Critical Mass: The Emergence of Global Civil Society

8. Influencing the IMF

Influencing the IMF Jo Marie Griesgraber 8 153 NGOs have long reviled the International Monetary Fund (IMF or Fund). It was initially designed in 1944 at the Bretton Woods Conference to assist member countries with short-term trade imbalances, but in the 1980s that role was no longer needed by the global financial community. Its major shareholders , the wealthy countries,1 determined to use the IMF as both their “debt collection agency” when the debt crisis broke through in the early 1980s, and as their “credit rating agency,” whereby low-income countries (LIC) had to be in good standing with the IMF in order to receive foreign aid. The policies the Fund required of the debtor or borrowing countries were designed to address short-term financial hemorrhaging of foreign currency by these countries. Other problems arose and intensified because the Fund persisted in applying the same “tourniquet-style” policies2 over decades, thwarting any hope of growth. The series of efforts to reform the IMF presented here demonstrate the difficulties of reforming a global institution that serves the interests of status quo economic powers. The energy expended on reforming the institution is based on its central role in impeding the growth of developing countries (and hence the hope for reducing poverty). The methods employed appealed to the principles espoused by democratic decision makers and to the moral values of a broad swath of citizens globally. Since the earliest case examined here (the debt crisis, beginning in 1982), much has changed in the world economy. By the time of the fifth case (2007), the question becomes: Are the major economies willing to salvage the IMF by making its governance more accountable and inclusive, or do the habits of power blind them to their own long-run self-interests, regardless of the moral arguments? DEBT, 1982 The international development community, especially religious organizations with missionaries in the field, started to toll the alarm bells shortly after Mexico ’s financial collapse in 1982. Fr. Tom Burns, a Catholic priest with the Maryknoll order in Peru, recounted the new indicator for Peru’s debt problems: the rising number of “emergency baptisms” he was called upon to perform in Lima’s slums, i.e., the rising number of infant deaths.3 The efforts to reduce, even remove, the debt burden from developing countries has been ongoing since at least 1982.4 Religious missionaries of every denomination, like Fr. Burns, warned that something was seriously wrong. The initiative for debt campaigning was therefore solidly within the religious community with partners in developing countries. These were soon joined by international development organizations such as Oxfam in the UK, and by left or progressive organizations such as the Institute for Policy Studies and the Development Group for Alternative Policies (D-Gap) in the US.5 My work began in 1989 at the Jesuit-related Center of Concern in Washington , DC. By that time, the first coalition of debt activists had already faded from fatigue. The options for action were limited to reducing bilateral debt, either singly between the US and a particular country, or internationally through the Paris Club (the ad hoc arrangement of Western official creditors that met to address the request of one debtor to reduce or restructure its debts). Before 1993 it was possible for the president and/or the US Congress to simply write off debt. In 1993, the Credit Reform Act (CRA) required that Congress appropriate new money to cover the loss to the US Treasury of any debt write-down. This reform in terms of US government accounting placed an additional burden on anyone wanting to reduce a foreign government’s debt. Bread for the World was instrumental in getting the US Congress to reduce the debt immediately prior to the implementation of the CRA, and the White House reduced the debt of Poland, Egypt, and Guyana (among others) at the same time. Initial international NGO efforts involved Oxfam in the UK and religious/ progressive groups in the US focusing on Paris Club meetings and then increasingly on the G7 Summits where major creditors would endorse increasingly generous terms for reducing debt in the Paris Club. 154 Jo Marie Griesgraber The real push to cancel the debt of poor countries came from the UK with the launch of the Jubilee 2000 Campaign. In the US, at the 1997 G7 Summit in Denver, Marie Dennis of Maryknoll, head of the Religious Working...