A special commission Wednesday released its report on what changes might be necessary at international financial institutions like the International Monetary Fund (IMF) and the World Bank. For months, there was speculation that the report would be harshly critical of the two lending agencies. But as RFE/RL's Andrew F. Tully reports, even members of the panel are divided over the meaning of the recommendations.
Washington, 9 March 2000 (RFE/RL) -- It is unclear whether the recommendations of a commission empaneled by the U.S. Congress will bring real change to the International Monetary Fund (IMF) and the World Bank.
In fact, there are deep divisions within the commission itself, so its recommendations may not have the weight to inspire the changes.
The International Financial Institution Advisory Commission calls for profound changes in how the IMF and the World Bank lend billions of dollars to nations around the world. It says the changes should take place during a five-year transition period.
It says the fund should abandon long-term lending to governments and return to its original mission of short-term loans. This position already has been put forward by the administration of U.S. President Bill Clinton and even his opponents in Congress.
As for the World Bank, it says the agency should stop lending money in Latin America and Asia to avoid duplicating the work of regional development banks. But the report recommends that it continue lending in Europe and Africa. This recommendation for the World Bank was supported by all 11 members of the commission. Eight of the 11 members supported the entire report.
The IMF's primary responsibility is to intervene if a member nation faces a financial crisis. The World Bank's mission is to mount development projects in less-developed countries.
Another proposal backed by all the panel's members is that the World Bank, the IMF and other regional development banks forgive all the loans to about 40 of the world's poorest nations that cannot be expected to repay the loans in the first place. There is one condition to that proposal: That these countries prepare plans to improve their economies.
The commission also recommends that international financial institutions be more accountable, that their operations be more open, that they are careful that the governments receiving the loans are not corrupt.
Not all the recommendations were accepted by all the members of the commission. And even one proposal that was supported unanimously was the subject of complaints at Wednesday's briefing, attended by five commission members including Allan Meltzer, the chairman of the panel. He is a professor of political economy at Carnegie Mellon University in Pittsburgh, Pennsylvania.
The briefing did not begin well. Meltzer began by saying he and another member of the majority that supported the entire report would outline the report, and that dissenters would be allowed to answer questions from the audience.
At Meltzer's first pause, there was an interruption by one of the commission's dissenters, Jerome Levinson. Levinson, a professor at the Washington College of Law, was among five panel members at the dais. Before Levinson could say much, Meltzer rapped the table vigorously to silence him.
Levinson: "As a matter of -- point of privilege, I think it's an outrageous procedure in which the members of the -- the dissenting members of the commission are not given an opportunity to make a very brief statement themselves and are confined to answering questions. I think it's symptomatic of the way in which the chairman has conducted this."
Meltzer: "You're out of order."
The rest of the briefing was not an outline of the commission's recommendation. Rather it was the majority's defense of the recommendations.
Jeffrey Sachs is a Harvard University professor and is director of the Center for International Development, which specializes in reducing world poverty. He and Meltzer both stressed that the aim of the report is not to destroy the international financial institutions. Meltzer put it this way:
"Before the report was released, some critics complained that the commission's recommendations would destroy the IMF. I am sure that we have not heard these charges for the last time. I want to state clearly that these charges are false."
In fact, Meltzer said, Stanley Fischer, the acting managing director of the IMF, was open to many of the panel's proposals.
Another dissenter who was given a brief period to make his case was Fred Bergsten, the president of the Institute for International Economics. He called the recommendations "radical" and said they would severely hamper the work of the IMF -- interceding in financial crises -- and the World Bank -- reducing poverty.
"The majority's proposals, we believe, would thus sharply increase of international economic disorder and dash the prospects for economic development for millions of poor people around the world."
For example, Bergsten said if the commission's recommendations had been in place in 1997, the IMF would not have been permitted to intervene in the Asian economic crisis.
Both Meltzer and Sachs responded that the recommendations include the five-year transition period that would allow such intervention. And they added that the report includes a recommendation that the IMF be allowed to intervene in severe emergencies.
Sachs was emphatic in defending the commission's report.
"I urge you to read the report. It is the opposite of what is being said. This is an argument for effective reform, not an argument for slash and burn, not an argument for canceling the IMF and the World Bank, as many news stories have somehow portrayed." Meltzer stressed that he cannot predict whether the recommendations will be adopted by the World Bank and the IMF. First, he said, the recommendations must be accepted by Congress. And Meltzer noted, for example, that the United States is only one of 182 member nations of the IMF.
