Sunday, July 30, 2006

Singapore, Unused to Protests, Girds for World Bank Meetings

Trichet prays for a successful meeting this Sept
July 28 (Bloomberg) -- Singapore police last week clashed with about 30 Molotov cocktail-wielding demonstrators, dispersing the crowd with a water cannon and a charge by baton-wielding officers clad in body armor.

U.K.-based ‘‘security experts'' and local police officers played the role of rioters in the battle, a dress rehearsal for International Monetary Fund and World Bank meetings here in September which are expected to attract protests from anti- globalization and other groups.

The meetings, to be attended by European Central Bank President Jean-Claude Trichet and more than 16,000 other officials, will be a key test for Singapore police, who are scheduled to announce their public order policy today. After race riots in the 1960s, the government imposed curbs on public assembly, and large-scale protests are almost unknown in the city-state.

‘‘The Singapore government has activated very considerable resources to deal with this event,'' said Steven Vickers, chief executive of Hong Kong-based International Risk Ltd. Groups ranging from South Korean farmers to Taiwan rice growers are expected to protest at the meetings, Vickers said.

At the World Trade Organization meeting in Hong Kong in December, police used tear gas and batons in clashes with demonstrators and arrested more than 1,000 people. At the 2000 IMF meetings in Prague, 600 people were hurt when protesters pulled cobblestones from the streets and flung them at police.

‘‘Our level of force will be proportionate to the level of violence,'' Soh Wai Wah, chief-of-staff at the Singapore Police Force, said after the mock battle on July 19.


For Singapore, the Sept. 12-20 meetings are an opportunity to showcase itself as a financial center and base for doing business in Asia.

The city is ranked second, after Hong Kong, in terms of economic freedom by the Heritage Foundation, and was named the best place in the world for Asians to live in a survey released April by human resource consultancy ECA International.

‘‘People here believe Singapore is safe,'' said Bruce Gale, an independent consultant to businesses in the region on political risk, in an interview in the city on June 23. ‘‘Foreign businesses, large numbers of them, have their regional headquarters in Singapore. This is what they intend to protect and I think they're doing a pretty good job of it.''

Fine Balance

Still, Singapore is known as a ‘‘fine city'' where instant penalties are meted out for misdemeanors ranging from spitting to littering. Amnesty International says the government curbs freedom of expression. In a 2005 report on human rights in the city, the U.S. Department of State cited ‘‘restriction of freedom of assembly and freedom of association'' as a problem.

‘‘Singapore has our own sets of laws, and we appeal to everyone to respect them,'' Soh said. ‘‘If these laws are broken, we will have to enforce them firmly, but also fairly and reasonably.''

Under Singapore law, any public protest of more than four people without a police permit is deemed illegal and permission must be sought before public assemblies and speeches are held. The government says the rules help maintain harmony in the city, where 36 people were killed in 1964 riots between the Chinese and Malay communities.

Peaceful Protests

The IMF and World Bank meetings are being held at Suntec Singapore International Convention & Exhibition Centre, in the center of the city. Civic groups are hoping that local authorities will allow peaceful protests to be staged near the meeting venue.

‘‘Our position is that any group should be able to participate without being excluded from decisions based on the whims and fancies of the IMF or the World Bank,'' said Ruki Fernando, a spokesman for the Asian Forum for Human Rights and Development, a Bangkok-based human rights advocacy group.

‘‘Decisions and policies drafted at this particular meeting are going to affect millions of people in over 200 countries, and those people have the right to be heard,'' he said.

Singapore police have been studying the way other countries handle protests, Soh said, adding that the city deployed riot police during general elections in 2001.

‘‘Our officers do have some experience, and definitely adequate training, to deal with various contingencies we can foresee in the coming event,'' Soh said. Police and immigration authorities will also prevent groups or individuals who could pose a security threat from entering Singapore, he said.

The July 19 rehearsal included anti-riot vehicles and a helicopter, with the ‘‘rioters'' hurling bottles and a real Molotov cocktail.

The meeting will be the largest international gathering ever held in Singapore. Some S$110 million ($69 million) of business for local companies and S$50 million of tourism may be generated during the event, the government said.

