Friday, Jul 4, 2008
The protests surrounding this weekend's meetings of the IMF and World Bank are the next step in the backlash to globalization.
Apr 15, 2000 | Lately, my friend Jim Schultz has been sending out a lot of e-mail. Schultz, a former San Franciscan, helps run an orphanage in Cochabamba, Bolivia, the poorest country in South America. Last year, Bolivia's government, under pressure from the World Bank, decided to privatize Cochabamba's municipal water company, selling it to a subsidiary of Bechtel Corp. Overnight, Bechtel doubled Cochabamba's water rates and Schultz witnessed the results: "Families earning a minimum wage of less than $100 per month were told to fork over $20 and more or have the tap shut off," he writes. He talks about a mother of five, an employee of a knitting factory, whose bill for drinking water amounted to the equivalent of her family's food budget for a week and a half.
At the turn of the year, Cochabamba exploded in protest, which escalated until last week, when Bolivia's government declared a state of siege, rousted protest leaders from their beds and fatally shot a 17-year-old demonstrator. When last heard from, Bechtel was packing its bags and trading blame with the Bolivian government for the debacle.
Cochabamba may seem far from Washington. But thousands of demonstrators are descending on the U.S. capital this weekend for precisely the reason that Cochabamba's angry peasants sent Bechtel packing: the one-size-fits-all, corporate-friendly dictates of the World Bank and International Monetary Fund, which hold their joint spring meeting there Sunday and Monday. Cochabamba is far, too, from New Haven, where I write this in a library at Yale University.
But a few yards outside the library doors, Yale students have been sleeping out in a plywood shanty for the past several weeks to pressure the university into higher standards for its apparel contractors -- for the sake of sweatshop workers like Schultz's friend in Cochabamba -- companies operating in the laissez-faire environment demanded by the IMF. The price of water in Bolivia might seem to have as little to do with American politics as, well, the price of tea in China. But Bolivian water, Chinese tea, Ivy League athletic gear -- not to mention the presidential race -- are increasingly part of the same story.
That story comes to the forefront again as the IMF and World Bank meet in Washington this weekend. Anti-globalization protestors are descending on the nation's capital, hoping to maintain the momentum from the protests at last year's World Trade Organization meeting in Seattle. The coming confrontation in Washington is being portrayed as the Seattle sequel -- the next foray for the "Teamsters and turtles" coalition of labor, environmental and consumer advocates who paralyzed the WTO meeting.
But while Washington's protestors plan civil disobedience, the real crisis in Washington this weekend is not in the streets -- it is in the conference rooms where finance ministers are meeting at a time of profound uncertainty about the future of the IMF and World Bank.
The IMF is at odds over the choice of its next managing director, but the real issue is how far and in what direction both institutions will be reformed. U.S. Treasury Secretary Lawrence Summers is pushing the institutions to get out of the long-term investment business altogether. France and Germany now call openly for trade policies that recognize social priorities beyond foreign-investment orthodoxy. Joseph Stiglitz, the former chief economist of the World Bank, denounces the IMF for imposing its political and economic agenda on developing countries. Stiglitz now calls for the kind of inclusive, locally driven development policy that only wild-eyed radicals envisioned a few years ago.
And like the first wave of protestors to arrive in Washington this week -- the "Jubilee 2000" movement of Catholic activists -- Stiglitz now calls upon the World Bank and IMF to write off most Third World debt. The international-finance establishment is beginning to fracture over the global economy, just as America's foreign-policy establishment tore itself apart over Vietnam.
And while the international financial institutions fracture from within, from without the protest movement gathering in Washington is not only against global corporations, it is also actively envisioning a pragmatic alternative to the current financial order, one that was marked by instability as the world's markets fluctuated wildly this week.
The roots of this weekend's protest are not in November's protests, but in the mid-1970s. The World Bank and IMF had been founded by the victorious allies after World War II for the modest but important job of stabilizing international currency and sponsoring post-war reconstruction. But in the '70s, both institutions took on a new and broader mission -- lending money to desperately indebted Third World countries and sponsoring big-time development projects like dams and railways.
But those loans came with a price: that Third World governments privatize state industry, lower wages and generally make their nations friendlier toward foreign investment.
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