In fact, it was difficult enough for the 11 members of the commission to agree on anything.
Washington, 9 March 2000 (RFE/RL) -- It is unclear whether the recommendations of a commission empaneled by the U.S. Congress will bring real change to the International Monetary Fund (IMF) and the World Bank.
In fact, there are deep divisions within the commission itself, so its recommendations may not have the weight to inspire the changes.
The International Financial Institution Advisory Commission calls for profound changes in how the IMF and the World Bank lend billions of dollars to nations around the world. It says the changes should take place during a five-year transition period.
It says the fund should abandon long-term lending to governments and return to its original mission of short-term loans. This position already has been put forward by the administration of U.S. President Bill Clinton and even his opponents in Congress.
As for the World Bank, it says the agency should stop lending money in Latin America and Asia to avoid duplicating the work of regional development banks. But the report recommends that it continue lending in Europe and Africa. This recommendation for the World Bank was supported by all 11 members of the commission. Eight of the 11 members supported the entire report.
The IMF's primary responsibility is to intervene if a member nation faces a financial crisis. The World Bank's mission is to mount development projects in less-developed countries.
Another proposal backed by all the panel's members is that the World Bank, the IMF and other regional development banks forgive all the loans to about 40 of the world's poorest nations that cannot be expected to repay the loans in the first place. There is one condition to that proposal: That these countries prepare plans to improve their economies.
The commission also recommends that international financial institutions be more accountable, that their operations be more open, that they are careful that the governments receiving the loans are not corrupt.
Not all the recommendations were accepted by all the members of the commission. And even one proposal that was supported unanimously was the subject of complaints at Wednesday's briefing, attended by five commission members including Allan Meltzer, the chairman of the panel. He is a professor of political economy at Carnegie Mellon University in Pittsburgh, Pennsylvania.
The briefing did not begin well. Meltzer began by saying he and another member of the majority that supported the entire report would outline the report, and that dissenters would be allowed to answer questions from the audience.
At Meltzer's first pause, there was an interruption by one of the commission's dissenters, Jerome Levinson. Levinson, a professor at the Washington College of Law, was among five panel members at the dais. Before Levinson could say much, Meltzer rapped the table vigorously to silence him.
Levinson: "As a matter of -- point of privilege, I think it's an outrageous procedure in which the members of the -- the dissenting members of the commission are not given an opportunity to make a very brief statement themselves and are confined to answering questions. I think it's symptomatic of the way in which the chairman has conducted this."
Meltzer: "You're out of order."
The rest of the briefing was not an outline of the commission's recommendation. Rather it was the majority's defense of the recommendations.
Jeffrey Sachs is a Harvard University professor and is director of the Center for International Development, which specializes in reducing world poverty. He and Meltzer both stressed that the aim of the report is not to destroy the international financial institutions. Meltzer put it this way:
"Before the report was released, some critics complained that the commission's recommendations would destroy the IMF. I am sure that we have not heard these charges for the last time. I want to state clearly that these charges are false."
In fact, Meltzer said, Stanley Fischer, the acting managing director of the IMF, was open to many of the panel's proposals.
Another dissenter who was given a brief period to make his case was Fred Bergsten, the president of the Institute for International Economics. He called the recommendations "radical" and said they would severely hamper the work of the IMF -- interceding in financial crises -- and the World Bank -- reducing poverty.
"The majority's proposals, we believe, would thus sharply increase of international economic disorder and dash the prospects for economic development for millions of poor people around the world."
For example, Bergsten said if the commission's recommendations had been in place in 1997, the IMF would not have been permitted to intervene in the Asian economic crisis.
Both Meltzer and Sachs responded that the recommendations include the five-year transition period that would allow such intervention. And they added that the report includes a recommendation that the IMF be allowed to intervene in severe emergencies.
Sachs was emphatic in defending the commission's report.
"I urge you to read the report. It is the opposite of what is being said. This is an argument for effective reform, not an argument for slash and burn, not an argument for canceling the IMF and the World Bank, as many news stories have somehow portrayed." Meltzer stressed that he cannot predict whether the recommendations will be adopted by the World Bank and the IMF. First, he said, the recommendations must be accepted by Congress. And Meltzer noted, for example, that the United States is only one of 182 member nations of the IMF.
In fact, it was difficult enough for the 11 members of the commission to agree on anything.