‘‘We are trying all means to hope to have a peaceful event, but if disorder should indeed break out, we will be ready,'' said police spokesman Tan Puay Kern.


It is no secret that the DOHA round of negotiations has failed. Singapore, the host of this Fall’s Annual Meeting of the World Bank and International Monetary Fund completey understands the importance of the forthcoming meeting. Expectedly. civil societies would be protesting the event at the host country to further cripple the grasp that these financial monsters have a hold of.

For activists who were at Hong Kong last December for the Ministerial Conference, this September meeting would proof crucial to repeat the victorious “No Deal” achieved last year.

Where Singapore has conveniently stated that street protests are already outlawed in their constitution, the country still procured offensive machinery to fend off would be protestors. This is an obvious flex of muscle. This labels the country as being hostile to protestors.

It is apparent that the financial monsters are at their Achilles heel. Together, we can hit them again, this September, the way we did in Hong Kong except that this time, the victory would taste so sweet.

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Thursday, July 27, 2006

IMF: Shrink It or Sink It

The International Monetary Fund is perhaps at its most vulnerable state in years. It is suffering a triple crisis--a crisis of legitimacy, a budget crisis, and a role crisis--that is unparalleled in its 62 years of existence. These circumstances provide critics of the Fund with an opportunity to radically shrink, disempower, if not decommission it altogether. If not seized, this opportunity can slip by, and circumstances might come together to reinvigorate and save the Fund.

Ten years ago, the Fund was flying high, arrogant in its belief that it knew what was best for developing countries. Today, the Fund is an institution under siege, hiding behind its four walls in Washington, DC, unable to mount an effective response to its growing numbers of critics.

Crisis of Legitimacy

The Fund's reversal of fortune stems mainly from the Asian financial crisis, which brought down the famed tiger economies in the summer and fall of 1997. The Asian crisis was the "Stalingrad" of the IMF, and it never really recovered from it. As Dennis de Tray, a former IMF official who was serving with the World Bank in Jakarta at the time of the crisis, put it, "Fund lost its legitimacy then, and it never recovered it."

The Fund suffered three devastating hits during the crisis. First, it was seen as being responsible for the policy of eliminating capital controls that many of the governments of East Asia followed in the years preceding the crisis. This policy of capital account liberalization did attract billions of dollars of speculative capital in the years from 1993 to 1997, but it also ensured that there would be no barriers to the outflow of capital during the panic in the summer of 1997, when about $100 billion left the economies of Indonesia, Philippines, Thailand, Malaysia, and South Korea in a few short weeks.

The second hit was the widespread perception that the multibillion rescue packages assembled by the IMF for the afflicted countries did not actually go to rescuing the economies but to pay off foreign creditors and speculative investors. Citibank, for instance, though heavily overexposed in Asia, did not lose a cent in the crisis. This scandalous development led to strong criticism of the IMF, even from free-market partisans such as George Shultz, former Secretary of State under Richard Nixon, who said that the Fund was encouraging "moral hazard" and should therefore be abolished.

The third blow to the Fund sprang from the results of the stabilization programs it pushed on the crisis economies. With their wrongheaded emphasis on cutting back on government spending in order to fight inflation, these programs actually accelerated the descent of these economies into recession.

The Asian financial debacle gave impetus to an ongoing review of the structural adjustment programs that the Fund, along with the World Bank, had imposed on over 90 developing and transition economies since 1980. Few of these had succeeded in bringing about the growth, reduction in inequality, and decrease in poverty that the countries undertaking these programs had been promised. Indeed, IMF "shock therapy" programs in Russia and Eastern Europe added millions of people to the poverty rolls in the 1990s. So dismal were the results that the Fund's extended structural adjustment program had to be renamed the "poverty reduction and growth facility."

Then, in 2002, with the Fund still reeling from the Asian financial crisis, Argentina collapsed, defaulting on $100 billion of its $140 billion foreign debt. Perhaps more than any other country in the world, Argentina had followed to a "t" the neoliberal prescriptions of the IMF, including radical deregulation, radical tariff liberalization, and financial liberalization. The Fund was also the strongest supporter of Argentina's currency board, which tied the supply of pesos, Argentina's currency, to the dollars in circulation in the country. When this mix of policies unraveled in 2001 and 2002, so did the IMF's credibility since it had thrown in billions of dollars in stabilization loans in support of them.

