Not just a Seattle sequel

The protests surrounding this weekend's meetings of the IMF and World Bank are the next step in the backlash to globalization.

By Bruce Shapiro
Published April 15, 2000 4:00PM (EDT)

Lately, my friend Jim Schultz has been sending out a lot of e-mail. Schultz, a former San Franciscan, helps run an orphanage in Cochabamba, Bolivia, the poorest country in South America. Last year, Bolivia's government, under pressure from the World Bank, decided to privatize Cochabamba's municipal water company, selling it to a subsidiary of Bechtel Corp. Overnight, Bechtel doubled Cochabamba's water rates and Schultz witnessed the results: "Families earning a minimum wage of less than $100 per month were told to fork over $20 and more or have the tap shut off," he writes. He talks about a mother of five, an employee of a knitting factory, whose bill for drinking water amounted to the equivalent of her family's food budget for a week and a half.

At the turn of the year, Cochabamba exploded in protest, which escalated until last week, when Bolivia's government declared a state of siege, rousted protest leaders from their beds and fatally shot a 17-year-old demonstrator. When last heard from, Bechtel was packing its bags and trading blame with the Bolivian government for the debacle.

Cochabamba may seem far from Washington. But thousands of demonstrators are descending on the U.S. capital this weekend for precisely the reason that Cochabamba's angry peasants sent Bechtel packing: the one-size-fits-all, corporate-friendly dictates of the World Bank and International Monetary Fund, which hold their joint spring meeting there Sunday and Monday. Cochabamba is far, too, from New Haven, where I write this in a library at Yale University.

But a few yards outside the library doors, Yale students have been sleeping out in a plywood shanty for the past several weeks to pressure the university into higher standards for its apparel contractors -- for the sake of sweatshop workers like Schultz's friend in Cochabamba -- companies operating in the laissez-faire environment demanded by the IMF. The price of water in Bolivia might seem to have as little to do with American politics as, well, the price of tea in China. But Bolivian water, Chinese tea, Ivy League athletic gear -- not to mention the presidential race -- are increasingly part of the same story.

That story comes to the forefront again as the IMF and World Bank meet in Washington this weekend. Anti-globalization protestors are descending on the nation's capital, hoping to maintain the momentum from the protests at last year's World Trade Organization meeting in Seattle. The coming confrontation in Washington is being portrayed as the Seattle sequel -- the next foray for the "Teamsters and turtles" coalition of labor, environmental and consumer advocates who paralyzed the WTO meeting.

But while Washington's protestors plan civil disobedience, the real crisis in Washington this weekend is not in the streets -- it is in the conference rooms where finance ministers are meeting at a time of profound uncertainty about the future of the IMF and World Bank.

The IMF is at odds over the choice of its next managing director, but the real issue is how far and in what direction both institutions will be reformed. U.S. Treasury Secretary Lawrence Summers is pushing the institutions to get out of the long-term investment business altogether. France and Germany now call openly for trade policies that recognize social priorities beyond foreign-investment orthodoxy. Joseph Stiglitz, the former chief economist of the World Bank, denounces the IMF for imposing its political and economic agenda on developing countries. Stiglitz now calls for the kind of inclusive, locally driven development policy that only wild-eyed radicals envisioned a few years ago.

And like the first wave of protestors to arrive in Washington this week -- the "Jubilee 2000" movement of Catholic activists -- Stiglitz now calls upon the World Bank and IMF to write off most Third World debt. The international-finance establishment is beginning to fracture over the global economy, just as America's foreign-policy establishment tore itself apart over Vietnam.

And while the international financial institutions fracture from within, from without the protest movement gathering in Washington is not only against global corporations, it is also actively envisioning a pragmatic alternative to the current financial order, one that was marked by instability as the world's markets fluctuated wildly this week.

The roots of this weekend's protest are not in November's protests, but in the mid-1970s. The World Bank and IMF had been founded by the victorious allies after World War II for the modest but important job of stabilizing international currency and sponsoring post-war reconstruction. But in the '70s, both institutions took on a new and broader mission -- lending money to desperately indebted Third World countries and sponsoring big-time development projects like dams and railways.

But those loans came with a price: that Third World governments privatize state industry, lower wages and generally make their nations friendlier toward foreign investment.

Instead of freeing Third World nations from debt, the measures pushed them further into the hole. The money for most of those dams and railways lined the pockets of corrupt officials, the competition for Western corporate investment drove wages in countries like Bolivia even lower. The result was not trickle-down success, but the economic culture of maquiladores -- those self-contained free-trade zones in which foreign investors can evade unions, the minimum wage and environmental regulation.

