[stop-imf] More on September protests; Stiglitz views

[Robert Weissman]

Excerpts from World Bank's Development News
August 31, 2001

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Headlines for Friday, August 31, 2001:
- WORLD BANK TO ALLOW PUBLIC ACCESS.
- I.M.F. REJECTS DEMANDS OF PROTESTERS.
- BETTER TO HAVE THE NEW WORLD BANK THAN THE OLD ONE:  STIGLITZ.

WORLD BANK TO ALLOW PUBLIC ACCESS.

The governing board of the World Bank met Thursday to discuss opening much
of its operations to public view, reports the Financial Times (p.4).  The
proposals were expected to be approved, but some countries, including
China and Russia, were said to be reluctant, and the move was criticized
by NGOs for not going far enough.

The proposals would allow public access to documents for individual
projects supported by the Bank, and performance assessments from the
Bank's internal evaluation department.  "The Bank recognizes that
transparency is crucial to development effectiveness," said Joanne Salop,
the Bank's vice president for operations.

The proposals followed lengthy consultations during which industrialized
countries and NGOs supported much greater moves towards transparency,
resisted by some emerging market countries.  Minutes of a Bank board
meeting in July showed some directors objecting to releasing their work
program on the grounds that "this would invite external actors to become
involved in issues discussed by the board."

Development campaigners demanded that all project documents submitted to
the board be released before projects were approved, and that board
meetings be held in public.  "This shows that the board of directors is
paralyzed," said Graham Saul of the Bank Information Center, an NGO.
"There is a gap between the rhetoric about openness and participation and
the reality."



I.M.F. REJECTS DEMANDS OF PROTESTERS.

The IMF chief spokesman has rejected demands by protesters who are
planning demonstrations against the Fund and World Bank when they meet
late next month, AP and the Washington Times (p. B11) report.

Thomas Dawson, the IMF's director of external relations, said Thursday it
was regrettable that the threat of violence hanging over the annual
meetings of the two organizations would limit discussions on serious world
economic problems.

Mobilization for Global Justice, one of the main groups planning
demonstrations, urged the IMF and World Bank on Tuesday to open their
meetings to the public, cancel all debt for the world's poorest nations,
help make education and heath care more available in these countries and
stop funding projects that harm the environment.

Dawson said both organizations consider their meetings open, with
thousands of journalists and hundreds of nongovernmental organizations
attending. "It is true that some meetings are not open," he said,
referring to two committee sessions that provide policy guidelines for the
IMF and World Bank. "This is not at all unusual when governments get
together to discuss market-sensitive information and decision-making."

He said what committee members planned to discuss was known in advance,
and speeches by Treasury Secretary Paul H. O'Neill and other participants
will be made available as they are delivered.

Dawson also said the two organizations had forgiven billions of dollars of
debt owed by poor nations, but none of their 183 member countries had
proposed the total debt forgiveness many protesters have called for. He
said poor countries with IMF and World Bank lending programs have
increased rather than decreased spending on health, education and other
social programs. Dawson said although he would not speak for the World
Bank, he believes its policy is to avoid projects that damage the
environment and to learn lessons from those that had.

Many countries use the annual meetings to seek meetings with bankers and
other private-sector investors. But Dawson said that would be difficult or
impossible this time. "We are trying to deal with this reality as best we
can, but given the nature of the security concern, I don't think we had
much choice" except to compress the normally weeklong meetings to two
days.

Commenting in an editorial, meanwhile, the Washington Post (p. A22) says
that what's distinctive about the protesters' rhetoric is not its target
or its radicalism but its curiously stale, dated air. In assailing the
World Bank for backing "socially and environmentally destructive projects,
such as oil, gas and mining activities," the Mobilization for Global
Justice sounds a lot like the critics who attacked the bank on those
grounds 20 years ago.

Those were good criticisms at the time, but since then, the Bank has
dramatically altered its lending policies; since 1980 the percentage of
loans going to the power sector has fallen by 90 percent, and almost all
projects go through an environmental audit. Some bad projects still get
through -- like the protesters, we have raised concerns about the bank's
current sponsorship of an oil pipeline in Chad, says the editorial. But
the impression lingers that the protesters haven't paid much attention to
what is really going on at the Bank; these days the cutting-edge critiques
point to the fact that, in its zeal to take all views into account and
avoid white elephants, the Bank is missing opportunities to fund the
projects that could help most.