The aftermath of the crisis was even more damaging. When Nestor Kirchner was elected president of Argentina in 2003, he declared that his government would repay its debt to private creditors, but only at 25 cents to the dollar. Enraged creditors told the IMF to discipline Kirchner, but, with its reputation in tatters and its leverage eroded, the Fund backed off from confronting the Argentine president, who got away with the radical write-down of Argentina's debt to the international private sector.

With another set of actors - developing country governments - Argentina's next move, along with Brazil, shattered the Fund's image of being an indispensable lender of last resort: Both governments paid off their all their debts to the Fund, enabling them to declare independence from an institution that is much hated in Latin America.

Budget Crisis

The crisis of legitimacy has had financial consequences. In 2003, the Thai government declared it had paid off most of its debt from the IMF and said it would soon be financially independent of the organization. Indonesia ended its loan agreement with the Fund in 2003 and recently announced its intention to repay its multibillion dollar debt in two years. A number of other big borrowers in Asia, mindful of the devastating consequences of IMF-imposed policies, have refrained from new borrowings from the Fund. These include the Philippines, India, and China. Now, this trend has been reinforced by the recent moves of Brazil and Argentina, which, in paying off all their debts and declaring financial sovereignty, have implicitly asserted that they do not want to borrow again.

What is, in effect, a boycott on the part of its biggest borrowers is translating into a budget crisis since over the last two decades the IMF's operations have been increasingly funded from loan repayments by its developing country clients rather than from the contributions of wealthy Northern governments, which deliberately shifted the burden of sustaining the institution to the borrowers. The upshot of these developments is that payments of charges and interests, according to Fund projections, will be cut by more than half, from $3.19 billion in 2005 to $1.39 billion, in 2006 and again by half, to $635 million in 2009, creating what Ngaire Woods, an Oxford University specialist on the Fund, described as "a huge squeeze on the budget of the organization."

Role Crisis

The erosion of the Fund's role as a disciplinarian of debt-ridden countries and an enforcer of structural adjustment has been accompanied by a futile search to find a new role.

An attempt by the Group of Seven to make the Fund a central piece of a new "global financial architecture" by putting it in charge of a "contingency credit line" to which countries about to enter a financial crisis would have access if they fulfilled IMF-approved macroeconomic conditions fizzled out when it was pointed out that the spectacle of a government seeking access to the credit line could itself trigger the financial panic that the government sought to avert.

A proposal to set up an IMF-managed "Sovereign Debt Restructuring Mechanism"-an international version of a Chapter 11 bankruptcy mechanism that would provide countries protection from creditors while they came out with a restructuring plan-collapsed owing to objections from South countries that it was too weak and opposition from the US, which feared it would curtail US banks' freedom of operations.

At the recent 2006 spring meeting of the IMF, the Fund was tasked to monitor relations among countries associated with global macroeconomic imbalances-that is massive trade surpluses or trade deficits-but the mandate was extremely vague. If anything, this reflected the desperation of the G 8 countries in searching for a role for an international economic bureaucracy that had become obsolete and irrelevant.

Why We Must Act Now

The current moment, when the IMF is most vulnerable owing to its triple crisis, is the most opportune time to launch a campaign to disempower it-to "shrink," if not decommission it.

Three factors are present which could work in favor of success in this campaign.

First, as noted above, the Fund's major developing country clients are fed up and with it and want out.

Second, the US elite is, more than ever, divided on the Fund, with a significant number of conservatives wanting to shut it down. The last time the Fund's financial resources came up for replenishment at the US Congress in 1998, the measure barely squeaked through. It is doubtful that a replenishment measure would pass today.

Third, the US and key European countries have had major differences in their policies towards the IMF. Key European governments, for instance, wanted to use the IMF to get Argentina to pay off the mainly European bondholders. The Bush administration, on the other hand, was cool to the idea, anxious to prevent Fund resources from bailing out European speculators. In another recent expression of divergence, the European governments were positive towards setting up the IMF-managed Sovereign Debt Restructuring Mechanism; the US torpedoed it.

