victory in the U.S. Congress regarding "user fees," the charges that many IMF and World Bank programs insist on for services like education and health care. As you might remember from those postings, Congress has mandated that the U.S. representatives to the boards of not only the IMF and World Bank, but also the regional multilateral development banks (Inter-American, African, Asian, and possibly some smaller institutions) oppose any programs that include requirements that user fees be charged to the poor for provision of primary health services or primary education. The bill has been passed by both the House and the Senate, and is awaiting the President's signature; there have been no threats to veto the bill. We want to express a huge THANKS to the many activists around the country who responded to our alerts. Your calls and letters had a major impact. This genuine step for a measure of justice for people in the South (and East) could not have been achieved without you. Below is the actual legislative language: ********************** USER FEES Sec. 596. The Secretary of the Treasury shall instruct the United States Executive Director at each international financial institution (as defined in section 1701(c)(2) of the International Financial Institutions Act) and the International Monetary Fund to oppose any loan of these institutions that would require user fees or service charges on poor people for primary education or primary healthcare, including prevention and treatment efforts for HIV/AIDS, malaria, tuberculosis, and infant, child, and maternal well-being, in connection with the institutions' lending programs. ********************** Attached to that is explanatory language, which provides more detail on what Congress demands: ********************** Joint Explanatory Statement of the Conference Committee: Sec. 596. User Fees The conference agreement includes a provision which requires the United States Executive Directors at all multilateral development banks and the International Monetary Fund to oppose any loan which requires user fees or service charges on poor people for primary education or primary health care. The managers further agree that user fees should not be imposed or required through Bank or Fund sponsored `community financing,' `cost sharing,' or `cost recovery' mechanisms prepared in conjunctions with loans, structural adjustment schemes or debt relief actions. The managers direct that the Committees on Appropriations be notified within 10 days if any loans, community financing, cost sharing, or cost recovery mechanisms requiring the imposition of user fees are approved by any multilateral development bank or the International Monetary Fund. ********************** 50 YEARS IS ENOUGH NETWORK ANALYSIS The Good News: This is the first time that the U.S. Congress has taken enforceable steps to have a concrete influence on the policies mandated by these institutions under structural adjustment programs. The original amendment called for the requirement to be delayed until 2002, but now the provision will take effect from the time of the President's signature. Another improvement over the original language is that this goes beyond the IMF and World Bank to include the regional development banks. These institutions frequently follow IMF/WB policies, and likely have a number of programs supporting the imposition of user fees for health & education. The enforcement mechanism here (the last paragraph) is interesting -- requiring that the Treasury Department report to Congress within ten days on the passage of any program with user fees. Although it doesn't literally "enforce," this move says "tell us each time the institutions go against our position" AND "tell us any time there are fees that you did not think it necessary to oppose." This is designed to make sure the Executive Directors signal U.S. opposition to discourage Treasury from applying its own judgement about how to signal opposition and when to desist from doing so. Previous attempts to influence policy at the institutions has called for the Executive Directors to use their "voice and vote" -- something they ducked by explaining that votes are seldom taken and minutes of their conversations are not made public. This enforcement mechanism, attached to an appropriation bill, contains within it the implication that future appropriations may be held up if user fees continue to be imposed. While the U.S. cannot simply legislate policy changes at multilateral institutions, it is very influential. Its position on an issue can have a persuasive effect on other governments, and can be taken as a policy guideline by the institutions themselves. The best news, of course, is that by passing this amendment, we may actually succeed in eliminating some of the most egregious obstacles to people getting the health care and education that they need. The Less Good News: The original amendment had a stronger enforcement mechanism: the threat of a cutoff of funds for the institutions if they were still imposing user fees in 2002 (the one-year delay would have given them a chance to reform gradually, you see). The IMF and World Bank usually prove impervious to demands for change from the outside unless their money is threatened, so we felt this threat was the best way to go. However, it did not survive the political negotiations around the appropriations bills. We can take some consolation from that fact that the enforcement mechanism detailed above has never been tried before, and looks promising. However, the multilateral institutions and the Treasury Department are adept at circumventing demands they don't like. We shall have to be vigilant as this law comes into effect to see if it is being obeyed. In terms of making sure this law is followed, we are hampered by the fact that the Treasury Department, which is charged with following it, was opposed to it. We can therefore not be confident that they will adhere to it without prompting and monitoring. =============== REQUEST FOR INFORMATION This provision will become law soon. We need to hear from our colleagues in borrowing countries about new World Bank, IMF, IBD, AfDB, and ADB programs that mandate user fees for education and health care. Please monitor the introduction of such fees in your country and the reason for their imposition. Send information to us at and/or . Thank you! Soren Ambrose 50 Years Is Enough Network Washington, DC USA =========================================================== 50 Years Is Enough Network http://www.50years.org To unsubscribe, email stop-wb-imf-request@50years.org with unsubscribe in the body of the message. Questions? email stop-wb-imf-owner@50years.org. --------------7CC31843ECBEBC6FE657CBC4-- From rob@essential.org Tue, 31 Oct 2000 12:28:06 -0800 Date: Tue, 31 Oct 2000 12:28:06 -0800 From: Robert Weissman rob@essential.org Subject: [stop-imf] Democracy more important than conditionality for development >From the World Bank's Development News DEMOCRACY MAKES COUNTRIES WEALTHIER. We like to believe freedom, economic progress, happiness and the quality of life are somehow related, and the last 20 years seem to have given us some pretty powerful geopolitical evidence that democracy works "better than the alternative", writes Sarah Hogg of the Independent (UK). But it is not so easy to put real numbers on its value-the related aims of two papers published yesterday in the Economic Journal. The most important of these sums up research into 220 loan-backed development programs by David Dollar and Jakob Svensson of the World Bank. This makes it clear how very much more likely such programs are to succeed if they are agreed with democratically-elected governments. The difference amounts to a full 20 percentage points. Indeed-uncomfortably for the Bank-politics are a much stronger indicator of the likely success of reform programs than the elements within the World Bank's control, such as the size of the loan that it makes and the number of conditions attached. These seem to have no relationship at all with its chances of success or failure, notes Hogg. This is important not merely because of the money at stake: in fiscal 2000, by no means a record year, the Bank and its soft-loan arm lent nearly $15.3 billion worldwide. It is also significant because our international institutions have traditionally tried to keep politics out of economics. The governments who set up the World Bank and the IMF after the Second World War also sought to leave a legacy of democratic institutions (along with a profoundly damaging faith in the efficacy of big government) in their former colonies, Hogg says. But they have not stopped lending when democracy crumbled. Of course, the institutions are in a cleft stick. Too much politics, and they are seen as the slaves of their biggest subscribers, notably the US; too little, and they are condemned as the supporters of Third World dictators. What shines through this research is the lethargy (if nothing worse) of autocratic governments, compared with the energy that seems to flow from democratic legitimacy, says Hogg. The World Bank cannot lend only to newly elected governments, but the evidence from this research cannot be ignored. The IMF and the World Bank cannot forget politics. Of course, in extreme cases, they already do turn off the tap. And they have become more questioning of the commitment to reform. Indeed, the World Bank claims that the failure rate has halved since the period covered by this research. But it would be good to think that it might follow the authors' advice to be more selective, she says. Tuesday, October 31, 2000 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. For more news go to http://www.worldbank.org/news To subscribe go to http://www.worldbank.org/devnews To unsubscribe send a blank email to leave-devnews-32732U@lists.worldbank.org From rob@essential.org Tue, 31 Oct 2000 12:36:31 -0800 Date: Tue, 31 Oct 2000 12:36:31 -0800 From: Robert Weissman rob@essential.org Subject: [stop-imf] NGOs Push for Impact Studies on Structural Adjustment Programmes FINANCE: NGOs Push for Impact Studies on Structural Adjustment Programmes By Gumisai Mutume Washington, Oct 23 (IPS) - Non-governmental organisations, encouraged by pronouncements by the International Monetary Fund (IMF), are pressing for comprehensive impact assessment studies to be carried out on structural adjustment programmes (SAPs). IMF Deputy Director of Policy Development and Review, Masood Ahmed recently announced that the IMF was establishing mechanisms to carry out such impact assessments. These mechanisms should be in place before year-end. The IMF also recently issued a discussion document that proposes more selective and limited conditions be attached to funding under the Poverty Reduction and Growth Facility (PRGF) which last year replaced the Enhanced Structural Adjustment Facility. Officials at the World Bank, the IMF sister organisation are not talking about their participation in the analyses, which are dependent on the Bank because of the institution's expertise in research. For about two years now, the Bretton Woods institutions have been promising to conduct the studies. Typical responses to the slow progress have included the lack of good and adequate data in developing countries. ''It is a problem if, after 20 years of structural adjustment programmmes there is no good data,'' says Sara Grusky, co-director at the non- governmental Globalisation Challenge Initiative. ''What we want to see done is a dis-aggregation of the impacts of reforms being pushed in the areas of agriculture, financial policy, trade and the social sectors ... to identify the kind of conditions that have the potential of having negative social effects.'' A Fall 2000 newsletter produced by the non-governmental World Development Movement, the Center of Concern and Globalisation Challenge Initiative notes that impact assessments could provide an 'early warning system' to ensure that loans with potential adverse social and environmental consequences are changed or discontinued. The studies could also muster the support of civil society and the media for IMF/Bank programmes if these are publicly perceived as operational and beneficial to a country. Before 1980, the Bank devoted a negligible amount of lending to SAPs. But, the last financial year saw 53 percent (15 billion dollars) of new Bank lending going to adjustment. The IMF's adjustment lending before 1980 was limited to short-term financing to stabilise exchange rates. Now, almost all IMF funding in poor countries goes to adjustment. Many people affected by SAPs do not understand the basis of these programmes nor do they know how they work. They also do not make any inputs into the development of the programmes, a feature the Bretton Woods promise will change under PRGF. NGOs working in the area, such as Friends of the Earth US, charge that even the implementers, the Bank and Fund, have very little in-depth understanding of the social and environmental effects of their policies on developing countries. They say country-by-country assessments could assist identify countervailing measures to offset temporary adverse effects on the poor or determine the pace and levels of liberalisation for differing economies. ''Questions that need to be asked include, what is the public perception and support of adjustment programmes?'' an IMF insider who supports the assessments as a new way of channelling adjustment lending told IPS. ''Should we, for instance postpone privatisation of an electricity power plant in favour of liberalisation in another sector until public support has been won?'' In a discussion document titled, 'Key Features of PRGF-Supported Programmes' the IMF notes that under the new approach, agencies providing external assistance will need to change the way in which their programmes support the efforts of national authorities. For instance, it calls for the development of ''transparent monitoring systems to improve efficient delivery of public services'' and at the point of policy implementation they should indicate what prior work had been done and how this had influenced the policies. According to Gita Bhatt of the IMF, there is no timeline yet and the method of study still needs to be worked out with the Bank. The studies would include all low-income countries taking part in the PRGF process. Responding to charges that the Fund and Bank have in the past promised they would carry out impact assessments but have not delivered, Bhatt says ''we have put it down on paper'' and all that remains is to carry it out. Bank and IMF programmes have increasingly come under fire for their perceived aggravation of poverty in developing countries. The majority of economies undergoing SAPs remain poor and critics charge that it is primarily because they are implementing structural adjustment programmes that they are not growing. In last year's 'Annual Review of Development Effectiveness' the Bank admitted that poverty increased and prospects for growth dimmed in the bulk of developing countries under review. It noted that in 54 percent of poor countries surveyed, the people experienced stagnating per capita income, rising poverty, declining life expectancy, or a combination of these. But the Bank and Fund are always quick to point out that it is not their policies that are responsible for the poor economic performance of these countries. On the other hand critics of IMF and Bank policies remain suspicious because critical SAPs documents remain secret. There are four key documents - the Country Letter of Development Policy sent to the Bank by the borrowing government, the IMF Letter of Intent sent to the Fund, the World Bank President's Report, which outlines the final adjustment programme and the PRGF Arrangement. Only the Letter of Intent is disclosed to the public. Also the conditions of SAPs have multiplied since the 1980s requiring governments to comply more and more with free-market related and governance demands whose effects are untested. Some of these conditions include capital account liberalisation, domestic financial liberalisation, trade and market reforms, budget austerity and privatisation. Apart from being required for SAPs these conditions are also prerequisite for governments to obtain bilateral donor assistance, loans, trade credits or debt relief. A paper released this year titled 'Governance-related Conditionalities of the IFIs' by Harvard professors Devesh Kapur and Richard Webb says the greatest burden rests on sub-Saharan Africa. It notes that in the case of the Bank, the average number of conditions per country rose from 32 between 1980 and 1983 to 56 by the end of the decade. An analysis of the institutions' arrangements with 13 sub-Saharan African countries last year revealed an average of 114 conditions of which 82 were governance related. Tanzania had the biggest share of conditions in Africa, with a total of 150. Kapur and Webb note that while conditions prior to 1980 were aimed at ensuring loan repayments, they have become ''a means for governmental and social engineering by creditors''. (END/IPS/IF/DV/gm/da/00) From rob@essential.org Fri, 10 Nov 2000 07:37:19 -0800 Date: Fri, 10 Nov 2000 07:37:19 -0800 From: Robert Weissman rob@essential.org Subject: [stop-imf] IMF, World Bank Reforms Leave Poor Behind, Bank Economist Finds IMF, World Bank Reforms Leave Poor Behind, Bank Economist Finds By Mark Drajem Washington, Nov. 7 (Bloomberg) -- The poor in developing countries are often better off when their governments ignore the policy advice of the International Monetary Fund and World Bank, according to a study by a World Bank economist. That conclusion by William Easterly, who in the past has co- written papers with IMF Deputy Managing Director Stanley Fischer and U.S. Treasury Secretary Lawrence Summers, calls into question one of the main objectives of the two global lenders -- fighting poverty. China, India and other countries that don't follow IMF and World Bank economic programs have seen more of their people lifted out of poverty in times of economic growth than have nations that take the advice of the Washington-based lenders, according to the research, to be presented at an IMF conference later this week. "A lot of the countries that have gotten a lot of lending from the IMF and World Bank are worse off," Easterly said in an interview, citing Zambia and the Philippines. "I don't think the record is real encouraging." To be certain, when developing nations see their economies shrink, the poor are often cushioned by IMF and bank loans, he found. Advocates for the poor have long complained that IMF and World Bank advice to countries to cut government payrolls, lower trade barriers and raise interest rates benefits rich residents of those countries and foreign investors, while hurting the poor. Harsh Criticism That criticism turned increasingly harsh, and even violent, in the last year, with the IMF and World Bank meetings in Washington in April and Prague in September disrupted by protesters. That has prompted the lenders to repeatedly underline their concern about poverty, with bank President James Wolfensohn and IMF chief Horst Koehler calling on rich nations to open their markets and forgive developing-country debt. The bank -- whose Washington headquarters is inscribed with the words "a world free of poverty" -- has also redoubled its efforts to research the effect of its lending on the poor. Easterly's work is part of that effort. "This is not the most convenient finding from the point of view of the World Bank's image," Easterly said. He said the poor don't have the skills to benefit from the new businesses, the cheaper imports and the high-technology jobs that often come with IMF-backed economic overhauls. "The World Bank and IMF affect the modern, formal economy, but the poor are not in the modern, formal sector," Easterly said. "The poor live on the margins." Conditions Attached The two lenders often work together in lending to poor and transitional economies such as Kenya, Russia and Indonesia. They have lent to about half the world's nations, attaching conditions such as deficit-reduction targets or the sale of state-owned assets. IMF and World Bank policy-makers say their reforms often generate necessary short-term pain for long-term gain. Selling the state-owned brewery in Tanzania, for example, meant workers lost jobs and citizens complained about foreign ownership of a national landmark. Yet Tanzania Breweries Ltd. now produces export-quality beer -- and has shifted from a drain on the state treasury to the impoverished nation's largest taxpayer. World Bank economist David Dollar said Easterly overstates the influence of World Bank and IMF conditions, and so finds negative effects where there's really little impact. "I don't think we have that much effect on policy," Dollar said. Still, Dollar said Easterly's findings point to the best way to rework the loans. "Originally, these things were meant for attacking short- term shocks," and that is the way they have been successful, Dollar said. "The proper role for these programs is short-term." Business Cycle Easterly's study looked at business cycles of about three years, comparing the numbers of people with incomes of $2 a day in countries that had IMF lending programs with those that did not. During times of economic growth, the poor didn't gain as much in countries in which the IMF lent money as they did those in places with no programs, although they weren't hurt as badly in recessions, according to the study. "Expansion under (IMF, World Bank) adjustment lending is less pro-poor, while contraction under adjustment lending is less anti-poor," Easterly wrote. Easterly dismissed the charge that he's focusing on the short- term pain in recipient countries that are merely headed for long- term economic gains. He cited countries such as the Philippines and Tanzania that borrow for decades. The Philippines, which has been borrowing from the IMF for almost 40 years, last month withdrew plans to borrow $314 million from after the fund refused to allow the government to raise its budget-deficit target. The next week, Markus Rodlauer, the IMF's chief for the Philippines, said "you can never say never" about a resumption of the program. From rob@essential.org Fri, 10 Nov 2000 09:25:00 -0800 Date: Fri, 10 Nov 2000 09:25:00 -0800 From: Robert Weissman rob@essential.org Subject: [stop-imf] Zambia debt payments to rise under HIPC IMF promise to make HIPC debt initiative work for Zambia remains Unfulfilled as December deadline looms Jubilee 2000 UK www.jubilee2000uk.org/main.html The IMF and World Bank are still struggling to find a solution to Zambia's debt crisis, which sees one of the poorest countries in Africa paying more on debt service after qualifying for the international Heavily Indebted Poor Countries (HIPC) initiative. Zambia has rejected recent IMF proposals to improve their position because they fall short of conclusively resolving Zambia's debt burden ? the job that HIPC was designed to do. The country has fulfilled its side of the HIPC deal, implementing harsh structural reforms which have brought down inflation, but seen an increase in the poverty gap. At recent meetings in Prague, the IMF promised to review Zambia's predicament when their own figures - publicised by Oxfam - showed payments rising by $70 million a year to $200 million after Zambia qualifies for HIPC in December. The rise is due to old IMF loans becoming due, and raises fundamental questions about the HIPC formula. Gordon Brown, chair of the IMFC admitted in certain cases, such as the case of Zambia where we see the figures, we recognise that there has got to be something done; in other words, that the debt payments have got to be looked at given the way their flow is going to come over a number of years. But one month on, with the December deadline looming, the IMF is still searching. Zambian finance minister Katele Kalumba, who called for a creative, visionary and intelligent resolution of Zambia's case has been disappointed with the response from creditors who designed the flawed HIPC scheme. The IMF have proposed four options, none of which, says Mr Kalumba in a letter to the institution seen by Jubilee 2000, will make a difference, because they do not significantly reduce the amount of money to be paid. Instead, the four proposals involve rescheduling or refinancing (through a mixture of grants and new loans), smoothing debt service obligations rather than reducing them. The case of Zambia presents real difficulties for creditors, who have been trumpeting the HIPC scheme. As Mr Kalumba points out the HIPC Initiative should release resources to support comprehensive development and long-term economic growth in Zambia. Failure of the HIPC Initiative to respond to this challenge in Zambia's case will negate all the work that has gone into this effort, and raise serious questions about the credibility of the HIPC Initiatives in general. Unless HIPC can provide outright cancellation to reduce the overall debt, Mr Kalumba pleads that it will not be enough. But for Zambia it is vital that creditors take a bold step. Mr Kalumba said that only total debt cancellation for Zambia would ensure that her high levels of poverty could be addressed. We must not forget the urgency and desperation of Zambia's present economic status writes Mr Kalumba, ... in short, well over four fifths of Zambia's population lives on less than a dollar a day. He identifies poverty, disease ? particularly AIDS - and debt as interlocking forces which prevent development in Zambia, but makes it clear which determines the others: the critical link in this vicious circle is debt, because its pervasive effect strangles all other efforts to make meaningful investment in strategies to counter the deprivation and disease. Zambia is the most vivid illustration of HIPC's flaws, but other countries have not done much better, even though their payments have fallen rather than the other way round. Tanzania saw barely any reduction in repayments after qualifying, Mali received just a 13% cut, and Senegal nineteen percent. On average, countries have been getting their annual payments reduced by just one third. See also Zambian finance minister calls on creditors to find a "creative solution" From rob@essential.org Tue, 14 Nov 2000 11:53:59 -0800 Date: Tue, 14 Nov 2000 11:53:59 -0800 From: Robert Weissman rob@essential.org Subject: [stop-imf] Turkish public sector workers protest budget cuts > Turkish public sector workers protest budget cuts > > By Steve Bryant > > > ANKARA, Nov 11 (Reuters) - Thousands of public sector workers demonstrated in > the Turkish capital on Saturday against government spending cuts under a > programme backed by the International Monetary Fund. > > A parliamentary commission is due next week to begin hearings on the 2001 > budget which foresees the smallest budget deficit in recent memory. > > The budget calls for a 10 percent pay raise for government workers in the > first half of 2001, with an additional two percent if the country fails to > reduce consumer inflation. > > Figures reported in October showed the yearly rate of inflation was over 40 > percent. > > Civil servants carrying banners and shouting slogans gathered under heavy > police surveillance in central Ankara to hear speeches by labour leaders. > > "This budget will create poverty, hunger and destitution for public workers," > said Siyami Erdem, head of the KESK labour group. > > "We are the ones who produce and serve for this country. We are not the ones > who earn money on credit or by laundering it or from failing banks," Erdem > said. > > Protesters also complained about the scheduling of repayments from a > state-run compulsory savings scheme. > > There were no reports of injuries or arrests but a protester from the central > city of Konya died after suffering a heart attack during the three-hour walk > leading up to the rally, the state-run Anatolian news agency said. > > One banner read: "We want an economy that favours workers and pensioners, not > big business and the IMF." > > A three-year IMF programme, backed by $4 billion in stand-by loans, aims to > reduce inflation in Turkey to single digits by the end of 2002. It has also > involved radical reforms of social security payments, including pensions. From rob@milan.essential.org Mon Nov 27 11:05:39 2000 From: rob@milan.essential.org (Robert Weissman) Date: Mon, 27 Nov 2000 06:05:39 -0500 (EST) Subject: [stop-imf] Argentina: National Strike against IMF Programs (fwd) Message-ID: From: Soren , Soren Ambrose, 50 Years is Enough: These major actions in Argentina follow similar strikes earlier this year, the largest of which brought 80,000 into the streets of Buenos Aires in actions supported by the Catholic Church, among others. They also follow weeks of jockeying by the de la Rua government, the IMF, and the U.S. Treasury Department over the shape of a mini-bailout loan for Argentina. All in all, especially given actions in Ecuador and Bolivia this year, it is probably fair to say that South America is experiencing some very serious resistance to the rule of neo-liberal globalization policies. Argentine Workers Hold Strike Thursday, 23-Nov-2000 7:46PM Story from AP / LAURENCE NORMAN BUENOS AIRES, Argentina (AP) -- Thousands of Argentines walked off their jobs Thursday, heeding a call by the country's major unions to join a 36-hour national strike to protest government austerity measures. Some 2,000 strikers massed outside Congress and peacefully kicked off the strike at midday, beating drums, exploding firecrackers and shouting slogans against government spending cuts and tax hikes -- part of an austerity plan devised with the backing of the International Monetary Fund to bail out the recession-bound economy. Hundreds of other workers blocked roads leading into Buenos Aires and clogged main avenues to the city center in one of the largest such strikes in years. ``We can't go on living like this. The government promised us change, but all it has done is to deepen the problems of those most in need,'' said Alejandro Lencina, a 71-year-old retired accountant. The strike began without major incident. Police were out in force, but said they would not intervene as long as protests were nonviolent. By Thursday evening the streets of Buenos Aires were deserted as transport workers and taxi drivers joined the stoppage. Come Friday morning, tens of thousands of workers from the health, energy and banking sectors were also expected to walk off the job. The work stoppage was called 10 days ago, soon after President Fernando De la Rua announced new efforts to help rejuvenate Argentina's anemic economy. Among those measures was a five-year public spending freeze and the deregulation of the pension system. He said the additional measures were needed on top of an existing austerity packet that included tax hikes and salary reductions for state workers. Such cost-cutting measures have been demanded by international lenders in exchange for billions of dollars in fresh loans that South America's second largest economy needs to cover its ballooning public-sector debt. Last year, the economy shrank by 3 percent, and little growth is expected this year. Unemployment has shot up to more than 15 percent. The government has demanded unions keep basic services running, including emergency and health services, water, energy and transport. But some Argentine's, like Buenos Aires lawyer Hector Lacasa, sided with the government, arguing that a national strike would damage the economy further. ``The country is in a dreadful situation and I don't think this is the best time to have this action,'' Lacasa said. General strike starts as IMF, Argentina warn on payment default risk Thursday, 23-Nov-2000 6:00PM Story from AFP / Oscar Laski Copyright 2000 by Agence France-Presse (via ClariNet) ---------------------------------------------------------------------------- ---- BUENOS AIRES, Nov 23 (AFP) - The first day of the 36-hour general strike protesting government belt-tightening economic policies in Argentina ended Thursday with none of the much-feared violence, but with vast worker support, union officials said here. Argentina's three major trade unions, to which around half of the nation's 14 million workers belong, called the strike to protest a package of fiscal, pension and tax reforms announced by the government two weeks ago. Calling the 36-hour strike were the General Work Confederation's (CGT) dissident segment led by Moyano, and the Central Argentine Workers' union (CTA). Up to 80 percent of industry, government and transportation workers joined the strike, Moyano said. The strike is likely to broaden considerably Friday when the official CGT, led by Rodolfo Daer, joins in at midnight Thursday. The strike is the harshest protest in President Fernando de la Rua's 11 months of government. "The government-orchestrated campaign of terror was useless," said truck driver Hugo Moyano, a leader of the dissident sector of the CGT. "The main violence stems from the unemployment, misery, destruction of wealth and health, and lower salaries from the (government's) economic plan," Moyano said. Although there were no clashes, numerous vehicle owners reported punctures from tacks thrown down on the road on the key bridge at Pueyrredon, which links the heavily industrial suburb of Avellaneda with the capital Buenos Aires. And bus companies reported attacks on their vehicles resulting in broken windows, but were unable to identify the perpetrators. President de la Rua was angered by the incidents, and in a brief presentation late Thursday -- his first comments on the strike -- he warned that his administration "is not willing to tolerate threatening actions" by the strikers. At the start of the strike an International Monetary Fund official joined Argentina's finance minister in warning the country risked defaulting on its debt unless key reforms were promptly implemented. According to the first deputy managing director of the IMF, Stanley Fischer, the belt-tightening package has to be implemented as soon as possible in order to reduce the risk of payment default, after international markets began to sound the alarm against Argentina's weakened economy some weeks ago. "We are in the middle of announcing a very important, courageous program that, if implemented together with the international aid, will only at that point see the risk of a payments default seriously disappear," Fischer said in an interview published Thursday in the daily La Nacion. Economy Minister Jose Luis Machinea agreed with Fischer on a radio station later in the day. "The risk of payment default in Argentina has not disappeared because the situation is still very serious," Machinea said. Argentina has been in recession for around 30 months, with estimated growth of just 0.7 percent in 2000, while some 15.4 percent of the work force is unemployed and 14.5 percent underemployed. From rob@milan.essential.org Tue Nov 28 16:33:00 2000 From: rob@milan.essential.org (Robert Weissman) Date: Tue, 28 Nov 2000 11:33:00 -0500 (EST) Subject: [stop-imf] Urgent Action Needed: Tanzanian Structural Adjustment and User Fees Message-ID: Dear Friends: Below follows an important urgent action alert from Sara Grusky of the Globalization Challenge Initiative, and additional material from Tanzanian NGOs. The IMF and World Bank are preparing to consider a structural adjustment package for Tanzania. The policy package was designed in consultation with foreign creditors rather than local citizens, despite Bank/IMF claims that their "new" structural adjustment policy will enhance civic participation. The information that follows below lays out the problem in some detail. The summary is that the structural adjustment program is very harsh, and includes user fees for healthcare and education -- something the United States is now obligated to oppose by law. What can you do? The Tanzanian package will be considered at the IMF and Bank later this week. Contact the executive directors (country representatives) to the IMF and Bank and urge them to oppose this brutal policy package. For those in the United States, remind the U.S. executive directors that they are obligated to oppose loans that are conditioned on user fees for healthcare and education. The U.S Executive Director to the World Bank is Jan Piercy. Contact information: tel: 202-458-0110, fax: 202-477-2967, e-mail: jpiercy@worldbank.org. The U.S. Executive Director to the IMF is Karin Lissakers, tel: 202-473-7759, e-mail: klissakers@imf.org. For other countries, check http://www.challengeglobalization.org/html/ta_menu6.shtml Calls and faxes are more effective than e-mails, but e-mails are MUCH better than nothing. Thanks! And don't forget to act right away -- decision making begins Thursday. -- Robert Weissman Essential Information P.O. Box 19405, Washington, DC 20036, USA Tel: 1-202-387-8030 Fax: 1-202-234-5176 www.essential.org STRUCTURAL ADJUSTMENT PROGRAM (SAP) ALERT ON IMF AND WORLD BANK LENDING TO TANZANIA Executive Summary By Globalization Challenge Initiative, A Project of the Tides Center, USA and the Integrated Social Development Programme, (ISODEC), Ghana [for the full 30-plus page text of the "Structural Adjustment Program (SAP) Information Alert for Tanzania" contact: global.challenge@juno.com] In late November and early December, the Government of Tanzania (GOT) will seek endorsement of its Poverty Reduction Strategy Paper (PRSP) from the Boards of the IMF and World Bank. Preparation of an acceptable PRSP, which is a three-year national development strategy, is a new pre-condition for low-income governments seeking assistance from donors and creditors, especially the IMF and World Bank. Never before have the IMF and World Bank possessed the power to endorse a borrowering country's entire national plan. Ironically, the institutions have seized these powers in the name of enhancing "country ownership" of the development process. The Government of Tanzania (GOT) prepared its PRSP with more input from foreign creditors and donors than from its own citizens. The government is dependent on donors and creditors for the majority of its development budget and, to survive, it must heed its creditors and donors. There are fewer incentives to heed the cries of citizens -- especially the poor and disadvantaged. The PRSP lacks credibility because the process lacked the informed participation of citizens' groups. (See attached statement from Tanzanian organizations.) Citizen "participation for validation" of the PRSP arises when donors and creditors, especially the IMF and World Bank, negotiate with the GOT in secret and fail to disclose agreements and commitments to the public. This was the case in Tanzania. Key macroeconomic and structural adjustment issues were addressed in secret negotiations, occuring in parallel to the PRSP consultations. These negotiation excluded citizen's groups. Citizens that buy and sell and pay taxes were excluded from key decisions about whether or how the economy of Tanzania will be liberalized, privatized and increasingly oriented to produce exports. Policies, such as those relating to the price of money and goods, taxation options, trade liberalization, and the privatization of key state-owned enterprises were not "on the table" for negotiation during the PRSP consultations. Beyond public view, a handful of government officials negotiated the following arrangements with the IMF and the World Bank during the first half of 2000: 1. IMF and World Bank Action in March 2000, which structured a debt relief operation for the GOT [through the Highly Indebted Poor Country (HIPC) Initiative] and set the terms and conditions of such relief. 2. IMF Action in April 2000, which extended a $181 million structural adjustment loan [through the IMF Poverty Reduction and Growth Facility (PRGF)] to the GOT. To secure the loan, the GOT agreed to execute a multitude of policies. 3. World Bank Action in June 2000, which extended a $290 million structural adjustment loan to the GOT. The World Bank's policy does not require disclosure of information about this loan. 4. Tanzania's macroeconomic and structural policy framework, which provides the basis for the PRSP. Although the PRSP will be disclosed to the public, the policy framework will not be. Secrecy, especially secrecy about the role of powerful foreign creditors, undermines democratic processes and the rights of citizens. The daily lives of citizens are profoundly affected by the economic policies that the GOT is obligated to implement as conditions for securing loans and obtaining debt reduction. Tanzanian citizens have a right to participate in the formulation of public policies through open and democratic analysis, debate, and consensus-building. They have the right to hold their government accountable for its performance, including its commitments to foreign creditors and donors. Ultimately, citizens bear the burden of repaying debts to the IMF and World Bank. Currently, the citizens of Tanzania experience "taxation without representation" because they are denied participation in formulating critical IMF and World Bank-financed operations. Fifteen years of structural adjustment programs (SAPs) have not improved the quality of life for Tanzanian citizens. The IMF and the World Bank have financed structural adjustment policies in Tanzania for about 15 years. Per capita income and basic human welfare indicators have fallen during this time period. For example, per capita GDP has fallen to the 1960 level and primary school enrollment rates plunged below 50 percent from an average of 80 percent during the 1980s. (further details in Tanzania SAP Alert, box 6.) The excessive number of policy prescriptions, or conditions, attached to the new loans and debt relief amount to micromanagement of the GOT. Tanzania's Policy Matrix, 2000-2002," which was appended to the Interim PRSP by the IMF and World Bank lists approximately 157 policies that the Government of Tanzania will be pressured to implement during this time period. In addition, there are more than 20 policy conditions linked to debt relief, ten policy conditions linked to the World Bank's Country Assistance Strategy (CAS), and additional conditions linked to IMF and World Bank-financed structural adjustment loans. Policy prescriptions will have various impacts on the citizens of Tanzania; some will be negative. Some policy conditions may principally benefit foreign creditors and investors. Others may support or undermine the objectives of sustainable development and poverty reduction in Tanzania. The "SAP Alert" elaborates on problematic policy prescriptions, including those which: Set fiscal and monetary targets that may continue to undercut public services, reduce internal demand, aggravate unemployment, and handicap efforts to boost investment in infrastructure and human development. Impose cost-sharing (i.e. new fees for services) in schools, health care centers and hospitals, which will continue to rob vulnerable communities of essential health and education services. The U.S. Government is now bound by law to oppose loans involving cost-sharing provisions. On October 25, 2000, the U.S. Congress passed a bill that requires the United States Executive Directors at the IMF, the World Bank and the regional development banks to oppose any loan that imposes user fees or service charges on poor people for primary education and health care. The legislation was subsequently signed into law. Further reduce import tariffs. Such tariff reductions often result in a flood of imports that can undermine domestic industrial and agricultural producers. Require capital account liberalization to attract foreign investment. However, speculative transactions provide profits to foreign investors while offering few, if any, benefits to the poor majority of Tanzania. Require privatization of public companies, which can increase unemployment, lower wages, increase the cost of goods and services, and decrease access to poor populations. Require the privatization of agricultural enterprises. Already, privatization has increased the prices of fertilizer and other inputs, and reduced access to credit. While large farmers and private traders have benefited from liberalization and privatization, small farmers, who constitute the majority of Tanzania's population, have not. Require the GOT to remain current on debt service payments. This is a standard condition of IMF loans. However, nearly a quarter of the government's 2001 budget is devoted to servicing external debt. In fact, even after debt relief, the level of Tanzania's external debt service rises. (Debt servicing requirement in 2001 will be higher than requirements in 1996-2000.) It is important to assess whether such policy conditions will hurt or help Tanzanians, especially poor and marginalized groups and women. However, the main issue relates to how these policy conditions are formulated. Behind closed doors, the IMF and World Bank push these policies on a government which is "on its knees" and desperate for foreign exchange. Negotiations relating to PRSPs and adjustment conditions should never undermine domestic consensus-building processes. How to Convey Your Views to the Executive Directors of the IMF and World Bank Tanzanian citizens are conveying their views of the PRSP and adjustment processes to their government and to their representatives on the Executive Boards of the IMF and World Bank. To convey your views, locate the names, addresses, phone, fax and e-mail contacts of the World Bank and IMF Executive Directors that represent your country at: www.challengeglobalization.org. In designing the PRSP process, the Executive Directors committed their institutions to open and transparent processes that would reconcile structural adjustment conditions with poverty reduction goals. Their promises are unfulfilled. Macroeconomic and structural policies cannot be designed in a participatory fashion to serve poverty reduction goals because, for the most part, they are formulated in secret. [For the full text of the Tanzania SAP Alert contact: global.challenge@juno.com] Comments from the Tanzania Gender Networking Project Regarding the IMF and World Bank endorsement of the Government of Tanzania's "Poverty Reduction Strategy Paper" Since the government, forced by the policies of the IMF and the World Bank, has embarked on policies of withdrawal of state support, women, children, and the rural poor have been most heavily indicated, and there is data that demonstrates this. The following are some specific comments on user fees in the areas of health and education. In general, the position of gender groups and many CSOs is that unconditional withdrawal of user fees in the areas of health, education, and water is necessary. It is in these sectors that vulnerable groups, particularly women, poor men, youth, and the rural population in general, have been impacted greatly; these sectors also are the arenas in which the government could have most positively helped these groups. Low performance in these sectors is one of the primary indicators of poverty; health and education are central to the development of the country and key to increasing productivity and economic growth. It is the responsibility of the government to ensure that these sectors are sufficiently resourced, without conditions. User Fees in the Education Sector In terms of the decision to abolish user fees at the primary school level, while we understand that the government is constrained, we contest that removing user fees at only one level is not sufficient and not sustainable. Even if this decision opens up the opportunity for primary school education to more students, which is not clear in and of itself, this creates an even wider gap between the number of students attending primary school and those attending secondary school. This gap has implications for increasing inequalities in terms of both gender and class. In addition, there is no indication that other constraining aspects related to education for poor families will be removed and no assurance that the levels of support currently provided to teachers will be maintained or increased. On the whole, the actual amount of money returning to the sector (Tsh. 10 -12 billion) is a very small amount of money and does not offer enough hope of addressing the major issues within the education sector. Attendance in primary schools in Tanzania remains at low levels. In 1995, the gross enrolment of school age children stood at 77%. This implies that 23% of school age children had not enrolled in schools. Since the net enrolment was 55%, then 45% of school age children were not attending school (URT: 1997, Basic Statistics in Education, p. 8). These figures only address one issue involved in primary school education, and do not touch other areas of quality, participation, retention, achievements, and other factors. There should be more analysis on the expected implications of this policy that addresses these other factors. In general, in order to encourage equality of opportunity in education, user fees must be eliminated at the secondary school and other levels. These fees contribute to the continued marginalisation of groups and a disadvantaged status between boys and girls, urban and rural, rich and poor. A study by TGNP shows that, out of the 39% of secondary school students attending government schools, a mere 8% come from the poorest households in the Tanzania communities and 34% are from the relatively well-off 20% in the communities (TGNP, 1998). Research by Katunzi and Sumra (1991) and TADREG (1996) showed that the cost-sharing policy has hit hardest boys and girls from low-income families, and therefore, reinforced low participation of both girls and boys. Therefore, user fees for secondary school have a great deal of implications when discussing reducing poverty within the country. The implication of these costs is that only an elite group receives the necessary education to be the prime decision-makers within the country. According to the Tanzania Gender Networking Programme's research on the Gender Budget Initiative, for the Ministry of Education and Culture alone, about 57% of its budget was devoted to salaries and personal emoluments for the Ministries in 1997. Salaries for employees of institutions accounted for 9% and 34% of the recurrent budget was for other charges. The overarching feature is the increase in the budget share for personnel emoluments, which has risen dramatically from 1994 to 1997. On the contrary the budgetary allocation for instructional materials, which is the key determinant of quality has fallen from 7% to 3% over the same period. In Tanzania, a mere 15% of the overall recurrent budget is reserved for financing the education sector, as compared to 35% in Kenya and 22% in Uganda. Cost sharing, with its implications of the allocation of fewer resources at different levels, has implications for quality, gender equality, corruption, and even more, the fact that you are depriving the majority of the people of their basic rights. The government has the ability, if it would efficiently reallocate its internal resources within government and sectors, it can do this work. In order to address serious concerns about inadequacy of access of poor Tanzanians to primary and secondary education, we recommend that the government PRSP process, to be approved by the WB soon, consider the following, among others: Cost sharing interventions should be eliminated at the primary and secondary levels within the PRSP. Include a broader examination of user fees, looking at not only the actual fee but also all the other associated factors that constrain many people. This includes recognition of the fact that costs for a secondary education include books, desk, uniform, transport, housing, and others. Reshuffle its current resources, in order to better finance education. There are areas that it could do so; for example the Personnel and Annulments that go to key people within government and Parliament; if they would reduce these, it could return to the people themselves. For instance, one-tenth of the money spent on houses, furniture and transport of top officials should be given to a girls scholarship fund. Instituting mechanisms for private sector to contribute to education, If there is any need remaining, creating creative and flexible mechanisms for parents and students to contribute to the educational system, such as through loans. User Fees in the Health Sector Although the government's overall objective of providing health status for all Tanzanians remains the same, there is an increased move towards privatisation and the public health sector is increasingly deprived of vital funds. In this process marginalized groups are increasingly impacted. The government needs to get rid of the user fees in the health sector, as the health of Tanzanians is crucial to development of the country. The Public Health System is the right of all Tanzanians, who contribute to government revenue. If the government can shirk some of its responsibilities, it cannot do so for health. The private sector has an important role to play but the Public Health System should be the backbone of health services the country. Otherwise the lives of the citizens would be at risk, as so many examples have begun to emerge showing this. First, we do not believe that the user fee policy in Tanzania is functioning. There is evidence from several studies and newspaper articles to the contrary, indicating that pregnant women and rural poor are unable to access crucial medical services, although these groups are supposedly exempted. These, especially the women, are the same groups that are doubly taxed, in that they are contributing to the future workforce of the country and then are required to pay for doing so. Women give involuntary subsidies to the health sector in various ways, including working as TBAs and caring for the infirm at home, and they should get some benefit. The government has yet to make this connection between the health of the people and the unpaid labour of some groups such as women. Apart from contributing to foreign exchange revenues through production and paying their taxes, they feed most of the patients in hospitals. On top of all that and cost sharing, they have to bring all important items during delivery when it is hypocritically claimed that mothers and children under five receive free treatment. For antenatal care and childhood immunisations, the exemption seems to still be functioning. However, for AIDS, mental illness and other diseases, fees are still imposed in one way or another. The problem is that determination is done at the time of service. Medicines and supplies are often not available at government hospitals, even if supposedly free, meaning that individuals have to buy from private dispensaries. From research conducted in Kondoa district, if a maternity patient fails to pay the said amount, the normal procedure is that the patient will be given delivery services but will not be discharged until costs are met (TGNP, GBI research, 1997). As it stands now, women pay for essential services that include cervical and breast cancer screening and treatment. These preventative measures are among the most cost-effective services. The government would be reaching most women in Tanzania if these services were funded. Donors could be asked to fund the initial equipment and supplies, but the government should be able to maintain the network through correct management and replacements. It is difficult to understand that a government which has funds to send leaders abroad for casual medical check-ups fails to get the Tsh. 600 million donor money allocated for x-rays because it could not pay its contribution of Tshs. 25 million (MoH appropriation account for the year ending30 June 1996, p. 13). In terms of the Health Sector Reforms, which provide more responsibilities for health sector at the local level, the vision is sound but problematic is whether the reforms would adequately confront the entrenched weaknesses in the health sector without marginalising large sectors of Tanzania's population from health services. Although in some few districts the CHF is working, there are many areas where it is not working, as mechanisms for ensuring its implementation have not been established. The PRSP document needs to provide coherent strategies and evidence on how the current policy is going to be affected in the real sense. It should also establish mechanisms for monitoring that this policy is currently being implemented. We are aware that the health reform programme has brought in a number of cost effective health interventions to be developed. The government Budget if used effectively and according to proper priorities can meet most of the costs and donors can make important contributions since most of these are preventive or curative at dispensary and Health Centre levels. Interventions affecting infants and children such as immunisations receive much donor assistance. The government, through the