Contents
 

The Institutions

The Events

The Issues

    Current Debate about Debt Relief

    Bank Policy on Disclosure of Information

    A New Fund for Communicable Diseases

The International Financial Institutions and Globalization

List of the main events at the 2001 Spring Meetings.

 
Links to Further Information
 

For a similar article on The Fall Meetings of the IMF and the World Bank, November 2001,   click here.

List of Official Websites on the IMF and the World Bank

List of NGO Websites

List of the Bretton Woods institutions.

List of Other Important Organisations in the Politics of International Finance

To see a longer article, for the UNESCO Encyclopaedia of Life Sciences, on the IMF as an intergovernmental institution,   click here.
 

A shorter version of this article was published in the Social Development Review, Volume 5, Number 2, June 2001, pp. 25-26. The review is published by the International Council on Social Welfare.

Please note there were two copy-editing mistakes in the published version.
   The IMF has a Managing Director and not a President.
   The Bretton Woods Project is an independent NGO and is not connected either to the Fund or to the Bank.

The Spring Meetings of the IMF and the World Bank, April 2001
By Peter Willetts, Professor of Global Politics, City University, London

The Institutions

The International Monetary Fund and the World Bank were founded at Bretton Woods in 1944 and officially they were to be two distinct autonomous institutions. Since then, the World Bank by itself has expanded into a set of related organisations. Legally, their constitutions, memberships, budgets and staff are separate and they operate within different headquarters buildings. The Bank was designed to deal with micro-economics -- to invest in specific projects that could be identified as bricks and mortar in a particular place. The Fund was designed to deal with the remote abstract questions of macro-economics -- the overall policy of a government in running its economy and its financial relations with other governments. Their difference is personified in James Wolfensohn, the President of the World Bank, who comes across as a warm, political leader, and Horst Köhler, who appears to be a dry, apolitical technocrat.

For a full list of the Bretton Woods institutions,   -   click here.

Politically, the two are much closer to each other than any other pair of global institutions. Their major policy meetings occur at the same time, in the same place. Ministers meet twice a year in the International Monetary and Financial Committee, which "advises" the Fund, and the Development Committee, which "advises" the Fund and the Bank. Although the two committees have no legal decision-making powers, their political weight makes them the focus for new policy initiatives. The two are composed in a similar manner, but are not identical, in terms of countries. Each has 24 members, with half from the richer developed countries and half from the developing countries. There is some difference in the people who attend. The members of the IMFC are all finance ministers. The Development Committee has virtually the same composition. In 2001, eleven countries sent the same person, seven country groups sent a different finance ministers and four sent the central bank governor or a similar minister: only Germany and the UK replaced their finance minister by their development minister. The major difference was the attendance of 25 major leaders of intergovernmental organisations at the Development Committee: there were fourteen heads of regional development banks or funds, five top officials from regional organisations and the heads of the UN, ILO, FAO, IFAD, UNCTAD, UNDP and the WTO. Fewer IGOs, with lower status representatives were at the IMFC. (The UN, ILO, UNCTAD, OECD, EU and the WTO were at the IMFC, while FSF, ECB and BIS were at the IMFC, but not the DC.)

The responsibilities of the two institutions have also over-lapped substantially since the 1980s. The Bank moved from project into programme lending, for whole sectors such as communications, education or health. This made it much more concerned with the overall budget. At the same time, the Fund extended deeper into the details of financial policy-making and hence the budgets for departmental programmes. Both adopted policies of structural adjustment.

The Fund and the Bank are officially United Nations specialised agencies, but they have been detached from the rest of the UN system, in comparison to the other specialised agencies. Until the late 1990s, they were totally secretive. Gradually more and more policy papers have been made available to the press and on the official web sites, but there are still substantial problems about papers on individual countries. Starting in April 2000, all the working papers for the Development Committee meetings have been put on the Bank's website, but the staff are still under pressure from some developing country governments not to do this. There is no hint - yet - of any form of public access to the meetings themselves, not even through closed circuit television. Thus, the main political communication of the ministers with the public is indirect, through press conferences. The great majority of the journalists are solely interested in their own country's economy or the general state of the global economy. Only a small number from the specialist financial press pay any attention to the institutions or to development questions. Given the lack of public access, it is not surprising there is no form of consultative status for NGOs. However, there is one loophole. Those NGOs that have a regular publication can obtain press accreditation.