In short, the three pillars on which the Fund stood for over sixty years-a belief in its indispensability on the part of developing countries, an "internationalist consensus" among the US elite, and the "transatlantic consensus" among the European and US elites-have been eroded significantly, opening up real possibilities for a global civil society campaign to disempower or decommission the Fund.

An Indispensable Lender of Last Resort?

While an increasing number of individuals and groups working on the IMF agree on its increasing dysfunctionality, there are some that are hesitant to call for putting it out of business owing to their feeling that there is still a need for a "lender of last resort" for developing countries.

This is no longer a viable role for the IMF.

For many Asian countries, a regional institution, which understands the complexities of a region better than the Fund and which would thus be less indiscriminate in imposing conditionalities, is the answer. The Asian Monetary Fund (AMF) that was vetoed by Washington and the IMF during the Asian financial crisis would have filled this role. Indeed, with the "ASEAN Plus Three" arrangement, the East Asian countries may now be moving in the direction of setting up such a regional financial grouping.

There is also movement in Latin America towards a regional institution that would have as one of its functions serving as a source of capital and as a lender of last resort: the Bolivarian Alternative for the Americas (ALBA), pushed by Venezuela, Bolivia, and Cuba.

But, one objection goes: East Asia and Latin America have significant capital resources to serve as a pool for a regional lender of last resort. But what about capital-poor Africa? This is the concern that has made many African governments reluctant to distance themselves from the Fund.

First of all, the principal need in Subsaharan Africa, as for most countries of the South, is genuine debt cancellation without external conditionalities, not the bogus HIPC ("highly indebted poor country") laced with IMF -style conditionalities. This would include the African countries' debt to the IMF, which the Fund has stubbornly opposed, though it grudgingly agreed recently to cancel the debt owed to it by 19 HIPC countries. As for the issue of who would serve as lender of last resort for Africa, this is important, but the IMF's awful record of bad advice and bad policies in this area hardly qualifies it to continue to serve this role. As one specialist has noted, not only is Africa becoming the refuge of policies that have failed elsewhere, but they are being implemented by Fund staff that are either less experienced or of lower caliber.

Instead of relying on the IMF, African governments could possibly draw on the cooperation of relatively capital-rich developing countries such as China, Venezuela, India, and South Africa to set up a regional institution that would serve as a lender of last resort However, learning from their experience with the North and the IMF, they should insist on equitable, no-strings-attached arrangements with these governments, which will not be easy, since some of them are just as exploitative as Northern interests.

But Africans have no choice but to gain control of the resources of their rich continent - through debt cancellation or repudiation, or through alliances with potential sympathetic allies in Venezuela and others who have already cut their ties to the Fund - and mobilize these resources for development instead of allowing them to hemorrhage out of Africa in the form of massive debt repayments to the big creditors, the World Bank, and the IMF.

The Consequences of Letting the Moment Slip by

The IMF is currently down and out, but its capacity to bounce back must not be underestimated. As yet unforeseen circumstances may push the US and the European countries to reconstitute a united front to revive the agency. Or the US may keep it on life-support to serve as de facto arm of Washington's unilateral policies, for instance, to discipline China into revaluing the renminbi to solve the US's balance of trade problem.

In other words, we do not have the luxury of being able to stand by and enjoy the sight of the Fund writhing in agony. We must assist in delivering it to the fate it richly deserves.

Campaign Demands and Activities

To achieve the strategic goal of disempowering the IMF, the Campaign should urge South country governments not to enter into new loan agreements with the Fund.

The Campaign should also urge governments to unilaterally repudiate debts claimed by the Fund.

We should ask countries on bogus or ineffective debt-relief schemes like HIPC, which are supervised by the IMF and the World Bank, to leave these programs altogether.

Similarly, the Campaign should ask governments on Poverty Reduction Strategy Programs (PRSPs) to dispense with the advisory and management services of the Fund and Bank and review the commitments they have made under these programs, if not abandon them unilaterally. Systematic exposure of the negative impact of Fund and Bank conditionalities on production, jobs, wages, income, gender equality, public health, public services, and the environment will be a critical task. The IMF's Poverty Reduction and Growth Facility seems especially vulnerable at this point, and a focused campaign to shut it down stands a chance of success, which could then build momentum for other initiatives.

