The IMF: Policy and Protest
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RAY SUAREZ: Now we get some analysis of today’s protests and the broader debate over globalization from two economic writers. Adrian Wooldridge is a Washington-based correspondent for the Economist Magazine and co-author of A Future Perfect: The Challenge and Hidden Promise of Globalization.” And Naomi Klein is a syndicated columnist for Canada’s Globe and Mail newspaper, and author of Fences and Windows: Dispatches from the Front Lines of the Globalization Debate.
Adrian Wooldridge, in your book, you call this the most important economic, political and cultural phenomenon of our time saying about globalization, “everybody evokes it but nobody will define it”. How do you define it?
ADRIAN WOOLDRIDGE: I define globalization essentially as freedom. Globalization is the ever freer movement of ideas, people, goods and services around the world. It’s about building bridges between people in countries and about breaking down barriers.
RAY SUAREZ: Naomi Klein, the people out in the streets, the people you talked to in your reporting following the protestors around the world, how do they define globalization. What are they fighting against? How do they define globalization?
NAOMI KLEIN: I think they’re fighting against the betrayed promise of precisely Adrian’s definition of globalization, that it was supposed to be about increased freedom but what we actually have is increased mobility for capital, we have increased trade of goods across services but we’re seeing increased militarization at our borders, increased militarization at the meetings where the decisions are made about our global economy; and we are seeing trade laws being written that are really about putting barriers up around intellectual property, for instance, around drug patents. So I think to describe it as freedom — I is really a liberation movement for capital, but I don’t think that it has turned into a liberation movement for people at all.
RAY SUAREZ: Well the IMF, World Bank, the WTO and its predecessor organization have been meeting every six months for years.
NAOMI KLEIN: Yes, in Washington.
RAY SUAREZ: And various places around the world. How have these protests changed the way they do business? Have they been heard inside those modern buildings that we saw in these pieces?
NAOMI KLEIN: I think that the debate about globalization in the past three years has changed the discussion. I think that three years ago, there was an illusion of a consensus that free trade was good for everyone, that a rising tide was lifting all boats. And I think at this stage, what is clear is that economic growth and tremendous amounts of profits and prosperity, can co-exist with tremendous inequality and disparity. And I also think it is a little misleading to concentrate on the backlash against these economic policies just at protests in Seattle and Washington because the truth is that the strongest backlash and the most effective backlash is in the countries where these policies are enacted. They’re in Argentina, they’re in Ecuador , they’re in brazil. There’s been a wave of movements to stop privatizations of water and electricity across Latin America. So I think that has to be part of the discussion because we can’t sort of invisibilize the countries that are living the policies and kind of present this as a debate between police and, you know, college students in Washington. That sort of erases the rest of the world.
RAY SUAREZ: Adrian Wooldridge, have these protests been heard and what about Naomi’s point that maybe there is a different platform on which everyone is standing because of the decline in the world economy?
ADRIAN WOOLDRIDGE: The world economy is going through a tough patch but certainly there has not been a decline in the consensus that a rising tide lifts all boats and the evidence suggests that a rising tide does lift all boats. The World Bank has produced definitive evidence that there is a direct and very clear correlation between economies that open themselves to trade and economies that grow and economies that close themselves to trade and economies that are stagnating and declining. Over the 1990s, the 24 most free globalizing developing countries increased GDP per capita by 5 percent a year. The non-globalizing, non-opening countries reduced GDP by 1 percent a year. At the same time living standards rose, life expectance rose, personal freedoms rose. It is clear that globalization helps the poor just as much as it helps the rich. In fact probably more.
NAOMI KLEIN: You know, I actually will only use statistics out of the pages of the Economist to refute that point; that in fact, the Economist has been reporting in explaining to its readers why there is this backlash against the policies in America and in Latin America and India. Of course there has been a rise in GDP That has co-existed with the free trade policies but it is precisely because the rise in GDP has co-existed with stagnant living standards or dropping living standards that people are rejecting policies in Bolivia, Argentina and India. India is a very good example. 7.5 percent growth. And I think part of the problem, figures like GDP are too crude to measure actual well being. We are used to saying growth is good. But if you look more close closely and I read this in the Economist actually – that while India’s GDP was increasing by 7.5 percent in the mid 90s, poverty alleviation was only taking place at 1 percent. Poverty was dropping at a rate of 1 percent. According to the Economist Magazine, before India opened itself up to the free trade policies, growth was slower but poverty elimination was faster, slightly faster. So I think that this is a terrain of tremendous debate.
RAY SUAREZ: Quick response.
ADRIAN WOOLDRIDGE: I think it is of tremendous debate. I point to one simple figure. If you go back to the early 1970s, the people in the world who lived on less than $1 a day was about 20 percent of the world population. If you look at the end of the 1990s, there are people living on that measly sum was less than 5 percent of the world population. Over the last 20 years, there have been two really, really dramatic facts that matter far, far more than all of these silly protests going on in the streets — the fact that the two giant economies, India and China that have been opening themselves up to globalization and that have been getting richer as a result of that opening up.