The NGOs operate in a variety of different ways. They prepare special reports on development issues and are allowed to make them available in the press centre. They provide special briefing meetings in buildings near to the headquarters buildings and they lobby individual journalists. Their questions at the press conferences serve to put mild pressure on ministers and the top staff and also alert the journalists to wider issues. Before and during the meetings, a variety of events enable the NGOs to network among themselves. It is particularly important that some of the richer American NGOs are able to fund attendance from Southern NGOs. This enables the Southern NGOs to learn more about the Fund and the Bank, while Northern NGOs learn more about the grass-roots impact of the Washington institutions.

The Events

As in previous years, there were officially only two days for the two main meetings. The International Monetary and Financial Committee met on Sunday 29 April and the Development Committee met the next day. For the third year running, there was also a brief joint meeting of the two committees. In practice, a wide variety of events occurred over the preceding week. Initially, the large US NGOs that have enough resources to have an office in the centre of Washington hosted a variety of NGO conferences, press briefings and meetings with Bank or Fund staff. On the Friday, Wolfensohn and Köhler set the scene for the press, by each holding a press conference. On the Saturday, the two major governmental caucuses held their meetings.

See below for a list of the main events at the 2001 Spring Meetings.

The developing countries met as the Group of 24. The Western industrialised countries met as the Group of 7, followed by the G10 on the next day. Afterwards the G24 held a single press conference, under the Nigerians, as the 2001 chair of the G77, with representatives from the other two regions, but the G7 was not so united. Competing press conferences were held at the same time by the US Treasury Secretary, Paul O'Neill, and by the President of the European Central Bank, Wim Duisenberg, with the Eurogroup Chairman, Didier Reynders.

Two Major Reports

On the Thursday, the IMF's Research Director, Michael Mussa, presented the latest edition of the biannual World Economic Outlook. With the US and Japan offering minimal growth, its author, Michael Mussa, caused controversy by calling on the European Central Bank to reduce interest rates: "The Euro area needs to become part of the solution rather than part of the problem". When challenged on the role he was taking, Mussa said "In the IMF, we do not call it interference. We call it surveillance." This seemingly technical argument was important for developing countries, because the ultra-conservative policies of the ECB and the general global slowdown were predicted to reduce African export earnings from their commodities. Nevertheless, China, India, Latin America and some African countries remained the best hopes for economic growth.

On the Sunday, the fifth edition of the annual World Development Indicators was launched by the World Bank's Chief Economist, Nick Stern. Both this report and maps showing changes since 1990 in the indicators for the International Development Targets are available on World Bank websites. This must be visited by any readers who need development data for reports, advocacy or teaching.

Unfortunately, one of the most dramatic findings was presented at the press conference, but is not in the report. When reductions in child mortality rates (the proportion of children who fail to live to their fifth birthday) are plotted against the strength of the economy (the gross national income per person), the graph shows no relationship between the two variables. Only 3% of the variation in the improvements in child deaths is explained by the countries' relative wealth. In other words, the suffering of the poor will not be solved by economic growth alone. The political commitment to social equity - even in the poorest countries - is of overwhelming importance in reducing child deaths.

To see the graph click here

When challenged on how the World Bank could endorse the provision of safe water as one of the indicators of progress, while at the same time promoting water privatisation, Stern acknowledged the importance of water, but more as an environmental question than as an equity, gender and health question. He denied the Bank had any blanket policy of privatisation:

"We do actually try to work with local communities to see the most effective way of providing water. Sometimes the cheapest way of providing water will be with private sector involvement, other times not. It depends on the local circumstances. But the key criterion that we present ourselves is what's good for fighting poverty."

NGOs must use these arguments to fight against user charges for water. Charges may be necessary to prevent waste by industry and agriculture, but charging the poor for access to water for household use is obscene. Apart from issues of social justice, it is also bad economics. Denial of clean water increases infant deaths and hence increases the birth rate.

The Issues

The news media were mainly concerned with interpretation of the latest data on the US economy and prospects for global growth. In particular, there was much attention given to the financial crises in Turkey and Argentina. Most governments and NGOs were more concerned with other long-term issues about the role of the Bank and the Fund in global politics.

Current Debate about Debt Relief

Since the Bank and the Fund first launched the Heavily Indebted Poor Countries Initiative in September 1996, the NGOs have been critical of the slow speed of the process and the limited amount of relief that has been offered. Their pressure and their arguments helped to produced an Enhanced Initiative in September 1999. The debt relief became deeper, faster and applicable to more countries, but the NGOs continued to campaign for complete debt cancellation. After nearly five years, there were still only 22 of the 41 countries expected to benefit that had reached the decision point (when eligibility for debt relief is agreed) and only Uganda had passed the completion point (when the bulk of the debt is cancelled). At the Spring Meetings, Wolfensohn argued that the Bank could not continue operating if all its debts were cancelled. Nevertheless, great emphasis was laid on the ability to offer more relief if a country's position deteriorated between its decision point and its completion point. The IMF also announced it was seeking funding for a new emergency post-conflict facility to provide subsidised assistance to countries affected by conflict, eleven of which were African countries in the HIPC list. The greatest progress lay in the number of donor countries that had agreed to complete cancellation of their bilateral official debt.