MoH, needs to install management mechanisms to ensure that equipment obtained is not lost, as well as providing annual maintenance funds and replacements when necessary. In a country like Tanzania where communication is difficult, household surveys are expensive and cannot be done every day. Yet those few which were done show important trends. The most recently available is the Tanzania Human Resources Development Survey (HRDS) 1992/94 used by the Social Sector Review of the World Bank (1996). This survey showed that people were alienated by poor services especially shortage of drugs caused partly by mismanagement and scarcity of funds. Health workers attempted to supplement their wages through drug sales. The current cost sharing plan is based on the assumption that with improved finances, the supply of drugs service will improve and the public system will win back patients. However, without management reform patients will still get poor services. Overall Comments >From the above discussions, we are proposing the following demands: The proposals by the government on user fees on education and health sectors should be further analysed with more input from the civil society, meaning the public. Relevant revelations have shown that there are at times some mis-communication between the government and the voices of the people. Many issues on the constraining environment in the sectors of education and health were raised by voters and candidates most recently during the course of the General Elections in October 2000. How come the PRSP processes continue without taking into consideration these issues being expressed by the public? The PRSP process as it is currently drawn, does not allow for collection and use of available data and case studies from the public, meaning that the proposals are not coming from concrete experiences that are happening every day. It is of critical importance that the PRSP processes open up and listen to the voices of the marginalised groups, such as women, youth and poor groups who will address the impacts of many of these policies, particularly the user fee. What we need is the abolition of user fees for health, education and water sectors, and the World Bank should stop making conditions on the same. Also we are demanding that the World Bank, when it looks at issues of cost sharing, it should look at the issue much more broadly and holistically. Experience shows that their strategies to overcome the constraints created by the effects of withdrawal of support to the social sectors come in piecemeal, e.g. special funds for education and for health. We are also demanding from our own government to devise more innovative strategies to obtain revenue, such as taxing and encouraging donations from the rich and the companies in the country, so that it helps to increase the money that government has to spend. The revenue base of the government is looking primarily at traditional sources of revenue. We also want to demand a more transparent monitoring and documentation of the implication of the costs of user fees and costs by government, donors, and the World Bank. Women and men of Tanzania have the right to know how their own government is serving their health and educational needs. In this way, we want our government to report in a transparent way how many women and men, girls and boys are able to access and benefit from the provided services. We want them to report the different types of services received by women and men, girls and boys. This is because good services are a right and not a privilege. A greater part of the money saved when overseas countries say Tanzania can pay less interest on its loans or can pay interest later should be dedicated to education and health, while ensuring that spending from other sources remains the same or is increased. A few Additional Comments on the PRSP from a Tanzanian perspective Process Throughout the PRSP processes, civil society organisations were demanding for more active involvement and participation in the process of both NGOs and communities. However, on the whole CSOs were involved in a superficial and half-handed manner. The government developed the document internally, while civil society organisations were involved in a separate process, convened by the Tanzania Coalition for Debt and Development (TCDD). At a later stage, the civil society working groups managed to participate in the sharing sessions in the documents already prepared by the government (the zonal workshops). Rather than having a joint-sharing process about the best way to merge the civil society and government inputs, the inputs prepared by the civil society organisations were simply sent to the government-led processes for integration. The consultation that was done was all in a rushed manner, not allowing for true dialogue, discussion, and debate. The latest stage, the National Workshop carried after the zonal workshops of the government process, involved NGOs to some extent, in that some NGOs were invited to comment at that workshop on all the topics in the strategy paper. Some of their inputs were very critical but ended there. They were not again called for their participation in the final drafting of the paper, although they had argued that the final process should include representatives of civil society organisations. In this way, civil society organisations were involved only at late stages of the process and did not truly participate in the process of preparing the poverty strategy paper for the United Republic of Tanzania. Content The Civil Society Report on PRSP described a more holistic approach to poverty eradication in Tanzania and sought to provide a detailed direction to address issues of globalisation and liberalisation as well as debt relief. Among many other specific recommendations, the paper called for: Mechanisms to be adopted to ensure full participation of all sectors of society in policy-formulation, implementation and monitoring of the debt relief strategy, with a pro-poor gender perspective approach. On the public and NGOs, in particular, need to be informed on the on-going dialogue between the government and the WB/ IMF. Major recommendations for the civil society, such as how to make the processes around debt relief funds more transparent, need to be taken into more serious consideration. Monitoring and reporting tools and structures need to be developed which are transparent and participatory, so to ensure that the funds released as a result of debt relief are allocated and used as planned, to fit the vision and objectives of the PRSP programme. On the whole, the final PRSP document does not demonstrate any gender perspectives and civil society inputs in a meaningful way. Many of the civil society actors feel cheated by both the government and the donors, especially the World Bank, who have been emphasising the importance of the civil society participation in the PRSP preparations and approval processes. From rob@milan.essential.org Tue Nov 28 21:38:03 2000 From: rob@milan.essential.org (Robert Weissman) Date: Tue, 28 Nov 2000 16:38:03 -0500 (EST) Subject: [stop-imf] Corrected Version to Tanzania Urgent Action Message-ID: Please replace the urgent action cover note sent earlier today with the following version. The significant change is that while healthcare and education user fees continue in Tanzania, the policy package to be considered later this week by the IMF and World Bank reportedly does not itself mandate such policies. My apologies for the confusion. -- Robert Weissman Essential Information P.O. Box 19405, Washington, DC 20036, USA Tel: 1-202-387-8030 Fax: 1-202-234-5176 www.essential.org Dear Friends: Below follows an important urgent action alert from Sara Grusky of the Globalization Challenge Initiative, and additional material from Tanzanian NGOs. The IMF and World Bank are preparing to consider the "Poverty Reduction Strategy Paper (PRSP)" package for Tanzania. The policy package was designed in consultation with foreign creditors rather than local citizens, despite Bank/IMF claims that their "new" PRSP policy will enhance civic participation. The information that follows below lays out the problem in some detail. The summary is that the structural adjustment program is very harsh, and user fees for healthcare and education -- something the United States is now obligated to oppose by law -- continue to impede access to health and education programs. What can you do? The Tanzanian package will be considered at the IMF and Bank later this week. Contact the executive directors (country representatives) to the IMF and Bank and inform them that the important structural adjustment issues were not on the negotiating table during the PRSP process. For those in the United States, remind the U.S. executive directors that they are obligated to oppose loans that require user fees for healthcare and education. The U.S Executive Director to the World Bank is Jan Piercy. Contact information: tel: 202-458-0110, fax: 202-477-2967, e-mail: jpiercy@worldbank.org. The U.S. Executive Director to the IMF is Karin Lissakers, tel: 202-473-7759, e-mail: klissakers@imf.org. For other countries, check http://www.challengeglobalization.org/html/ta_menu6.shtml Calls and faxes are more effective than e-mails, but e-mails are MUCH better than nothing. Thanks! And don't forget to act right away -- decision making begins Thursday. -- Robert Weissman Essential Information P.O. Box 19405, Washington, DC 20036, USA Tel: 1-202-387-8030 Fax: 1-202-234-5176 www.essential.org STRUCTURAL ADJUSTMENT PROGRAM (SAP) ALERT ON IMF AND WORLD BANK LENDING TO TANZANIA Executive Summary By Globalization Challenge Initiative, A Project of the Tides Center, USA and the Integrated Social Development Programme, (ISODEC), Ghana [for the full 30-plus page text of the "Structural Adjustment Program (SAP) Information Alert for Tanzania" contact: global.challenge@juno.com] In late November and early December, the Government of Tanzania (GOT) will seek endorsement of its Poverty Reduction Strategy Paper (PRSP) from the Boards of the IMF and World Bank. Preparation of an acceptable PRSP, which is a three-year national development strategy, is a new pre-condition for low-income governments seeking assistance from donors and creditors, especially the IMF and World Bank. Never before have the IMF and World Bank possessed the power to endorse a borrowering country's entire national plan. Ironically, the institutions have seized these powers in the name of enhancing "country ownership" of the development process. The Government of Tanzania (GOT) prepared its PRSP with more input from foreign creditors and donors than from its own citizens. The government is dependent on donors and creditors for the majority of its development budget and, to survive, it must heed its creditors and donors. There are fewer incentives to heed the cries of citizens -- especially the poor and disadvantaged. The PRSP lacks credibility because the process lacked the informed participation of citizens' groups. (See attached statement from Tanzanian organizations.) Citizen "participation for validation" of the PRSP arises when donors and creditors, especially the IMF and World Bank, negotiate with the GOT in secret and fail to disclose agreements and commitments to the public. This was the case in Tanzania. Key macroeconomic and structural adjustment issues were addressed in secret negotiations, occuring in parallel to the PRSP consultations. These negotiation excluded citizen's groups. Citizens that buy and sell and pay taxes were excluded from key decisions about whether or how the economy of Tanzania will be liberalized, privatized and increasingly oriented to produce exports. Policies, such as those relating to the price of money and goods, taxation options, trade liberalization, and the privatization of key state-owned enterprises were not "on the table" for negotiation during the PRSP consultations. Beyond public view, a handful of government officials negotiated the following arrangements with the IMF and the World Bank during the first half of 2000: 1. IMF and World Bank Action in March 2000, which structured a debt relief operation for the GOT [through the Highly Indebted Poor Country (HIPC) Initiative] and set the terms and conditions of such relief. 2. IMF Action in April 2000, which extended a $181 million structural adjustment loan [through the IMF Poverty Reduction and Growth Facility (PRGF)] to the GOT. To secure the loan, the GOT agreed to execute a multitude of policies. 3. World Bank Action in June 2000, which extended a $290 million structural adjustment loan to the GOT. The World Bank's policy does not require disclosure of information about this loan. 4. Tanzania's macroeconomic and structural policy framework, which provides the basis for the PRSP. Although the PRSP will be disclosed to the public, the policy framework will not be. Secrecy, especially secrecy about the role of powerful foreign creditors, undermines democratic processes and the rights of citizens. The daily lives of citizens are profoundly affected by the economic policies that the GOT is obligated to implement as conditions for securing loans and obtaining debt reduction. Tanzanian citizens have a right to participate in the formulation of public policies through open and democratic analysis, debate, and consensus-building. They have the right to hold their government accountable for its performance, including its commitments to foreign creditors and donors. Ultimately, citizens bear the burden of repaying debts to the IMF and World Bank. Currently, the citizens of Tanzania experience "taxation without representation" because they are denied participation in formulating critical IMF and World Bank-financed operations. Fifteen years of structural adjustment programs (SAPs) have not improved the quality of life for Tanzanian citizens. The IMF and the World Bank have financed structural adjustment policies in Tanzania for about 15 years. Per capita income and basic human welfare indicators have fallen during this time period. For example, per capita GDP has fallen to the 1960 level and primary school enrollment rates plunged below 50 percent from an average of 80 percent during the 1980s. (further details in Tanzania SAP Alert, box 6.) The excessive number of policy prescriptions, or conditions, attached to the new loans and debt relief amount to micromanagement of the GOT. Tanzania's Policy Matrix, 2000-2002," which was appended to the Interim PRSP by the IMF and World Bank lists approximately 157 policies that the Government of Tanzania will be pressured to implement during this time period. In addition, there are more than 20 policy conditions linked to debt relief, ten policy conditions linked to the World Bank's Country Assistance Strategy (CAS), and additional conditions linked to IMF and World Bank-financed structural adjustment loans. Policy prescriptions will have various impacts on the citizens of Tanzania; some will be negative. Some policy conditions may principally benefit foreign creditors and investors. Others may support or undermine the objectives of sustainable development and poverty reduction in Tanzania. The "SAP Alert" elaborates on problematic policy prescriptions, including those which: Set fiscal and monetary targets that may continue to undercut public services, reduce internal demand, aggravate unemployment, and handicap efforts to boost investment in infrastructure and human development. Impose cost-sharing (i.e. new fees for services) in schools, health care centers and hospitals, which will continue to rob vulnerable communities of essential health and education services. The U.S. Government is now bound by law to oppose loans involving cost-sharing provisions. On October 25, 2000, the U.S. Congress passed a bill that requires the United States Executive Directors at the IMF, the World Bank and the regional development banks to oppose any loan that imposes user fees or service charges on poor people for primary education and health care. The legislation was subsequently signed into law. Further reduce import tariffs. Such tariff reductions often result in a flood of imports that can undermine domestic industrial and agricultural producers. Require capital account liberalization to attract foreign investment. However, speculative transactions provide profits to foreign investors while offering few, if any, benefits to the poor majority of Tanzania. Require privatization of public companies, which can increase unemployment, lower wages, increase the cost of goods and services, and decrease access to poor populations. Require the privatization of agricultural enterprises. Already, privatization has increased the prices of fertilizer and other inputs, and reduced access to credit. While large farmers and private traders have benefited from liberalization and privatization, small farmers, who constitute the majority of Tanzania's population, have not. Require the GOT to remain current on debt service payments. This is a standard condition of IMF loans. However, nearly a quarter of the government's 2001 budget is devoted to servicing external debt. In fact, even after debt relief, the level of Tanzania's external debt service rises. (Debt servicing requirement in 2001 will be higher than requirements in 1996-2000.) It is important to assess whether such policy conditions will hurt or help Tanzanians, especially poor and marginalized groups and women. However, the main issue relates to how these policy conditions are formulated. Behind closed doors, the IMF and World Bank push these policies on a government which is "on its knees" and desperate for foreign exchange. Negotiations relating to PRSPs and adjustment conditions should never undermine domestic consensus-building processes. How to Convey Your Views to the Executive Directors of the IMF and World Bank Tanzanian citizens are conveying their views of the PRSP and adjustment processes to their government and to their representatives on the Executive Boards of the IMF and World Bank. To convey your views, locate the names, addresses, phone, fax and e-mail contacts of the World Bank and IMF Executive Directors that represent your country at: www.challengeglobalization.org. In designing the PRSP process, the Executive Directors committed their institutions to open and transparent processes that would reconcile structural adjustment conditions with poverty reduction goals. Their promises are unfulfilled. Macroeconomic and structural policies cannot be designed in a participatory fashion to serve poverty reduction goals because, for the most part, they are formulated in secret. [For the full text of the Tanzania SAP Alert contact: global.challenge@juno.com] Comments from the Tanzania Gender Networking Project Regarding the IMF and World Bank endorsement of the Government of Tanzania's "Poverty Reduction Strategy Paper" Since the government, forced by the policies of the IMF and the World Bank, has embarked on policies of withdrawal of state support, women, children, and the rural poor have been most heavily indicated, and there is data that demonstrates this. The following are some specific comments on user fees in the areas of health and education. In general, the position of gender groups and many CSOs is that unconditional withdrawal of user fees in the areas of health, education, and water is necessary. It is in these sectors that vulnerable groups, particularly women, poor men, youth, and the rural population in general, have been impacted greatly; these sectors also are the arenas in which the government could have most positively helped these groups. Low performance in these sectors is one of the primary indicators of poverty; health and education are central to the development of the country and key to increasing productivity and economic growth. It is the responsibility of the government to ensure that these sectors are sufficiently resourced, without conditions. User Fees in the Education Sector In terms of the decision to abolish user fees at the primary school level, while we understand that the government is constrained, we contest that removing user fees at only one level is not sufficient and not sustainable. Even if this decision opens up the opportunity for primary school education to more students, which is not clear in and of itself, this creates an even wider gap between the number of students attending primary school and those attending secondary school. This gap has implications for increasing inequalities in terms of both gender and class. In addition, there is no indication that other constraining aspects related to education for poor families will be removed and no assurance that the levels of support currently provided to teachers will be maintained or increased. On the whole, the actual amount of money returning to the sector (Tsh. 10 -12 billion) is a very small amount of money and does not offer enough hope of addressing the major issues within the education sector. Attendance in primary schools in Tanzania remains at low levels. In 1995, the gross enrolment of school age children stood at 77%. This implies that 23% of school age children had not enrolled in schools. Since the net enrolment was 55%, then 45% of school age children were not attending school (URT: 1997, Basic Statistics in Education, p. 8). These figures only address one issue involved in primary school education, and do not touch other areas of quality, participation, retention, achievements, and other factors. There should be more analysis on the expected implications of this policy that addresses these other factors. In general, in order to encourage equality of opportunity in education, user fees must be eliminated at the secondary school and other levels. These fees contribute to the continued marginalisation of groups and a disadvantaged status between boys and girls, urban and rural, rich and poor. A study by TGNP shows that, out of the 39% of secondary school students attending government schools, a mere 8% come from the poorest households in the Tanzania communities and 34% are from the relatively well-off 20% in the communities (TGNP, 1998). Research by Katunzi and Sumra (1991) and TADREG (1996) showed that the cost-sharing policy has hit hardest boys and girls from low-income families, and therefore, reinforced low participation of both girls and boys. Therefore, user fees for secondary school have a great deal of implications when discussing reducing poverty within the country. The implication of these costs is that only an elite group receives the necessary education to be the prime decision-makers within the country. According to the Tanzania Gender Networking Programme's research on the Gender Budget Initiative, for the Ministry of Education and Culture alone, about 57% of its budget was devoted to salaries and personal emoluments for the Ministries in 1997. Salaries for employees of institutions accounted for 9% and 34% of the recurrent budget was for other charges. The overarching feature is the increase in the budget share for personnel emoluments, which has risen dramatically from 1994 to 1997. On the contrary the budgetary allocation for instructional materials, which is the key determinant of quality has fallen from 7% to 3% over the same period. In Tanzania, a mere 15% of the overall recurrent budget is reserved for financing the education sector, as compared to 35% in Kenya and 22% in Uganda. Cost sharing, with its implications of the allocation of fewer resources at different levels, has implications for quality, gender equality, corruption, and even more, the fact that you are depriving the majority of the people of their basic rights. The government has the ability, if it would efficiently reallocate its internal resources within government and sectors, it can do this work. In order to address serious concerns about inadequacy of access of poor Tanzanians to primary and secondary education, we recommend that the government PRSP process, to be approved by the WB soon, consider the following, among others: Cost sharing interventions should be eliminated at the primary and secondary levels within the PRSP. Include a broader examination of user fees, looking at not only the actual fee but also all the other associated factors that constrain many people. This includes recognition of the fact that costs for a secondary education include books, desk, uniform, transport, housing, and others. Reshuffle its current resources, in order to better finance education. There are areas that it could do so; for example the Personnel and Annulments that go to key people within government and Parliament; if they would reduce these, it could return to the people themselves. For instance, one-tenth of the money spent on houses, furniture and transport of top officials should be given to a girls scholarship fund. Instituting mechanisms for private sector to contribute to education, If there is any need remaining, creating creative and flexible mechanisms for parents and students to contribute to the educational system, such as through loans. User Fees in the Health Sector Although the government's overall objective of providing health status for all Tanzanians remains the same, there is an increased move towards privatisation and the public health sector is increasingly deprived of vital funds. In this process marginalized groups are increasingly impacted. The government needs to get rid of the user fees in the health sector, as the health of Tanzanians is crucial to development of the country. The Public Health System is the right of all Tanzanians, who contribute to government revenue. If the government can shirk some of its responsibilities, it cannot do so for health. The private sector has an important role to play but the Public Health System should be the backbone of health services the country. Otherwise the lives of the citizens would be at risk, as so many examples have begun to emerge showing this. First, we do not believe that the user fee policy in Tanzania is functioning. There is evidence from several studies and newspaper articles to the contrary, indicating that pregnant women and rural poor are unable to access crucial medical services, although these groups are supposedly exempted. These, especially the women, are the same groups that are doubly taxed, in that they are contributing to the future workforce of the country and then are required to pay for doing so. Women give involuntary subsidies to the health sector in various ways, including working as TBAs and caring for the infirm at home, and they should get some benefit. The government has yet to make this connection between the health of the people and the unpaid labour of some groups such as women. Apart from contributing to foreign exchange revenues through production and paying their taxes, they feed most of the patients in hospitals. On top of all that and cost sharing, they have to bring all important items during delivery when it is hypocritically claimed that mothers and children under five receive free treatment. For antenatal care and childhood immunisations, the exemption seems to still be functioning. However, for AIDS, mental illness and other diseases, fees are still imposed in one way or another. The problem is that determination is done at the time of service. Medicines and supplies are often not available at government hospitals, even if supposedly free, meaning that individuals have to buy from private dispensaries. From research conducted in Kondoa district, if a maternity patient fails to pay the said amount, the normal procedure is that the patient will be given delivery services but will not be discharged until costs are met (TGNP, GBI research, 1997). As it stands now, women pay for essential services that include cervical and breast cancer screening and treatment. These preventative measures are among the most cost-effective services. The government would be reaching most women in Tanzania if these services were funded. Donors could be asked to fund the initial equipment and supplies, but the government should be able to maintain the network through correct management and replacements. It is difficult to understand that a government which has funds to send leaders abroad for casual medical check-ups fails to get the Tsh. 600 million donor money allocated for x-rays because it could not pay its contribution of Tshs. 25 million (MoH appropriation account for the year ending30 June 1996, p. 13). In terms of the Health Sector Reforms, which provide more responsibilities for health sector at