Mark Weisbrot

The

Clinton administration claims to have learned something from the outpouring of

protest against the World Trade Organization (WTO) last December. "Those

who heard a wake-up call in Seattle got the right message," said President

Clinton. Maybe so, but then they hung up the phone and went right back to sleep.

Fortunately

for the world, the administration and its allies will not slumber for long. In

just a couple of weeks, thousands of protesters will take to the streets of the

other Washington — the District of Columbia — for a week of events that will

probably rival Seattle in its impact on the institutions of globalization.

Religious

groups will lead a rally for debt relief for poor countries on April 9.

Organized labor will gather its troops and others to oppose the expansion of the

WTO on April 12. And on April 16, the International Monetary Fund (IMF) and

World Bank will face the first major demonstrations ever to take place on their

home territory. In addition to a rally and march, many protesters will attempt

to shut down the spring meetings of the Fund and the Bank with non-violent civil

disobedience — as they did with the WTO meetings in Seattle.

 

The

roots of discontent

This

is a movement that is not going away. In some ways it is reminiscent of the

early stages of protest against the Vietnam War. Those who understand this

movement know that unless there is a drastic change in our government’s policy,

it will continue to grow in numbers and in strength.

The

analogy is appropriate along a number of dimensions: For years the American

public was told that we were fighting for the freedom of Vietnam, and that

victory was around the corner. As the casualties mounted and official lying was

exposed, and the horror and cruelty of the war became more widely known, people

began to question the prosecution of the war. Then they began to question the

justification, and finally the motives of our entire foreign policy.

This

time it is our foreign economic policy that is being held up to scrutiny, and

for millions of Americans it has already become discredited. That this could

happen at the peak of our longest-running economic expansion, with unemployment

at a 30-year low, is further evidence that this movement is deeply rooted.

The

Seattle protests plucked the WTO from its cozy obscurity and dragged it out into

the daylight, where ordinary citizens could see the impact that it has on their

lives, and the lives of other people around the world. This forced President

Clinton to scuttle the WTO’s Millennium round of negotiations.

The

April protests will cause many people to learn about the IMF and the World Bank

for first time, and others to find out more about what they do. This is almost

certain to diminish support for these organizations.

 

The

case against the IMF

The

IMF is the most powerful financial institution in the world. It is arguably the

most powerful institution of any kind, in terms of its impact on the lives of

hundreds of millions — and indirectly, billions — of people. This is due to an

informal arrangement under which borrowing countries must first reach agreement

with the IMF, in order to get credit from other multilateral institutions,

governments and often private sources as well. This gives the IMF the power to

choose finance ministers and central bankers, and even to topple governments

that do not comply with its conditions.

The

U.S. Treasury Department is the overwhelmingly dominant influence in the IMF and

holds this system together. So anything that weakens support for the IMF in its

home base has the potential to collapse the whole arrangement. The recent report

of a congressional commission that sharply criticized the IMF, and called for

downsizing its mission, has contributed to this weakening. And the fight between

the Clinton administration and Europe over who would head the IMF – recently

resolved with the administration agreeing to support Germany’s No. 2 choice,

Horst Koehler — is another sign of strain.

The

IMF is commonly portrayed as a global rescue operation — an international

"lender of last resort" analogous to our own Federal Reserve at the

national level. But this is not true, even in those instances in which the IMF

intervenes in a crisis situation. The Federal Reserve will provide funds to a

failing financial institution in the United States, in order to prevent the

collapse from spreading. The IMF does something quite different: It helps to

form a creditors’ cartel, so that the lenders can collect as much as possible on

their debt from the government that is facing a crisis. In the Asian crisis, for

example, the main result of their intervention was to get governments such as

those of South Korea and Indonesia to guarantee the debt of private borrowers.

Although

the IMF’s most destructive policies are carried out in the poorer countries,

they also hurt working people in the United States. For these reasons a growing

portion of organized labor here is joining the movement to curb the power of the

IMF. After all, unions opposed NAFTA because the agreement made it easier for

American corporations to relocate to Mexico, drive down wages and undercut

labor’s bargaining power. The IMF does all of the things that NAFTA did, in

dozens of countries, making it labor’s most powerful adversary.

The

IMF also pressures countries to produce for export rather than for domestic

markets. This can cause a glut of manufactured or agricultural goods on world

markets, driving down prices, encouraging "dumping" and putting more

downward pressure on wages. Many of the thousands of steel workers who lost

their jobs in the wake of the Asian economic crisis are casualties of IMF

policies.

 

Time

for another wake-up call

Although

Treasury Secretary Larry Summers is now jumping on the reform bandwagon, it

appears that he is simply trying to preempt demands for real change. He refuses

to support cancellation of the poorest countries’ debt to the IMF and the World

Bank, a basic demand of the worldwide movement for debt relief. This debt is

widely known to be unpayable, and it is within the means of these institutions

to let go of these claims. But they refuse to do so, preferring instead to use

the debt to maintain control over the economic policies of these countries.

James Wolfenson, the head of the World Bank, and Koehler, soon to approved as

the new managing director of the IMF, concur with Summers. 

They’re

going to need a few more wake-up calls.

  

Mark

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

Washington, D.C.