Bank Policy on Disclosure of Information

The Poverty Reduction Strategy Papers, launched in 1999, had two new features. They were to be "country-owned" and to be produced in conjunction with civil society in each country. The major NGOs had all welcomed this as a positive new approach in principle. They soon became disillusioned because some of the consultations with civil society were badly organised and some appeared to be more a public relations exercise than a genuine contribution to policy-making. The NGOs tend to be impatient with the slow speed of change and intolerant of bureaucratic failings. However, one important point came to be made with increasing force. No consultation exercise could be meaningful if local NGOs did not have access to the policy documents. The Bank recognised it had to review and update its policy on information disclosure, but initially tried to keep the drafts of the new policy secret. Then a revised draft became more restrictive than the relatively open approach in the first draft. For the Spring Meetings, several NGOs made disclosure their priority. The Bank Information Center delivered a letter signed by more than 500 organisations from over 100 countries. At his first press conference, Wolfensohn had to respond to several questions on this subject. He argued that five years ago no documents were released and now 85% were. The constraint was opposition from member governments. He was not prepared to demand from his shareholders things they did not want to do, but the goal was "total transparency". Dialogue should be "on the basis of information. Otherwise you cannot have a dialogue." While Wolfensohn's strong personal commitment was expressed convincingly, he was overstating what had already been achieved. It is a measure of how far Bank has to go that it still releases less than the Fund.

A New Fund for Communicable Diseases

In recent years the World Bank has devoted increasing attention to the fight against communicable diseases, first of all AIDS and tuberculosis and then malaria. It has lent on average $270 million annually and is planning to increase this to $900 million in 2001. Finance is going both to projects in individual countries and to support research on drugs and vaccines. Several factors had come together to make this a priority issue at Bank-Fund meetings since 1999. Kofi Annan had been taking a lead at the UN; the G8 had responded to an initiative by the Italians and the British at the Cologne Summit, and they convened an International Conference on Infectious Diseases at Okinawa in December 2000; the increased emphasis on poverty reduction led directly to a greater priority for public health; and the recent court case in South Africa had heightened the possibilities of cheaper drugs in developing countries. While the IMFC endorsed "the need for global action on health" for the first time in 2001, the Development Committee had already taken up question of AIDS in the previous year. The concern was carried forward this year with the idea of a new multilateral trust fund for the three main diseases. The clear hope expressed to the press by Wolfensohn was to gain commitments to a multi-billion dollar fund administered by the Bank, in time for its announcement and endorsement at the UN General Assembly Special Session on AIDS in June 2001.

References on the Origins of the Fund

• General Assembly resolutions 54/283 of 5 September 2000, 55/13 of 3 November 2000 and 55/242 of 27 February 2001.
• The African Consensus and Plan of Action adopted by the African Development Forum, Addis Ababa, 3-7 December 2000 in UN document A/55/774.
• Chair's Summary of the International Conference on Infectious Diseases, Okinawa, 7-8 December 2000 in UN document A/55/705.
• Kofi Annan's report, A/55/779 of 16 February 2001, in preparation for the UN General Assembly Special Session on AIDS.

The International Financial Institutions and Globalization

The most striking aspect of the Spring Meetings is that three separate processes are taking place, with relatively little engagement between them. The finance and development ministers are operating in a high-level, future oriented, global, policy-making system. The press are concerned with current, short-term, country-level prospects of the larger economies. The NGOs are networking among themselves and monitoring political change, with a focus on the impact on local communities in developing countries. Of the three, the NGOs are the most concerned to establish linkages, by trying to obtain some press coverage for their views and some access to the ministers. Generally speaking only the specialist financial press covers development questions and the NGOs are ignored by most of the journalists. Security is so tight that NGOs have no possibility of making opportunistic contact with ministers or government officials, as they do at the UN. Apart from those that can make direct personal contacts, the main opportunity NGOs to exercise pressure is by raising questions at press conferences.

At the same time as the Spring Meetings were taking place in Washington, the third session of the Preparatory Committee for the Financing for Development "high-level event", due in early 2002 in Mexico, was getting under way in New York. The two events had little impact upon each other. Apart from a Quaker pamphlet left among the NGO papers, FFD was not mentioned publicly in Washington. Similarly, in New York, a general concern about the impact of the Fund and the Bank did not translate into any concern with what had happened at the Spring Meetings. However, the Bureau of the FFD PrepCom did report that the Executive Boards of both the Bank and the Fund were engaged in dialogue about their participation at the Mexico event. In contrast, the WTO Committee on Trade and Development was too divided to finalise any position on FFD.