the local level, the vision is sound but problematic is whether the reforms would adequately confront the entrenched weaknesses in the health sector without marginalising large sectors of Tanzania's population from health services. Although in some few districts the CHF is working, there are many areas where it is not working, as mechanisms for ensuring its implementation have not been established. The PRSP document needs to provide coherent strategies and evidence on how the current policy is going to be affected in the real sense. It should also establish mechanisms for monitoring that this policy is currently being implemented. We are aware that the health reform programme has brought in a number of cost effective health interventions to be developed. The government Budget if used effectively and according to proper priorities can meet most of the costs and donors can make important contributions since most of these are preventive or curative at dispensary and Health Centre levels. Interventions affecting infants and children such as immunisations receive much donor assistance. The government, through the MoH, needs to install management mechanisms to ensure that equipment obtained is not lost, as well as providing annual maintenance funds and replacements when necessary. In a country like Tanzania where communication is difficult, household surveys are expensive and cannot be done every day. Yet those few which were done show important trends. The most recently available is the Tanzania Human Resources Development Survey (HRDS) 1992/94 used by the Social Sector Review of the World Bank (1996). This survey showed that people were alienated by poor services especially shortage of drugs caused partly by mismanagement and scarcity of funds. Health workers attempted to supplement their wages through drug sales. The current cost sharing plan is based on the assumption that with improved finances, the supply of drugs service will improve and the public system will win back patients. However, without management reform patients will still get poor services. Overall Comments >From the above discussions, we are proposing the following demands: The proposals by the government on user fees on education and health sectors should be further analysed with more input from the civil society, meaning the public. Relevant revelations have shown that there are at times some mis-communication between the government and the voices of the people. Many issues on the constraining environment in the sectors of education and health were raised by voters and candidates most recently during the course of the General Elections in October 2000. How come the PRSP processes continue without taking into consideration these issues being expressed by the public? The PRSP process as it is currently drawn, does not allow for collection and use of available data and case studies from the public, meaning that the proposals are not coming from concrete experiences that are happening every day. It is of critical importance that the PRSP processes open up and listen to the voices of the marginalised groups, such as women, youth and poor groups who will address the impacts of many of these policies, particularly the user fee. What we need is the abolition of user fees for health, education and water sectors, and the World Bank should stop making conditions on the same. Also we are demanding that the World Bank, when it looks at issues of cost sharing, it should look at the issue much more broadly and holistically. Experience shows that their strategies to overcome the constraints created by the effects of withdrawal of support to the social sectors come in piecemeal, e.g. special funds for education and for health. We are also demanding from our own government to devise more innovative strategies to obtain revenue, such as taxing and encouraging donations from the rich and the companies in the country, so that it helps to increase the money that government has to spend. The revenue base of the government is looking primarily at traditional sources of revenue. We also want to demand a more transparent monitoring and documentation of the implication of the costs of user fees and costs by government, donors, and the World Bank. Women and men of Tanzania have the right to know how their own government is serving their health and educational needs. In this way, we want our government to report in a transparent way how many women and men, girls and boys are able to access and benefit from the provided services. We want them to report the different types of services received by women and men, girls and boys. This is because good services are a right and not a privilege. A greater part of the money saved when overseas countries say Tanzania can pay less interest on its loans or can pay interest later should be dedicated to education and health, while ensuring that spending from other sources remains the same or is increased. A few Additional Comments on the PRSP from a Tanzanian perspective Process Throughout the PRSP processes, civil society organisations were demanding for more active involvement and participation in the process of both NGOs and communities. However, on the whole CSOs were involved in a superficial and half-handed manner. The government developed the document internally, while civil society organisations were involved in a separate process, convened by the Tanzania Coalition for Debt and Development (TCDD). At a later stage, the civil society working groups managed to participate in the sharing sessions in the documents already prepared by the government (the zonal workshops). Rather than having a joint-sharing process about the best way to merge the civil society and government inputs, the inputs prepared by the civil society organisations were simply sent to the government-led processes for integration. The consultation that was done was all in a rushed manner, not allowing for true dialogue, discussion, and debate. The latest stage, the National Workshop carried after the zonal workshops of the government process, involved NGOs to some extent, in that some NGOs were invited to comment at that workshop on all the topics in the strategy paper. Some of their inputs were very critical but ended there. They were not again called for their participation in the final drafting of the paper, although they had argued that the final process should include representatives of civil society organisations. In this way, civil society organisations were involved only at late stages of the process and did not truly participate in the process of preparing the poverty strategy paper for the United Republic of Tanzania. Content The Civil Society Report on PRSP described a more holistic approach to poverty eradication in Tanzania and sought to provide a detailed direction to address issues of globalisation and liberalisation as well as debt relief. Among many other specific recommendations, the paper called for: Mechanisms to be adopted to ensure full participation of all sectors of society in policy-formulation, implementation and monitoring of the debt relief strategy, with a pro-poor gender perspective approach. On the public and NGOs, in particular, need to be informed on the on-going dialogue between the government and the WB/ IMF. Major recommendations for the civil society, such as how to make the processes around debt relief funds more transparent, need to be taken into more serious consideration. Monitoring and reporting tools and structures need to be developed which are transparent and participatory, so to ensure that the funds released as a result of debt relief are allocated and used as planned, to fit the vision and objectives of the PRSP programme. On the whole, the final PRSP document does not demonstrate any gender perspectives and civil society inputs in a meaningful way. Many of the civil society actors feel cheated by both the government and the donors, especially the World Bank, who have been emphasising the importance of the civil society participation in the PRSP preparations and approval processes. From rob@milan.essential.org Wed Nov 29 00:46:17 2000 From: rob@milan.essential.org (Robert Weissman) Date: Tue, 28 Nov 2000 19:46:17 -0500 (EST) Subject: [stop-imf] Short-fuse sign on for Tanzania user fee issue Message-ID: Marie Clarke of the Quixote Center is circulating this very important, very time sensitive NGO sign-on letter on the Tanzania policy package to be considered by the World Bank and IMF. Please send sign-ons directly to Marie at . Short Fuse Sign-On Letter DUE WEDNESDAY NOVEMBER 29, 2000 at 3:00 EST!!! Dear Friends, As many of you know, Congress has passed legislation in the Foreign Operations Appropriations Bill that opposes user fees or other forms of cost sharing for basic services like education and health care in impoverished countries. This legislation also includes reporting language that requires that Congress be notified within 10 days if any loans are approved that include user fees. Tanzania's Poverty Reduction Strategy Paper will go before the board of the IMF and World Bank on Thursday November 30, 2000. It is possible that this paper includes user fees for health care and education. It is essential that we alert Treasury that the NGO community is watching to ensure that they uphold this new law and vote against user fees in the Tanzania PRSP. THIS IS OUR OPPORTUNITY TO MAKE THIS LEGISLATION COUNT! Please sign your organization or religious community on to this letter by 3:00 Eastern Standard Time TOMORROW, Wednesday NOVEMBER 29, 2000. You can sign on by emailing Marie Clarke at mariec@quixote.org. WE CANNOT ACCEPT INDIVIDUAL SIGNATURES AT THIS TIME, but feel free to fax a similar letter to Summers directly. His fax number is 202-622-0073. Name: ____________________________ Title: _____________________________ Organization or Religious Community Name: _____________________________ Dear Secretary Summers: The undersigned non governmental organizations and religious communities are writing to you because the boards of the World Bank and IMF will be meeting November 30, 2000 and December 1, 2000 to endorse Tanzania's Poverty Reduction Strategy Paper (PRSP). This blueprint document by the government of Tanzania, drafted in consultation with the IMF and World Bank, is required in order to release loans from the Poverty Reduction and Growth Facility and/or debt relief. It has come to our attention that Tanzania's interim PRSP in fact imposes user fees in the form of "cost-sharing to dispensaries and health centers." The boards of the World Bank and IMF will be deciding whether to approve Tanzania's PRSP. As you know, it is now the policy of the United States to oppose the imposition of user fees through World Bank or IMF sponsored mechanisms for primary health and education services in conjunction with IMF and World Bank loans, structural adjustment plans and debt relief. Pursuant to PL 106-429, Congress specifically directs the Secretary of the Treasury to "instruct the United States Executive Director... to oppose any loan that would require user fees or service charges on poor people for primary education or primary health care." The intent of this language is clarified to mean "user fees should not be imposed or required through Bank or Fund sponsored "community financing," "cost sharing," or "cost recovery" mechanisms prepared in conjunction with loans, structural adjustment schemes or debt relief actions." If the PRSP presented to the boards of the IMF and World Bank includes user fees for basic services, in our view, the actions of the United States' representatives at the meetings to approve such a PRSP are precisely what Congress intended to address in PL 106-429. Accordingly, we expect that following your instructions to them, the U.S. executive directors of the Bank and the Fund will oppose the imposition of "cost sharing" in Tanzania's PRSP and will oppose a final PRSP that contains "cost sharing" or any other form of user fee for health and education. We also anticipate that within ten days of the Bank and Fund decisions, you will notify the Committee on Appropriations if Tanzania's PRSP contains "cost sharing" or any other mechanism requiring the imposition of user fees. We would also appreciate hearing from you about any steps the U.S. representatives took to oppose user fees in Tanzania's PRSP because we are aware of the importance of access to basic health care and education in the sustainable development of a country. Sincerely, cc: Jan Piercy, U.S. Executive Director to the World Bank Karin Lissakers, U.S. Executive Director to the IMF From rob@milan.essential.org Wed Nov 29 11:50:32 2000 From: rob@milan.essential.org (Robert Weissman) Date: Wed, 29 Nov 2000 06:50:32 -0500 (EST) Subject: [stop-imf] World AIDS Day information packet, including IMF/Bank focus Message-ID: GLOBAL TREATMENT ACCESS CAMPAIGN: PUTTING THE WORLD IN LOCAL WORLD AIDS DAY COMMEMORATIONS World AIDS Day information packet and tool kit, produced on behalf of the Health GAP Coalition, is intended to assist advocates who wish to address the global AIDS crisis during local World AIDS Day commemorations. To download the World AIDS Day Kit go to http://www.globaltreatmentaccess.org, Contents: o Health GAP Contact info o Global Treatment Access Issues Update o Action Sheet: Get Involved o Sample press release focusing on global access issues. o Artwork for reproduction for posters and stickers. o Grassroots Media Guide: ACT UP Philadelphia's Guide on Media Work o Additional resources and information. o Health GAP's World AIDS Day Report Card: Has access to life-saving AIDS medicines improved in poor countries? The Health GAP Coalition is a U.S. based group of organizations and individuals dedicated to increasing access to essential medicines and technologies in poor countries threatened by the global AIDS catastrophe. __ On December 1 every year, many communities across the world hold ceremonies to commemorate the dead, celebrate the living, and renew a pledge to fight against the AIDS epidemic. In the United States and other wealthier nations, access to anti-HIV therapies and medicine to treat AIDS-related infections, many people are living much longer and healthier lives. In many countries, the astronomical prices charged for medicine and the crushing debt payments imposed by the IMF and World Bank effectively deny access to drugs for 95% of the globe's people with HIV. In a number of African nations, 25% if the population has HIV and rates new infections are growing rapidly. With no access to care and treatment, AIDS will erase many countries. There is a simple equation to staunch the death and dying. The United States must use its clout and power to: o Force the IMF and World Bank to use their own financial resources to cancel the debts of the world's poorest countries. Debt cancellation must no longer be linked to structural adjustment policies. o Force the World Health Organization to create a global program for public and private sector generic drug manufacturers that generates the massive economies of scale in manufacturing and raw materials, country level drug registry, and create a global generic distribution system. From rob@milan.essential.org Wed Nov 29 21:25:21 2000 From: rob@milan.essential.org (Robert Weissman) Date: Wed, 29 Nov 2000 16:25:21 -0500 (EST) Subject: [stop-imf] IMF Letter Fires A Warning Shot At Indonesia (fwd) Message-ID: Dow Jones Newswires November 29, 2000 Far Eastern Economic Review FEER: IMF Letter Fires A Warning Shot At Indonesia HONG KONG -- Frustrated by the slow pace of economic reform, the International Monetary Fund has fired a warning shot across the Indonesian government's bow, the Far Eastern Economic Review reports in its latest edition to be published Thursday. In a tersely worded letter dated Nov. 8 and obtained by the magazine, Anoop Singh, the Fund's Washington-based deputy director for Asia and the Pacific, demanded that Jakarta move decisively to minimize risks in its fiscal decentralization plan, use higher oil revenues to repay government debt and set a firm timetable for asset sales. Failure to do so by early December, the letter suggests, could stop the IMF's board from approving fresh loans to the country. IMF officials in Washington refused to comment on the matter. In the three-page letter, Singh details "the main actions which were due to be implemented by end-October...and which have yet to be completed." One of the IMF's top concerns is Indonesia's proposed devolution of fiscal authority from the center to local governments - part of a sweeping new decentralization program scheduled to take effect on Jan. 1. The IMF wants Jakarta to prohibit local governments from borrowing independently from abroad and from borrowing independently at all through 2001. The IMF has long been critical of what one Fund official calls "the politicization of Ibra." Now it wants Ibra to "publish a detailed asset schedule for the first half of 2001 after securing letters of commitment from asset owners and appointing financial advisors in all cases," according to the letter. The IMF also wants the government to get parliament's approval to reschedule the delayed sale of two banks - Bank Central Asia and Bank Niaga. Finally, it wants Ibra's debt restructuring of its 21 largest debtors subject to "independent assessment from Ibra's oversight committee." (The Review is published by Dow Jones & Co. (DJ), which also publishes this and other newswires). From rob@milan.essential.org Wed Nov 29 21:28:19 2000 From: rob@milan.essential.org (Robert Weissman) Date: Wed, 29 Nov 2000 16:28:19 -0500 (EST) Subject: [stop-imf] Congressional letter to Summers on Tanzania Message-ID: November 28, 2000 The Honorable Lawrence Summers Department Of Treasury 1500 Pennsylvania Ave NW Washington, D.C. 20220-0002 Dear Secretary Summers: We are writing to you because the boards of the World Bank and IMF will be meeting November 30, 2000 and December 1, 2000 to endorse a Poverty Reduction Strategy Paper (PRSP) for Tanzania. This blueprint document, prepared by the government of Tanzania in consultation with the IMF and World Bank, is required in order to release loans from the Poverty Reduction and Growth Facility and/or for debt relief. It has come to our attention that the interim PRSP for Tanzania in fact imposes user fees in the form of "cost-sharing to dispensaries and health centers." As you know, it is now the policy of the United States to oppose the imposition of user fees for health and education services in conjunction with IMF and World Bank loans, structural adjustment plans and debt relief. Pursuant to PL 106-429, the Foreign Operations Appropriations Act of Fiscal Year 2001, Congress specifically directs the Secretary of the Treasury to "... instruct the United States Executive Director... to oppose any loan that would require user fees or service charges on poor people for primary education or primary health care." More specifically, Congress intends that "... user fees should not be imposed or required through Bank or Fund sponsored 'community financing,' 'cost sharing,' or 'cost recovery' mechanisms prepared in conjunction with loans, structural adjustment schemes or debt relief actions." In our view, the actions of the United States' representatives at the Bank and Fund meetings to endorse 'cost sharing' in the PRSP for Tanzania are precisely what Congress intended to address in PL 106-429. Accordingly, we expect that following your instructions to them, the U.S. Executive Directors of the Bank and the Fund will oppose the imposition of 'cost sharing' in the PRSP for Tanzania, and oppose a final PRSP that contains 'cost sharing' or any other form of user fee for health and education services. Within ten days of the Bank and Fund decisions, we anticipate your notification of the Committee on Appropriations if the PRSP for Tanzania contains 'cost sharing' or any other mechanism requiring the imposition of user fees. We would also appreciate hearing from you about the steps the U.S. representatives take to oppose user fees in the PRSP for Tanzania. Sincerely, Signers of letter to Secretary of Treasury Summers regarding user fees and Tanzania Sent 11-29-00 1. Rep. Dennis Kucinich 2. Rep. Peter DeFazio 3. Rep. Bernard Sanders 4. Rep. Tom Lantos 5. Rep. George Miller 6. Rep. Marcy Kaptur 7. Rep. Maurice Hinchey 8. Rep. John Conyers 9. Rep. Samm Farr 10. Rep. Earl Hilliard 11. Rep. Bill Pascrell Jr. 12. Rep. Sherrod Brown 13. Rep. John Lewis 14. Rep. Barbara Lee 15. Rep. Jan Schakowsky 16. Rep. Jim McGovern 17. Rep. Cynthia McKinney From rob@milan.essential.org Wed Nov 29 23:08:42 2000 From: rob@milan.essential.org (Robert Weissman) Date: Wed, 29 Nov 2000 18:08:42 -0500 (EST) Subject: [stop-imf] AFL-CIO to Treasury: Oppose User Fees in Tanzania Message-ID: November 29, 2000 Timothy Geithner Under Secretary for International Affairs U.S. Treasury Department 1500 Pennsylvania Avenue, N.W. Washington, D.C. 20220 Dear Under Secretary Geithner: The AFL-CIO appreciates the work you did to secure full funding for the enhanced HIPC debt relief program. Our joint efforts paid off earlier this year when Congress agreed to appropriate the funds needed to finance the U.S. contribution to the program. A key part of that victory was the creation of a new requirement that the Secretary of the Treasury instruct the U.S. Executive Directors at the IMF and the World Bank to oppose any loans that "require user fees or service charges on poor people for primary education or primary healthcare." It has come to our attention that the boards of the World Bank and IMF will be meeting November 30, 2000 and December 1, 2000 to endorse Tanzania's Poverty Reduction Strategy Paper (PRSP). In your letter of October 24th, you mentioned that Tanzania will use HIPC resources to abolish user fees for primary education. But the Interim PRSP and Decision Point Document for Tanzania indicate that the government plans to extend cost-sharing to dispensaries and health centers. While the Decision Point Document does state that the government will pay "specific attention to the exemption mechanisms for the poor," there are no further details on how these exemption programs will function and avoid the failures of such programs in the past. Unfortunately, we do not know whether the final PRSP that will come to the boards this week incorporates this user fee provision. A copy of the final PRSP has not been made public, and a number of civil society groups in Tanzania, including trade unions, have complained that the consultation process employed by the government was sorely inadequate. We can only hope that Tanzania's final PRSP does not provide for the extension of user fees in the primary health sector, especially since there are presently no guarantees that an exemption program would ensure that the poor actually continue to have full and free access to primary health services in the face of these fees. If the final PRSP does provide for such user fees, the U.S. Executive Directors must, in accordance with PL 106-429, oppose this imposition of "cost sharing". It was not the intention of Congress, nor the AFL-CIO, to deny Tanzania needed debt relief. But this relief will only be effective if it is used to increase access of the poor to essential services, rather than decrease it. We trust that the U.S. Executive Directors will succeed in preventing the imposition of any such user fees, and that debt relief will be provided to Tanzania in accordance with U.S. law. Otherwise, we look forward to your notification of the Committee on Appropriations within ten days of the PRSP's approval and to a full explanation of the steps taken by the U.S. Executive Directors to oppose user fees in Tanzania's PRSP. Sincerely, David A. Smith, Director Department of Public Policy From rob@milan.essential.org Thu Nov 30 17:32:24 2000 From: rob@milan.essential.org (Robert Weissman) Date: Thu, 30 Nov 2000 12:32:24 -0500 (EST) Subject: [stop-imf] Special Multinational Monitor offer Message-ID: ** SPECIAL MULTINATIONAL MONITOR OFFER ** - Please forward - Multinational Monitor, a magazine edited by Robert Weissman, is offering one-year subscriptions to new subscribers, or for gifts, for $15 -- a $10 discount from the normal one-year subscription rate. Multinational Monitor appears 10 times a year (monthly, with two double issues). Founded by Ralph Nader, it is the leading source of critical reporting on the activities of multinational corporations and the international globalizing institutions -- the IMF, World Bank and WTO. If you want to get a sense of the magazine, older issues are archived at http://www.essential.org/monitor. You can rush right now and take advantage of this offer by clicking on http://www.essential.org/monitor/subscribe.html and ordering on-line through our secure server. You can also call in credit card purchases. Contact Katie Auerbach at 202-387-8030. Or, send a check or credit card information to: Multinational Monitor PO Box 19405 Washington, DC 20036 USA If you are paying by credit card through regular mail, make sure to indicate whether you are paying by Visa or Mastercard, the card number and its expiration date. Also, for those subscribing through regular mail, please provide us with your address. Or, if you are giving the Monitor as a gift, provide us with the address of the recipient(s). This offer is available only for U.S. residents. A comparable discount is available for Canadian and Mexican residents. We regret that we cannot extend the offer for those living in other countries. The offer expires December 31, 2000. From rob@milan.essential.org Thu Nov 30 18:23:08 2000 From: rob@milan.essential.org (Robert Weissman) Date: Thu, 30 Nov 2000 13:23:08 -0500 (EST) Subject: [stop-imf] Alert: Petition to WB on "market-based" land reform (fwd) Message-ID: **PLEASE SEND SIGN-ONS TO and (NOT TO US!)** The following is a very important petition to the World Bank on a very important subject too often neglected by activists in the North: the impact of World Bank policies on existing and future land reform programs. For most people in Southern countries, agriculture is the primary occupation and source of sustenance. Systems of land tenure established by colonial regimes or corrupt governments have in too many cases prevented the most disadvantaged from getting the land they need to survive. The latest twist on this old problem is the entry of the World Bank into the fray. In several countries, including Brazil, whose WB-financed "Land Bank" has been examined in the 50 Years Is Enough newsletter, the Bank is attempting to substitute "market-based" land reform for existing systems of expropriation of under-utilized land from large landowners. The petition below explains the threat represented by such programs. Please add your voice to those around the world calling for a stop to the World Bank's attempt to make land into "just another commodity" to be subjected to the whims of the marketplace. The 50 Years Is Enough Network will continue to follow developments in this important area. Soren Ambrose - 50 Years Is Enough Network - Washington DC USA Friends, Attached please find a petition to the World Bank on market-based land reform prepared by FIAN and Via Campesina. Please look it over and let me (or Vilmar Schneider of FIAN, vilmar@fian.org,) know whether or not you can sign on by Thurs., December 7. FIAN and Via Campesina have worked closely on this issue with the National Forum on Agrarian Reform in Brazil, as well as with grassroots groups in other countries (eg, Phillipines, So. Africa) where the Bank is promoting "market-based" land reform programs. Thanks for your attention to this. Best, Steve Schwartzman Environmental Defense 1875 Connecticut Avenue,Suite 1016 Washington, D.C. 20009 Tel. 202 387 3500 Fax 202 234 6049 Sschwartzman@environmentaldefense.org +++++++++++++++++++++++++++++++++++++++++++++++++++ Petition to the World Bank Land is much more than a commodity 1. The gap between claims and politics Those nowadays engaged in agrarian reforms are meeting with a paradoxical situation. he explicit and repeatedly expressed will to implement agrarian reform is confronted by a reality from which any declarations and resolutions of international conferences seem to rebound. The documents cover a period starting with the World Conference on Land Reform and Rural Development of 1979 up to the World Food Summit in 1996. Considering the discussions on global action plans there is a remarkable consent: The majority of the groups most severely threatened and affected by hunger and poverty are living on the land. If one does want to give them a chance to solve their difficult situation, they need sufficient access to productive resources like land, forest, water, seeds, money, markets, education and information. Starting from this common assumption the countries of the South and North agreed in the action plan of the World Food Summit in Rome to consider and implement agrarian reform programmes as an elementary part of strategies to fight poverty. However, political reality demonstrates a strange contradiction to this claim. In most countries of the South agrarian reform processes have been stagnating. Under the auspices of structural adjustment programmes and neoliberal agrarian policies, agrarian reforms are increasingly being replaced by the introduction or widening of land markets. Moreover, the privatisation policy of collective reformed sectors (e.g. Mexico), or of old communal lands (e.g. Bolivia, Peru, many African countries) and the liberal trading regime - which is putting small farmers in competition with highly subsidised products from the North that are commercialized by transnational corporations in the Southern markets under economical and social dumping conditions - lead to a destruction in the existing access of small farmers and other marginalised groups to productive resources, often with alarming results. The paradigm of agrarian reform according to which land is to be the property of those working on it, is being replaced by another one: The right to land belongs only to those who own the money to buy it. The social function of land property is being increasingly ignored. The same is true regarding access to other resources like water, seeds, finances, technical assistance and education. Polarisation instead of redistribution, and reconcentration takes the place of decentralising the ownership of resources. 