Similarly, the Mobilization's demand for an unconditional cancellation of
impoverished countries' debt, its denunciation of privatization and IMF
"economic austerity programs" for developing countries and its scorn for
the allegedly sinister designs of multinational corporations parrot the
rhetoric that used to be heard from the military dictatorships and corrupt
populists who governed much of Latin America and Africa in the 1970s and
'80s. The juntas and "Big Men," too, claimed their people would be better
off without foreign investment and banks or the IMF; but what they
delivered was a "lost decade" of chaos and hyperinflation that eventually
led to their overthrow.

The democrats who mostly replaced them in Latin America, as well as the
new democratic governments of Europe and Southeast Asia, looked around the
world; they saw that the only nations that have succeeded in rising from
poverty since World War II have been those, like South Korea and Taiwan,
that have embraced the private sector and trade. The results of
open-market policies since then, as we said, have been mixed. But to many
people who actually live in the developing countries serviced by the World
Bank and IMF, the program of the Washington protesters will sound like a
return to policies they have repeatedly -- and democratically -
repudiated, the editorial concludes.

Further, the Independent (UK, p.13) reports that anti-globalization
campaigners are holding a training camp for protesters wishing to disrupt
the annual meetings of the World Bank and the IMF this year.  While the
Ruckus Society, which is holding the training camp, says it is committed
to non-violent protest, its intention to create a forceful presence at the
annual meetings will not please the Washington police.  The force is
expecting up to 100,000 demonstrators at the meetings on September 29-30,
and estimates the cost of policing the event will be $29 million.

Also reporting, Lib=E9ration (France, p.11) says Washington has opted for a
"fortress strategy."  A three-meter-high fence will be raised around the
headquarters of the IMF and the World Bank, and for good measure around
the White House.  The fence has become the focal point of protesters' ire,
the story says, quoting Mervyn Macano of the International Action Center
as saying, "It's a violation of the inalienable right to demonstrate, it's
the symbol of the World Bank's power and closed mentality."

Meanwhile, reports Reuters, Washington Police Chief Charles Ramsey
Thursday defended his plan to ring the heart of the nation's capital with
more than two miles (3.2 km) of chain link fence to keep
anti-globalization demonstrations from disrupting the annual meetings.
"If you're the person out on the front lines, any steps you take to secure
a site, I think, are reasonable," he said. "We're going to take whatever
steps we feel are necessary to ensure the security of our people, the
delegates and the protesters ... We're just there to maintain security,
that's all. We're not trying to give them a hard time. They have a First
Amendment right to get out and protest, we respect that."


BETTER TO HAVE THE NEW WORLD BANK THAN THE OLD ONE:  STIGLITZ.

Virtually everyone, even the people now complaining, agrees that the way
the World Bank was doing business had to change, writes Columbia
University economics professor and former World Bank Chief Economist
Joseph Stiglitz in a letter to the editor of the Financial Times (p.14).
Would critics really rather see a return to the bad old days when the Bank
spent much of its time funding big dams and bridges regardless of the
effects on the environment?

It may be that the Bank has become too fluffy in some ways, but the
alternatives are far worse, Stiglitz says.  Surely it is better for the
World Bank to consult with NGOs than to rely on the opinions of government
officials who in many countries were not democratically elected and do not
speak of the people they purportedly represent.  Even if such consultation
does not help development happen faster, talking to a range of groups
about how they want their society to develop is the right thing to do.
Even if it were not, pushing programs that lack mass support simply does
not work, as many studies have shown.

There is no sensible reason to push these sorts of "reforms" even though
the financial type love to feel they are bringing "market discipline" to
countries in trouble, Stiglitz continues.  Markets are the key to long-run
success, but creating a market-friendly environment entails more than
mindless deregulation: it requires, for instance, competition policies,
strong and well regulated financial institutions, an environment that is
conducive to the transfer of new technologies, governments that are not
corrupt-all issues that were ignored by the old World Bank but are central
to the thinking of the new one.

There is still a lot of work to be done, says Stiglitz, but no one said
the World Bank could become perfect overnight.  While the narrow focus of
the old Bank did not work, at least the more comprehensive approach of the
new Bank has raised the right issues.  Transformations are always hard and
mistakes are made along the way.  World Bank President James Wolfensohn
should be given credit for trying, Stiglitz says.  Blaming him for a
drop-off in foreign direct investment is simply ludicrous.

There are many alternative views about how best to proceed with
development. The World Bank should present the options and countries
should democratically decide what they want to do, Stiglitz says.

Also writing to the editor of the FT (p.14), Ronald Freeman of Lipper and
Company International says Wolfensohn has certainly tried unrelentingly to
discover the right formula for development.  It is an effort worth making.
Let's give him credit for it.





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