Marc Weisbrot

It’s

amazing what an organized group of people can accomplish when their cause is

just and they are willing to be stubborn and creative about it. Last December

they knocked the wind out of the WTO in Seattle. Now this diverse and expanding

movement has got the world’s two most powerful financial behemoths– the IMF and

the World Bank– running scared.

The

past week’s demonstrations in Washington, DC are just the beginning of the IMF

and World Bank’s troubles. While they have many friends in high places, they

have little support — and a lot of opposition– among the world’s people.

Leaders

of the Group of 77– an organization representing countries with 80 percent of

the world’s population– expressed their support for the demonstrators. They

noted that "many countries have rejected the results of various policy

initiatives of the World Bank and the IMF," including crushing debt

burdens, privatization of state-owned industries, and a "one- size-fits-all

attitude."

More

than a decade after the end of the Cold War, there are signs that the Global

South may be resuming its centuries-long struggle against the North for the

right to determine how it will participate in the international economy. And

there is no greater threat to that right than the IMF and the World Bank. These

are undeniably colonial institutions, in which the hundreds of millions of

people who lives are affected by their decisions have no voice or effective

representation. They have made many people around the world very cynical about

electoral democracy– for what good is the right to vote for the party of your

choice in El Salvador or Russia, when the most important economic decisions are

being made by foreign bureaucrats on H street in Washington?

This

combination of resistance in the heart of the empire, with increasing opposition

from its victims abroad, may be just what the world needs to win a new deal for

the three billion people– half the planet– who now survive on less than $2 a

day.

Breaking

the Bank

The

battle is over, the war goes on. One of the new fronts that has opened up is a

grassroots campaign to boycott World Bank bonds, through which the Bank raises

most of its capital. This movement is truly international, with organizations in

35 countries. In the United States, it provides a way for activists to educate

their communities about what the Bank does, and also empowers them to do

something about it.

Like

the divestment movement that helped bring down the system of apartheid in South

Africa, this campaign will bring its message to local governments, universities,

churches, unions, and other institutional investors that might otherwise

consider the World Bank’s bonds a safe and reasonable investment.

Friends

or Foes?

The

Bank and the Fund have mounted a defense, often winning support among newspaper

editors and commentators who know little about their actual policies and impact.

"There is no organization on earth that is doing more for the poor than we

do," James Wolfensohn, president of the World Bank, told the media last

week.

Wolfensohn

would be hard-pressed to defend this statement, not least because most of the

Bank’s lending is dependent on the borrower meeting the IMF’s conditions. This

is not just a technicality– it means that the Bank is just as responsible as

the IMF is for all the social and economic destruction caused by the Fund’s

commands. This includes the tens of millions of people pushed into poverty in

countries such as Indonesia, Russia, and Brazil. The Fund’s policies, and the

Bank’s role in enforcing them, prompted the World Bank’s chief economist, Joe

Stiglitz, to resign in frustration last December.

This

week Stiglitz cast his lot with the protesters, saying that they "were

trying to bring to the fore a set of values that a large number of people,

particularly young Americans, feel strongly about– issues that go beyond just

making a living and materialism– that they care about the environment and about

the poor in developing countries, and that they care about democratic

processes."

The

Bank and the Fund claim that they are in favor of debt relief for the world’s

poorest countries. But they have been dragging their feet so slowly that it is

difficult to take them seriously. Four years after the launch of their Heavily

Indebted Poor Countries initiative, only five of the 41 potentially eligible

countries have met the requirements for partial debt reduction. Others will have

to go through years of the Fund’s destructive "structural adjustment"

programs in order to qualify for debt relief that, in many cases, will not

significantly reduce their annual payments.

The

protesters, along with major religious denominations from throughout the world,

have demanded cancellation of the poor countries’ debt. This debt is now worth

only about 10 cents on the dollar, since financial markets recognize that most

of it can never be paid. So it is within the means of the IMF and World Bank to

forgive this debt. But Wolfensohn refuses to consider this option, stating

recently that to do so would "screw up the market" for debt. Given

that the markets have already discounted the vast majority of this debt, it is

not clear what he could mean. A more likely explanation is that he, along with

other Fund and Bank officials, see the debt as a means to control these

countries’ economic policies, and are in no hurry lose that leverage.

Meanwhile,

on the home front, the latest Business Week/Harris poll shows that the American

people are a lot closer to the views of the protesters than to the intellectuals

who sneer at them from the op-ed pages. When asked to describe their views on

trade, only 10 percent chose "free trader." Fifty percent chose

"fair trader," a label rarely used by anyone outside the labor or

protest movement. And 37 percent chose "protectionist"– a word that

is never granted a positive connotation in the press, and has probably become as

discredited in mainstream opinion as "communist." Although there were

mixed feelings about globalization in general, people most often chose

"protecting the environment" and "preventing the loss of US

jobs" as a major priority for trade agreements– putting them very much at

odds with our policy makers and trade officials.

These

demonstrations are a way of helping our leaders catch up with public opinion.

 

Mark

Weisbrot is co-director of the Center for Economic and Policy Research in

Washington, D.C/

Name:

Mark Weisbrot 

E-mail: <weisbrot@cepr.net> 

Center for Economic and Policy Research 

1015 18th Street NW, 

Suite 200 Washington, DC 20036 

Phone (202) 822-1180 x228 

(www.cepr.net)