From Letter to the Editor In Today's Washington Post:
No Friend of Poor Nations
Thursday, September 26, 2002; Page A32
Robert Weissman of the Mobilization for Global Justice throws Enron mud to see if it will stick to the International Monetary Fund (IMF) or the World Bank [op-ed, Sept. 25]. He lives a fantasy in which developing countries' problems are caused by outsiders, international institutions are in thrall to ideology and the slogans of street protesters will prove a balm to all that ails this world.
But how much of his critique reflects any understanding of the world?
Brazil is taking out new loans to pay off old ones? The United States does that every day. The real problem is that ahead of coming elections, skittish investors are asking Brazil to pay exorbitant interest rates. IMF support will help the country get past the elections (when interest rates can be expected to come down) and help keep the country solvent. That's a real solution.
Mr. Weissman offers little in the way of concrete solutions -- just noise. He apparently can't bear the fact that when governments have problems that slogans can't solve, they turn to the IMF and the World Bank for help.
As Mr. Weissman and his compatriots make their point in the streets of Washington this weekend, it is worth remembering that, beyond exercising their right to free speech, they will be trying to prevent the legitimate representatives of 184 governments from meeting to look for solutions to their problems. Mr. Weissman and his sympathizers are no friends of developing countries.
THOMAS C. DAWSON Director External Relations Department International Monetary Fund Washington
Robert Weissman mischaracterized the World Bank. We do not support charging poor people for health or education.
The headline on his piece, "The Enron of the Developing World," conveniently forgets to mention that the bank recommended against an Enron project in India because it believed that the project was not economically viable. The bank also concluded that an Enron project in Nigeria was not in the best interests of the country, and it canceled a loan to finance a water project in Ghana because there had been no competition in the awarding of the contract to an Enron subsidiary. Perhaps Mr. Weissman should learn a lesson from Enron's experience and focus on accurate accounting.
CAROLINE ANSTEY Chief Spokesperson World Bank Washington
_________________________________________
The Enron of the Developing World
By Robert Weissman
Wednesday, September 25, 2002; Page A27
Wall Street gets it. So does Congress. Even President Bush gets it. But not the International Monetary Fund (IMF) and the World Bank.
The era of market fundamentalism is over. Marketization, deregulation and privatization, and the opportunities for market manipulation offered by inadequate regulation -- all central elements in the rise and fall of Enron
-- are now discredited in the United States. And in developing countries, where their effects have been most devastating, they are the object of widespread public opprobrium.
Unfortunately, the IMF and the World Bank continue to sing from the market-fundamentalist hymnal.
• Marketization: Just as Enron created new markets in exotic commodities such as bandwidth, so the IMF and the World Bank have worked to marketize services previously in the public and noncommercial realm. Case in point: user fees for primary health care. The World Bank continues to support such charges, even after reversing its support for education fees. The effect is to deny poor people access to care. In Papua New Guinea, for instance, the introduction of user fees led to a decline of about 30 percent in the average monthly attendance at outpatient health centers.
• Deregulation: Reckless deregulation in California enabled Enron and other energy companies to gouge customers. Similarly, IMF- and World Bank-induced deregulation in developing countries has had disastrous consequences. In the Philippines and in Ghana, for example, deregulation in the mining sector has opened the country to giant multinational companies, displacing tens of thousands of residents and paving the way for environmental devastation. • Privatization: Central to Enron's international agenda was the takeover of privatized electricity and water services in developing countries. One country where Enron sought to gain control of a privatized water system was Ghana. Concerns about corruption -- including those voiced by the World Bank -- led to the collapse of the deal.
But the World Bank continues to push for water privatization in the West African nation. In preparation, water prices have doubled, and the bank anticipates prices rising for the foreseeable future, even though poor Ghanaian consumers can pay as much as 10 percent to 20 percent of their income for drinking water. In a country where one-third of urban consumers are not even connected to water pipes, the private operators would have no duty to expand service to the poor.
In the Dominican Republic, World Bank-supported privatization let Enron swoop in, buy parts of the electric utility and jack up rates. When consumers and the government couldn't pay the high prices, Enron turned off the power. Enron and other buyers of the privatized utility are now alleged to have paid too little, thanks to a valuation performed by an Arthur Andersen subsidiary.
• Financial market manipulation: Enron's financial fraud is now legendary. But consider the IMF's deceit in Brazil: Everyone knows the country has no prospect of paying off its foreign debt. But rather than acknowledging this and working out a discounted payment arrangement for creditors, the IMF is making new loans to pay off old ones. This has two immediate effects: It enables the private creditors, including the big U.S. banks, to be paid off, with debt obligations shifted to the IMF. And it enables the IMF to extract austerity measures from Brazil that are explicitly intended to lock in fundamentalist market policies, no matter which party Brazilians elect in coming elections.
Restraints on corporate power are even more necessary in developing countries than in the United States. But the market fundamentalists at the IMF and the World Bank continue to systematically unshackle corporate activity in the Southern Hemisphere. That's a major reason thousands will demonstrate against the IMF and the World Bank in Washington this weekend.
Action makes a difference: In 2000, after the last major U.S. demonstrations against the IMF and the World Bank, Congress passed a law requiring the United States to oppose IMF or World Bank loans that include user fees for primary education or health care. Partly as a result, Tanzania lifted primary education user fees, 1.5 million additional children -- mostly girls -- were able to go to school.
The writer works with the Mobilization for Global Justice and is editor of Multinational Monitor magazine.
© 2002 The Washington Post Company