Africa/Global: Activist Events Shine; G7 & IMF Disappoint at April Meetings

Activist Events Shine; G7 & IMF Disappoint at April
Meetings in Washington

Soren Ambrose - 50 Years Is Enough Network - Washington,
DC USA

The IMF and World Bank held their 2005 semi-annual
meetings last weekend (April 16-17).

ACTIONS

It was a good weekend, from the standpoint of the
activities organized by civil society. On Friday we had a
crowd of 150 or so outside the Treasury Department at
lunchtime to urge the G7 Finance Ministers, meeting there
later that day, to come to agreement on a plan to
genuinely cancel 100% of the multilateral debt claimed of
countries in crisis, without conditions. The event
featured several speakers from the Global South and street
theatre. A very spirited event, co-sponsored by 50 Years,
Jubilee USA, American Friends Service Committee Africa
Program, Africa Action, and the Mobilization for Global
Justice (MGJ).

Friday evening, the MGJ, the DC activists' collective that
first came together for the April 2000 protests against
the IMF and World Bank, held a teach-in on local and
global issues. Speakers included Virginia Setshedi from
the Anti-Privatisation Forum (South Africa), Lidy Nacpil
from the Freedom from Debt Coalition (Philippines), Victor
Geronimo from the Colectivo Popular (Dominican Republic),
and Basav Sen (MGJ). After the speakers, that audience
split into 6 discussion groups on issues of local and
global concern like labor, prisons, healthcare, etc. The
event was very well-received, with many people happy to
see the links between DC issues and global ones so
effectively exhibited.

Saturday was the big day. MGJ hosted a rally in the park
across from the IMF/WB, which turned into a rally to
Dupont Circle, for a festival of resistance, including
lots of music. The crowd was probably about 1000 -
significantly more than the Washington Post's estimate of
200, tho certainly not as many as we would have liked.
What we lacked in size we made up for in energy; indeed,
this event probably had as positive and energetic a feel
as any I've attended in the last 9 years in Washington.

For a good selection of pictures from the events, see the
website of 50 Years Is Enough steering committee member,
the Global Justice Ecology Project:
http://www.globaljusticeecology.org/index.php?name=news

On Sunday, MGJ sponsored community service projects to
emphasize its seriousness about the theme for the weekend
- "a better world is under construction," which is to say
that people are dealing with problems themselves and not
waiting for institutions to solve them. A surprisingly
large number of people from out of town participated in
those projects.

As usual, numerous meetings among civil society groups and
between some of those groups and IMF/WB and government
officials took place. The most unusual events involved a
group of parliamentarians from six different countries,
North and South, was in town presenting a petition with
over 1000 legislators' endorsements, calling for
fundamental reform at the Bank. They held a public event
on Sunday which was well-attended.

DEBT & IMF CONDITIONS

The official meetings, on the other hand, seem not to have
gone well for our side. The G7 Finance Ministers issued a
communiqué indicating that little progress was made on
negotiations for 100% debt cancellation. The major bone
of contention was between the U.S. and U.K. plans for IMF
debt relief: the Brits wanted to sell a substantial
portion of the IMF's gold stocks to finance the relief,
while the U.S. was against gold sales and wanted to
finance it through the resources in the IMF's structural
adjustment facility (the "Poverty Reduction and Growth
Facility"). We don't really feel that how the
institutions "finance" debt relief should be the concern
of debt advocates, but we supported going after the PRGF,
the most destructive element in the IMF. The U.S. seems
not to have won any other countries over to its side;
indeed, some of the European governments have responded by
wanting to *increase* the amount of money going into the
PRGF, which will serve mainly to enable the IMF to force
devastating conditions more effectively on more countries.

It is possible that there will not be any further attempts
to secure a deal on IMF debt before the G8 Summit in
Scotland in early July - bad news, given the progress that
seemed to have been made in the last year. A compromise
on World Bank/African Development Bank debt is likely to
be announced at the summit.