2. Agrarian Reforms - a State Obligation to Human Rights The International Peasant Movement La Via Campesina and the Human Rights Organisation FIAN International initiated in 1999 a Global Campaign for Agrarian Reform. The Campaign was started to implement the human rights obligation of agrarian reform. The human right to food as recognised in Art. 11 of the International Covenant on Economic, Social and Cultural Rights (hereafter ICESCR), implies that landless peasants and agricultural workers must gain access to those resources, with which they can produce food: this is mainly land. All states parties to the ICESCR are therefore obliged individually or in international co-operation to respect, protect and fulfil those deprived people's access to productive resources. In Art.11.2 of the ICESCR the "reform of agricultural systems" is explicitly spelled out as one of the most important means of realising the Right to Food. In the final declaration of the first "International Meeting of Landless Peasants" held in Honduras at the end of July 2000 delegates from 24 countries from Africa, Asia, Europe and Latin America stated: "We reject the ideology that considers land only as a commodity. We observe with concern that the dominant agrarian policies, implemented within the framework of neo-liberalism, increasingly attempts to subject Agrarian Reform to the mechanics of the land market. [...] We wish to assert that, when governments fail to keep their commitment to agrarian reform and just allow the market to govern the distribution of land, they violate the human rights of peasant families who need access to land to realise their right to feed themselves as well as other economic, social and cultural human rights". 3. "The market-assisted land reform" Taking into account that the World Bank's declared sustainable poverty reduction in its Operational Directive on Poverty Reduction (OD 4.15, 6) its overarching objective, we want to express our deep concern about the reform policies implemented by the Bank on the structure of landholdings. Since the mid nineties the Bank has been widely advertising its new model of the "market-assisted land reform" in several regions of the world. These programmes are meant to address poor people's lack of productive assets. The "market-assisted land reform" is supposed to provide an efficiency and equity- enhancing redistribution of assets in developing countries. This approach - considered to be a more promising approach than using land reform agencies and relying on expropriation - differs from government directed land reform primarily in the institutional mechanisms used to transfer land. In a market assisted land reform, beneficiaries receive a combination of grants and loans from public and private sectors which they use to negotiate the purchase of land from willing sellers. The application of this model gives rise to great concern and is unacceptable for La Va Campesina and FIAN because it does not guarantee the realisation of an integrated and comprehensive agrarian reform that will fulfil the right of poor peasant farmers to have access to land and other productive resources enabling them to feed themselves in dignity. The market assisted land reform policies are unable to address the problem of unfair land distribution since market led land redistribution in oligopolistic environments is impossible. By implementing this model the Bank is failing to realise its own Operational Directive on Poverty Reduction as well. This has been illustrated by the results of such programmes so far. There is no evidence that the reforms of land markets have fundamentally altered the patterns of landownership. Firstly, the programmes aimed at helping people to buy land are primarily designed for those farmers who already have some production capacity and seem to be able to run an economically feasible project. Less qualified families, despite being much needier, are excluded from these programmes. Secondly, the typical smallholder beneficiaries are not able to generate enough income to repay their land purchase loans if they do not get adequate support. Applying this model in El Salvador has shown that the debts have to be cancelled if the beneficiaries are not to be forced to abandon their plots of land. Furthermore, the price of land has increased because of the state credit supply. This situation is far worse in countries where there exists a land shortage as in the case of the Philippines. The supposed cost reduction will thus turn out to be an illusion: If the land price increases, the State and the so called beneficiaries will be unable to pay for the land reform process. In cases like South Africa, additional problems occur since not enough land is being delivered through the willing-seller set up. According to the OD 4.15, 39, effective implementation and operation of most poverty- reduction projects require the active involvement of the beneficiaries. Active beneficiary participation should also be built into earlier stages of the project cycle. Nevertheless, in the case of the market-assisted land reform programmes the Bank does not respect its own operational directives: As the Brazilian experience illustrates, the Bank has bypassed landless and small farmers' organisations at the national level and did not handle the negotiations about the project as well as its implementation, as a transparent and participatory process. The market model is substituting the existing agrarian reform programmes that rely principally on expropriation. As empirical evidence shows, however, a more equitable redistribution of assets cannot be reached in oligopolistic environments without State intervention. In Guatemala, Colombia, Brazil and the Philippines, for instance, the agrarian reform institutes are disappearing due to their lack of resources whereas the Land Banks or Funds are experiencing ever increasing budgets. At the same time, the market model offers landholders the opportunity to sell land which otherwise would have undergone expropriation, or is of low quality. In cases like South Africa the redistribution programme of the past few years has partially turned into a programme for bailing out highly indebted white farmers off their marginal lands. These effects show that the market-assisted land reform policies fail to meet states' legal obligation to reform agrarian systems in a way that guarantees the right to adequate food. 4 . Demands Taking into account that the majority of the World Bank's member states ratified the International Covenant on Economic, Social and Cultural Human Rights, and that the Bank is, therefore, obligated to respect, protect and fulfil the human rights enshrined in the Covenant, we want to ask the Bank for: * a suspension of approval and support to further market-assisted land reform programmes; * a re-examination of the market-assisted land reform model starting a participatory monitoring process that involves in the different countries where the programme has been applied the major representative organisations of the landless people, the governments and independent researchers. Special attention should be paid to the following questions: first if the market-assisted land reform programmes are complementing previous agrarian reform processes in a sensible way or threaten to replace them; second, if they are improving the sustainable access of the rural poor to productive resources; and third, if they are improving the equal access, by men and women, to land and other natural and productive resources. * ensuring that the World Bank's land reform policies guarantees the right to adequate food and the reform of the agrarian systems to this end instead of contributing to human rights violations by undermining the State's obligations under human rights. * an evaluation and revision of previous structural adjustment programmes of the agrarian sector under the aspect of their implications for the agrarian reform processes in the respective countries; * including a land and agrarian reform policy in all rural poverty reduction strategies that guarantees peasants' access, property and control of land and other productive resources; * enforcing the Plan of Action of the World Food Summit related to agrarian reform and the right to adequate food. From rob@milan.essential.org Fri Dec 1 00:52:06 2000 From: rob@milan.essential.org (Robert Weissman) Date: Thu, 30 Nov 2000 19:52:06 -0500 (EST) Subject: [stop-imf] Final version of letter on Tanzania and user fees Message-ID: November 29, 2000 1500 Pennsylvania Ave., NW Washington, DC 20220 Dear Secretary Summers: The undersigned non-governmental organizations and religious communities are writing to you because the boards of the World Bank and IMF will be meeting November 30, 2000 and December 1, 2000 to endorse Tanzanias Poverty Reduction Strategy Paper (PRSP). This blueprint document by the government of Tanzania, drafted in consultation with the IMF and World Bank, is required in order to release loans from the Poverty Reduction and Growth Facility and/or debt relief. It has come to our attention that Tanzanias interim PRSP in fact imposes user fees in the form of cost-sharing to dispensaries and health centers. The boards of the World Bank and IMF will be deciding whether to approve Tanzanias final PRSP. As you know, it is now the policy of the United States to oppose the imposition of user fees through World Bank or IMF sponsored mechanisms for primary health and education services in conjunction with IMF and World Bank loans, structural adjustment plans and debt relief. Pursuant to PL 106-429, Congress specifically directs the Secretary of the Treasury to instruct the United States Executive Director... to oppose any loan that would require user fees or service charges on poor people for primary education or primary health care. The intent of this language is clarified to mean user fees should not be imposed or required through Bank or Fund sponsored community financing, cost sharing, or cost recovery mechanisms prepared in conjunction with loans, structural adjustment schemes or debt relief actions. If the final PRSP presented to the boards of the IMF and World Bank includes user fees for basic services, in our view, the actions of the United States representatives at the meetings to approve such a PRSP are precisely what Congress intended to address in PL 106-429. Accordingly, we expect that following your instructions to them, the U.S. executive directors of the Bank and the Fund will oppose the imposition of cost sharing in Tanzanias PRSP and will oppose a final PRSP that contains cost sharing or any other form of user fee for health and education. We also anticipate that within ten days of the Bank and Fund decisions, you will notify the Committee on Appropriations if Tanzanias PRSP contains cost sharing or any other mechanism requiring the imposition of user fees. We would also appreciate hearing from you about any steps the U.S. representatives took to oppose user fees in Tanzanias PRSP because we are aware of the importance of access to basic health care and education in the sustainable development of a country. Sincerely, Quest for Peace/Quixote Center RESULTS, USA 50 Years Is Enough Network Center for Economic Justice Essential Action The Development GAP Jubilee 2000/USA National Council of the Churches of Christ in the USA Maryknoll Office for Global Concerns Lutheran World Relief Church World Service Church Women United Bread for the World NETWORK: A National Catholic Social Justice Lobby Tanzania Gender Networking Programme, Dar es Salaam, Tanzania Global Exchange Sisters of Mercy U.S. Province Friends of the Earth U.S. Church of the Brethren Washington Office United Methodist Church, General Board of Church and Society The Norwegian Campaign for Cancellation of Third World Debt/Jubilee 2000 Jubilee Chicago in Chicago, Illinois Cornell University Program in International Nutrition Ithaca,NY Womens EDGE Network for Environmental and Economic Responsibility of the United Church of Christ Minnesota Fair Trade Coalition Missionary Oblates of Mary Immaculate First Mennonite Church of Denver Resource Center of the Americas Committee for Academic Freedom in Africa Peace and Justice Center of Southern California The Southern California Conference of Social Justice Coordinators Voices on the Border Project Health for Leon Katalysis Partnership Rights Action Peace & Social Justice Ministry & Parish Council Catholic Church of the Incarnation, Sarasota, Florida RESULTS, Kalamazoo RESULTS, Santa Barbara, CA RESULTS Global Group Leader in Albuquerque, New Mexico RESULTS, Oakland Social Justice & Peace Commission Jesus Christ, Prince of Peace Roman Catholic Parish Clinton, Iowa Congregation Ahavath Israel Ewing, NJ Pax Christi New Jersey Tri-State Coalition for Responsible Investment Newton, NJ International Society for the Preservation of the Tropical Rainforest Sherman Oaks, California The Gordon R. Irlam Charitable Foundation Redwood City, California Benedictine Sisters of Erie Jubilee 2000 Missoula, Montana Long Island Progressive Coalition Sisters of St. Francis of Philadelphia INTERCONNECT Nicaragua Center for Community Action AIDS Survival Project Providing Tools for Living with HIV Student Coalition for Social Justice Act Up/East Bay, Oakland, CA Middle East Childrens Alliance, Berkeley, CA Vice Mayor Maudelle Shirek, Berkeley, CA Womens International League for Peace and Freedom, Mary Wood branch, Springfield IL From rob@milan.essential.org Fri Dec 1 16:35:07 2000 From: rob@milan.essential.org (Robert Weissman) Date: Fri, 1 Dec 2000 11:35:07 -0500 (EST) Subject: [stop-imf] Washington: Demonstration at IMF on 1-year anniversary of Seattle Message-ID: Below are three stories on Thursday's demonstration outside IMF headquarters in Washington, where we marked the one-year anniversary of the WTO demonstrations in Seattle by holding a "counter-summit" outside the formal opening of the IMF's new propaganda distribution center. The stories are largely accurate (though we wish to assure people that the chant referred to in the AP story was definitely NOT "forgive the debt now" but rather "CANCEL the debt now"). Not included are the admonition by 50 Years Is Enough Director Njoki Njehu that the IMF's guest of honor for the reception, Washington Mayor Anthony Williams, should be pressing the IMF and the World Bank to pay their fair share for city services to their hosts. Since they are exempt from taxes, they could, as other quasi-public institutions do, make "payments in lieu of taxes" (PILOTS). Also underplayed is the participation of many union activists, particularly folks from the HERE local who we supported in the September 26 demonstrations coinciding with the Prague annual meetings of the IMF/WB. We should also add that one protester who was surprised to receive an invitation to the event did attend, and heard IMF Managing Director Horst Koehler make a speech about how the new "IMF Center" represents the IMF's new commitment to openness and transparency. Seizing on the spirit of his words, our activist friend distributed flyers offering non-fiction versions of some of the exhibits in the IMF Center (e.g., noting the IMF's role in creating and maintaining the international debt crisis). After distributing about 50 of the flyers, he was informed that he was officially "dis-invited" and escorted out of the celebration of openness and transparency. -Soren Ambrose - 50 Years Is Enough Network - Washington DC USA The stories from AFP and AP: Anti-globalization activists mark WTO anniversary with IMF protest WASHINGTON, Nov 30 (AFP) - An estimated 125 anti-globalization activists staged a spirited protest outside IMF headquarters here Thursday to mark the first anniversary of huge demonstrations in Seattle, Washington, which helped galvanize their movement. Protesters gathered to mount what they called a "counter-reception" as local officials and International Monetary Fund dignitaries prepared to inaugurate a new IMF public information center. Demonstrators chanted slogans denouncing "corporate greed" and demanding cancellation of debts owed by developing countries. Police presence was minimal and protesters were making no attempt to interfere with Fund activities. The action came on the date one year ago that tens of thousands of demonstrators disrupted a ministerial meeting in Seattle of the World Trade Organization, an event that shocked US authorities and conference delegates and helped ignite a worldwide movement against economic globalization. "We note that the IMF was kind enough to schedule a formal event on the one-year anniversary (of Seattle), which gave us an opportunity to come out here to point out that what the IMF is doing is very consonant with what the WTO does around the world -- making the world safe for corporate privilege, making the world worse for the people in countries impacted by their policies, which are mainly countries of the South," said Soren Ambrose of the anti-IMF network 50 Years Is Enough. Standing at the edge of the crowd, IMF spokesman William Murray said the Fund welcomed dialogue and debate. "We have no problem with public dissent and criticism," he said. "As long as they're well-behaved, we have no problem with them." Many human rights, ecology and trade union activists argue that the free flow of trade and capital across national borders -- as advocated by the IMF and the WTO -- benefits big business while harming the interests of the poor and degrading the environment. Defenders of globalization insist that open borders and free trade boost living standards. ================== Demonstrators Protest New IMF Center Thursday, 30-Nov-2000 4:30PM Story from AP / HARRY DUNPHY WASHINGTON (AP) -- About 100 protesters demanding debt forgiveness for poor countries demonstrated outside the International Monetary Fund headquarters Thursday on the anniversary of protests that shut down a global trade meeting in Seattle. The event was timed to coincide with an IMF reception opening a new ground-floor visitors center that the once-secretive 182-nation organization established to explain its role in the global economy. Outside, protesters banging on drums and carrying banners chanted: ``Forgive the debt ... now!'' Banners denounced global corporations and lending policies of the IMF and the World Bank that demand austerity programs by debtor countries. The sister institutions manage debt relief programs for the world's poorest nations, most of them in Africa. The demonstrators also targeted the World Trade Organization, which polices international trade. Rioters trashed large areas of Seattle to protest the WTO's 1999 annual meeting there. Those attending the reception, such as Washington Mayor Anthony Williams and IMF Managing Director Horst Koehler, passed through demonstrators as they entered the building. They were handed protest literature as policemen kept watch. ``We would like to thank the IMF for its good planning in opening the center one year after the shutdown of the WTO'' meeting in Seattle, said Robert Naiman, who led the demonstrators in chanting slogans. ``Since then the IMF has continued to make the world safe for corporations while poor people suffer.'' Naiman said those taking part in the protest included advocacy groups such as the Center for Economic Justice, the 50 Years Is Enough Network of groups that oppose the IMF and the World Bank, environmentalists and students. The IMF Center houses exhibits that trace the organization's history since its founding in July 1944 and explain basic economic issues such as trade deficits. Member countries' currencies and antique coins depicting ancient trade routes also are on display. ========== Seattle one year on: activists celebrate, hopes fade for new WTO talks Story from AFP / Nathaniel Harrison WASHINGTON, Nov 30 (AFP) - Activists on Thursday marked the first anniversary of huge protests in Seattle, Washington, which shocked a WTO ministerial conference and galvanized a worldwide movement against economic globalization. Demonstrations and teach-ins were planned in Seattle to celebrate what militants claim was a clear victory over the World Trade Organization and its corporate-driven regulations, which they say harm the poor and degrade the environment. Here in the US capital, activists were scheduled to gather outside the offices of the International Monetary Fund to stage a "counter-reception" as local officials and IMF dignitaries inaugurated a new facility. The IMF and its sister institution, the World Bank, have also been targeted by foes of globalization in the aftermath of Seattle, where tens of thousands of human-rights, environmental and trade union activists laid siege to a WTO ministerial meeting from November 30 to December 3 last year. The size and militancy of the protests stunned US and Seattle authorities and unnerved delegates to the long-awaited gathering, which had been called to forge an agenda for a new round of trade liberalization talks that they hoped would materialize this year. The meeting eventually collapsed -- for reasons, organizers insisted, that had nothing to do with the violent street demonstrations. In their heavily guarded convention center, ministers did indeed squabble among themselves, unable to set aside national priorities in order to reach consensus on a new trade agenda. Since Seattle, WTO members have yet to iron out their differences. Pascal Lamy, European Union trade commissioner, on Monday acknowledged that a fresh bid to hold a new trade round was not on the horizon. "I also note that the necessary political energy for such a project of globalization has diminished," he said. While the WTO remains in apparent disarray, the antiglobalization drive has gathered steam, activists say. "In the past year, the Seattle Coalition has grown here and abroad, with protests and events occurring wherever the corporate globalization agenda is promoted," said Lori Wallach, director of Public Citizen's Global Trade Watch, a body founded by Ralph Nader. "The joy of it is there is no team of roving organizers," she said. "Each of the protests ... comes from informed, activated local residents." At another, larger IMF-World Bank gathering in Prague last September, some 12,000 people turned out to protest the policies of the two institutions. Similar demonstrations have been held since Seattle in Geneva, London, Adelaide, Cincinnati and elsewhere. Four months after Seattle, an estimated 6,000 to 10,000 protesters poured into the streets of Washington to denounce the annual April meetings of the IMF and the World Bank. Under heavy police protection, delegates had to be bused in to their meetings at the crack of dawn to avoid demonstrators. Diplomatic sources in the Gulf state of Qatar said last month that authorities there had withdrawn their offer to host the next WTO ministerial meeting at the end of 2001. While the reason given was a lack of hotel space during the Muslim holy month of Ramadan, anti-WTO activists claimed the move as another triumph. Rejecting arguments from the IMF, the World Bank and the WTO that globalization -- the unfettered flow of trade and capital across national borders -- reduces poverty and improves living standards, opponents maintain that such policies place corporate profits ahead of social and environmental needs. Speaking of the new building the IMF plans to dedicate later Thursday, Njoki Njoroge Njehu of the anti-IMF "50 Years Is Enough Network" said: "If the IMF tried to put a 'center' in Port-au-Prince or Lusaka, the people would be there right away to ask when they will start listening to the people who live under their policies. "When, for example, will they stop using the ideology of 'free markets' to impose 'user fees' on poor peoples' access to such basic public services as education, health care and water?" From rob@milan.essential.org Fri Dec 15 18:34:48 2000 From: rob@milan.essential.org (Robert Weissman) Date: Fri, 15 Dec 2000 13:34:48 -0500 (EST) Subject: [stop-imf] Special Multinational Monitor offer Message-ID: ** SPECIAL MULTINATIONAL MONITOR OFFER ** - Please forward - Multinational Monitor, a magazine edited by Robert Weissman, is offering one-year subscriptions to new subscribers, or for gifts, for $15 -- a $10 discount from the normal one-year subscription rate. Multinational Monitor appears 10 times a year (monthly, with two double issues). Founded by Ralph Nader, it is the leading source of critical reporting on the activities of multinational corporations and the international globalizing institutions -- the IMF, World Bank and WTO. If you want to get a sense of the magazine, older issues are archived at http://www.essential.org/monitor. You can rush right now and take advantage of this offer by clicking on http://www.essential.org/monitor/subscribe.html and ordering on-line through our secure server. You can also call in credit card purchases. Contact Katie Auerbach at 202-387-8030. Or, send a check or credit card information to: Multinational Monitor PO Box 19405 Washington, DC 20036 USA If you are paying by credit card through regular mail, make sure to indicate whether you are paying by Visa or Mastercard, the card number and its expiration date. Also, for those subscribing through regular mail, please provide us with your address. Or, if you are giving the Monitor as a gift, provide us with the address of the recipient(s). This offer is available only for U.S. residents. A comparable discount is available for Canadian and Mexican residents. We regret that we cannot extend the offer for those living in other countries. The offer expires December 31, 2000. From rob@milan.essential.org Mon Dec 18 16:01:36 2000 From: rob@milan.essential.org (Robert Weissman) Date: Mon, 18 Dec 2000 11:01:36 -0500 (EST) Subject: [stop-imf] New Bretton Woods Update online Message-ID: This is a short message to inform you that the Bretton Woods Update December 2000 can now be obtained at: http://www.brettonwoodsproject.org/update/20/ It is available in HTML and as a fully formatted PDF file for easy printing. You can also subscribe to receive the entire Update as a plain text e-mail. Please inform others in your organisation and networks and provide links to the Update from your website where possible. Thanks, Alex Wilks Bretton Woods Project + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + CONTENTS THIS ISSUE INCLUDE * World Commission report has far-reaching implications * Indigenous policy dilution threat * Bank land reforms contested * Participation review: mixed findings * Narmada controversy re-erupts * Labour representatives meet World Bank * Panama Bay scheme: alert * New UK child poverty initiative * Chad President