Critics Say IMF, World Bank


By Charles A. Radin

Boston Globe
April 13, 2000

With hunger and unemployment rampant in Haiti, international lenders, including the World Bank and the International Monetary Fund, pressured President Jean-Bertrand Aristide in 1995 to adopt to what Haitians called ''the death plan.''

The proposal to integrate Haiti into the global economy called for privatizing rice, sugar, and cement production and dropping tariffs on imports. But the result, according to Haitian and international activists, was to wipe out domestic production of these vital commodities, leaving the impoverished country more import-dependent than ever, and its people less able to pay. There have been other dire results from IMF and World Bank programs across Africa and in the former Soviet Union, say critics and developmental economists. Even when their programs led to environmental calamities, like major cyanide spills at bank-funded mining projects in Kyrgyzstan and Guyana, the governments of the world's most impoverished nations must obey, they say.

It is this increasingly vocal critique of the two agencies, which until recently ran their global programs in relative obscurity, that is expected to bring thousands of activists to Washington this weekend in an effort to disrupt their quarterly meeting. The activists hope, through demonstrations and civil disobedience, to focus the kind of attention on the bank and the IMF that they focused on globalization and the World Trade Organization in Seattle last December.

''No matter how many times they fail,'' the IMF and the World Bank can make policy in poor nations ''because they are the only game in town'' for countries that cannot get credit elsewhere, Jeffrey Sachs, director of Harvard University's Center for International Development, said in a telephone interview yesterday. ''They hold the purse strings. ''There is a very, very good reason for the intense scrutiny'' of the IMF and World Bank, said Sachs, who has advised governments from Bolivia to Eastern Europe to the former Soviet Union on economic restructuring and modernization.

The agencies are not accountable to anyone but top financial officials of the wealthiest nations, they make decisions in closed meetings, and they fail to produce the desired results, Sachs said. ''If they were fulfilling their missions in a better way, you wouldn't have this kind of protest,'' he said. Widening the worldwide gap between rich and poor, installing ''terminator genes'' in crops so that poor farmers cannot save seed from year to year, jeopardizing monarch butterflies in an effort to grow pest-resistant corn - all are examples of what the protesters now gathering in Washington see as a global corporate mentality running wild at the expense of self-determination and self-sufficiency of ordinary people.

Some of the complaints have been around for years; others are of recent vintage. What is changing, apparently rapidly, is the number of Americans who are concerned and who are becoming aware that the World Bank and IMF are major agents of globalization. ''There is a great deal of insecurity about globalization,'' said Caroline Anstey, chief spokeswoman for the World Bank. ''There is the thought among people in the streets that they would like to be a part of the process. ''Globalization has become a pejorative,'' she said. ''The bank would say it is a great opportunity, but there are also risks'' - and she insisted the bank is giving a high priority to addressing those risks. ''There are people in the streets who don't know what the bank does, who see us as a part of global capitalism. We would like to see a leveling of the playing field in favor of developing countries.''

IMF spokesman David Hawley said globalization is the public's overriding concern, and ''it is plain that the fund and the bank are seen as emblems of globalization.'' He said the fund is accountable to its member governments, which decide by consensus such issues as whether proceedings will be open or closed. Their assertions are ridiculed by critics like professor Noam Chomsky of the Massachusetts Institute of Technology, who believes the bank and IMF are not trying to alleviate poverty and stabilize international currencies - the tasks assigned by their charters - but are helping rich nations and individuals get richer, and making it impossible for poor nations ever to pay off their debts.

The poor nations became deeply indebted to private banks in the rich nations during the Cold War, Chomsky said; often the borrowers were authoritarian regimes, supported by the West because of their opposition to communism, and spent the borrowed money on armaments. A high percentage of current borrowing by debtor countries goes to pay off the private banks, he said, ''transferring private debt into public debt'' and shifting the risk to the public, whose taxes underwrite the two agencies.

At the same time, he said, they ''impose costs on the poor who didn't borrow'' by insisting on privatization. Privatization, according to Chomsky and other critics, often broadens the gaps between rich and poor, because people who already are rich are most able to buy when a nation sells off its telephone company or - as in Haiti's case - its cement company and sugar processors. Critics as diverse as Republican Senator Jesse Helms of North Caroline and Michael Prokosch, a Boston-based organizer of the weekend protests, have another complaint about globalization. It is making end-runs around democratic governments, they say. Globalization ''moves decision-making from an arena in which we have some influence, like Congress, to an arena where we have no influence and no idea what's going on'' until after decisions are made, Prokosch said.

Jagdash Bhagwati, a Columbia University professor of economics, said there is ''a tremendous upside to globalization,'' but the road in that direction will grow rougher unless the US administration and the IMF take a more sophisticated view of the process and a more sensitive attitude toward affected people. ''They think of globalization in its totality as one big blob, rather than distinguishing its parts,'' Bhagwati said. ''Free trade, free love, free immigration, free capital flows, free everything.'' This caused the IMF to bungle the Asian financial crisis and ''put in the hands of the foes of globalization the dagger they were seeking,'' he said. ''We also have been coming on strong in our push for markets, ignoring the effects on people and their cultures. That is an American thing. ... We always fail to appreciate how this feels to people who feel we are out to impose ourselves.'' The most important recent development, many observers and activists say, is that serious debate on problems related to globalization has jumped the Atlantic.

Chomsky noted that genetic modification of food had long been an issue in developing countries, but global corporations pursuing the technology forged ahead with support from the US government and international organizations. Only when the ''terminator gene'' - which would block farmers from saving seed for future planting - became an issue in the United States did Monsanto, the principal corporation working on the gene, back down. Monsanto apologized to the public and pledged to discontinue the research. Sachs said change will not come easily, noting that 15 years of resistance to easing the debt burden of the poorest nations is evidence that international financial institutions will defend the system that gives them power. ''However,'' Sachs said, ''attention is beginning to be focused where it needs to be.''

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