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FINANCE: Three-Piece Suits Populate This Secretive Conclave

Emad Mekay

WASHINGTON, Apr 14 2005 (IPS) - Two of the world’s most influential financial institutions, the World Bank and the International Monetary Fund (IMF), will hold their semi-annual meetings this year amid worries about uneven global growth and long-time accusations by development groups that they cater to rich countries at the expense of the poor.

Dozens of the world’s finance and development ministers and central bank governors are expected to gather behind closed doors in Washington for the Apr. 16-17 Spring Meetings of the IMF and the World Bank, amid extremely tight security.

Anti-corporate globalisation and social justice activists are planning several events to protest the absence from the formal agenda of many issues they say are important to the world’s poor and to global stability.

Among the main issues to be discussed at the meetings will be the state of the world economy, including soaring oil prices, and IMF and World Bank efforts to introduce market changes into middle- and low-income countries around the world.

The IMF will also discuss ways to support what it calls "financial stability" – a term critics say denotes a worry-free environment for multinational corporations – and the preliminary results of an internal review commissioned in late 2004 by IMF Managing Director Rodrigo de Rato of the IMF’s strategic mid-term direction.

The sister institutions say they will also review efforts to achieve the Millennium Development Goals, which include significantly lowering mother and child mortality rates and halving the number of hungry people by 2015.

Based on current trends and data gathered by the World Bank and IMF, most developing countries will fail to meet the MDGs by the deadline – in part, critics say, because of misguided policies in the two institutions and an untenable debt burden.

Briefings are planned on studies of various proposals for new financing mechanisms and further debt relief for developing countries, including the sale of the IMF’s undervalued gold reserves.

Despite calls from activist groups around the world, the IMF argues that gold sales cannot be made without ensuring that it has adequate resources to continue its lending to the neediest countries.

Rato said in a speech on Apr. 4 that those calling for complete debt forgiveness should realise that IMF loans account for only a small share of low-income country debt and that real increases in overall donor aid to low-income countries would still be needed.

There are indications that the two institutions will use the occasion, as they have before, to give developing nations the usual dose of advice on the need to open up their economies.

In his speech previewing the meetings, Rato said that increased aid and debt forgiveness alone would not end poverty. He said that developing nations need to eliminate trade barriers, cut public spending, devalue their currencies and expand the rights of private investors.

"The costs of these barriers – especially those imposed by low-income countries on each other – are often higher than the costs of rich country protectionism," Rato argued.

On the sidelines of the meetings, ministers from the powerful Group of Seven (G7) most industrialised nations – Canada, Germany, France, Italy, Japan, Britain and the United States – will be gathering in Washington to chart out their economic plans for the future.

Meanwhile, development groups will be rallying for 100 percent debt cancellation for the world’s poorest countries.

The British charity Oxfam calculates that forgiving the crushing debts of 32 of the poorest countries would cost just over three dollars per person annually in Britain and 1.20 per U.S. citizen.

"Sub-Saharan Africa’s annual debt payments of 12 billion dollars could be enough to combat the HIV/AIDS pandemic," said Salih Booker of the Washington-based Africa Action.

"This system of global apartheid has elevated greed over the life of an entire continent, in a scandal hidden in plain sight," he said.

Groups are also planning demonstrations, educational events, rallies, film screenings and other activities to protest the policies of the two institutions.

The meetings at the headquarters of the two institutions in downtown Washington will also be held under a cloud of concern about the agenda of the World Bank’s incoming president, Paul Wolfowitz, currently the number two official at the Defence Department.

Activists worry that his past dealings with private contractors in Iraq do not augur well for the anti-poverty mission of the World Bank, the world’s largest development agency, which is involved in hundreds of major projects.

Public Citizen, a U.S. consumer group that tracks the World Bank’s lending policies, complained ahead of the meetings that Wolfowitz had played a prominent role in awarding a water contract in U.S.-occupied Iraq that precluded public review and was initially kept secret from Congress.

"We’ve seen just how bad Mr. Wolfowitz’s judgment has been when it comes to delivering water to the people of Iraq," said Wenonah Hauter, director of Public Citizen’s Water for All Campaign. "Let’s hope it’s a hard lesson learned – and that the World Bank does not follow in his misplaced footsteps."

As deputy defence secretary and the architect of Iraq’s reconstruction following the 2003 U.S.-led invasion, Wolfowitz was also behind the privatisation of other essential services in the country, Public Citizen said.

Another group, the Mobilisation for Global Justice, is demanding that the board meetings be opened to the media and pubic scrutiny; that the debt burden of impoverished countries be lifted; and that the institutions stop imposing harmful economic conditions and halt all financing of environmentally and socially destructive projects.

But while those demands have been made repeatedly for years, the World Bank and IMF, whose boards are dominated by the United States and European Union, have snubbed them. And there is little indication that things will be different this time around.