Global Policy Forum

By James Arnold

The annual meetings of the World Bank and IMF finally drew to a close on September 27. eCountries takes a look back at the issues and events that dominated the financial world's biggest meet-and-greet. Of course, as world-weary veterans will tell you, nothing actually gets done at the World Bank/IMF annual meetings. Nominally intended as a forum to get the two institutions' members together, it has swollen into a schmooze-fest, where flesh-pressing investment bankers take precedence over worthy policymakers, and where talk of poverty and inequality is restricted to thinly attended seminars. This jaundiced argument more or less held true for the Prague meetings. But that doesn't mean that Prague was pointless. In fact, this year's meetings were rich in incident - just not always of the type the organizers might have wished for.

Debt relief

This was supposed to be the big topic of the Prague meetings. After a noisy campaign at the end of last year, groups such as Jubilee 2000 were hoping to put the case for debt forgiveness at the meetings. But they didn't make much headway. Although a few developed countries - notably Canada - made encouraging noises about moratoria, the rich world decided to continue working on the more cautious Highly Indebted Poor Countries (HIPC) program. Nor did the issue get the media play it deserved: for several days, officials plugged away in meeting after meeting, but debt relief only hit the headlines when Bono, the lead singer of U2, showed up for a seminar.

Touchy-feeliness

Possibly aware that these meetings weren't going to produce any major break-throughs for the poor, James Wolfensohn, the president of the World Bank, went out of his way to project a cuddly, concerned image. In a report published during the meetings, "The Quality of Growth", the Bank outlined a shift in its economic policies away from a straight concentration on growth-promoting policies, and towards quality-of-life indicators. And Wolfensohn talked constantly of involving NGOs in decision-making - a move that has worried many Bank traditionalists and some country members. Even the IMF, long criticized for being stand-offish and opaque, has made a determined attempt to appear transparent and friendly.

Horst Koehler These were Koehler's first meetings as the IMF's managing director. And expectations, to be fair, were low. Koehler was not a success in his previous role at the head of the EBRD - arguably one of the toughest jobs in global finance. But he seemed to blossom in Prague. His spontaneous, tough-talking, frank style went down well, especially in contrast to the polished but unsatisfying diplomacy of his predecessor, Michel Camdessus. Koehler sees himself as a reformer and intends to refocus the IMF on macroeconomic policy and financial market stability, while increasing its role in combating poverty. Although these reforms were in fact initiated under Camdessus, Koehler's sense for PR should ensure that he gets the credit.

Eastern Europe

This was the first time the meetings had taken place in the ex-communist world. Ten years after the beginning of reform in the region, it was a chance to take stock. And the delegates didn't seem to like what they saw. Although the East European economy has finally started to grow, there was concern that the fruits of this growth were not filtering down into living standards in the way economic theory says they should. In an unprecedented display of contrition, World Bank officials admitted that Fund and Bank policies had in the past been directed too much towards free-market reforms, without enough focus on the social safety net. Such contrition did not, however, help Russia, whose delegation came to Prague in search of a new IMF loan agreement, but returned empty-handed.

Market worries

Try as they might to focus their attention on poverty and inequality, the delegates were distracted by the erratic behavior of financial markets - the plunging euro, surging oil prices and sharp drops on stock markets. By September 22, the nervousness had reached its peak, and the concerted central bank intervention in the currency markets was much more exciting than earnest World Bank seminars. G7 finance ministers, who met on September 23 in Prague, issued a tough but bland communiqué, vowing to intervene again if necessary, and within 24 hours the immediate panic was over. But the fundamental issues were much discussed throughout the meetings, especially the effect of high oil prices on developing countries, and the implications of the weak euro for EU expansion.

Protests

After Seattle and Washington, Prague was always going to be a tense meeting. Although the streets were quiet during the first week of the conference, delegates grew increasingly nervous as the September 26 day of protests drew near. And sure enough, there was violence - although on a smaller scale than many had feared. In their intention to block access to the conference center, the protests failed: Czech police were extremely efficient, and the protestors' lack of effective leadership contributed to their muddle.

But they succeeded in scaring the delegates, and raising the question of whether such lavish events project the right image. As respectable NGOs reflected on S26 after the event, however, most agreed that the violence did enormous harm to the anti-globalization cause; their focus now is likely to be more on working with, rather than against, the international financial institutions.

So were the meetings a success? That depends. If their intention was simply to discuss IMF and World Bank business, then they may well have succeeded to the organizers' satisfaction. But there's much more to this ten-day bonanza than that. And in most other regards - especially publicity - the Prague meetings were a disappointment. Big stories like the euro intervention and the protests kept development issues out of the headlines. And the delegates were so concerned about security that the meetings were wrapped up a day earlier than was planned: many people left town right after the protests on September 27, and the closing ceremony, scheduled for September 28, was quietly cancelled. That doesn't make the meetings a total waste of time: even at the tensest moments, the networking went on at a furious pace. It takes more than a few petrol bombs to stop bankers schmoozing.

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