The leaders of the International Monetary Fund and the World Bank have set out their vision of the future in major speeches to their annual meetings in Prague. IMF managing director Horst Koehler and World Bank President James Wolfensohn pledged more responsive and efficient organizations to further global economic integration, with the particular aim of cutting poverty. Meanwhile anti-globalization demonstrators had their say in a different way in the streets of the Czech capital.
Prague, 27 September 2000 (RFE/RL) -- IMF managing director Horst Koehler concedes that even experts can learn from unfolding events. In his keynote speech yesterday to the financial institutions' annual meetings, he said the IMF needs to gain a better understanding of the dynamics of international capital markets.
In other words, even the high-powered officials at the IMF need to know more about the milieu within which the private sector moves capital in and out of countries and economic sectors.
Explaining this, Koehler said international private capital flows have become a major source of growth, productivity and jobs. But he said they can also be a source of volatility and crisis. He referred to the 1997 and 1998 financial meltdowns in Asia and Russia, saying these had made people more aware of the importance of stability in the international financial system.
In that last comment, Koehler was probably in accord with many of the demonstrators who were marching on the heavily guarded meeting building even as he spoke. The Asian crisis of 1997 was characterized by lightning-fast movement of foreign capital out of the previously booming region as soon as it became clear that profits were at risk. Since that time, an international anti-globalization movement has grown, rejecting the idea that economic integration will eventually benefit all, even the poorest.
In his speech, Koehler said the public must be aware that crises can occur again in an open and dynamic global economy. But he also said the IMF's work should be to make these shocks less frequent and less severe. He said the Fund must continue building an international financial architecture that is able to absorb shock and encourage the private sector to better judge and manage risk.
Koehler, who took the helm of the IMF only a few months ago, said his aim is to place crisis prevention, through surveillance, at the center of the fund's activities.
He said his organization must develop a culture in which member countries are eager to seek the IMF's advice about looming financial problems early and voluntarily --- instead of waiting until after the tidal wave has broken. By such means, he said, the United Nations' target of halving world poverty in the next 15 years can be achieved. He predicted the IMF would have a key coordinating role in this process. As he put it:
"I'm aware of the critical debate about globalization, and many questions raised have to be of concern to all of us. But I also want to be clear: If the IMF did not exist already, this would be the time to invent it."
In a similarly upbeat speech, World Bank President James Wolfensohn touched more on socio-economic issues. He said that high-income countries must increase their development aid to poor countries -- which is running far below hoped-for levels -- speed broad debt relief, and dismantle trade barriers. Wolfensohn:
"We cannot turn globalization back. Our challenge is to make globalization an instrument of opportunity and inclusion, not of fear and insecurity."
The words "fear" and "insecurity" are apt ones to bring into a discussion about globalization. As South Africa's quiet-spoken finance minister Trevor Manuel told journalists on the margins of the annual meetings, a lot of young people and poor people feel a sense of displacement when faced with this process beyond their control.
Manual made the point that the impact of globalization is felt locally. In other words, a worker in France will worry about losing his job at a factory whose owner is investing, say, in Thailand. The Frenchman does not necessarily know that other Thai workers may be worrying about losing their own jobs as manufacture is switched to a cheaper production base in, say, Bangladesh.
Manuel believes this preoccupation with local as opposed to internationalist positions goes a long way towards accounting for the fragmentation of the anti-globalization movement. He said anti-globalists know what they do not like, but are unable to formulate a positive alternative for how world development should proceed.
However, such doubts did not seem to weigh heavily on the minds of the hundreds of activists who rioted in the center of Prague yesterday, nor on those who tried to storm the congress center, where the annual IMF/World Bank meetings were taking place. Although they did not manage to disrupt the proceedings seriously, the extremists did gain a world audience for their protests -- thanks to wide media coverage.