Wall Street gets it. So does Congress. Even President Bush gets it. But not
the International Monetary Fund (IMF) and the World Bank.
The era of market fundamentalism is over. Marketization, deregulation and
privatization, and the opportunities for market manipulation offered by inadequate
regulation -- all central elements in the rise and fall of Enron -- are now discredited
in the United States. And in developing countries, where their effects have been
most devastating, they are the object of widespread public opprobrium.
Unfortunately, the IMF and the World Bank continue to sing from the market-fundamentalist
hymnal.
• Marketization: Just as Enron created new markets in exotic commodities such
as bandwidth, so the IMF and the World Bank have worked to marketize services
previously in the public and noncommercial realm. Case in point: user fees for
primary health care. The World Bank continues to support such charges, even after
reversing its support for education fees. The effect is to deny poor people access
to care. In Papua New Guinea, for instance, the introduction of user fees led
to a decline of about 30 percent in the average monthly attendance at outpatient
health centers.
• Deregulation: Reckless deregulation in California enabled Enron and other
energy companies to gouge customers. Similarly, IMF- and World Bank-induced deregulation
in developing countries has had disastrous consequences. In the Philippines and
in Ghana, for example, deregulation in the mining sector has opened the country
to giant multinational companies, displacing tens of thousands of residents and
paving the way for environmental devastation.
• Privatization: Central to Enron's international agenda was the takeover of
privatized electricity and water services in developing countries. One country
where Enron sought to gain control of a privatized water system was Ghana. Concerns
about corruption -- including those voiced by the World Bank -- led to the collapse
of the deal.
But the World Bank continues to push for water privatization in the West African
nation. In preparation, water prices have doubled, and the bank anticipates prices
rising for the foreseeable future, even though poor Ghanaian consumers can pay
as much as 10 percent to 20 percent of their income for drinking water. In a country
where one-third of urban consumers are not even connected to water pipes, the
private operators would have no duty to expand service to the poor.
In the Dominican Republic, World Bank-supported privatization let Enron swoop
in, buy parts of the electric utility and jack up rates. When consumers and the
government couldn't pay the high prices, Enron turned off the power. Enron and
other buyers of the privatized utility are now alleged to have paid too little,
thanks to a valuation performed by an Arthur Andersen subsidiary.
• Financial market manipulation: Enron's financial fraud is now legendary.
But consider the IMF's deceit in Brazil: Everyone knows the country has no prospect
of paying off its foreign debt. But rather than acknowledging this and working
out a discounted payment arrangement for creditors, the IMF is making new loans
to pay off old ones. This has two immediate effects: It enables the private creditors,
including the big U.S. banks, to be paid off, with debt obligations shifted to
the IMF. And it enables the IMF to extract austerity measures from Brazil that
are explicitly intended to lock in fundamentalist market policies, no matter which
party Brazilians elect in coming elections.
Restraints on corporate power are even more necessary in developing countries
than in the United States. But the market fundamentalists at the IMF and the World
Bank continue to systematically unshackle corporate activity in the Southern Hemisphere.
That's a major reason thousands will demonstrate against the IMF and the World
Bank in Washington this weekend.
Action makes a difference: In 2000, after the last major U.S. demonstrations
against the IMF and the World Bank, Congress passed a law requiring the United
States to oppose IMF or World Bank loans that include user fees for primary education
or health care. Partly as a result, Tanzania lifted primary education user fees,
1.5 million additional children -- mostly girls -- were able to go to school.
The writer works with the Mobilization for Global Justice and is editor
of Multinational Monitor magazine.
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