Congressional or parliamentary oversight and budgetary provisions and practices should be used to call hearings and conduct audits on the IMF in the US, Europe, Japan, and South countries. Withdrawal of membership from the IMF might be an issue that can be floated to attract both official and civil society interest. Holding a forum on this issue in a lead country, for instance, Argentina, could trigger similar fora in other countries. This could be coupled with the holding of civil society referenda on continued membership in the IMF, such as the exemplary one conducted on Brazil's membership in the Free Trade of the Americas in 2002. Indeed, where the possibility of victory is present, we can push for parliaments to take a vote on whether or not to withdraw from the IMF.

A major conference on alternatives to the IMF on the issue of lender of last resort should be organized for 2007, with comprehensive research work undertaken this year in preparation for this event. As a curtain raiser for this conference, the Campaign will sponsor a day-long seminar on alternatives to the Fund in Singapore during the fall meeting of the IMF-World Bank in September of this year.

A central operational principle of the campaign is to provide different participating organizations with the opportunity to join the campaign at their "comfort level." Some governments and organizations, for instance, may not yet be prepared to endorse a call to withdraw from the IMF but may be willing to withdraw from a PRSP or call for the shutting down of the PRGF.

The Challenge before Us

In his classic work, The Structure of Scientific Revolutions, Thomas Kuhn showed how paradigms evolve from frameworks that trigger a quantum leap in knowledge to hindrances to further advance in science. Similarly, the IMF transmogrified from a vital institution contributing to global growth and stability in the two decades following the Second World War to an 800-pound gorilla blocking the route to sustainable development for the billions of the world's poor in the last three decades. Had this obsolete institution been terminated during its 50th year in 1994,

  • - 22 million Indonesians and one million Thais would have been saved from falling under the poverty line owing to the capital account liberalization policies it had imposed on the East Asian countries;
  • - Argentina, the poster boy of IMF-style neoliberalism, would have been saved from the tragedy of having over half of its people unemployed and living in poverty;
  • - Thousands of people in Malawi would have been saved from the starvation and malnutrition that stemmed from the IMF's forcing Malawi to "commercialize" its food procurement and stabilization agency, a move that led to its bankruptcy.
  • - 100 million people in Russia and Eastern Europe would not have had a free fall into poverty courtesy of IMF shock therapy programs.

Global economic governance is important, but it is a system in which the Fund as it is currently configured no longer has any positive role to play. The Fund's assuming stabilizing functions in a volatile world of unregulated global finance has been consistently torpedoed by its strongest member, the United States, while its serving as a lender of last resort has been systematically undermined by the conditionalities it imposes on its borrowers, which have exacerbated poverty and inequality and institutionalized economic stagnation.

Disempowering the Fund will not lead to global financial and fiscal chaos, as Wall Street would have us believe. On the contrary, disempowering the Fund is a conditio sine qua non for the creation of a truly just, rational and effective system of global financial governance. IMF conditionalities doom developing countries to crises and deeper poverty. IMF "rescue" programs do nothing except rescue the big creditors while saddling people with recessionary stabilization programs. The IMF, indeed, has no interest in curbing the power of the global speculators, and so long as it remains in a position of power, blocking genuine global financial reform at the behest of Wall Street, there will be more financial crises, more insecurity for people, and less accountability on the part of finance capital.

Like old nuclear reactors, the IMF is dangerous and, many argue, must be retired. The optimum solution to the problems posed by such Jurassic institutions is to decommission them. But if this is not yet possible at this point in the case of the Fund, then its power to do harm and its reach must be drastically curtailed.


After a decade of arrogance and promised deliverance, the end is finally here. This is why the meeting this fall in Singapore is so crucial. With the WTO in limbo, the underlings such as World Bank and the International Monetary Fund are trying their outmost to stay alive.

This fall, no matter where you are, US, UK or even in Singapore, celebrate the fall of the IFIs.

