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Western Press Review: 'It's The Economy'

  • Don Hill



Prague 13 April 2000 (RFE/RL) -- Commentators in today's sampling of the Western press turn overwhelmingly to examining world economic issues.

GUARDIAN: Recovery from the dark days of late 1998 has been rapid and robust

Writing from Washington in The Guardian, London, Larry Elliott says the International Monetary Fund's World Economic Report yesterday showed an upbeat side that was especially welcome since the IMF has long felt under siege. In Elliott's words: "[The mood at the IMF] is cheery, almost upbeat. Its biannual World Economic Outlook, released yesterday, shows that recovery from the dark days of late 1998 has been rapid and robust. To be sure, the IMF has some well-warranted words of caution, particularly about the durability of the U.S. boom and the continued ill-health of Japan, but it has been pleasantly surprised by what has happened since the Russian debt default took the global economy to the brink 20 months ago."

WASHINGTON POST: There's a paradox in the air

A commentary in The Washington Post also uses the siege metaphor. Writer John Burgess says that staff members of the IMF find the recent criticism of the fund puzzling. As he puts it: "To many people in the bank and fund, there's a paradox in the air. They feel they've never done their job so well -- they've reformed their huge institutions, making them more responsive to local concerns. Two years ago, they helped pull the world back from near financial collapse with $100 billion in emergency loans. Yet so often, the thanks they get is fire from all directions: chants and sit-ins from demonstrators; accusations from members of Congress of incompetence, waste, environmental abuse and secrecy; lectures from academics that the two organizations need to be downsized."

Burgess writes also: "The IMF in the last five years has moved toward more openness after years of being run with a central banker's love of secrecy. Its chief meets with reporters more often; it has publicly conceded that it got things wrong early in the 1997 financial crisis, pressing borrowing countries toward austerity rather than letting them grow their way back into health." He concludes: "In the meantime, the IMF has put in place auditing safeguards to try to make it harder for borrowers to cheat, after being hit by questionable reporting of foreign-exchange holdings by Russia and Ukraine."

WALL STREET JOURNAAL EUROPE: The World Bank and IMF are dinosaurs left over from the Cold War

However, Kenneth R. Timmerman, a contributing editor at Reader's Digest magazine, contends in a commentary published today by the Wall Street Journal Europe that both the IMF and the World Bank should fold their tents and creep away into the night. Timmerman doesn't use the word "siege," but he describes one. He offers this reasoning: "World Bank lending has played a premier role in reinforcing both poverty and corruption in the very countries it has pretended to help. An investigation I conducted for Reader's Digest magazine over the past year found case after case of World Bank disasters, spawned by a system that is so hopelessly corrupt it cannot be reformed."

Timmerman continues: "The conservative Heritage Foundation in Washington has released a study of 68 developing countries that have been receiving massive infusions of World Bank loans. The study found that 39 of those countries had only increased their [gross national product] by an average 1 percent per year from 1970 through 1997. In 20 other countries, the economy had actually shrunk, despite World Bank support."

The commentary concludes: "The U.S. Congress should wake up to the fact that these institutions are dinosaurs left over from the Cold War. Instead of keeping them on life support, the West should use its contributions to finance and manage development projects directly in the world's poorest countries, where it will do the most good."

LOS ANGELES TIMES: It is virtually axiomatic now that reforms are in order

Los Angeles Times columnist Tom Plate says that some of the protesters mounting siege this week on the World Bank and IMF are doubtless well-informed and well-grounded in their goals. Others, he suggests, probably do not know what they're talking about. Either way, he says, there is evidence that their targets are vulnerable. In Plate's phrasing: "It is virtually axiomatic now, even within the world's political establishment, that reforms are in order, especially for the IMF."

He writes: "With nice timing, the Overseas Development Council, a widely respected Washington-based nongovernmental organization, has weighed in this week with a withering critique of the IMF's performance in the Asian financial crisis and a strong recommendation that it transfer over to the World Bank the longer-range, anti-poverty development portion of its overflowing portfolio. It wants the IMF to concentrate on monitoring the performances of national economies and on swift intervention when serious crises surface. Yet the report calls not for the IMF's abolition, as its most irresponsible critics do, but for major institutional change. It would end the notorious IMF practice of conditionality, whereby nations have to get down on their knees and lick the IMF's boots if they want any bailout money."

Plate says: "It's true that the street demonstrators aren't engaging in the most sophisticated or helpful dialogue. Yet until the grand debate on globalization is truly joined, and a third way invented that improves on both the debate and the very concept, those who still don't get or still don't buy it will be back to the barricades and back to the future of sometimes violent protest in the streets."

FINANCIAL TIMES: The Fed should pay heed to the IMF's warnings

Britain's Financial Times devotes an editorial to the IMF's publication yesterday of its World Economic Outlook. When the IMF speaks, at least this time, the editorial says, the U.S. Federal Reserve Board should listen. As the newspaper puts it: "Predicting the end of the U.S. economic expansion has not been a very profitable strategy over the past few years. But with new economy stocks waning, the International Monetary Fund's warnings about the vulnerability of the U.S. economy are timely. [The fund] has been cautioning that imbalances in the U.S. economy pose a risk to global growth. In yesterday's [report], the fund warned that the action taken to address these imbalances has been inadequate."

The British newspaper concludes: "[The Fed's] strategy of giving the expansion plenty of breathing space has paid off so far. [But] it will not necessarily continue to do so. The Fed should pay heed to the IMF's warnings at its next monetary policy meeting in May."

WALL STRET JOURNAL EUROPE: We would just caution not to read too much into one quarter's worth of positive figures

The Wall Street Journal Europe looks today at mainland China's apparent promise of an imminent world-trade boom, and warns as follows: "It is certainly tempting to believe that the current batch of rosy statistics represents a [Chinese] down payment on a much bigger reward for opening to the world economy. [Impending] membership in the [World Trade Organization] does offer China significant benefits, especially for workers who will see their real incomes rise."

"It is unfortunate," the Wall Street Journal continues, "that [China] hasn't done more to minimize the dislocations that will result at first. But if it takes greater exposure to global competition to force China to come to terms with its state enterprise problem, then that's still a favorable outcome. We would just caution not to read too much into one quarter's worth of positive figures."
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