The sole clear connection between the Spring Meetings and the United Nations was an Economic and Social Council meeting convened immediately afterwards to receive reports from the key leaders of the Washington institutions. This meeting addressed development financing, the creation of a development-friendly international financial system, and public and private responsibility in the prevention of financial crises.

There is widespread awareness among NGOs that the policy language at the Fund and the Bank has changed, but it is generally assumed that the IFIs remain tools of a supposedly-coherent entity, called global capitalism. Thus, NGOs quite often express fear of "co-option of the poverty discourse" by the Bank. NGOs have a professional bias against optimism, so nobody dares suggest in public that the change in language represents a real change in policy. The key figure is Wolfensohn, as President of the Bank. He must either be regarded as an accomplished actor or a sincere advocate of progressive change. Whether one observes the care with which he biased his press conference towards questions from women or the simple manner in which he went out in the dark to a police barricade, in order to address Indian demonstrators against the Narmada dams, it is difficult to believe Wolfensohn is duplicitous.

For this independent observer, there is little doubt that the key European ministers and the top international officials are genuinely concerned with the interrelationship between economic, environmental and social policy. This is more evident for development ministers and Bank staff than it is for finance ministers and Fund staff. However, in both institutions, policy and practice is currently subject to review and change of great breadth and depth. There has been nothing comparable in the past, except at the two moments of significant historical change: the ending of the dollar standard in 1971-73 and the eruption of the debt crisis in the early 1980s. The problem is whether the policy change at the top can be translated into change within all the departments and the field missions of each institution. Will real policy reduction strategies be implemented?

The IMF is terrified of the possibility of a financial crisis in one country generating a threat to the whole global financial system, followed by widespread economic collapse and political upheaval. Those concerned with social development are similarly scared of the impact of global markets upon the poor and are angry about collusion between transnational corporations and exploitative élites. The two sides can be allies rather than enemies, because the Fund, the Bank and the NGOs all now want transparency in the economic system, an end to corruption, the rule of law and democratic government. Although the Fund has not adopted a poverty agenda for as long a time nor in such depth as the Bank, their desire for financial stability does mean their governance agenda is genuine.

NGOs should seize this opportunity and engage fully with the civil society consultations that are a required process in the production of the Poverty Reduction Strategy Papers. To remain distant is to hand victory to the forces of inertia. Instead of being afraid of co-option into the Washington Consensus, NGOs should co-opt the Washington institutions into their people-centred, anti-poverty consensus.

Copyright Peter Willetts, 2001.
The text of this website is subject to Copyleft - it may be freely used for any non-commercial purpose provided that the author and the website address are cited.
 

The Main Events at the Spring Meetings 2001

Thursday 26 April

• Michael Mussa, IMF Research Director, launches World Economic Outlook.

Friday 27 April

• Drop the Debt and Oxfam International "Pre-Wolfensohn Press Conference".

• Press conference with James Wolfensohn, World Bank President.

• Press conference with Horst Köhler, IMF Managing Director.

• Bono of U2, telephone press conference calling for 80% debt cancellation.

• Press briefing by World Bank Vice-President for Latin America and the Caribbean.

Saturday 28 April

• Press conference with five African finance ministers.

• Meeting of the Group of 24 – followed by a press conference.

• Meeting of the Group of 7 – followed by separate press conferences with Wim Duisenberg, President of the European Central Bank, and Paul O'Neill, the US Treasury Secretary.

Sunday 29 April

• Meeting of the Group of 10, but no press conference.

• Nick Stern, World Bank Chief Economist, launches the World Development Indicators.

• Meeting of the International Monetary and Financial Committee – followed by a press conference with Gordon Brown, the IMFC Chairman and Horst Köhler, IMF Managing Director.

• Joint Meeting of the IMFC and the Development Committee – followed by a press conference with Gordon Brown, the IMFC Chairman, Yashwant Sinha, Development Committee Chairman, and Horst Köhler, IMF Managing Director.

• Anti-globalisation demonstration outside the headquarters buildings of the Bank and the Fund.

Monday 30 April

• Lennart Båge, President of the International Fund for Agricultural Development launches the Rural Poverty Report.

• Meeting of the Development Committee – followed by a press conference with the Chairman, Yashwant Sinha, and James Wolfensohn, World Bank, President.
   

Copyright Peter Willetts, 2001.
The text of this website is subject to Copyleft - it may be freely used for any non-commercial purpose provided that the author and the website address are cited.