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Tuesday, July 25, 2006

WTO Membership Suspended Indefinitely

A decision has been made at the WTO to indefinitely suspend the WTO's DOHA negotiations across the board after the breakdown of the meeting of G6 Ministers that took place on Sunday and Monday.

The suspension of the DOHA talks was announced on Monday by several of the
Ministers of the G6 (the United States, European Union, Brazil, India, Japan, Australia).

It was confirmed by WTO director general Pascal Lamy at a press briefing starting 6.00 pm on Monday. Lamy said the WTO members had agreed to this at an informal heads of delegation meeting on Monday afternoon.

At the heads of delegation meeting, the G6 Ministers explained the situation and other delegations gave their preliminary responses.

Any formal decision to suspend the negotiations, and on when they are to resume, and what the WTO would do in the meanwhile, will have to be taken by the WTO General Council at its meeting later this week.

The sudden stopping of the DOHA negotiations came as a shock to the WTO members, as there was an expectation that the G6 Ministers would revive the flagging talks after the G8 Summit last week at which the political leaders of G8 countries and five developing countries had pledged to direct their Ministers to show additional flexibilities in their respective positions.

The G6 meeting of 23-24 July was to have been the first of a series of several meetings, out of which an agreement among the G6 members on the modalities on agriculture and non-agricultural market access (NAMA) was supposed to emerge.

The WTO delegations were already preparing to put aside their vacation in the first half of August, or even for the entire month, due to expectations that any progress in the G6 process would then oblige the other WTO members to consider the new proposals that would be emerging.

Few, if any, expected the first G6 talks to collapse so completely. The next meeting, originally scheduled for 28-29 July, has been cancelled. There are no plans for any more G6 talks for the time being, and the talks will thus hibernate, at least for several months. Some of the G6 Ministers when asked did not discount the possibility that the suspension" could last for years.

The immediate cause of the dramatic breakdown was the refusal or inability of the US to provide even a hypothetical improvement on its present offer on reduction of the allowed or bound maximum level of trade-distorting domestic support in agriculture.

According to several of the G6 Ministers, each delegation except the US had put forward possible new positions, or "flexibilities", that it may make if it was matched by new and adequate offers by the others.


Here’s another real-time illustration of why the Big Brother is BAD for both you and I. US, being a key member of the G6 refuse to even remotely hypothesis on an improvement for a better ‘globalized world’, a better world which was projected upon the founding on the DOHA round.

It was rumored that in the corridors, diplomats from developing countries were wondering how 6 WTO members can in fact, determine the fate of the membership as well as the suspension of the DOHA talks.

Once again, a victory against the WTO has been reprised since the December Ministeral Conference in 2005. Another salient knock will, without a doubt put this giant financial bully out of business forever.

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Monday, July 17, 2006

DOHA Talks to be Salvage by Global Loan Sharks

GENEVA — Trade ministers will meet at the end of July in a last ditch effort to salvage the deadlocked Doha round of trade liberalization talks.

Spurred by the Group of Eight summit of major industrial countries, ministers from Brazil, the European Union, India, Japan, United States as well as senior negotiators from Australia met with World Trade Organization chief Pascal Lamy to assess the state of play in the negotiations.

They agreed to schedule two further ministerial meetings in Geneva in the final week of the month, when they will try to agree precise formulas for cutting industrial and farm tariffs and subsidies, said U.S. Trade Representative Susan Schwab.

"The idea is to have another go at it with a bit more determination and hopefully a bit more flexibility," said India's Trade Minister Kamal Nath. "The work could spill into August, as there's a lot of work to do."

Ministers will meet in Geneva July 23-24 and again July 28-29, Nath and Schwab said.

The complex trade talks named after Qatar's capital where they were launched in 2001 were aimed at boosting the global economy and lift millions out of poverty worldwide by lowering trade barriers across all sectors, with particular emphasis on developing countries.

But the round, which is already two years behind schedule, has stalled because of differences between rich and poor countries, as well as between the EU and the U.S.

G-8 leaders meeting in Russia on Monday called for greater efforts to move the talks forward, with Brazilian President Luiz Inacio Lula da Silva saying the negotiations were "in a crisis."

