FINANCE: IMF Eyes Anti-Terrorist Role

By Emad Mekay Reprint | | Print |

Emad Mekay

WASHINGTON, Nov 16 2001 (IPS) - The International Monetary Fund (IMF) is signing up for counter-terrorism duty. Critics, however, say the agency should concentrate on fighting poverty.

IMF Managing Director Horst Koehler said Thursday the Fund would work to devise and police a regulatory framework to cut off financial flows to terrorists and money-laundering operations.

“Making globalisation work for the benefit of all requires that we are also active in safeguarding the stability and integrity of the international financial system,” Koehler said. “And recent events have shown the need for stronger international cooperation to combat terrorism.”

Details of action are to be discussed by the Fund’s policy-making International Monetary and Financial Committee in Ottawa, Canada, Nov. 17-18. Koehler said the agency’s options include using its financial sector reviews to aid efforts, currently spearheaded by Washington, to track down and freeze assets of suspect terrorist organisations.

“This week there was a broad consensus in the IMF’s Executive Board that the Fund must step up further its activities in these areas,” Koehler said, adding that the lender and economic watchdog would pursue closer cooperation with international bodies such as the 29-nation Financial Action Task Force.

Activists, accustomed to criticising the IMF for its role in economic globalisation and the conditions tied to its loans in developing countries, blasted it for seeking an essentially political mandate.

Mark Helm of the environmental group Friends of the Earth said the institution’s first and foremost mission was to boost development and fight poverty rather than take on terror campaigns.

“Addressing money laundering and terrorism are noble objectives,” Helm acknowledged. The Fund’s decision-makers, however, “need to be mindful that tens of thousands of children die every day of starvation, millions are hobbled in poverty, and environmental destruction is rampant.”

“It’s horrible that some 6,000 people died on September 11 but it’s equally horrible that on September 11 thousands died of starvation and in civil wars across the globe.”

Joanne Carter of Results, another Washington-based IMF watchdog, said it was an encouraging sign that the Fund was willing to help with the fight but added she had doubts about whether it had worthwhile expertise to contribute in the ways envisaged.

Rather, the Fund and its sibling, the World Bank, should seek to help fight terrorism by uprooting its economic causes. “The two institutions can fundamentally help eliminate the breeding ground for terrorism by genuinely reducing poverty and reducing the social chaos that leads to it,” Carter said.

Koehler, however, noted his agency was gearing up to increase lending to developing countries and said this was designed to help them cope with the economic aftershocks of the Sep. 11 terrorist attacks on the United States.

“The international community should not let the downturn in the global economy derail the efforts of low-income countries to reduce poverty,” Koehler said.

The IMF chief met this week with a group of African finance ministers to discuss debt relief. He said the Fund and World Bank also were willing to reassess debt-relief provisions under the Heavily Indebted Poor Country (HIPC) initiative.

Koehler spoke to reporters here in advance of the agency’s and the World Bank’s annual meetings in Ottawa over the weekend. The talks had been scheduled for Washington Sep. 29-30 but were put off following the Sep. 11 terrorist attacks.

The talks have been scaled down and will involve only the agencies’ key policy-making committees: the Bank’s Development Committee and Fund’s International Monetary and Financial Committee.

Shareholding governments will be represented in much the same way as they are on the lenders’ executive boards: Larger shareholders like the United States and Britain will have their own representatives while smaller shareholders will be grouped in blocs and share representatives. The institutions have 183 shareholders but the committees consist of 24 members each.

Activist groups had targeted the Washington meetings for demonstrations but also called off most of their plans following the attacks on the World Trade Centre and the Pentagon, symbols of economic globalisation and U.S. military power.

Their demands of the institutions – which some groups will seek to deliver through protest and lobbying in Ottawa this weekend – include a stop to structural adjustment programmes, debt cancellation for the world’s poorest countries, and a halt to financing for environmentally destructive infrastructure projects. They also have called on the Bank and IMF to open the meetings and allow public participation in decision-making processes.