2002: Assessing a Pivotal Year

50 Years is Enough looks back on 2002 

(Thanks, great piece, e-debater Soren... We in SA were privy to the recent
Cape Town holidaying of one Kenneth Rogoff, the rogue IMF chief economist
who last year made headlines with gossip about Stiglitz's Princeton snobbery
on the IMF website in the midst of a really putrid reply to Stiggy's
suggestion that perhaps the world doesn't need the IMF... So in contrast to
this statement below -- "Instead of advancing positive arguments on behalf
of their policies, IMF officials now spend more time acknowledging mistakes
and making vague promises of change" -- readers of SA's Business Day
newspaper got Rogoff's full-blown arrogance, to the extent that he
practically denied there were any problems with the rand's amazing, absurd
fluctuations the last 3 years... You can check the silly quotes at
www.bday.co.za and search for Rogoff)

***

We've encountered some technical problems in the past month in updating our
website, which means we haven't been able to post the December issue of our
newsletter, Economic Justice News.  We hope to have that problem solved and
the newsletter up very soon (at www.50years.org).  For now, we're passing
along the cover story, an overview of the past year's developments, before
it becomes too stale (note that this was written before US Treasury
Secretary O'Neill's resignation)!  For subscription info (to the hard copy
of the newsletter), write back and we'll get you set up.

2002: Assessing a Pivotal Year
By Soren Ambrose

50 Years is Enough Network/ New Voices on Globalization

 Seattle, Three Years After

 We find ourselves writing this piece during the third anniversary of
"Seattle."  Once simply a name for a pleasant city in the Pacific Northwest,
"Seattle" now carries an almost mythical significance: it symbolizes to this
day the turning point in public awareness of the Global Justice Movement in
the U.S.,  as the large demonstrations and the meltdown in official
negotiations at the World Trade Organization (WTO) ministerial meeting in
Seattle, November 30 - December 3, 1999 captured  the U.S. media's and
public's imaginations.

 In  assessing the impact of  Seattle after the passage of three years, we
see  a mixed picture, and of course it's not always easy to determine what
is cause and what is effect.  There has been a virtual stalemate in the
progress of corporate globalization through formal channels since the
spectacular failure of the attempt to open a new round of trade negotiations
in Seattle.  In this issue of Economic Justice News, Sarah Anderson reviews
the lack of progress in trade negotiations despite the nominal victory that
wealthy countries claimed last November in Doha, Qatar in opening a
"development round" -- so named because they promised to prioritize the
needs of the most impoverished countries.  Even President Bush's victory in
getting "fast track" trade authority approved -- by one vote! -- in Congress
hinged on his exploitation of the "war on terrorism."

 The International Monetary Fund and the World Bank have, of course, come in
for more scrutiny since Seattle, thanks to successful large mobilizations in
April 2000 and September 2002 in Washington, and in September 2000 in
Prague.  We continue to pressure the institutions, and have seen heir
influence slip as a result of our continued, unified opposition and their
own incompetence.

 Just before Seattle, the institutions launched their most concrete response
to years of protests against structural adjustment -- the "poverty reduction
strategy" (PRS) process, which calls for governments and civil societies in
borrowing countries to come up with their own development plans.  Most civil
society organizations now agree with our original prediction that the
institutions would not countenance real participation in mapping the
policies that matter most to them -- the "macro" issues of trade,
investment, subsidies, currency values, etc. -- and that the resulting
programs would therefore differ little from the old structural adjustment
programs.  Fortunately, the determination of civil society organizations to
monitor and critique the PRS process has prevented the institutions from
getting much mileage out of this transparent attempt to create the illusion
of "participation" and "ownership" where little or none exists.

 Latin America, Crucible of Resistance

 As Stasy McDougall writes in this issue, the policies demanded by the IMF
and World Bank have been further discredited by the catastrophic economic
collapse in Argentina over the last year.  In the East Asian financial
crisis of 1997-98, the IMF could claim that they were not in charge when
things began to slip, but in Argentina, the government had been perhaps the
most eager student of the IMF, with Finance Minister Domingo Cavallo racing
to outdo his mentors in Washington since 1990.  The government and political
system of Argentina certainly deserve a good deal of blame for the
catastrophe, but its terms were made possible by the IMF, and then greatly
intensified by the IMF's demands for further austerity in a time of virtual
bankruptcy.  Although Argentina has slipped from the front pages of U.S.
newspapers, the crisis there has not receded, and IMF officials are aware
that every day of suffering there increases the damage done to the IMF's
reputation worldwide.

