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'WHAT WASHINGTON CONSENSUS? I NEVER SIGNED ANY'- CAMDESSUS

by Chakravarthi Raghavan


Bangkok, 13 Feb 2000 -- "What Washington Consensus, I never signed any," Michel Camdessus, IMF Managing Director, said Sunday at UNCTAD-X in one of its 'interactive sessions' in responding to an NGO representative - Martin Khor of the Third World Network.

In 1988, soon after Michel Camdessus took over as Managing Director of the International Monetary Fund, UNCTAD's then Secretary-General  the late Kenneth Dadzie went to visit him in Washington DC, on a Sunday, to discuss with him the Third World Debt crisis and the UNCTAD view on the need for writing down the debts owed by countries to private banks.

Camdessus, Dadzie told this writer on return, agreed with many of UNCTAD's analysis on the debt issues, but said this was a thought he could afford to have only on a Sunday!

Well, Camdessus came to Bangkok at the invitation of UNCTAD Secretary-General Rubens Ricupero to address the tenth session and participate in an interactive meeting, and spoke at the Conference on Sunday, a day before his laying down office as the IMF head.

The Sunday and the imminent retirement perhaps encouraged him to say some things at UNCTAD-X that is not normally IMF language, mixed, though, with many of the shop-worn cliches in the IMF armoury:

"Now we know, it is not enough to increase the size of the cake. How the cake is shared is equally relevant to the dynamics of development." Well, some lessons in development economics after 12 years on the job.

Or, another one:

"it is recognized that the market can have major failures, that growth alone is not enough or can even be destructive of the natural environment or precious social goods and cultural values. Only the pursuit of high quality growth is worth the effort -- growth that can be sustained over time... growth that has the human person at its center.... growth based on continuous effort for more equity, poverty alleviation, and empowerment of poor people, and growth that promotes protection of the environment and respect for national cultural values... a striking and promising recognition of a convergence between a respect for fundamental ethical values and the search for efficiency...."

"...that systematically dismantling the state is not the way to respond to the problems of modern economies; rather, we must aim for a slimmer yet more effective state, able to provide the private sector with a solid framework in which the rule of law could prevail on a level playing field."

Or, "the new emerging paradigm, rooted in fundamental human values, taken together with a better ability to prevent and manage the crises, is a distinct and positive chance of our times... a new perception of globalization is emerging .. a call for common action to transform globalization into an effective instrument for development. Globalization can be seen in a positive light, not what some have portrayed it to be, a blind, potentially malevolent force that needs to be tamed... a logical extension of the same basic principles of economic and human relations that have already brought prosperity to many countries...."

As incredulous delegates and observers listened, the Camdessus speech was also splattered with a mixed bag of old and new IMF virtues -- liberalization of trade and capital movements, but with an orderly approach, need for transparency, accountability, democratic governance, fighting corruption, poverty alleviation as the center-piece of economic policy ('we cannot ignore poverty'), need for gender equality, increasing aid, debt relief, market access to developing countries, support to Kofi Annan's recommendation for ceiling on national military expenditures -- a re-invigorated multilateralism so that globalization is no longer operated by autonomous technological and financial forces, but towards world unity in the service of human kind, etc.

The South African Trade Minister Alec Erwin referred to Fund-Bank proposals for multilateral debt relief and IMF gold sales and need for quick action on these.

There were also some polite comments and questions about the relationships of the new paradigm with the Washington Consensus, and from St. Lucia about the problems of very vulnerable economies which may not strictly come under the category for fast debt reliefs, and the President of the Board Amb. Petit of France, asking Camdessus to amplify some of his personal views now with those of the IMF.

Then came some comments and questions from Mr. Martin Khor of the Third World Network that clearly upset Camdessus.

It was almost touching, Khor said, to see Camdessus at the end of his IMF career to be born again as a 'human development advocate' talking about health, education, poverty and environment. But it would have been more convincing if he had first acknowledged the big role of the IMF in generating the crisis of poverty and development in Africa, Latin America and how the IMF's structural adjustment policies had caused cutbacks in health and education budgets. In Asia the IMF, through its earlier advice for financial liberalization, had led to the present crisis. It was the IMF that introduced conditionalities of high interest rates, tight money, budget cutbacks, and closure of local banks.

Yet, said Khor, Camdessus does not take lessons from IMF mistakes but continues to dole out advice to the victimized countries, and with double standards, since the advice for transparency etc could have equally applied to international players in the markets, the hedge-funds etc. And while Camdessus said the reform of the affected countries were not yet over, he forgot to say that the reform of the international financial system had not even started. He had not even called for transparency and strict regulation of financial markets and big players there. NGOs of the South were fighting corruption and cronyism in their countries. But what about the corruption and cronyism in the North, and what Prof Bhagwati had called the Wall Street-US Treasury-IMF complex?

If Camdessus had been serious he would have led a process of reform to curb speculators and short-term flows of funds, and prevented the IMF being used by financiers and the US Treasury. If he had been serious, the IMF should at least have changed the quota shares so that developing countries could acquire more shares and quotas, at least to have 50% voting rights. If Camdessus was serious about his new paradigm, he should confess to his past sins, admit the IMF's liability for the economic and social losses of many countries and advocate all the required changes.

Khor was cheered loudly by the government delegations and observers inside the plenary hall.

While replying, the picture of Camdessus on the large videoscreens in the hall showed Camdessus was clearly upset - though part of the reason perhaps lay in the fact that before he came into the hall in the morning another NGO had splattered his face with a cream-pie.

Camdessus started off with sharing Erwin's sense of crisis and need for speedy actions on debt relief, and then added: "I don't know what the Washington Consensus was. I never signed it."

He was, of course, right. The gospels setting out Christ's preaching were those of the apostles, not Christ himself. And the stern injunctions by the prophets of the Market God (the Fund and the World Bank) echoed by the Washington think tanks were assembled and given the name 'Washington Consensus' by Prof Williams. And thus, it has become easy - first by the Bank and now the Fund to deny authorship, though in its hey day neither repudiated them or distanced themselves from the Consensus.

"You are more interested in the mistakes of the past than in exploring paths for the future," Camdessus told Mr. Khor, and refused to make any mea culpas. The lowering of interest rates and government spending by Thailand and others was because their adjustment had succeeded, not because of Malaysia's reversal of course and capital and exchange controls which were no panacea, Camdessus claimed. Liberalization had been undertaken in countries in a disorderly way, and in Korea it was the IMF that had advised some reversals.

Though Khor had raised the issue of double standards in terms of lack of transparency and accountability of markets and big players there, Camdessus repudiated any double-standards, citing the examples of the UK and Canadian governments in making disclosures! (SUNS4606)

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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