"The leaders in St. Petersburg made it clear that we have to make this happen as soon as possible," Schwab said.

Most countries are sticking rigidly to the same positions they have maintained for months, even though Lamy warned that a recent Geneva meeting was the last realistic chance to find agreement on lowering trade barriers.

The entire process is rapidly running out of time because U.S. President George W. Bush's authority to "fast track" the trade deal enabling U.S. envoys to negotiate an agreement that can be submitted to Congress for a yea-or-nay vote without amendments runs out in mid-2007.

"Now the question is to test how flexible are the flexibilities" that leaders expressed in St. Petersburg, added Brazil's Foreign Minister Celso Amorim.

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Monday, July 10, 2006

Wolfowitz Plea Ahead of G8 Summit

World Bank President Paul Wolfowitz has called on leaders to push for agreement on a deal to free up global trade at the forthcoming G8 summit in Russia.

In a letter to leaders of the top industrialized and developing nations, Mr Wolfowitz warned that "time was running out" for a deal to be reached.

Long-running negotiations on a trade deal have so far failed to bear fruit.

Leaders of the world's richest nations are preparing to meet in St Petersburg for the G8 summit this weekend.

They will be joined by leaders of the so-called +5 group of major developing nations - China, India, Brazil, South Africa and Mexico.

Mr Wolfowitz urged leaders at the G8 gathering to work towards a compromise on the thorny issue of global trade.

"Our collective efforts can make the difference," the World Bank president wrote.

"We can work to lift millions from poverty, boost developing country income, improve global market access and reduce taxpayer and consumer costs for all, or allow the whole effort to collapse, with harm to everyone.

"A collective pledge by the US to reduce agriculture subsidies, by the (European Union) to improve market access and the +5 members to limit tariffs on manufactures... could help seal a deal."

Global competition

Mr Wolfowitz's comments come two weeks after trade ministers meeting in Geneva failed to pave the way for agreement in their latest round of trade talks.

Poor nations argue that the world's richest countries must open up their agriculture markets and end farm subsidies before they open up their manufacturing and services markets to global competition.

Mr Wolfowitz told leaders who will attend the summit, which officially begins on 15 July, that full trade liberalisation could potentially generate $300bn a year in additional global economic production.

'Collective pledge'

The world's poorest people, the 1.2 billion living on less than $1 a day, are counting on your good intentions being transformed into decisive action
- Paul Wolfowitz, World Bank President

The G8 is made up of Canada, France, Germany, Italy, Japan, Russia, the UK and the US.


Has the World Bank finally opened up their eyes? Have the idly people come to realise that that there are people out there who geuninely need the aid?

It seems like WB has forgotten its mission statement. The very reason why it was formed. Now as it grows imminent that with the failing policies, they may all lose their jobs. Is this an eleventh hour attempt to savage what little support?

DOWN with World Bank! DOWN with International Financial Instituitions!

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Wednesday, July 05, 2006

UK Must Pull Plug on World Bank to Help Poor

The World Bank and International Monetary Fund (IMF) are pursuing such damaging policies against poor people that the UK must stop funding them, says a new report by Christian Aid.

The radical call to withdraw British money from these international financial institutions comes in the wake of new evidence showing that they persistently attach economic conditions to loans grants and debt cancellation that harm poor countries' chances of development.

Last year, Tony Blair bowed to years of campaigning by Christian Aid and others by announcing that Britain would no longer be forcing these conditions on the aid it gives. Since then the UK government says it has been trying to persuade the World Bank and IMF to follow suit but to no avail.

In its latest report, Challenging Conditions: A New Strategy for Reform at the World Bank and IMF, Christian Aid says the time for gentle pressure has now passed and that Tony Blair should in future withhold around £450 million (nine per cent of the total UK aid budget) that it donates yearly to the IMF and World Bank. Norway has already pledged to redirect some of its funds from the institutions.

'The IMF and World Bank are insisting on pursuing anti-poor policies so it only right that Britain stops funding from them,' said Anna Thomas, Christian Aid's senior aid analyst.

'The whole architecture of aid is now changing and both the World Bank and the IMF are increasingly out of step with what is really needed to alleviate poverty in the developing world. Their endless mantra of privatisation and liberalisation being the only road to riches is both old fashioned and wrong headed. Britain needs to send the strongest possible signal that reform is overdue' she said.