spends pipeline windfall on arms * Code of conduct call for Bank anthropologists * Study on strategic issues for development banks * Bretton Woods summit on Dutch coast * PNG forest moratorium in question * New "Net the debt" website * Mexican NGOs demand transparency * Argentine bail-out causes more hardship * US contests user fees * Turkey crisis and IMF * Let them drink Coke * Tanzanians criticize PRSP process * Disillusionment with democracy * Reflections on Kenyan PRSP process * Latest on Bank net gateway plans + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + BRETTON WOODS UPDATE A digest of information and action on the World Bank and IMF Number 20, December 2000 Published by BRETTON WOODS PROJECT Supporting UK NGOs on World Bank and IMF reform www.brettonwoodsproject.org From rob@milan.essential.org Mon Dec 18 16:12:35 2000 From: rob@milan.essential.org (Robert Weissman) Date: Mon, 18 Dec 2000 11:12:35 -0500 (EST) Subject: [stop-imf] Indonesia complains about IMF pressure Message-ID: Indonesian leader says IMF playing into his enemies' hands Sunday, 17-Dec-2000 3:00AM Story from AFP BANGKOK, Dec 17 (AFP) - Indonesian President Abdurrahman Wahid has claimed that the International Monetary Fund (IMF) is bolstering his enemies by delaying its latest aid tranche, according to local media. The IMF was playing into his adversaries' hands by criticising his administration, Wahid told the Bangkok Post in comments reported Sunday. "The IMF must learn the art of compromise ... The IMF must understand me," he said. The organisation, for example, should realise that it is politically prudent for the Indonesian government to continue subsidising farmers for at least three years, Wahid said. It must also appreciate that certain political factors will take time for Jakarta to control, Wahid said, alluding to recent separatist activity throughout the archipelago, such as in Aceh. For its part, Indonesia will try to "meet the IMF stipulations," the president said. IMF officials are reported to be frustrated with and critical of the current political instability and Wahid's handling of the economy. Earlier this week Indonesia's coordinating minister for the economy confirmed that the IMF had delayed the scheduled December disbursement of a 400 million dollar loan to Jakarta. According to Jakarta media reports, Indonesia has failed to fulfil a number of key reform commitments on deadline, prompting the fund to postpone this month's loan disbursement, part of a five billion dollar loan package, until February or March. But Indonesian officals have stressed that the delay is for purely technical reasons related to "scheduling" and is not Jakarta's fault. The IMF came to Indonesia's rescue when the regional financial crisis hit the country in 1997. However, the bailout is subject to Indonesia's economic reform. Wahid visited Bangkok on December 14 and 15 to receive an honorary doctorate in philosophy from the Asian Institute of Technology, a university in the Thai capital. From rob@milan.essential.org Tue Dec 19 16:04:12 2000 From: rob@milan.essential.org (Robert Weissman) Date: Tue, 19 Dec 2000 11:04:12 -0500 (EST) Subject: [stop-imf] IMF/WB threaten to cut off Kenya for interest rate controls Message-ID: Kenya May Face New Aid Embargo Over Bills NAIROBI (Dec. 18) XINHUA via NewsEdge Corporation - International donors are threatening to withdraw more than 450 million U.S. dollars in aid to Kenya following the passing of laws that contradict the country 's commitments on economic reforms, the December 18-24 issue of the EastAfrican weekly reported. The donors, led by the World Bank and the International Monetary Fund (IMF), are anxious that the Donde Bill, passed recently by Kenya seeking to control interest rates, would undermine the operation of the free market mechanism. They are also worried that a motion passed in the Kenyan parliament in October this year would scuttle efforts to make the country's civil service leaner and efficient. Jose Fajgenbaum, IMF senior advisor on Africa, was quoted as saying that the interest rate regulation bill amounts to a return to price controls, which will cause distortions and inefficiencies. On whether the IMF would be less inclined to assist Kenya following the bill's approval, Fajgenbaum said this would depend " on how the bill is implemented". The Donde Bill will take effect in January if Kenyan President Daniel arap Moi does not veto it. Two other bills, expected in the Kenyan parliament next year seeking to introduce price controls on petroleum products and abolish fuel and foreign-exchange adjustment levies on electricity bills, are also seen by the international donors as renege on the complete liberalization of the energy sector in Kenya. The international donors are also concerned over the country's privatization exercise following the stalled partial sale of state- owned Telkom Kenya to a foreign strategic investor. Kenyan President Moi said on Wednesday that "privatization also has its limits and should not be allowed to go too far." Harold Wackman, World Bank country director to Kenya, reacted immediately by cautioning that there would be "some problems" with non-adherence to the comprehensive reform programs. If the donors take punitive action on the Kenyan government over the drastic policy reversal, key poverty alleviation programs in the country would be derailed, the weekly newspaper said. From rob@milan.essential.org Tue Dec 19 17:24:50 2000 From: rob@milan.essential.org (Robert Weissman) Date: Tue, 19 Dec 2000 12:24:50 -0500 (EST) Subject: [stop-imf] Jubilee Nicaragua on HIPC Message-ID: DECLARATION OF NICARAGUA JUBILEE COALITION (COALICION JUBILEO NICARAGUA) 12/12/200 Between the 18th and 21st of December, Nicaragua's entry into the Heavily Indebted Poor Countries (HIPC) initiative will be discussed in Washington. HIPC was designed in 1996 to relieve the debt of the 41 most heavily indebted countries in the world, including Nicaragua. The Nicaragua Jubilee Coalition considers it important to call upon the Nicaraguan population not to have high expectations regarding the amount to be canceled under this initiative, inasmuch as other countries' experience has demonstrated that the level of HIPC relief does not surpass 40 percent of their total debts. There have even been cases of countries where debt service payments increased after the process. We must be aware that Nicaragua's decision point will not imply an automatic cancellation of the debt, much less a solution to the problem of indebtedness, given the composition of the debt and the degree of relief under this initiative. The eligible balance to be cancelled under HIPC currently is $1.177 million, which is only 80 percent of the total Paris Club debt before 1988. As to multilateral debt it is still not known for certain what the amount of the reduction will be. We consider it inconsistent to speak of debt relief for poverty reduction and simultaneously continue insisting on the application of structural adjustment prescriptions, such as: privatization of the national telephone and energy companies, and even the imposition of fees for basic services like education and health care, concealed under projects of modernization and autonomy. Debt relief under this initiative has failed not only because of its design and implementation, but because in its essence it prioritizes the attainment of macroeconomic goals over sustainable human development. It is ironic that debt relief, in spite of its reforms, is tied again to the same economic policies that have managed to keep our country perpetually indebted. The Nicaraguan Jubilee Coalition continues in its demand for a total and unconditional cancellation of the external debt, because it is illegitimate, immoral and unjust. The regimes that incurred this debt, no less than the creditors were irresponsible and not transparent in the use of those funds. Therefore, it is not now the responsibility of the Nicaraguan people, 80 percent of whom are poor, to pay the costs of this irresponsibility. We insist that the debt already has been paid numerous times through interest payments on the same and inequitable trading relationships between our countries and the industrialized countries of the North. It is not possible that the same countries that historically have become rich at the expense of our traditional knowledge and genetic resources (later used in industry) and the environmental imbalance that is a product of their greenhouse gases, now claim a financial debt. This minority that exploits Earth's common resources has a debt with our peoples, we the minority who consume less than our rightful portion of the planet's resources. Our Jubilee message is clear and just: the debt cannot continue being the cross of the Nicaraguan people, this is unjust and immoral. Therefore we demand: *Cancellation of the external debt, without the application of structural adjustment conditionalities that have done so much damage to our country. *That the funds freed up by debt cancellation be invested in a transparent and responsible manner, prioritizing the investment towards the country's poorer rural areas. *That the cancellation of this debt does not result in a reduction in development assistance. *That policies for the taking on of debt be established which avoid continuous concessional loans and avoid a process of acceleration of new indebtedness. *That there be a true process of consultation, information and construction with the grassroots, on the essential components for fighting poverty caused by neoliberal policies. *An overhaul of the present model of development that is impoverishing more and more those sectors excluded from Nicaraguan society. We appeal to the ethical call of the Biblical figure of the Jubilee as the New Beginning with justice and fairness. We do not ask for alms nor charity but the restitution of that which has been unjustly taken from our natural wealth and by means of the exploitation of our people. We are certain that the outcry of the Nicaraguan people and its just demands will prevail: Yes to life, No to debt! ------- Forwarded message follows ------- PRONUNCIAMIENTO DE LA COALICION JUBILEO NICARAGUA 12/12/200 Entre el 18 y 21 de Diciembre, se estar discutiendo en Washington el ingreso de Nicaragua al punto de decisin de la Iniciativa para Pases Altamente Endeudados (HIPC), diseada en 1996 para el alivio de las deuda de los 41 pases ms endeudados del mundo, incluyendo Nicaragua. La Coalicin Jubileo Nicaragua considera importante hacer un llamado a la poblacin nicaragense a no crearse muchas expectativas respecto al volumen y la dimensin del monto a cancelar bajo esta iniciativa, por cuanto la experiencia en otros pases han demostrado que el nivel de alivio bajo HIPC no supera el 40% del total de sus deudas. Inclusive se ha visto el caso de pases en los cuales se ha dado un incremento del pago del servicio de su deuda a pesar de completar todo el proceso. Debemos estar conscientes que el ingreso de Nicaragua al punto de decisin no implicar una automtica condonacin de la deuda, ni mucho menos constituye la solucin al problema de endeudamiento de nuestro pas, dada la composicin de la deuda y el grado de alivio que se da bajo esta iniciativa. El saldo elegible de Nicaragua a ser cancelada bajo la HIPC en estos momentos abarca la suma de $1,177 millones, lo que representa nicamente el 80% del total de lo adeudado con el Club de Paris hasta 1988. En relacin a la deuda con los organismos multilaterales an se desconoce a ciencia cierta cul ser el monto a condonar. Consideramos incoherente de que se hable de alivio de la deuda de Nicaragua pretendiendo reducir la pobreza, y a la vez se contine insistiendo en la aplicacin de las recetas de ajuste estructural, tales como: la privatizacin de la telefona nacional y empresa de energa, e inclusive cobro a los servicio bsicos como la educacin y la salud, encubierto bajo proyectos de modernizacin y autonoma. El alivio de deuda bajo esta iniciativa ha fracasado no solamente por su diseo e implementacin, sino porque en su esencia se prioriza el cumplimiento de las metas macroeconmicas, por encima del desarrollo humano sostenible. Es irnico que el alivio de deuda, a pesar de sus reformas, nuevamente est atado a las mismas polticas econmicas que han logrado mantener endeudado perpetuamente a nuestro pas. La Coalicin Jubileo Nicaragua contina en su demanda de una cancelacin total e incondicional de la deuda externa, por ser ilegtima, inmoral e injusta. Tanto los regmenes que contrataron dicha deuda, como los acreedores fueron irresponsables y poco transparentes en el uso de esos fondos, por lo tanto, no corresponde ahora al 80% del pueblo pobre nicaragense el pagar los costos de esta irresponsabilidad. Insistimos en que la deuda ya ha sido pagada numerosas veces a travs del: pago de los intereses a la misma y a cuenta del intercambio comercial desigual entre nuestros pases y los pases industrializados del Norte. No es posible que los mismos pases que histricamente se han enriquecido, a costa de nuestros conocimientos tradicionales, recursos genticos (luego utilizados en las industrias) y del desequilibrio ambiental producto de sus emisiones de gases de invernadero, ahora clamen una deuda financiera. Esta minora que sobreexplota los recursos comunes de la tierra tienen una deuda con nuestros pueblos, la minora que consumimos menos de nuestra parte justa de los recursos del planeta. Nuestro mensaje de Jubileo es claro y justo:. La deuda no puede continuar siendo la cruz del pueblo de Nicaragua, es injusto e inmoral. Es por esto que demandamos: 1) Que se cancele la deuda externa, sin la condicionalidad de aplicar los ajustes estructurales que tanto dao han hecho a nuestro pas. 2) Que se inviertan de manera responsable y transparente los recursos cancelados, priorizando la inversin hacia las reas rurales ms pobres del pas. 3) Que la cancelacin de esta deuda no implique una disminucin de la ayuda internacional. 4) Que se establezcan polticas de endeudamiento que eviten los continuos prstamos concesionales y evite el proceso de aceleracin del nuevo endeudamiento. 5) Que haya un verdadero proceso de consulta, informacin y construccin desde las bases sobre componentes esenciales para combatir la pobreza provocada por las polticas neoliberales. 6) Revisin del actual modelo de desarrollo que est empobreciendo cada vez ms a los sectores excluidos de la sociedad nicaraguense. Apelamos al llamado tico de la figura bblica del Jubileo como el Nuevo Comienzo con justicia y equidad. No demandamos limosnas, ni caridad sino la restitucin de aquello injustamente tomado de nuestras riquezas naturales y por medio de la explotacin de nuestro pueblo. Estamos seguros que el clamor del pueblo nicaragense y su justas demandas triunfaran: S a la vida, No a la deuda! From rob@milan.essential.org Wed Dec 20 16:30:37 2000 From: rob@milan.essential.org (Robert Weissman) Date: Wed, 20 Dec 2000 11:30:37 -0500 (EST) Subject: [stop-imf] World Bank updates, details HIPC Message-ID: PRESS CONFERENCE Heavily Indebted Poor Countries (HIPC) Initiative Washington DC, December 18, 2000 MS. ANSTEY: Welcome to 'everything you wanted to know about HIPC Initiative and were afraid to ask.' This is an update on where we are on HIPC and debt relief, and we thought we'd do it just before going into the events of this week. On my left, I'm sure you all know, is Axel van Trotsenburg, who heads the HIPC program in the Bank, and to his left is Jacob Kolster, and I think, Axel, you're going to speak for a few minutes to set the scene, and then we'll just open for questions. We are making a transcript of this briefing, so when you ask question, if you could press the button on your mike and announce who you are and your media organization, that would be great. MR. VAN TROTSENBURG: Thank you, Caroline. Good morning. I suggest that it would be useful to quickly update you where we are with regard to this implementation of this debt relief program, and particularly to clarify a couple of things. Just to recall, this initiative is now about four years old, and it was enhanced in a major way in 1999 at the Cologne Summit, and subsequently this initiative, this enhanced initiative was endorsed at the Annual Meetings of 1999. Essentially the main idea was that it should provide a lot more deeper debt relief, i.e., more resources, and that more countries should benefit quicker. So, basically, 14 months or 15 months into this enhanced initiative, where do we stand? There were many critical voices to say that this debt initiative could not get a lot of countries debt relief on time and quickly. And one of the concerns was that in the beginning people thought only a few countries qualified by the spring meetings, and subsequently a target was set of about having 20 countries having debt relief packages by the end of the year. This was most strongly voiced at the Annual Meetings where Ministers endorsed this objective to have 20 countries at their so-called decision point. That means at the point when debt relief is committed as well as when it starts being delivered for at least 20 countries. What we are actually expecting is that by the end of the week we hope to have 22 countries' approved packages. As of today, we have 15 countries having their packages approved, and we will have this week another round of Board meetings for seven countries. The division is that four Latin American countries will have debt relief packages. They include Bolivia, Guyana, Honduras, which were approved earlier, and hopefully this week we will have Nicaragua added to this list. And the remaining countries, 18 countries, are in Africa. What we have done for your easy reference is we have circulated for you a little chart where, if I can draw your attention to the last column where the countries which have been approved to date, namely, the 15 countries, are listed individually and the countries for which Board meetings are scheduled this week are listed in the second box below it. So this is basically what we are working on. Certainly when we are talking about the countries, you see also the challenges ahead. And here you see mainly the post-2000 countries. While we have been having work undertaken on Chad, for example, or Ethiopia, you see that many countries are conflict-affected, and that will be a difficult challenge to exactly determine when these countries could get at their respective debt relief. Now, what does this now all mean in terms of, like you say, well, here are all these countries getting now these debt relief packages? What is actually the size of this, and what does this ultimately mean in terms of poverty reduction efforts? A second table was circulated to you in which you see a little bit of a listing what has been committed in terms of debt relief. What we are expecting is that by the end of this week we will have approvals of debt relief packages of--we express it always in net present value terms--about $20 billion in committed debt relief. Now, what is important is that this is often a rather difficult term to digest. What is maybe a more helpful way of expressing it is: What is the associated debt relief with this committed debt relief? And what we are expecting is that these countries can over time expect debt service relief on the order of towards $34, $35 billion from these 22 debt relief packages. This is--and here what you should--this is the HIPC Initiative, but what we always should know, that the HIPC Initiative also builds upon existing debt relief mechanisms as well as there are unilateral debt relief initiatives where, for example, the U.S. Government as well as other governments have committed themselves to write off official development assistance credits vis-a-vis these countries. This means that the $35 billion you can almost add up to about $20 billion more in debt service relief to be expected from these existing debt relief mechanisms as well as the unilateral initiatives by the respective OECD countries. So the overall package these countries are going to expect from this is about 30--$54, $55 billion over time. Now, this is debt relief which is not going to be delivered as of when the decision is being taken, but it will be spread over time. And that means that if you look at this, it's that we are seeing that the debt stocks of these countries can be reduced by very, very significant margins. We expect that the HIPC Initiative alone would slash the net present value debt stocks on average by about 48 percent. If you add the other debt relief mechanisms to it, you can expect that these debt stocks could be slashed by two-thirds for these 22 countries. In addition, if you look at the debt service, and particularly what is important in the initial years is if you compare what these countries were paying on a cash basis and what is being paid after this Enhanced HIPC Initiative, these debt service--debt service would be slashed by about a third. Now, this will also means--and here, again, what is important is, to put that in relative terms, when you look at what we use often the debt service indicators, that is, the debt service to exports, or the debt service to fiscal revenues, and particularly the debt service to fiscal revenues gives a little bit a feeling of the fiscal space available for additional social spending. Now, if you look at those ratios, what we are seeing is that these ratios are going to be slashed to about 10 percent or lower, so 10 percent of exports or fiscal revenues. Now, this you have to relate, again, if you look at the--in dimension terms, the developing country average is about double of that, if you look at the indicators prevailing in other developing countries. So we expect that there will be additional resources available for social expenditures. Now, the Enhanced HIPC Initiative was not only that these resources or these debts are being slashed, but ultimately that these freed-up resources could be used for poverty-reducing expenditures. And that is where we have been trying to have a much closer link between this program and the poverty reduction efforts. When you look to these 22 countries, if you have a chance to look at them, you see that there is a heavy emphasis on the poverty situation in these countries, and what is being tried is to see how one can identify those areas where expenditures could be expended. Now, here we have had actually already some quite good things to report on. Take, for example, in Uganda. Many of these resources have been channeled towards financing the universal primary education program, which over the last couple of years has allowed to double primary school enrollment in Uganda. In Mozambique, we have had a variety of programs being supported from education to health to AIDS prevention. In Honduras, some of these resources are being used for the reconstruction in the wake of Hurricane Mitch. So there are many programs which are being supported under this program, but clearly they are only one part of the overall envelope. What we are often stressing--and that is important always to keep in mind if this program is to be successful--is that these resources, these debt relief resources, need to remain additional to what existing flows are providing; otherwise, you would have a substitution exercise, and the net effect for the governments would be very, very limited. Certainly the challenge ahead for us now in the next year is to make sure that these resources are being channeled to the areas which have been identified, and we will work closely with the governments involved. Maybe to conclude, also a brief remark about the creditor participation as well as the financing issues as they are confronted by multilateral institutions. In this context, I think we have made remarkable good progress. We have had the Paris Club--that is, the club of official creditors--completely on board to provide its share of the debt relief, and with regard to the multilateral institutions, we have actually that all multilateral institutions have now through their respective decisionmaking bodies now have also taken the decisions to participate not only in the enhanced initiative but also have identified their modalities of participation. Clearly, what came out of this process is that a number of these institutions, including the African Development Bank and the Inter-American Development Bank most prominently, will not have the resources to finance this initiative only, solely with their internal resources. Therefore, we have the so-called HIPC Trust Fund, which is managed by the World Bank, and there we have been receiving pledges and contributions to date of about $2.5 billion from virtually all OECD--from all, actually, OECD countries. And critical to the success has been certainly the EU contribution of about 734 million euro, but equally important has been the successful passage of the U.S. legislation of--I think it is an appropriation--no, authorization of $600 million for the trust fund, with this year's appropriation of $360 million to the trust fund. This has given it an enormous boost, and we are now certainly in a position to help these institutions help deliver the needed debt relief. In the case of the World Bank, the IDA will take the full responsibility, but we will, you know, discuss with the IDA Deputies, in the future, future replenishments, the financing of the World Bank part. As part of our delivery, certainly the IBRD has contributed to date about $1.3 billion to the HIPC Trust Fund to cover part of the cost of the World Bank. The last idea to give you how the World Bank delivers this, the result is that we at least cover 50 percent of the debt service falling due. And what you are seeing is it depends on the countries coming forward at anywhere between 50 and almost--in certain cases, almost 100 percent of the debt service is being covered through this program. The variance in this is largely dependent on the debt relief packages, because we will do whatever is required and delivered in that rate between 50 and 100 percent of the debt service falling due. Let me maybe stop here and then take some more questions and maybe clarify. Thank you. QUESTION: Damian Milverton, Dow Jones. In terms of the funding for the regional banks, the African Development Bank is now in a position to meet all of its commitments then through the trust fund, is what you're saying? It won't need to seek additional funding from its backers? MR. VAN TROTSENBURG: The African Development Bank has a cost, and it is, again, unfortunately expressed in net present value terms, but that's the way we--about $2.3 billion. The African Development Bank has committed itself to provide about $370 million out of its own resources, and the remainder is to be covered by donor resources. And what has been agreed, there is a framework agreement in place with donors, which was agreed earlier this year, that these resources would be made available. Certainly for what the African Development Bank can do as of today is to make a full commitment to provide the necessary interim relief, that is, the relief between when we are taking decisions to provide the relief until the so-called completion point, when the relief is converted into an irrevocable commitment over time. And the idea of the African Development Bank is to provide 80 percent of the debt service falling due. But, yes, the resources are available so that the African Development Bank can now also make the appropriate decisions to deliver the relief. QUESTION: Mark Dragin (ph) from Bloomberg. Two questions, if I can. In Uganda's case, before, their debt relief was approved by both the IMF and the World Bank's Board and then held up in the Paris Club. When we're getting all these approvals this week, do we need to say that this is still subject to Paris Club and other approvals? And the second question about Chad: Is their debt relief being held up because of the problems associated with the pipeline and the use of that signing bonus from the oil companies? MR. VAN TROTSENBURG: Starting with the latter, yes, this is one of the issues which certainly is a concern. As you will understand, particularly there has been overwhelming support by the international community for debt relief, but there is also overwhelming support that we need to make sure that the resources are being channeled to the appropriate thing. There have been questions there. There is a country dialogue on this, and they are dealing with issues of that type. Certainly we want to make sure that the main focus is poverty reduction. On the