Protests Go Smoothly as Debt Relief Plan Deliberated
As protesters denounced the global economic regime, world leaders agreed Saturday to pursue new ways of resolving financial crises, including a groundbreaking bankruptcy court process for insolvent governments.
Members of the International Monetary Fund’s policy-making panel also promised to make good on an earlier pledge to contribute another $1 billion for Third World debt relief.
The actions came during the first day of official deliberations by members of the IMF and World Bank. The sister institutions, which lend money to nations in distress and finance development programs in poor countries, will conclude their fall meetings today.
“What we’re seeing is a new compact between developing and developed countries, effectively a new deal for the world economy,” said British Chancellor of the Exchequer Gordon Brown. “The developed world will meet its commitments.”
Much to their dismay, the elite financial institutions have come to symbolize a wide range of grievances about the global economy, and previous meetings have drawn thousands of protesters to Washington. IMF and World Bank leaders sought Saturday to emphasize their achievements, as well as their ongoing efforts to improve the sometimes chaotic system of global finance.
They said their new crisis-response initiative would reduce the likelihood that future debt defaults would cause as much damage as the Asian financial crisis of the late 1990s or the more recent collapse of Argentina’s economy.
“The lack of any predictable process for resolving debt crises exacerbates the depth and duration of the difficulties,” said U.S. Treasury Secretary Paul H. O’Neill. “We must explore every possible option to improve the current system.”
The policy committee directed the IMF staff to develop by April a “concrete proposal” for establishing an internationally recognized legal process for restructuring the debts of governments in default.
It also endorsed efforts to include “collective action” clauses in future government bond issues to prevent one or two holdouts from blocking a debt restructuring plan approved by a majority of creditors.
The objective of both proposals is to resolve future debt crises quickly and before they threaten to destabilize large regions. Without such procedures, governments tend to delay inevitable defaults as long as possible, and a single creditor can go to court and tie up debt restructuring efforts for years.
The additional $1 billion for debt relief will be used to cover the IMF and World Bank’s share of the Heavily Indebted Poor Country Initiative, which has approved up to $37 billion in debt relief for 34 countries.
But the new deal falls far short of what many debt-relief advocates say is needed to let impoverished countries spend their money on social programs to relieve suffering rather than paying back lenders.
Wealthy nation finance ministers rejected proposals endorsed by nongovernment organizations such as Jubilee 2000 to increase HIPC debt relief by as much as $150 billion.
While finance officials huddled over their new initiatives, a diverse collection of anti-globalization activists rallied for an entirely different vision of global justice.
Lofting placards and chanting slogans, demonstrators called on the IMF and World Bank to open their meetings to the public, forgive billions of dollars in debt, withhold support for projects that degrade the environment and ban policies that impose economic hardships on local residents.
By unofficial estimates, at least 5,000 protesters were on the streets Saturday afternoon. But their goal of surrounding the IMF and World Bank headquarters was thwarted by a force of about 3,000 riot-clad police from Washington and other communities, as far away as Ohio and Illinois.
Yet the interactions between protesters and law enforcement contrasted sharply with those on Friday, when police arrested 649 anti-globalization activists, including self-proclaimed anarchists accused of vandalism. By early Saturday evening, police said they arrested four protesters for allegedly carrying explosive devices nearby.
Perhaps because the march was orderly and police had succeeded in thoroughly shutting down a large area of downtown surrounding IMF headquarters, near the end of the day officers relaxed some of their restrictions.
They allowed a group of a few hundred protesters to proceed to a small park a few blocks from IMF headquarters, where they ended the march with a rally. And when about 40 activists bound themselves together with duct tape and lay down in the middle of an intersection, police--who had already blocked off the street--decided to wait them out rather than arrest them.
The demonstrators had begun with a rally near the Washington Monument that featured singing, dancing and drum-beating that lent a festival flavor to a clear autumn day.
Marie Clarke, national coordinator for the debt-cancellation group Jubilee USA Network, said poor nations should be allowed to spend their money on AIDS patients instead of debt service to world lending agencies.
Ralph Nader, the consumer crusader and Green Party presidential candidate in 2000, said he feared that Congress would abandon its drive for tougher corporate crime laws amid the debate over war with Iraq. He denounced high chief executive salaries and the looting of corporate treasuries as the biggest “fit of greed and self-enrichment that the world has ever seen.”
Colorful props have become a staple of the anti-globalization protests, and Saturday’s demonstrations were no exception.
A 20-foot inflatable pig was labeled “Hog-tied corporate glutton.” An inflatable shark had a globe in its mouth and the sign: “IMF equals Loan Shark.” A large, rolling Trojan horse was marked: “World Bank Aid.”
A dozen activists donned business suits and oversized papier-mache heads and hands stained with red paint.
“These are businessmen, butchers, with blood on their hands,” said Eddie Haynes, 34, of the Vermont-based Bread and Puppet Theater. “So few people have so much power over so many, and it’s killing people who don’t have an ability to protect themselves,” he said.
An environmentalist contingent took exception to financial policies that activists said encourage the exploitation of energy and mineral resources in poor countries.
“Because they pollute, they lower the standards of living, which hurts the goal of poverty elimination,” said Nick Salter, 17, from Denver.
As they marched, the protesters chanted “More world, less bank,” and carried signs saying, “Drop the debt.” As their route took them past Department of Treasury headquarters, many booed.
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Times staff writers Jonathan Peterson and Aaron Zitner contributed to this report.