 Argentina has been a bellwether for the entire continent of South America.
It was, after all, the most affluent country in the region for decades, and
its recent humiliation after a decade of applause from the IMF has fanned
the flames of suspicion and discontent that were already heating up in other
countries.  Uruguay, with its economic dependence on Argentina, has seen its
economy bottom out despite its own policy moderation.  Ecuador has just
elected Lucio Guttierez, the army general who served briefly as nominal head
of an indigenous-led coup against IMF policies in 2000.  In Bolivia, the
popular movements that rose up in Cochabamba against World Bank-mandated
water privatization and in the southern regions against U.S. incursions on
agriculture in the name of the "war on drugs" led to the surprising success
of Evo Morales, the first indigenous candidate to vie seriously for the
presidency, and who now controls an influential bloc in the national
parliament.  In Chile, often considered the most stable and contented
country on the continent, protests against policies of "labor flexibility"
have sprung up.  Paraguay is now facing its own economic crisis; the central
bank governor and finance minister resigned at the end of November when the
legislature refused to approve austerity policies demanded by the IMF.
Venezuela and Colombia, of course, have their unique crises going on, both
of which are at least partly rooted in discontent with "free market"
economics and its resulting gross disparities.

 Most encouraging of all has been Brazil, by far the largest country, and
one of the ten largest economies in the world.  There Luiz Inacio "Lula" da
Silva was elected President, as the Workers Party (PT) swept to a massive
victory which also gave it more seats in the federal legislature than any
other party.  Lula won for many reasons, but prominent in every analysis has
been his opposition to the standard IMF/World Bank policies.  While it is
not clear how much leeway Lula will have in unchaining Brazil from
conditions attached to a massive $30 billion loan arranged a few months
before the election to offset market panic in the wake of Argentina's
collapse and the prospect of a PT victory, he clearly offers the best hope
of creating and implementing new alternatives that will re-assert Brazilian
sovereignty.  Lula has done much to try to soothe establishment concerns
about radical economic policy change, and his much-deflated rhetoric in the
last year has caused concern among many long-time supporters.  His one-time
condemnation of the Free Trade Area of the Americas (FTAA), for example, has
softened to a willingness to negotiate, albeit with a firm promise to
re-structure the talks to preserve Brazil's interests.  But there is ample
reason to hope that once he is inaugurated on January 1, he will not only
feel freer to voice his true opinions, but that he will also have enough
support and creativity to chart a new course for the country, one that could
plausibly be adopted by the other countries of South America.  With Lula and
his fellow progressive and radical leaders on the continent coming to the
fore, we may well have witnessed in 2002 the culmination of not just the
decisive resistance to 20 years of harsh neo-liberal rule, but the birth of
a new, justice-based vision of the global economy.

 IMF Steals Idea, Mucks It Up (what else is new?)

 The biggest news coming out of the September meetings of the IMF and World
Bank was the proposal from Anne Krueger, the second-ranking (and top U.S.)
official at the IMF to create a body empowered to stem crises in countries
facing default.  Argentina has been the inspiration for her "sovereign debt
restructuring mechanism," which, in her conception, would be used primarily
for "middle-income" countries facing an imminent crises with international
repercussions.

 The original idea for such a panel comes from Jubilee campaigns in Germany
and Austria.  They proposed a wholly-independent body of experts which would
have the power to order a debt "standstill" for troubled countries and to
impose solutions on crisis situations which would strike a balance of the
interests of both creditors and debtors, whose claims would be considered in
the context of the specific situation.  These proposals purposely left room
for a determination that the debts should be comprehensively cancelled or
judged illegitimate because of their origin (corruption, failed projects,
etc.). The panel would also be available to all indebted countries, and not
restricted to monumental crises.

 The IMF proposal, not surprisingly, is more tame.  In addition to the
limits on its use, the creditors would maintain ultimate control over the
mechanism, and the IMF itself would be exempt from its determinations.  The
IMF would also play a key role in determining which countries qualify for
consideration by the panel.  Creditors would also be under no formal
obligation to accept the findings of the panel

 Even this exceedingly moderate proposal has been strongly opposed by
private banks.  The progress made in September was in the U.S. Treasury
Department's unambiguous announcement that it supported Krueger's proposal,
about which it had earlier sent very mixed signals.  The proposal is now
supposed to be developed and formally presented at the April meetings of the
IMF and World Bank boards.

 Civil society organizations from Europe and North America will be working
to prevent the boards from approving, or, if possible, even considering the
IMF proposal.  We will be arguing for a truly independent body, with
appropriate scope and power to make responsible judgments about the
legitimacy and cancellation of debts.  Our struggle in this case will be an
uphill battle, but we believe that public (and Congressional) support for a
broader consideration of the continuing debt crisis can be mobilized.

 The Privatization Agenda

 It has become clearer in recent months that the World Bank's privatization
schemes, whose outlines have been described in past issues of Economic
Justice News by Nancy Alexander, are indeed slated to be the new emphasis
for that institution.  This is very bad news both for economic democracy --
people will have little voice in determining how national assets are valued
and handled -- and basic survival -- essential services like water
provision, health care, education, etc. will be sold off to the highest
bidders with little guarantee that the most vulnerable people will continue
to have access.