Paris Club, let me also here say that what we have is usually an extensive consultation going on between the creditors. With the Paris Club, we usually have--we usually do a preliminary debt sustainability in which we seek the guidance from our Boards. But we also use these documents to consult with other creditors that are the multilaterals, but also the Paris Club. And in the other two at the horizon, they already take this up. This is certainly not the case that the debt relief is being held up by the Paris Club. Also, when you were alluding to the Uganda case, what usually happens after a completion point, then there are negotiations with the Paris Club. I think that ultimately it is that this is not an issue of holding up debt relief. What very often happens by the Paris Club is particularly when a country comes to the completion point, the Paris Club is already providing a flow relief, and that continues until the final agreement is signed. So in a way, there is not a time when a country could be possibly put at a disadvantage, that because the meetings are taking place a month or two later, that all of a sudden they don't get any relief. They get the relief on a continuous basis. MR. van TROTSENBURG: There is certainly, and yet to be clear here, there is an issue with what we call the so-called non-Paris Club bilateral creditors. Many of these debts have been in arrears, and these are debts where countries, debtor countries have had difficulties to seek a final agreement with those debtors and that are bilateral types, and there are difficulties for these countries. What we are trying to do is encourage certainly those bilateral creditors to come together with these debtor countries and seek a solution that is consistent with this debt relief arrangement. MR. MORITSU: Ted Moritsu with Knight-Ridder. I'm wondering if you have any estimate of the $54- to $55 billion you're talking about how much that would actually translate into resources for poverty reduction, inasmuch as I assume that, in some cases, the resources don't really exist because the countries haven't been able to make the payments anyway. MR. van TROTSENBURG: I think we will do a lot more work. As we come up, we have to be quite focusing on getting all of these papers out. But at least for about ten countries we did some calculations. So I don't have it for the 22. But to give you one idea is, in terms of the debt service relief, when I said debt service would be reduced by a surge in absolute terms or if you look at that the debt service would fall, in terms of debt service to export or fiscal, to be about 10 percent or lower, what that actually means is that we calculated that there would be relief in the order of like 1.5 percent on an annual basis. So this is not a one-year shot. This is a continuous shot. Now, what does 1.5 percent of GDP really mean for you? I would say compare that to the average HIPC spending on education and health. The average HIPC country spends about 4 percent of GDP on education and about 2 percent on health. Now, if you didn't take 1.5 percent, and this may be a very simplistic thing, with everything being equal, and if you were to want to increase expenditures in those areas, you would have almost a possibility of increasing by 25 percent. Now, this already raises serious absorption problems, but what I'm trying to say is that these resources, compared to the existing envelope, if you would then direct that even more to the priority areas, be it primary education, minimal health care package, AIDS prevention, malaria or even rural development, you could do actually quite a bit. Now, you have also to see that these resources is not a one-time. People say, Well, 1.5 percent against 100 percent, what is this? What is important is that actually where debt relief is different from the normal resources of flow, it is that it is now automatic. It is there. What you will have with normal aid flows is that there will be always renewed negotiations, be it you get a grant or a credit. This is, once you get the final decision on this, this is a flow which is to stay. So I think this is very important to keep in mind when we are talking about poverty-reducing expenditures. Many of these countries have suffered over time the ups and downs of expenditure swings, which makes it sometimes also difficult to plan, you know, to have basically teachers in school or to have health care stocked with medicine if you cannot count on a certain budget envelope. These type of resources would be there over time. And I think what is important to see is that the reason why we want to link it is you could, that you see that these resources would need to provide benefits over time as opposed to a one-shot operation. MS. ANSTEY: Axel, I wonder if you could say a little bit going forward--after this week, we promised 20, we hope to get 22--about the Bank's position about what else the donor countries have to do to make poverty reduction sustainable, in terms of trade, in terms of removing agricultural subsidies. MR. van TROTSENBURG: I think there is, clearly, from our side, a concern from essentially two angles: One is the angle from the trade, that if you want to have debt relief in an environment where you don't have sufficient access to markets. It's almost futile because these countries need to have the possibilities to grow, to export their products. In that context, when Caroline said, Well, what does this now actually mean, you have to think about this. The HIPC countries have about a GDP of $170 billion, the OECD countries spend, in agricultural subsidies, close to double of that amount of their GDP. So that gives basically you the dimensions of well over $300 billion. So the dimensions are just enormous, and it is certainly, if you--if one wants to give significant long-term support to these countries, it's free access to OECD markets for the products from HIPC countries. The second one is what I mentioned earlier, the issue of additionality. Certainly, it is needed that we remain committed to the poorest countries, given that they are confronted by a whole series of challenges. And unfortunately they don't become the least bit of--they become more, and certainly one of the latest, if you look at this, is the AIDS epidemic, where again enormous resources are being drained from these countries. So one of the things that we would like to make sure is that HIPC is not going to replace existing aid flows, but that it certainly needs to be additional. The net effect of all of this has to be positive and cannot be neutral or negative. And that is certainly a concern where we, and we will be looking more closely to this as we are going now to implement to see what is going to happen with aid flows to these countries, as well as debt, we can make sure that the HIPC resources are indeed ultimately additional to what has been committed by the international community. This is certainly two of the important things. The CRT is certainly the whole question of the international community to look also at the longer term debt sustainability, and that is largely, if you wish, again, more of a responsibility from both sides, from the creditor as well as from the debtor country. What do I mean with that? For the debtor country, it will be imperative to integrate their debt management much more tightly within their overall development agenda and macro agenda, so that certainly all of the efforts which have been made over the last two years are not made or are not being reversed because of debt, as well as creditor countries, where they should be restrained by export credit agencies, as well as the need to provide sufficiently highly-concessional financing these countries are going to need. So there are a couple of key challenges ahead, which will determine the success of this initiative. QUESTION: I'm Sean [unintelligible] from AFP. Are you saying that the net present value of countries at the completion point was 20 billion USD? MR. van TROTSENBURG: Roughly. QUESTION: What, in that amount, would have not been paid anyway? If you understand my question, and if the calculation is possible. MR. van TROTSENBURG: Well, that $20 billion to which I was referring is actually only the relief. That's the relief which is going to be provided. When you mention, and what is often said is, look, what are you actually talking about? Most of these debts are not being serviced anyhow, so only what you are doing is just, you know, recognizing existing situation. That is indeed true with certain types of debts. I'm talking here particularly about debts in the past with commercial banks. They have been virtually now being resolved, largely, also with the help of the IDA debt reduction facility, where the Bank provides grants to countries to allow those resources to be used to basically buy back these debts at a very steep discount rate, usually in the order of 90 percent or more. Those debts were not paid and were, in this way, cleaned up, if you wish. In the case of the bilaterals, here you have to differentiate between the Paris Club and the non-Paris Club. In the Paris Club debts, here most of them have been, their schedules have been adjusted, and usually the countries are being current on the corrected new debt service scale that is basically on what the Paris Club has been providing them. Only in the case of Russia, those debts often were not serviced because they were dating back from the days of former Soviet Union. In the case of the non-Paris Club debts, many of them, indeed, have not been serviced. In the case, and that is very important to keep in mind, in the case of the multilateral debt; i.e., World Bank, IMF, IDB, African Development Bank, these debts are being serviced. These are not sleeping debts or whatever you want to call them, but they are active debts. See, those would be clear that this has allowed the Bank to be continuously very active with this country in support of their development efforts. So, if you wish, multilateral debt relief, every single dollar of it constitutes a real cost to these institutions because, essentially, these are active portfolios. So what I often hear, you know, you just correct something, this is maybe correct for certain types of debts. It's not accurate if you talk about multilateral debt. QUESTION: This is kind of really to that point. One of the criticisms that's made of the HIPC program is that, from a wide-ranging number of people, is that the Bank can actually afford with its own reserves to write off all of the debt from the HIPC countries, and it's not going far enough in doing that. Can you do that and why don't you? MR. van TROTSENBURG: There always questions what you can do more and what you do--and why the Bank doesn't do one thing and why we do not write off all of these claims on these countries. First, I think we need to keep in mind the Bank is only one partner and one actor in this. I think we should keep in mind that maybe the World Bank or the IMF are very prominent, like say in the multilateral family. But when we are turning our attention, for example, to countries in Latin America, the Bank is certainly not the largest multilateral creditor, the Inter-American Development Bank, and in Central America it is very often even including a small Central American multilateral bank, which is bigger than the World Bank, as well as the IMF. So, when we are talking about this, one needs to always keep in mind with initiatives, which go beyond the HIPC initiative, you have first to think that the Bank cannot act alone because it will not even have then often the most significant effect. Secondly, we need to ensure that we are all acting together. This is one of the ideas which was applauded around the world, that the HIPC initiative tries to be comprehensive. So whatever you do needs to be comprehensive, and the Bank can only be part of this and cannot be seen acting in isolation. Certainly, you have to say, okay, if you want to give additional debt relief, one needs to think about what are the parameters of why you want to do it. One idea is what sometimes people say is, well, we would like to reduce the threshold levels which have been established. That is one thing. And that would mean that certainly also a lot more countries will come in, and now you have to think what that would actually mean for the multilateral system, and particularly the regional development banks. There is an argument what I'm often hearing is, well, you should do more because it is poverty what drives the argument. If poverty is the argument to reduce the debt, then I think one needs to keep in mind is where are the bulk of the poor living, and the bulk of the poor are living in India and in China. Now, if you introduce a debt reduction scheme on this basis, then you would have to expand this initiative in such a way that essentially you would probably not be able to afford that, either for the World Bank, let alone for--those are organizations. And I think that is an important aspect to keep in mind when one expands this that you say, well, at what stage does this become detrimental. Equally, what is often forgotten is that ultimately the Bank is a cooperative, and particularly for the soft-loan window, this is taxpayers' money which has been provided to the Bank, and it's a kind of revolving window. You provide that money at one stage in the '60s to Korea. Korea is paying those monies back, and that money is being used to provide new credit to Bangladesh, to Africa. Now, if you stop this, and you can write this off, that you could do. But, ultimately, you will not have a new reflow to these countries. And that means that ultimately either the international community will say, Look, that is a great idea. We are going to replenish this to the fullest amount. Then you could do a lot more. The world hasn't been working like this. I think one needs always to keep in mind that development assistance is far from its target. Development assistance, supposedly the recommended number is 0.7 percent of GDP. We are at an OECD average of 0.26. So I think one needs to keep in mind, if one wants to keep this type of system going, there are clear limits of what you can do and what you can't do. MR. CICER: Peter Cicer [ph] from DPA. It was the Bank and donor countries that lend this money and commercial banks initially. In your discussions on debt relief, what type of reflection has there been like looking long term, in terms of better cooperation, to ensure something like this--I mean, you know these countries don't get in the situation again in the future or, you know, the lending countries. I mean, it's just sort of like we set up this situation and now we're rectifying it. Are we going to have to go through this cycle again in 30 years or are there going to be--it's like a cooperative sort of set up to, you know, like better communication to deal with it? MR. van TROTSENBURG: I think this is an important question which we will discuss a lot more as we go along. When we looked at this, certainly when you said, we did this, you see that actually the debt situation has been created by a combination of internal and external factors. We felt, ultimately, not to say that one is guilty or more guilty or the other is more guilty. I think what we have is a common responsibility to deal with this problem. That is where you have HIPC coming in. Equally, there is a joint responsibility to look into the future. That means that you are trying to deal not only with factors which are under the control of donor countries, like when I said about trade policies, about continued aid, these type of issues. But you have also the internal factors. That means that one would need to make sure that certainly the economies are well run, certainly that there is a satisfactory macro framework. But then there is also a push, if you wish, for a stronger poverty focus in the development programs in these countries. I think that is one of the ideas which came out of this enhanced HIPC framework and the discussion in '99 was this whole what we call poverty reduction strategy papers. Not so much that the World Bank or the IMF or other institutions were reinventing poverty as a topic, but much more common recognition by many around the table is that if you want to reach the international development goals we have to basically align our activities as well as donor activities much more to those goals in order to make it happen. I think that there was a need to basically strengthen this. And I would say that it's not only on the coordination, but also that you look at operational procedures from our side, but there may be also at other donor's side to see what can be done in order to improve the situation. Certainly on debt HIPC is not giving the 100 percent guaranty that these kinds of problems cannot occur again. Why not? Because there are, in some cases if there is economic mismanagement, if you have catastrophes coming up on you like civil wars, there is no guaranty that if these type of things occur that you may again face finance problems. These are some of the real issues. But I think that what we hope is that if you have a framework in which you bring the debts to sustainable levels, and provided governments continue pursuing their economic policies which are growth enhancing as well as having a strong focus on poverty reduction, which also allows the continued financial support from the donor community, we believe that this is a way where you can significantly improve the prospects for these countries. But it will be an interaction of many factors which will continue to be determining the ultimate outcome of the debt situation in these countries. MS. ANSTEY: Thank you. I think we'll call it a day. If anyone wants to grab Axel on his way out, please feel free to do so. [Whereupon, at 10:50 a.m., the press conference was concluded.] From rob@milan.essential.org Fri Dec 22 00:32:40 2000 From: rob@milan.essential.org (Robert Weissman) Date: Thu, 21 Dec 2000 19:32:40 -0500 (EST) Subject: [stop-imf] Open letter critiquing IMF/Bank debt relief Message-ID: A very important open letter from Eurodad and other European debt campaigners. Eurodad contact info is: EURODAD - European Network on Debt and Development, Rue Dejoncker 46, B-1060 Brussels, Belgium, Tel: 00-32-2-5439060, Fax: 00-32-2-5440559, Website: www.oneworld.org/eurodad -- Robert Weissman Essential Information P.O. Box 19405, Washington, DC 20036, USA Tel: 1-202-387-8030 Fax: 1-202-234-5176 www.essential.org OPEN LETTER EURODAD TO OUR MINISTERS AND REPRESENTATIVES IN THE BOARDS OF THE WORLD BANK AND IMF This is an open letter from the members of EURODAD (the European Network on Debt and Development), who have been working together on the debt crisis over the past ten years, and who have been instrumental in setting up and supporting Jubilee 2000 campaigns for debt cancellation across the world. The year 2000 is ending - but the burdens of external debt carried by the poorest nations continue to deprive them of the resources needed to fight poverty. The Jubilee 2000 movement continues to bring together new alliances of groups and individuals, particularly in the South, united around the common goal of reducing poverty. This letter sets out what we think has been achieved and what remains to be done. We recognise that some parts of the international community have made significant efforts to lessen the burden of external debt. Overall, it is estimated that the HIPC Initiative will now deliver roughly $50 billion of debt reduction in nominal terms. And as the latest analyses show, the first eleven countries that made it to the Decision Point of the enhanced HIPC Initiative will, for example, pay on average one third less in debt servicing in 2001-2003 than they did in 1998-9. This is certainly something. But it is not enough. Consider the following facts: - The probable total of twenty-two countries that will reach Decision Point by the end of the year represents 60% of the number of countries that are eligible for the HIPC Initiative. But the total NPV debt reduction that these countries will actually receive represents just 12% of the total NPV debt burden of the 41 HIPCs. - The total amount of debt service reduction delivered by the HIPC Initiative since its inception in 1996 amounts to approximately US$1.1 billion. In that time, the 41 HIPC countries have paid a total of over US$ 35 billion in debt servicing . Thus, the HIPC Initiative has managed to reduce the total debt servicing burden of the HIPCs by a grand total of just over 3% during the past four and a half years. - For eight out of a sample of twelve countries, spending on debt servicing in the three years after reaching Decision Point will on average be greater than current spending on either education or health It is clear that much remains to be done. Governments and institutions around the world have committed to ambitious national and international development goals, including a halving of poverty, by 2015. Debt cancellation alone will not ensure success. But these targets are certainly out of reach if there is not a sustainable end to the debt crisis. As we move forward into 2001, we urge you to bear in mind the following points: The enhanced HIPC Initiative is inadequate. The current debt reduction scheme still defines debt 'sustainability' in an entirely arbitrary fashion, and does not deliver sufficient debt service reduction. Yet the need for new resources in the least developed countries is growing, not diminishing. Witness, for example, the devastating impact of HIV/AIDS in sub-Saharan Africa. It simply does not make sense that sub-Saharan Africa should be fighting HIV/AIDS with new loans from the World Bank whilst continuing to pay debt service on old loans. The concept of debt sustainability, and the mechanism for delivering debt reduction, must be rethought, and urgently. If debt reduction is to contribute to poverty reduction, then levels of poverty must themselves be part of the determination of the levels of debt servicing that a country can sustain. Many NGOs and academics have called for a 'bottom-up', human development approach to debt sustainability, which would deliver debt reduction that is much deeper and directly linked to resource requirements. From this human development perspective, it is clear that some countries have no capacity whatsoever to service debt, and that they will need all of their debt cancelled. In our view, creditor constraints in financing deeper debt reduction have been overstated. The only remaining obstacles are in cancelling multilateral development bank debt, where more innovative uses of the institutions' own resources are needed. The true obstacles to further debt reduction are political, not financial. Moreover, the solution to the debt crisis must be a permanent and realistic one: debt reduction efforts must not just deliver short-term reductions in debt servicing, followed by a reversion to a rising trend. For example, debt servicing for the first eleven countries to reach Decision Point will jump by 20% on average in 2004-5, as compared to 2001-3. This might be reasonable if economic output was also to increase by the same amount. But, given current economic conditions, particularly in commodity markets, this is very unlikely to happen. Debt reduction based on unreasonable conjecture will once again fail to deliver a sustainable solution. At the same time, it must be remembered that the HIPC Initiative will only free up resources for poverty reduction if countries continue to borrow as much as they did before reaching Decision Point. Thus, debt burdens are likely to start rising again after countries reach Completion Point. A sustainable end to the debt crisis must also consider the impact of future borrowing trends, as well as bearing in mind that creditors share co-responsibility for inappropriate past lending to corrupt governments, where poor people derived no benefit, but still bear the brunt of the repayment efforts. Debt reduction must be additional to existing ODA flows. There is concern that some bilateral donors are giving with one hand, but taking away with the other, as existing ODA budgets are used to fund debt cancellation commitments. This practice threatens to undermine the whole premise of debt reduction, and must end. The 41 HIPC countries are not the only ones where the constraints of servicing external debt have profound implications for poverty. Many other SILICs and SIMICs, such as Haiti and Nigeria, face similar debt problems. Whilst some of these countries are able to benefit from some debt reduction through traditional mechanisms, they also face severe poverty problems. The impact of debt burdens on social sector spending must not be forgotten, and coverage for future debt reduction schemes must be extended. Recipients of debt reduction also have responsibilities: any resources freed up by debt reduction must be channelled to poverty reduction and social sector expenditures. This has always been the raison d'tre of debt reduction. Country governments should be encouraged to devise ways of channelling debt reduction resources for poverty reduction in ways that: - Are effective and transparent (for example, additional to existing social sector budgetary spending, so as to avoid problems of fungibility) - Have positive impact on the lives of poor people - Are monitorable, particularly by the poor themselves Country innovation in developing these types of mechanisms, incorporating a broad-based participation of civil society such as in Uganda's Poverty Action Fund, should be encouraged. The I-PRSP linkage between the HIPC Initiative framework and country-owned Poverty Reduction Strategies has proved inadequate. It has actually drawn attention away from the need to ensure that debt reduction proceeds flow to poverty reducing measures. A better solution would be to make debt reduction initiatives and PRS processes parallel at this early stage. Countries that develop explicit, suitable and monitorable debt reduction spending plans would be immediately eligible for debt reduction; continued IFI financing would be contingent on the basis of continued progress in developing broader poverty reduction strategies, and transparent budget processes over the next 3-5 years. On this latter point, we will be pushing hard to ensure that these new poverty reduction strategies are country-owned and participatory in all aspects, and differ from structural adjustment programmes of old by truly prioritising the needs of the poor. Moreover, transparency is not a one-way street: creditors themselves still have further to go in making available all information on loans to, and programmes in, developing countries. There is a need to remove other external constraints to poverty reduction and sustainable development in low income countries. There is, for example, an inextricable link between trade and debt. Many low income countries, facing adverse terms of trade, have built up significant current account deficits. These are financed externally - resulting in greater debt burdens. Low-income countries must have unimpeded foreign market access for their exports. Our organisations will continue to lobby and campaign on these issues in the months and years ahead. We will in particular focus on the upcoming G7 Summit in Genoa as an opportunity for the international community to at last come up with a lasting solution to the ongoing debt crisis. Yours sincerely, Ted van Hees EURODAD Co-ordinator Endorsed by the following members of the European Network on Debt and Development: Jubilee 2000 Austria Austria OEFSE (Michael Obrovsky) Austria 11.11.11 Belgium Broederlijk Delen Belgium IBIS Denmark KEPA Finland Agir Ici France Campagne "Par lAn 2000: annulons la dette" France WEED Germany Jesuits for Debt Relief and Development Ireland Cordaid The Netherlands WEMOS The Netherlands Intermon Spain Forum Syd Sweden Swiss Coalition of Development Organisations Switzerland CAFOD UK Christian Aid UK Save de Chilkdren Fund UK UK World Development Movement UK Also endorsed by Oxfam International as an affiliated network. From rob@milan.essential.org Tue Dec 26 05:08:58 2000 From: rob@milan.essential.org (Robert Weissman) Date: Tue, 26 Dec 2000 00:08:58 -0500 (EST) Subject: [stop-imf] Walden Bello: The Bush Administration and the IMF/World Bank Message-ID: Washington's Political Transition Threatens Bretton Woods Twins By Walden Bello* The coming to power of the Republicans in Washington, DC, spells deep trouble for the International Monetary