I miss the anti-globalisation movement. Not because I want to smash capitalism, and not because I think two dark towers on the swampy banks of the Potomac are responsible for poverty, disease and the voice in the back of my head that keeps telling me to buy new Nikes — but because the most creative street protests since 1968 made it respectable to talk about the international financial system over dinner. It wasn’t always the most rigorous conversation, and Naomi Klein’s agit-pop essays in Canadian condescension got rather more airplay than, say, Joseph Stiglitz’s accessible economics, or Jeffrey Sachs’s paeans to sustainability. But here in Cape Town, on the fragile, iridescent edge of the property bubble, we have to take what we can get.
The series of International Monetary Fund (IMF) and World Bank meetings that begins in Washington on Friday — and culminates next week in the 60th anniversary beanfest of the Bretton Woods institutions — will not offer much street-level entertainment. But the barricades will still be there in case homeland security and general apathy haven’t sufficiently thinned the ranks of the disaffected — and behind them, elements of the protestor’s agenda may actually be debated.
Of course, the bad cops of the IMF are almost uniformly depressing on the prospects for institutional reform and a new policy approach. Speaking last week under the rubric, ”The IMF at 60: Evolving Role, Current Challenges”, the fund’s MD Rodrigo de Rato had this to say: ”Continued expansion in linkages among economies and financial systems [that’s globalisation to you] will provide … more efficient allocation of global savings, but will also continue to increase systemic risks, and risks related to spillovers.”
He went on to acknowledge the broader challenges of a global economic environment — in which emerging markets are starting to play a more important role — and called for ”continued” work in assisting poor countries to ”set the basis for sustained, rapid growth and poverty reduction”.
It is difficult to imagine a more anodyne assessment of the situation facing the fund. Despite a welter of research papers and colloquia, alternatives to the Washington consensus have failed to coalesce, and although De Rato is gritting his teeth through the restructuring of Argentinian debt, no one on his staff is effectively selling a new approach to the functioning of capital markets.
Against this backdrop, the failure of both the IMF and the World Bank to make meaningful changes in the level of representation accorded their clients in the developing world at board level stands out more starkly.
Minister of Finance Trevor Manuel, the chairperson of the IMF development committee, is regularly accused of failing to push hard enough for reform in Washington by critics who argue that he has allied himself too closely with the reform agenda of rich countries like Japan, and has failed to win even derisory concessions, such as the appointment of an ”eminent persons group” to advise the board on governance.
Patrick Bond of the Centre for Civil Society — ever the voice of reason — suggests that Manuel has simply bustled about trying to put new lustre on the chains of global economic apartheid, and bungled even that through poor strategic choices. This is just silly. Manuel is in no position to shame the fund and the bank into repairing their democracy deficit overnight — a successful economic reform process in a middle-income regional power doesn’t confer that kind of political capital. What he can do is work closely with sympathetic countries in the G8 and the G24 to extract as much immediate benefit as possible from multilateral institutions while pursuing a reform agenda.
To that end, his relationship with British Chancellor of the Exchequer Gordon Brown seems to be working fairly well. Brown has put his considerable clout behind a series of proposals to reform international development finance along lines that will strike a warm chord among the pointy-headed technocrats at the National Treasury.
On the sidelines of the United Nations General Assembly last week, as Brazilian President Luiz Inácio Lula da Silva set a flotilla of unlikely proposals adrift, South Africa allied itself with Brown’s more boring and more workable call for a single international financing facility to coordinate activity, cut costs and enable aid recipients to budget with something approaching certainty.
Brown’s more recent plan is to write off multilateral debt for the most miserably impoverished countries. Britain will start by chipping in its portion — about 10%, or $1,8-billion over 10 years. This proposal will get considerable support at next week’s meeting — and the United States, which opposes both ideas, will look both mean and isolated.
These are baby steps, to be sure, and it would be nice if Manuel put down his vuvuzela, picked up a shofar and brought the walls tumbling down. In the absence of such a revelation, we are going to have to settle for diplomacy — and if that amounts to polishing the chains, pass me the Brasso.