Global Policy Forum

At IMF Meeting, Optimism Inside, Outrage Outside


World financial ministers see good signs for global economic growth,
while protesters focus on the plight of poor nations.

By Warren Vieth and Jon Marino

LA Times
April 25, 2004

The world's wealthy nations promised Saturday to take new steps to promote growth in the global economy, while protesters banged pots and pans to try to focus their attention on the poor. Concern about the health of the world economy and the plight of developing countries emanated from both sides of the police barricades as global financial leaders launched two days of deliberations at the International Monetary Fund and World Bank complex.

"We share the increased optimism regarding the global recovery," said Sudan Finance Minister Elzubier Ahmed Elhassan, briefing reporters inside the heavily guarded IMF headquarters. "But we need to remain vigilant…. Poverty is a major contributor to global instability." "Another world is possible," declared protest organizer Robert Weissman of the Mobilization for Global Justice, which called on the IMF and World Bank to cancel the debts of poor countries, stop telling them how to run their finances and end support for environmentally damaging projects. The group also called on the organizations to conduct open meetings.

Finance ministers and central bank governors from the Group of 7 industrial nations emerged from a morning summit to declare that the global recovery was gathering speed but remained subject to such risks as high oil prices, rising interest rates, geopolitical conflicts and signs of economic overheating in China. "Rising energy prices can have a negative effect on world GDP growth," said U.S. Treasury Secretary John W. Snow, remarking on a run-up that has pushed the spot price of oil as high as $38 a barrel in recent weeks, compared with about $26 a year ago. The rise has contributed to gasoline prices exceeding $2 a gallon in California and other areas. Although the increase has been attributed in part to OPEC production cuts, Snow said it appeared global oil production was roughly in balance with consumption and that replenishment of depleted inventories was driving the recent rise in price. IMF economists issued a report on the eve of the weekend meetings projecting the world economy would grow at a relatively robust rate of 4.6% this year. But they cautioned that every $5 increase in the price of oil would trim the growth rate by 0.3%.

The G-7 countries — the United States, Canada, Britain, Germany, France, Italy and Japan — pledged to take additional steps to promote global economic growth and boost employment, including tax, spending and labor market reforms and a renewed commitment to reducing trade barriers. Later in the day, the IMF steering committee issued a similar call to arms. "Much remains to be done," said British Chancellor of the Exchequer Gordon Brown.

Snow said he encouraged his counterparts to follow the Bush administration's lead by cutting taxes to stimulate growth. "The evidence is pretty clear that lower marginal tax rates are consistent with higher employment … higher real wages and greater prosperity," he said. Although other countries have criticized the United States for contributing to global financial instability by running up big budget and trade deficits, Snow insisted that the administration was committed to sound fiscal practices and was taking steps to shrink the shortfall.

The G-7 ministers and IMF overseers promised to work together to combat terrorist financing; help fund the reconstruction of Iraq and Afghanistan; foster economic development throughout the Middle East; and improve strategies for reducing global poverty, such as providing more aid in the form of grants rather than loans and working in partnership with Third World entrepreneurs and small businesses. They also discussed ways to enhance the flow of remittances — money sent by guest workers to their home countries. Remittance payments have grown to more than $100 billion a year and have become an increasingly important element of global financial flows. But the cost of transmitting money tends to be high, limiting the potential benefits to the recipient countries, officials said.

African finance ministers said developed countries needed to do far more than they had been willing to do in the past, such as expanding existing debt-relief initiatives, removing barriers to Third World exports and reducing farm subsidies that encouraged overproduction and depressed world commodity prices.

Outside the IMF and World Bank complex, protesters marched through the streets of the District of Columbia, condemning the twin institutions on the 60th anniversary of their founding at the Bretton Woods conference of 1944. Organizers said about 3,500 demonstrators took part; police estimated the number at 1,500 to 2,000. Carrying signs demanding "People over profit," "Fair trade not free trade" and "No globalization without representation," demonstrators staged a musical march, banging mixing bowls and pots with wooden spoons and eggbeaters to synchronize with snare and bongo drums. Upside-down buckets were used to keep the beat; even cowbells and plastic jugs filled with rocks became instruments. In an unlikely cover tribute, protesters revamped the staccato lyrics of rapper DMX, singing "Stop, drop, shut 'em down; open up shop. Oh no, that's how the World Bank rolls!"

The National Lawyers Guild provided more than a dozen legal observers wearing neon-green caps to aid protesters who might be arrested or who felt their legal rights were being violated. Guild spokesman Zachary Wolfe said the organization began providing lawyers to monitor protests after the 1999 IMF-World Bank protests in Seattle, where many demonstrators were tear-gassed and arrested. Saturday's protesters came prepared as well; dozens paraded with noses and mouths protected by handkerchiefs in case of a tear-gassing.

The IMF and World Bank protesters received support from women who said they planned to march in today's rally for women's reproductive rights. Some combined the themes, wearing shirts declaring their "pro-choice and anti-capitalist" sentiments. "It's all related," said Edith Wilson of Pittsburg, who came to Washington with her daughter for today's women's rights protest and joined in Saturday's march against the World Bank and IMF. "It's about freedom. People should have economic freedom, and women should have a right to choose."

Although Saturday's events lacked the intensity of some past IMF and World Bank protests, police estimated more than 100 vehicles — mostly SUVs and luxury cars — were spray-painted with anarchist symbols or scratched with keys. Two protesters were arrested for property destruction along the march route; one also allegedly assaulted an officer with a slingshot and thumbtacks.

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