Fund and the World Bank. The Bretton Woods institutions will lose their liberal internationalist protectors like Treasury Secretary Larry Summers who believe in using the Fund and Bank as central instruments to achieve US foreign economic policy objectives. And coming in with President-elect George W. Bush will be a set of conservative analysts and technocrats representing the thinking of the US Congress' Advisory Commission on International Financial Institutions. Also known as the "Meltzer Commission," after its chairman, banker Alan Meltzer, the body issued earlier this year a report condemning the IMF for promoting global macroeconomic instability and portraying the World Bank as irrelevant to the mission of promoting development and reducing global poverty. Confronted with four years of Republican hegemony, James Wolfensohn, president of the World Bank, is rumored to be contemplating resigning before the end of his second term in office. The IMF's Stalingrad The Washington political transition catches the IMF and the World Bank at their most vulnerable state in years. If any event may be said to have contributed to undermining the Fund, it was the Asian financial crisis, whose legacy of collapsed financial systems, bankrupt corporations, and rising poverty and inequality continue to plague the region. Indeed, one can say that the Asian financial crisis was the Stalingrad of the IMF. Bearing in mind the limits of metaphor, the IMF during the Asian financial crisis acted like the German Sixth Army, making one wrong move after another on the way to disaster. It was the IMF that helped trigger the massive flow of volatile speculative capital into the region by pressing the Asian governments for capital account liberalization prior to the crisis, egged on itself by the US Treasury Department. It was the IMF that confidently moved in after the panicky flight of speculative capital began, with a tight fiscal and monetary formula that, by drastically reducing government's capacity to act as a counterforce to the downturn in private sector activity, converted the financial crisis into an economic collapse. It was the IMF that assembled the high-profile multibillion dollar rescue packages that were meant to rescue foreign creditors even as local banks, finance companies, and corporations were told to bite the bullet by accepting bankruptcy. It was the IMF that imposed on the fallen economies a program of radical deregulation and financial and trade liberalization that was essentially Washington's pre-crisis agenda that the tigers had been able to frustrate during their days of prosperity. And it was the IMF that, at the urging of the US Treasury Department, killed the proposal for an Asian Monetary Fund (AMF), which would have pooled together the reserves from the more financially solid economies to serve as a fund from which those of them being subjected to speculative attack could draw to shore up their currencies. Among other things, this move contributed to widening the divergence in the policies toward the Asian region of the United States and Japan, the AMF's prime backer. As the stricken economies registered negative growth rates and record unemployment rates in 1998, and over one million people in Thailand and 21 million in Indonesia fell below the poverty line, the IMF joined corrupt governments, banks, and George Soros as the villains of the piece in the view of millions of newly impoverished Koreans, Thais, and Indonesians. But equally as consequential for its future as an institution was the fact that the IMF's actions brought the long simmering conflict over the role of the Fund within the US elite to a boil. The American right denounced the Fund for promoting moral hazard, with some personalities like former US Treasury Secretary George Shultz calling for its abolition, while orthodox liberals like Jeffrey Sachs and Jagdish Bhagwati attacked the Fund for being a threat to global macroeconomic stability and prosperity. Early in 1999, a conservative-liberal alliance in the US Congress came within a hair's breath of denying the IMF a $14 billion increase in the US quota. The quota increase was salvaged, with arm-twisting on the part of the Clinton administration, but it was clear that the long-time internationalist consensus that had propped up the Fund for over five decades was unraveling. Another Disaster The Fund's performance during the Asian financial crisis led to a widespread reappraisal of Fund's role in the Third World in the 1980s and early 1990's, when structural adjustment programs were imposed on over 90 developing and transition economies. Judged by the extremely narrow criterion of promoting growth, structural adjustment programs were a failure, with a number of studies showing that adjustment had brought about a negative effect on growth. Indeed, after over 15 years, it was hard to point to more than a handful as having brought about stable growth, among them the very questionable case of Pinochet's Chile. What structural adjustment had done, instead, was to institutionalize stagnation in Africa, Latin America, and other parts of the Third World, a fact reflected in a study of the Center for Economic and Policy Research which shows that 77 per cent of countries for which data is available saw their per capita rate of growth fall significantly from the period 1960-1980 to the period 1980-2000, the structural adjustment period. In Latin America, for one, income expanded by 75 per cent during the sixties and seventies, when the region's economies were relatively closed, but grew by only six per cent in the past two decades. Broadening the criteria of success to include reduction of inequality and bringing down poverty, the results were unquestionable: structural adjustment was a blight on the Third World. A study by Mattias Lundberg and Lyn Squire of the World Bank summed it up thus: "The poor are far more vulnerable to shifts in relative international prices, and this vulnerability is magnified by the country's openness to trade...[A]t least in the short term, globalization appears to increase both poverty and inequality." Imposed at the start of the 1980's, adjustment was a central factor in the sharp rise in inequality globally, with one authoritative UNCTAD study covering 124 countries showing that the income share of the richest 20 per cent of the world's population rose from 69 to 83 per cent between 1965 and 1990. Structural adjustment has also been a central cause of the lack of any progress in the campaign against poverty. The number of people globally living in poverty-that is, poverty according to the unrealistic and restrictive World Bank criterion of earning less than a dollar a day-- increased from 1.1 billion in 1985 to 1.2 billion in 1998, and ,is expected to reach 1.3 billion this year. According to a recent World Bank study, the absolute number of people living in poverty rose in the 1990's in Eastern Europe, South Asia, Latin America and the Caribbean, and SubSaharan Africa-all areas that came under the sway of adjustment programs. As a consequence of greater public scrutiny following its disastrous policies in East Asia, the Fund could no longer pretend that adjustment had not been a massive failure in Africa, Latin America and South Asia. During the World Bank-IMF meetings in September 1999, the Fund conceded failure by renaming the ESAF the "Poverty Reduction and Growth Facility" and promised to learn from the World Bank in making the elimination of poverty the "centerpiece" of its programs. But this was too little, too late, and too incredible. Support for the IMF in Washington was down to the US Treasury. Indeed, so starved of legitimacy and support was the Fund at the end of the 20th century that US Treasury Secretary Larry Summers, who in an earlier incarnation as chief economist of the World Bank had been one of the chief backers of structural adjustment, found that he could only save it by damning it. The IMF, he told Congress, deserved to be preserved as a part of the international financial architecture, but when it came to dealing with developing countries, Washington would support "a new framework for providing international assistance...one that moves beyond a closed, IMF-centered process that has too often focused on narrow macroeconomic objectives at the expense of broader human development." Meltzer Torpedoes the Bank The Asian financial crisis triggered the IMF's crisis of legitimacy. However, under Australian-turned-American Jim Wolfensohn's command, the World Bank seemed likely to escape the massive damage sustained by its sister institution. Since assuming office in 1996, Wolfensohn, by opening up channels of communication with the non-governmental organizations and with the help of a well-oiled public relations machine, tried to recast the Bank's image as an institution that was not only moving away from structural adjustment but was also making poverty-elimination its central mission, promoting good governance, and supporting environmentally-sensitive lending. The best defense, in short, was to expand the agency's agenda. But the torpedo in the form of the Meltzer Commission found its mark in February of this year. Exhaustively examining documents and interviewing all kinds of experts, the Commission came up with a number of devastating findings that bear being pointed out: 70 per cent of the Bank's non-grant lending is concentrated in 11 countries, with 145 other member countries left to scramble for the remaining 30 per cent; 80 per cent of the bank's resources are devoted not to the poorest developing countries but to the better off ones that have positive credit ratings and, according to the Commission, can therefore raise their funds in international capital markets; the failure rate of Bank projects is 65-70 per cent in the poorest countries and 55-60 per cent in all developing countries. The World Bank, in short, was irrelevant to the achievement of its avowed mission of global poverty alleviation. And what to do with the Bank? The Commission urged that most of the Bank's lending activities be devolved to the regional developing banks. It does not take much, however, for readers of the report to realize that, as one of the Commission's members revealed, it "essentially wants to abolish the International Monetary Fund and the World Bank," a goal that had "significant pockets of support...in our Congress" Much to the chagrin of Wolfensohn, few people came to the defense of the Bank. Instead, the realities of the Bank's expanded mission were exposed in the months leading up to the World Bank-IMF meeting in Prague in September. The claim that the Bank was concerned about "good governance" was contradicted by the exposure of its profound involvement with the Suharto regime in Indonesia, to which it had funnelled over $30 billion in 30 years. According to several reports, including a World Bank internal report that came out in 1999, the bank tolerated corruption, accorded factual status to false government statistics, legitimized the dictatorship by passing it off as a model for other countries, and was complacent about the state of human rights and the monopolistic control of the economy. That this close embrace of the Suharto regime continued well into the Wolfensohn era was particularly damning. The image of a new, environmentally sensitive Bank under Wolfensohn also evaporated in the avalanche of criticism that came after the Meltzer report. The Bank was a staunch backer of the controversial Chad-Cameroon Pipeline, which would seriously damage ecologically sensitive areas like Cameroon's Atlantic Littoral Forest, and Bank management was caught violating its own rules on environment and resettlement when it tried to push through the China Western Poverty Project that would have transformed an arid ecosystem supporting minority Tibetan and Mongolian sheepherders into land for settled agriculture for people from other parts of China. A look at the Bank's loan portfolio revealed the reality behind the rhetoric: loans for the environment as a percentage of the Bank's total loan portfolio declined from 3.6 per cent in FY 1994 to 1.02 per cent in 1998; funds allocated to environmental projects declined by 32.7 per cent between 1998 and 1999; and more than half of all lending by the World Bank's private sector divisions in 1998 was for environmentally harmful projects like dams, roads, and power. Indeed, so marginalized was the Bank's environmental staff within the bureaucracy that Herman Daly, the distinguished ecological economist, left the Bank staff because he felt that he and other in-house environmentalists were having no impact at all on agency policy. Confronted with a list of thoroughly documented charges from civil society groups during the now famous Prague Castle Debate sponsored by Czech President Vaclav Havel during the tumultuous IMF-World Bank meeting in Prague on September 23 of this year, Wolfensohn was reduced to giving the memorable answer, "I and my colleagues feel good about going to work everyday." It was an answer that, in underlining the depth of the Bretton Woods system crisis of legitimacy, was matched only by IMF Managing Director Horst Koehler's famous line at that same event: "I also have a heart, but I have to use my head in making decisions." All this makes for interesting politics in the next few years. The motivation of the incoming Republicans in criticizing the IMF and World Bank lies in their belief in free-market solutions to development and growth. This may not coincide with that of progressives, who see the IMF and World Bank as a tool of US hegemony. But the two sides can unite behind one agenda at this point: the radical downsizing, if not dismantling, of the Bretton Woods twins. *Dr. Walden Bello is executive director of the Bangkok-based Focus on the Global South, a program of the Chulalongkorn University Social Research Institute. Focus on the Global South (FOCUS) c/o CUSRI, Chulalongkorn University Bangkok 10330 THAILAND Tel: 662 218 7363/7364/7365/7383 Fax: 662 255 9976 E-mail: N.Bullard@focusweb.org Web Page http://www.focusweb.org From rob@milan.essential.org Fri Dec 29 16:08:02 2000 From: rob@milan.essential.org (Robert Weissman) Date: Fri, 29 Dec 2000 11:08:02 -0500 (EST) Subject: [stop-imf] An Optimistic View from Walden Bello Message-ID: 2000: The Year of Global Protest against Globalization by Walden Bello Excerpted from: FOCUS ON TRADE, Number 58, January 2001 --------------------------------------------------------- 2000: The Year of Global Protest against Globalization by Walden Bello* The last year will probably go down as one of those defining moments in the history of the world economy, like 1929. Of course, the structures of global capitalism appear to be solid, with many in the global elite in Washington, Europe, and Asia congratulating themselves for containing the Asian financial crisis and trying to exude confidence about launching a new round of trade negotiations under the World Trade Organization (WTO). What we witnessed, nevertheless, was a dramatic series of events that might, in fact, lead to that time when, as the poet says, "all that is solid melts into thin air." For global capitalism, the year began a month early, on Nov. 30-Dec. 1, 1999, when the Third Ministerial of the WTO collapsed in Seattle. It ended earlier this month with an equally momentous event: the unraveling of the Climate Change Conference in the Hague. Seattle: the Turning Point The definitive history of the Seattle events still needs to be written, but they cannot be understood without the explosive interaction between the militant and unrelenting protests of some 50,000 people in the streets and the rebellion of developing country delegates inside the Seattle Convention Center. Much has been made about the different motivations of the street protesters and the Third World delegates and the differences within the ranks of the demonstrators themselves. True, some of their stands on key issues, such as the incorporation of labor standards into the WTO, were sometimes contradictory. But most of them were united by one thing: their opposition to the expansion of a system that promoted corporate-led globalization at the expense of social goals like justice, community, national sovereignty, cultural diversity, and ecological sustainability. Still, the Seattle debacle would not have occurred without another development: the inability of the European Union and the United States to bridge their differences on key issues, like what rules should govern their monopolistic competition for global agricultural markets. And the fallout from Seattle might have been less massive were it not for the brutal behavior of the Seattle police. The assaults on largely peaceful demonstrators by police in their Darth Vader-like uniforms in full view of television cameras made Seattle's mean streets the grand symbol of the crisis of globalization. When it was established in 1995, the WTO was regarded as the crown jewel of capitalism in the era of globalization. With the Seattle collapse, however, realities that had been ignored or belittled were acknowledged even by the powers-that-be whose brazen confidence in their own creation had been shaken. For instance, that the supreme institution of globalization was, in fact, fundamentally undemocratic and its processes non-transparent was recognized even by representatives of some of its stoutest defenders pre-Seattle. The global elite's crisis of confidence was evident, for instance, in the words of Stephen Byers, the UK Secretary for Trade and Industry: "The WTO will not be able to continue in its present form. There has to be fundamental and radical change in order for it to meet the needs and aspirations of all 134 of its members." Seattle was no one-off event. Bitter criticism of the WTO and the Bretton Woods institutions was the not-so-subtle undercurrent of the Tenth Assembly of the United Nations Conference on Trade and Development (UNCTAD X) held in Bangkok in February. Indeed, what brought an otherwise uneventful international meeting to the front pages of the world press was the pie-splattered face of outgoing IMF Managing Director Michel Camdessus, who was on the receiving end of a perfect pitch from anti-IMF activist Robert Naiman. >From Washington to Melbourne Naiman's act helped set the stage for the first really big post-Seattle confrontation between pro-globalization and anti-globalization forces: the spring meeting of the IMF and the World Bank in Washington, DC. Some 30,000 protesters descended on America's capital in the middle of April and found a large section of the northwest part of the city walled off by some 10,000 policemen. For four rain-swept days, the protestors tried, unsuccessfully, to breach the police phalanx to reach the IMF-World Bank complex at 19th and H Sts.,NW, resulting in hundreds of arrests. The police claimed victory. But it was a case of the protestors losing the battle but winning the war. Just the mere fact that 30,000 people had come to protest the Bretton Woods twins was already a massive victory according to organizers who said that the most one could mobilize in previous protests were a few hundred people. Moreover, the focus of the media was on Washington, and the first acquaintance of hundreds of millions of viewers throughout the world with the World Bank and IMF were as controversial institutions under siege from people accusing them of inflicting poverty and misery on the developing world. >From Washington, the struggle shifted to Chiang Mai in the highlands of Northern Thailand, where the Asian Development Bank (ADB), a multilateral body notorious for funding gargantuan projects that disrupted communities and destabilized the environment, held its 33rd Annual Meeting in early May. So shaken was the ADB leadership by the sight of some 2000 people asking it to leave town that soon after the conference, ADB President Tadao Chino established an vice presidential level "NGO Task Force" to deal with civil society. Fearful of even more massive protests in 2001, the ADB also shifted the site of its next annual meeting from Seattle to Honolulu in the belief that the latter would be a secure site. Chiang Mai had significance beyond the ADB, however. With a majority of the protesters being poor Thai farmers, the Chiang Mai demonstrations showed that the anti-globalization mass base went beyond middle class youth and organized labor in the advanced countries. Equally important, key organizers of the Chiang Mai actions, like Bamrung Kayotha, one of the leaders of the Forum of the Poor, had participated in the Seattle protest, and they saw Chiang Mai not as a discrete event but as a link in the chain of international protests against globalization. The battle lines were next drawn Down Under, in Melbourne, Australia, in early September. The glittering Crown Casino by Melbourne's upscale waterfront had been chosen as the site of the Asia-Pacific Summit of the World Economic Forum (Davos Forum) which had become a leading force in the effort to put a more liberal face to globalization. The casino, many activists felt, was a fitting symbol of finance-driven globalization. In nearly three days of street battles, some 5,000 protesters were at times able to seal off key entrances to the Casino, forcing the organizers to bring some delegates in and out by helicopter, again in full view of television. And again, as in Seattle, rough handling of demonstrators by the police, many of them mounted, magnified the global controversy over the event. The Battle of Prague Later that month came Europe's turn to serve as a battleground. Some 10,000 people came from all over the continent to Prague, prepared to engage in an apocalyptic confrontation with the Bretton Woods institutions during the latter's annual meeting in that beautiful Eastern European city in the most beautiful of seasons. Prague lived up to its billing. With demonstrations and street battles trapping delegates at the Congress Center or swirling around them as they tried to make their way back to their quarters in Prague's famed Old Town, the agenda of the meeting was, as one World Bank official put it, "effectively seized" by the anti-globalization protesters. When a large number of delegates refused to go to the Congress Center in the next two days, the convention had to be abruptly concluded, a day before its scheduled ending. As important as the protests in Prague was the debate held on Sept. 23 at the famous Prague Castle between representatives of civil society and the leadership of the World Bank and the IMF, an event orchestrated by Czech President Vaclav Havel. Instead of bridging the gap between the two sides, the debate widened it, since, in response to concrete demands, World Bank President James Wolfensohn and IMF Managing Director Horst Koehler were not prepared to go beyond platitudes and generalities, as if worried that they might overstep the bounds set by their G-7 masters. George Soros, who defended the Bank and Fund at the debate, said it all when he admitted that Wolfensohn and Koehler had "performed terribly" and had blown their most important encounter with civil society. After Seattle, much talk about reforming the global economic system to bring on board those "being left behind" by globalization was emitted by establishment personalities like Bill Gates, Bill Clinton, Tony Blair, Kofi Annan, and Nike CEO Phil Knight. The Davos Forum, in fact, placed the question of reform at the top of the agenda of the meetings it held for the global elite. A year after Seattle, however, there has been precious little in the way of concrete action. The most prominent reform initiative, the Group of Seven's plan to lessen the servicing of the external debt of the 41 Highly Indebted Poor Countries (HIPC) has actually delivered a debt reduction of only $US 1 billion since it began in 1996-or a reduction of their debt servicing by only 3 per cent in the past four and a half years! One year after the Seattle collapse, talk about reforming the decision- making process at the WTO has vanished, with Director General Mike Moore, in fact, saying that that the non-transparent, undemocratic "Consensus/Green Room" system that triggered the developing country revolt in Seattle is "non-negotiable." When it comes to the question of the international financial architecture, serious discussion of controls on speculative capital like Tobin taxes has been avoided. An unreformed IMF continues to be at the center of the system's "firefighting system." A preemptive, pre- crisis credit line at the Fund (which no country wants to avail of) and a toothless Financial Stability Forum-where there is little developing country participation-appear to be the only "innovations" to emerge from the Asian, Russian, and Brazilian financial crises of the last three years. At the IMF and the World Bank, similarly, there is no longer any talk about diluting the voting shares of the US and European Union in favor of greater voting power for the Third World countries, much less of doing away with the feudal practices of always having a European head the Fund and an American to lead the Bank. The much-vaunted consultative process in the preparation of "Poverty Reduction Strategy Papers" (PRSP) by governments applying for loans is turning out to be nothing more than an effort to add a veneer of public participation to the same technocratic process that is churning out development strategies with the same old emphasis on growth via deregulation and liberalization of trade, with maybe a safety net here and there. At the Bank, strong resistance to innovations that would put the priority on social reforms led to the resignation of two reformers: Joseph Stiglitz, the chief economist, and Ravi Kanbur, the head of the World Development Report task force. Debacle in The Hague The protests throughout the year had a strong anti-TNC strain, with the World Bank, IMF, and WTO regarded as servitors of the corporations. A strong distrust of TNCs had, in fact, developed, even in the United States, where over 70 per cent of people surveyed felt corporations had too much power over their lives. Distrust and opposition to TNCs could only be deepened by the collapse in early December of the Hague Conference on Climate Change, owing to US's industry's unwillingness to significantly cut back on its emission of greenhouse gases. At a time that most indicators are showing an acceleration of global warming trends, Washington's move has reinforced the conviction of the anti-globalization movement that the US economic elite is determined to grab all the benefits of globalization while sticking the costs on the rest of the world. Assessing the post-Seattle situation, C. Fred Bergsten, a prominent advocate of globalization, told a Trilateral Commission meeting in Tokyo last April that "the anti-globalization forces are now in the ascendancy." That description is even more accurate now. With the global elite itself having lost confidence in them, a classic crisis of legitimacy has overtaken the key institutions of global economic governance. If legitimacy is not regained, it is only a matter of time before structures collapse, no matter how seemingly solid they are, since legitimacy is the foundation of power structures. The process of delegitimation is difficult to reverse once it takes hold. Indeed, what we might call, following Gramsci, as the "withdrawal of consent" is likely to spread to the core institutions and practices of global capitalism, including the transnational corporation. 2001 promises to be an equally trying time for the globalist project. * Executive director of Focus on the Global South in Bangkok and professor at the University of the Philippines. ------------------------------------------------------------------ Focus-on-Trade is a regular electronic bulletin providing updates and analysis of trends in regional and world trade and finance, with an emphasis on analysis of these trends from an integrative, interdisciplinary viewpoint that is sensitive not only to economic issues, but also to ecological, political, gender and social issues. Your contributions and comments are welcome. Please contact us c/o CUSRI, Wisit Prachuabmoh Building, Chulalongkorn University, Bangkok 10330 Thailand. Tel: (66 2) 218 7363/7364/7365, Fax: (66 2) 255 9976, E-Mail: admin@focusweb.org, Website: http://focusweb.org. Focus on the Global South is an autonomous programme of policy research and action of the Chulalongkorn University Social Research Institute (CUSRI) based in Bangkok.