[stop-imf] Wash Post: The Enron of the Developing World

[Robert Weissman]

Wednesday, September 25, 2002
Washington Post
Page A27 

The Enron of the Developing World
By Robert Weissman

Wall Street gets it. So does
Congress. Even President Bush gets it. But not the International Monetary
Fund (IMF) and the World Bank.

The era of market fundamentalism is over. Marketization, deregulation and
privatization, and the opportunities for market manipulation offered by
inadequate regulation -- all central elements in the rise and fall of Enron
-- are now discredited in the United States. And in developing countries,
where their effects have been most devastating, they are the object of
widespread public opprobrium.

Unfortunately, the IMF and the World Bank continue to sing from the
market-fundamentalist hymnal.

¢ Marketization: Just as Enron created new markets in exotic commodities such
as bandwidth, so the IMF and the World Bank have worked to marketize services
previously in the public and noncommercial realm. Case in point: user fees
for primary health care. The World Bank continues to support such charges,
even after reversing its support for education fees. The effect is to deny
poor people access to care. In Papua New Guinea, for instance, the
introduction of user fees led to a decline of about 30 percent in the average
monthly attendance at outpatient health centers.

¢ Deregulation: Reckless deregulation in California enabled Enron and other
energy companies to gouge customers. Similarly, IMF- and World Bank-induced
deregulation in developing countries has had disastrous consequences. In the
Philippines and in Ghana, for example, deregulation in the mining sector has
opened the country to giant multinational companies, displacing tens of
thousands of residents and paving the way for environmental devastation.

¢ Privatization: Central to Enron's international agenda was the
takeover of
privatized electricity and water services in developing countries. One
country where Enron sought to gain control of a privatized water system was
Ghana. Concerns about corruption -- including those voiced by the World Bank
-- led to the collapse of the deal.

But the World Bank continues to push for water privatization in the West
African nation. In preparation, water prices have doubled, and the bank
anticipates prices rising for the foreseeable future, even though poor
Ghanaian consumers can pay as much as 10 percent to 20 percent of their
income for drinking water. In a country where one-third of urban consumers
are not even connected to water pipes, the private operators would have no
duty to expand service to the poor.

In the Dominican Republic, World Bank-supported privatization let Enron swoop
in, buy parts of the electric utility and jack up rates. When consumers and
the government couldn't pay the high prices, Enron turned off the power.
Enron and other buyers of the privatized utility are now alleged to have paid
too little, thanks to a valuation performed by an Arthur Andersen subsidiary.

¢ Financial market manipulation: Enron's financial fraud is now legendary.
But consider the IMF's deceit in Brazil: Everyone knows the country has no
prospect of paying off its foreign debt. But rather than acknowledging this
and working out a discounted payment arrangement for creditors, the IMF is
making new loans to pay off old ones. This has two immediate effects: It
enables the private creditors, including the big U.S. banks, to be paid off,
with debt obligations shifted to the IMF. And it enables the IMF to extract
austerity measures from Brazil that are explicitly intended to lock in
fundamentalist market policies, no matter which party Brazilians elect in
coming elections.

Restraints on corporate power are even more necessary in developing countries
than in the United States. But the market fundamentalists at the IMF and the
World Bank continue to systematically unshackle corporate activity in the
Southern Hemisphere. That's a major reason thousands will demonstrate against
the IMF and the World Bank in Washington this weekend.

Action makes a difference: In 2000, after the last major U.S. demonstrations
against the IMF and the World Bank, Congress passed a law requiring the
United States to oppose IMF or World Bank loans that include user fees for
primary education or health care. Partly as a result, Tanzania lifted primary
education user fees, 1.5 million additional children -- mostly girls -- were
able to go to school.

The writer works with the Mobilization for Global Justice and is editor of
Multinational Monitor magazine.

© 2002 The Washington Post Company