Spring Protests in Washington, DC: Another Seattle?

The Clinton administration claims to have learned something from the
outpouring of protest against the World Trade Organization (WTO) last
December. “Those who heard a wake-up call in Seattle got the right message,”
said President Clinton. Maybe so, but then they hung up the phone and went
right back to sleep.

Fortunately for the world, the administration and its allies will not slumber
for long. In just a couple of weeks, thousands of protesters will take to the
streets of the other Washington — the District of Columbia — for a week of
events that will probably rival Seattle in its impact on the institutions of
globalization.

Religious groups will lead a rally for debt relief for poor countries on
April 9. Organized labor will gather its troops and others to oppose the
expansion of the WTO on April 12. And on April 16, the International Monetary
Fund (IMF) and World Bank will face the first major demonstrations ever to
take place on their home territory. In addition to a rally and march, many
protesters will attempt to shut down the spring meetings of the Fund and the
Bank with non-violent civil disobedience — as they did with the WTO meetings
in Seattle.

The roots of discontent

This is a movement that is not going away. In some ways it is reminiscent of
the early stages of protest against the Vietnam War. Those who understand
this movement know that unless there is a drastic change in our government’s
policy, it will continue to grow in numbers and in strength.

The analogy is appropriate along a number of dimensions: For years the
American public was told that we were fighting for the freedom of Vietnam,
and that victory was around the corner. As the casualties mounted and
official lying was exposed, and the horror and cruelty of the war became more
widely known, people began to question the prosecution of the war. Then they
began to question the justification, and finally the motives of our entire
foreign policy.

This time it is our foreign economic policy that is being held up to
scrutiny, and for millions of Americans it has already become discredited.
That this could happen at the peak of our longest-running economic expansion,
with unemployment at a 30-year low, is further evidence that this movement is
deeply rooted.

The Seattle protests plucked the WTO from its cozy obscurity and dragged it
out into the daylight, where ordinary citizens could see the impact that it
has on their lives, and the lives of other people around the world. This
forced President Clinton to scuttle the WTO’s Millennium round of
negotiations.

The April protests will cause many people to learn about the IMF and the
World Bank for first time, and others to find out more about what they do.
This is almost certain to diminish support for these organizations.

The case against the IMF

The IMF is the most powerful financial institution in the world. It is
arguably the most powerful institution of any kind, in terms of its impact on
the lives of hundreds of millions — and indirectly, billions — of people.
This is due to an informal arrangement under which borrowing countries must
first reach agreement with the IMF, in order to get credit from other
multilateral institutions, governments and often private sources as well.
This gives the IMF the power to choose finance ministers and central bankers,
and even to topple governments that do not comply with its conditions.

The U.S. Treasury Department is the overwhelmingly dominant influence in the
IMF and holds this system together. So anything that weakens support for the
IMF in its home base has the potential to collapse the whole arrangement. The
recent report of a congressional commission that sharply criticized the IMF,
and called for downsizing its mission, has contributed to this weakening. And
the fight between the Clinton administration and Europe over who would head
the IMF ? recently resolved with the administration agreeing to support
Germany’s No. 2 choice, Horst Koehler — is another sign of strain.

The IMF is commonly portrayed as a global rescue operation — an
international “lender of last resort” analogous to our own Federal Reserve at
the national level. But this is not true, even in those instances in which
the IMF intervenes in a crisis situation. The Federal Reserve will provide
funds to a failing financial institution in the United States, in order to
prevent the collapse from spreading. The IMF does something quite different:
It helps to form a creditors’ cartel, so that the lenders can collect as much
as possible on their debt from the government that is facing a crisis. In the
Asian crisis, for example, the main result of their intervention was to get
governments such as those of South Korea and Indonesia to guarantee the debt
of private borrowers.

Although the IMF?s most destructive policies are carried out in the poorer
countries, they also hurt working people in the United States. For these
reasons a growing portion of organized labor here is joining the movement to
curb the power of the IMF. After all, unions opposed NAFTA because the
agreement made it easier for American corporations to relocate to Mexico,
drive down wages and undercut labor’s bargaining power. The IMF does all of
the things that NAFTA did, in dozens of countries, making it labor’s most
powerful adversary.

The IMF also pressures countries to produce for export rather than for
domestic markets. This can cause a glut of manufactured or agricultural goods
on world markets, driving down prices, encouraging “dumping” and putting more
downward pressure on wages. Many of the thousands of steel workers who lost
their jobs in the wake of the Asian economic crisis are casualties of IMF
policies.

Time for another wake-up call

Although Treasury Secretary Larry Summers is now jumping on the reform
bandwagon, it appears that he is simply trying to preempt demands for real
change. He refuses to support cancellation of the poorest countries’ debt to
the IMF and the World Bank, a basic demand of the worldwide movement for debt
relief. This debt is widely known to be unpayable, and it is within the means
of these institutions to let go of these claims. But they refuse to do so,
preferring instead to use the debt to maintain control over the economic
policies of these countries. James Wolfenson, the head of the World Bank, and
Koehler, soon to approved as the new managing director of the IMF, concur
with Summers.

They’re going to need a few more wake-up calls.

Mark Weisbrot is co-director of the Center for Economic and Policy Research
in Washington, D.C.