But wait there's more. Both the G7 Finance Ministers'
communique and the statement from the International
Monetary & Financial Committee (which sets IMF policy)
echoed earlier comments by Treasury Secretary John Snow
regarding the creation of a new IMF facility. It is this
facility which we have identified as the potential very
large "catch" in evaluating the US proposal for 100%
multilateral debt cancellation. It looks as if such a
thing might well be created soon, juding from the
statements' language, even in the absence of sweeping debt
cancellation. The IMFC, for example, said in its
statement that it "looks forward to further work on a
policy monitoring arrangement to enhance the IMF's
signaling role for countries that do not need or want IMF
financing."

The IMF already has programs that solely monitor policy
development in countries, without IMF funds going to the
government. It is our suspicion that going to the trouble
of creating a new "facility" would represent an effort to
formalize the IMF's "gatekeeper" (here called "signaling")
function. As things stand now, other multilateral and
bilateral donors and lenders follow the IMF's lead in
determining when a country is creditworthy. If the IMF
withholds a tranche (installment) of an agreed loan
program because of failure to adhere to policy conditions,
the World Bank, the regional development banks, and
bilateral agencies will follow suit. This function is
unofficial - no written rule guarantees this role for the
IMF. If the IMF creates this new facility, with the
attendant fanfare, it can position it to be the arbiter of
countries' creditworthiness even if the IMF stops making
loans altogether.

For us, such a move would negate a large part of the
benefit of 100% multilateral debt cancellation. Our
demand for cancellation is in large part motivated by a
recognition that such debt is used to keep governments
trapped in loan-and-repay cycle that ensures they will be
perpetually subject to external economic conditions that
work against their own interests. If the liberation from
debt no longer would imply liberation from the IMF, it
would be a great loss. The move would still be
worthwhile, since people are suffering inordinately from
the diversion of funds they need in order to pay off the
debts incurred against their own interests. But the
change would be merely ameliorative rather than a clear
contribution to systemic transformation.

We continue to argue that debt cancellation is the most
important pre-requisite for genuine people-centered
development in the Global South, and that therefore it
should be the top priority of development institutions
like the World Bank and for Southern countries' finance
ministries.

Two other tidbits from the official statements - actually
one is from the G24 group of countries - round out this
report.

ARGENTINA

Enormous pressure was put on the Argentinian government,
which recently stunned observers by winning over a crucial
supermajority of bondholders to its proposed payment of
about 31 cents on the dollar, to make arrangements to pay
off those who refused to go along. As the IMFC put it:
"The Committee welcomes Argentina's rapid recovery. The
recent debt exchange offer represents an important step
toward the long-term goal of sustainable growth. Argentina
will now need to formulate a forward-looking strategy to
resolve the remaining arrears outstanding to private
creditors consistent with the IMF's lending into arrears
policy, and to continue with necessary structural
reforms."

These are fighting words, given the IMF's contentious
relationship with Argentina since it played a major role
in creating the circumstances for its 2001 economic crash.
During the negotiations with bondholders, the IMF
frequently expressed concern, but resisted getting heavily
involved since it was not really in its purview. In the
end, the Argentinian government got about 76% of its
bondholders to agree to the new terms. It did so by
playing the game by the rules - it went to the market and
negotiated with those who wanted something from it. The
IMF initially welcomed the resolution of the crisis. It
has no grounds on which to tell Argentina that after using
recognized market mechanisms - the IMF's paramount value -
it should now change its negotiating terms and offer a
better deal to those who did not cooperate with it. The
response no doubt reflects the growing concern - even
panic -- among banks and governments that Argentina's
success may encourage other indebted governments (such as
the Philippines and Nigeria) to try to follow in its
footsteps. It is questionable whether the Kirchner
government could reverse itself at this stage even if it
wanted to without embroiling its country in fresh
political turmoil. This dispute could end up becoming a
key part of a turning point in North-South economic
relations.

THE G24

Meanwhile, the director of the Washington office of the
G24 (mostly large middle-income developing countries)
stated at a press conference that the skewed power
equations at the IMF board (where the wealthy countries
control all the levers of power) must be addressed soon,
or borrowing countries will begin to avoid the IMF as much
as possible. That would be a very good thing.

The official, Ariel Buira, said, "If you look at reserves,
the reserves of the developing nations are considerably
higher than the reserves of industrial countries.

"So the current system of governance is completely out of
line with economic realities, and what is happening as a
result of this is that people are moving away" from the
IMF and the World Bank.