 The process of inviting corporations and "operational" non-governmental
organizations (relief agencies and other contractors) to take over provision
of basic services by choosing the most profitable sectors and customers is
underway.  As subsidy programs for impoverished people are eliminated, these
private actors will be subsidized by grants from the World Bank and wealthy
governments, so that they can promise to serve the general population and be
guaranteed a profit.

 It appears more plausible now than ever to say that the Bank, after working
with the IMF to devastate governments through structural adjustment, is now
insisting that to get any further assistance, the government's last
responsibilities and assets must be turned over to private actors, often
foreign.  Does the Bank's private sector development strategy represent the
next phase in dispossessing citizens of poor countries?  Stay tuned . . . .

 "What Should We Do About The United States?"

-slogan emerging from Bali Preparatory conference for the World Summit on
Sustainable Development

The legacy of Seattle is a positive one, which people in the U.S. will
probably, at the next turn of the century, cite as a defining historical
moment (along with September 11, 2001).  But the determination of those
behind the corporate globalization agenda continues to challenge our
capacity to resist it.  We are doing well, but we will need to intensify our
own struggle and stand in solidarity with others in the months and years to
come.

It is particularly hard to be sanguine in the face of the most reactionary
regime to control Washington for many decades.  As the Bush regime prepares
itself for a war best explained by commercial motivations and old-fashioned
imperialism, it is also crafting new and more sinister ways of subverting
foreign aid, the United Nations, and the very notion of international
relations.  Opposing this government will be among the most important tasks
for U.S. global justice activists over the next two years.  Finding a
realistic alternative to the Democratic Party, and/or fighting for real
campaign finance reform will be necessary components of that struggle.
European governments, like the U.S. Democratic Party, must also be
encouraged to act with increased force and determination to resist the Bush
Administration's impulse to launch the planet into rapid ecological and
political chaos.

In the new world that we have come to face in the U.S. since September 11th
and in the Bush Administration's decision to aggressively pursue the secret
longings of the imperialist right wing, we find that the World Bank is being
used quite plainly to reward those countries that support U.S. goals.
Pakistan has won unprecedented levels of generosity in debt relief from the
Bank, and Turkey, facing a crisis similar to Argentina's, has been allowed
to take out loans far in excess of the quota a member country would normally
be limited to.  Cowed by the erratic support and condemnation from the U.S.
Treasury Department, the World Bank has apparently chosen to play to some of
Secretary Paul O'Neill's obsessions by emphasizing results and standards,
and is consciously avoiding controversy with opponents like ourselves.
Instead of confidently lecturing borrowing governments on their problems,
the Bank has tried to adopt the role of advocate for the Global South.  Its
main messages now focus on the need for wealthy governments to open their
markets to Southern exports, provide more development assistance, and
eliminate agricultural subsidies (the latter being a U.S. policy that).  Its
criticism, often explicit, of U.S. policy is tempered by the fact that O'
Neill is obviously uncomfortable with U.S. agricultural subsidies, and has
even publicly disagreed with the Bush steel tariffs.  The more open
disagreements on development policy between the U.S. and Europe have also
provided space for the Bank to fill this new role, one which conveniently
obscures the Bank's own role in creating the vulnerabilities and dependency
that magnify the impact of such polices.

There are nonetheless persistent rumors that World Bank President James
Wolfensohn, a Democrat appointed by President Clinton in 1995, will be asked
to step down by President Bush.  Rumored replacements include James Baker
and Paul O'Neill.  While this whole guessing game remains very uncertain,
and Wolfensohn should not be underestimated as a politician, it is clear
that the Baker/O'Neill threat strengthens the U.S. hand in insisting that
the Bank limit its involvement outside programs which offer tangible
advantages for U.S. business.

At the IMF, meanwhile, the arrogance which was once its hallmark has been
worn down by the series of crises it now faces in long-time client
countries.  Instead of advancing positive arguments on behalf of their
policies, IMF officials now spend more time acknowledging mistakes and
making vague promises of change.

For the second half of Bush's term, much will be determined by how much the
Administration focuses on using the international financial institutions to
advance U.S. interests, or how much success ideologues like Allan Meltzer,
now advising the Administration, can have in reducing the scope and size of
the institutions.  The 50 Years Is Enough Network does find points of
overlap between the critiques of the Congressional committee, known as the
Meltzer Commission, which eviscerated the institutions.  But while taking
some pleasure in seeing the institutions weakened, we also find ourselves
fearful that the power to control the economies of Southern and transition
countries will be increasingly turned over to the private sector and to U.S.
government ideologues, both less accountable and less concerned with
fairness than even the World Bank.

It's a complex world we face now.  Our guiding principle continues to be
acting in solidarity with the Global South to restore economic democracy.
We hope to see you on the barricades and in the church basements, community
meetings, and affinity group convergences where the education and
strategizing necessary to propel the Global Justice Movement forward happen.