RAY SUAREZ: Let’s talk a little bit more about the silly protests. Naomi Klein talks about the workers in Argentina, people in Indonesia and other places in the developing world, who have had a promise, she says, betrayed. Is there any other way to talk to the WTO, to talk to the World Bank for rank and file workers besides street action? Is there some other way to engage in the debate with central bankers, with finance ministers, than to come yell at them on the streets of world cities?
ADRIAN WOOLDRIDGE: The problem with Argentina is that the Argentineans have run their economy very badly. They borrowed too much money and spent too much of the money not on things like capital projects but feather bedding workers largely in the public sector so it is mismanaged internal policies, I’m afraid, that is leading to this problem now. They need to adopt better policies. People are naturally upset about the fact that they’re undergoing this sort of crisis and it is natural to respond in terms of protests, although I think people protesting in Argentina have very little to do with the people protesting on the streets of Washington. What they need is better management of their own economies.
NAOMI KLEIN: I think what they need is better control of their own economies. The reason why an instances tugs like the International Monetary Fund is so controversial because the role they play in the developing world is often to override the decisions the democratic decisions of people. And the best example of this is going in brazil right now where the Brazilian people are about to elect de Silva, as their next president. De Silva is a left-wing politician, spent his life campaigning against the International Monetary Fund saying he would like to renegotiate the term of the debt saying the debt was illegitimate a lot accumulated under a dictatorship and saying he doesn’t want more free trade policies like the area of the Americas. The International Monetary Fund has loaned $30 million to brazil recently but they did something they often do when it looks like a country is about to turn to the left. They post-dated the check so that 80 percent of the money comes after the Brazilian election. And there are strings attached, which say that they have the right to pull the money if the new government changes economic course. So these, precisely it’s this overriding of the right to self-determination that is leading to the backlash.
RAY SUAREZ: You heard Adrian dismiss the connection between demonstrators in Buenos Aires and demonstrators in Seattle and Washington. And one feature of the coverage is often that these are some of the most comfortable best fed, best educated young people in the world who are speaking on behalf of people they rarely speak to. How do you answer that critique because it’s a pretty persistent one?
NOAMI KLEIN: Yeah. I think there is much more global communication happening at the grass roots level and I think the reason we are seeing protests in Washington against institutions that a few years ago most Americans hadn’t even heard of even though their headquarters were in Washington, D.C., is because of globalization. It’s not against globalization. It’s because globalization also applies to people. And we have been sharing stories across borders. And I even think that we have to sort of slow down and ask ourselves why it is that the International Monetary Fund and the World Bank make their decisions in Washington when the policies and the decisions that are taken are applied everywhere but in the United States. And this is a symbol, really, of what is wrong with these institutions; that they make decisions so far away from where the decisions are implemented. I certainly wouldn’t like it if my government was making decisions about how to run my country, you know, in Malawi , if they were doing that, and would I see it as an assault on my democracy. I think it is an act of solidarity to say if the IMF envoy who is a man named Anup Sing who can’t walk down the streets of Buenos Aires without being greeted by a symphony of pots and pans and I saw that in Buenos Aires a few weeks ago, then why should they be able to walk down the streets of Washington, D.C. And have the right to serene, spa-like atmosphere. Politics are messy and you have to be accountable for your decisions. And there is something structural in the way these institutions are set up that creates far too much distance from the decision makers and the places where the policies are enacted.
RAY SUAREZ: What about that?
ADRIAN WOOLDRIDGE: I think if you are borrowing money from people, you can’t lay down conditions under which you borrow the money. I think the IMF is absolutely right to lay down conditions on the way it lends money there. Is no other way in which a fund can operate responsibly to do that. And on the grounds–
NAOMI KLEIN: That’s why the primary demand of the protestors is debt forgiveness.
ADRIAN WOOLDRIDGE: These people are not democratically accountable. On the contrary. IMF Is democratically accountable to the people who provide the funds for the IMF, most of which are sovereign states, most of which are democratically elected states which consists of United States, which consist of the European countries, which consists of Japan. So there is a process of accountability going on. But you can’t simply borrow money from people and lay down your own conditions to it. I would love to do that to my own bank manager but I don’t expect it to happen.
RAY SUAREZ: Are there not layers of people in between somebody who’s putting together a computer keyboard in a Mexican factory or sewing sneakers in Southeast Asia? I mean, you say yes these governments are borrowing money but the sneaker worker isn’t, and isn’t that who the people on the streets are trying to speak for?
ADRIAN WOOLDRIDGE: But — I’m afraid though that you have to– it’s the governments who have to be accountable for their economic policies. If they are borrowing money, they cannot simply lay down the conditions under which they borrow it. So yes, of course people have a right to protest if they think their economies are being very, very badly managed internally but they don’t have the right to lay down the conditions under which their governments borrow money from an international fund.
RAY SUAREZ: Quick response.
NAOMI KLEIN: Of course, the debt itself is tremendously controversial, and the primary demand of the protests this weekend is debt cancellation, precisely because the debts that are being paid off were often accumulated under dictatorships, in the case of South Africa, a country was forced to inherit the apartheid debt. So you have the ANC government paying off the debt accumulated under apartheid. And what we are seeing is that when citizens try to elect governments that are going to have new policies, those policies are overridden and it is very difficult to call that democracy.
RAY SUAREZ: Naomi Klein and Adrian Wooldridge, thank you very much.