The report gives many examples of World Bank and IMF reforms which have worsened, rather than reduced, poverty.

In Haiti, 85,000 farmers and workers were hit by the closure of local sugar factories after the IMF pushed the government to lower sugar tariffs from 50 per cent to three per cent and abolish import licences. Cheap imports flooded in and local production dropped by almost 50 per cent.

In Mozambique, more than half the banks in rural areas have closed following privatisation which was introduced as a condition for World Bank loans. Farmers now have to stash their money in mattresses or bury it in the ground. Lending to small companies and the informal sector is the backbone of private sector development in poor countries, yet privatisation has led to a 25 per cent drop in lending to local farmers during the past five years.

In Bolivia, one person died and 100 were wounded in protests against rising water costs in the city of Cochabamba. Water bills increased by up to 300 per cent after the World Bank pushed the government to lease out the city's water and sanitation system. This meant that poor families were spending 25 per cent of their income on water. Following the unrest, the government cancelled the contract and renationalised water services.

Christian Aid concludes that instead of providing future funds to the World Bank and the IMF they should either be redirected to effective multilateral institutions, such as the United Nations Development Programme or to bankroll the UK's share of multilateral debt cancellation.

'Each UK taxpayer pays more than £15 a year to the IMF and World Bank. That money is being used to push developing countries to privatise services and open markets before they are ready. The British government has said it doesn't agree with this practice. Now it's time for them to put their money where their mouth is and pull the plug on the IMF and World Bank,' said Anna Thomas.

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Monday, July 03, 2006


For most WTO watchers, the breakdown of the talks over the weekend was expected. Negotiating positions of most major countries have been so far apart in the key areas of agriculture and non-agricultural market access, that too much was left for the ministers to accomplish.

Since the beginning of the Doha Round, the developed and developing countries have differed considerably as to what should be a realistic outcome of the current round. Developing countries have argued the negotiating outcomes should give them the policy flexibilities necessary to pursue their development goals, since the Doha Round was pursuing what was conceived as a ‘Development Agenda.’ This essentially meant their development concerns, which in agriculture implied addressing food security and livelihood, should get primacy. But the developed countries saw the talks as an opportunity to further trade liberalisation through across-the-board tariff reductions. These countries felt developing countries could be given only limited flexibilities to address their development concerns.

It is in agriculture that there are seemingly irreconcilable differences. While the developed set of countries is only interested in securing market access through tariff reductions, they are not willing to effect meaningful reductions in farm subsidies. Developing countries have consistently argued that farm subsidies have created a discriminatory regime that has undermined the interests of their farmers.

While several of these countries have not been able to realise their potential in global markets, as they cannot compete with the subsidised products, many others have found their domestic markets swamped by cheap imports originating in developed countries. It was logical to argue, which developing countries have done, that developed countries must establish their commitment to the functioning of a non-discriminatory trading system by reducing their farm subsidies.

Clearly, this is not going to happen anytime soon. But the developing countries must ensure their core concerns are addressed, and that food security and livelihood concerns are reflected adequately in any deal that is done.

A critical aspect of the negotiations in the ensuing weeks and months is the process that is gone through. WTO director-general Pascal Lamy has already indicated members have asked him to try to broker a compromise “as soon as possible.” It is doubtful if this approach can at all substitute a negotiated deal — history shows the pitfalls of a “brokered deal” can come back and haunt many countries, particularly in the developing world.


The WTO should have been eliminated the day it was started. It did not alleviate and instead, introduced poorer countries into heavier debts. It did not seek to solve and has never addressed the issue of livelihood. 10 years on, the world has grown sick of the speech generated by the WTO. We want action. We want it now!

We have worked hard to secure a no deal at last December, Ministerial Conference. This September, delegetes from all over the world will attend the IMF/WB Annual Meeting in Singapore. The World Bank has openly called for protestors to take to the street.

We have helped those who were unable to help themselves in Hong Kong last year. This year, let's take to the streets of Singapore and end the selfish agendas of the International Financial Institutions!

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