A few people picked up on this crisis early, especially those on the receiving end. I remember more than 20 years ago being part of a group at the University of Chicago protesting a peace prize to Robert McNamara, then head of the World Bank. Most of us were angry about McNamara's record as secretary of defense during the Vietnam War.

But a graduate student from Mexico, a former seminarian named Primitivo Rodriguez (today one of his country's most inventive and visionary reformers), insisted that the harsh new economic order being imposed by the World Bank was as noteworthy a crime. Unfortunately, Rodriguez was the exception. Most analysts didn't wake up to the IMF-World Bank's blunders until the late-'90s Asian economic crisis, when even Business Week and Morgan Stanley could smell the coffee and proclaimed the international financial regime a debacle.

But Seattle brought the issue of globalization to the front pages and quickly got the attention of a number of people on Capitol Hill. On Thursday, five members of Congress released a sweeping "Global Sustainable Development Resolution" originally drafted by Rep. Bernie Sanders, I-Vt., incorporating a wide range of steps to stem the worldwide "race to the bottom," a race even corporate-globalization champion President Clinton now warns against.

The bill calls for the United States to renegotiate trade agreements to include worker rights and environmental protections. It calls for reining in the IMF and World Bank to their original roles as guarantors of international financial stability and proposes United Nations oversight of international lending.

Washington, in other words, is no Seattle rerun. The issues, the players and the American public itself were all changed by Seattle, in ways few would have predicted a year ago.

There is, for instance, the hot issue of the moment, most-favored trading status for China, which Clinton is trying to push through as his final foreign-policy achievement. Until recently, opponents of China's entry into the World Trade Organization -- including both the AFL-CIO and Pat Buchanan, who addressed the federation's China-trade rally this week -- framed their argument in the language of economic nationalism, pitting American jobs against the Chinese economy. The question still divides the broad Seattle coalition, with the AFL-CIO's critics claiming that defeating the China trade bill will only hurt Chinese workers.

But since Seattle, a growing body of evidence has emerged suggesting that Chinese workers as well as American jobs are at risk from unrestricted trade, accelerating the so-called "race to the bottom" in wages, and environmental and human-rights standards. The South China Business Post estimates that if China joins the WTO, the already-low wages of rural workers will drop by an average of 2 percent over the next five years. Economist Nicholas Lardy of the Brookings Institution, hardly a rabble-rouser, predicts that the WTO agreement will lead to a 33 percent decline in output of Chinese agriculture. The National Labor Committee reports that some regions of China are already lowering their wages to attract or keep American investors like Wal-Mart.

This data has emboldened the AFL-CIO's rhetorical shift from jobs for Americans to international workers' rights, and driven it into a closer relationship with environmental and human rights groups. Indeed, no institution better symbolizes the shift in the parameters of debate than the labor federation, which is either the dinosaur or 800-pound gorilla of American social-change politics. For months, the AFL refused to join in this weekend's demonstrations against the IMF, sticking to its narrow China demonstration Wednesday. Just a year ago, the labor federation supported the Clinton administration's call for an $18 billion increase in IMF funding. But at the last minute, AFL-CIO president John Sweeney shifted course, not only throwing his weight behind the weekend's protest but signing an angry statement against IMF lending policies in the Third World.

Sweeney is not the only person whose views have shifted since Seattle. In this presidential year, the American public's views have changed dramatically from the free-market orthodoxy of a few years ago. A recent study of U.S. attitudes toward globalization conducted by the University of Maryland found that overwhelmingly, Americans support global economic integration, but that they want it managed to protect the environment, labor and the poor.

The protests, meanwhile, are having measurable effect. Major universities -- including such high-profile, high-endowment institutions as Brown and Cornell -- have pledged to void their apparel contracts with companies that fail sweatshop evaluations, for instance. (Yale isn't yet one of them, which is why those students are camped out on the plaza.) Global protest recently drove the chemical giant Monsanto out of the genetically engineered food business. Starbucks has promised to buy so-called Fair Trade coffee from growers who respect workers' rights.

As dramatic as last year's Seattle protests were, this week's events in Washington cut closer to the bone in some ways. The WTO is a murky and ambiguous rule-making body, but all but the most ardent localists approve the general concept of regulating trade; the only argument is over whether labor, environmental and human-rights standards are part of the picture. On the other hand, to reform international financial institutions is to reform the bodies that have imposed a specific economic model worldwide, creating the greatest gulf between rich and poor in human history.

What matters about this weekend's demonstrations is not the number of protestors. These days, anyone with a bus, a driver's license and an e-mail list can get bodies to Washington. Instead, this weekend's events are important because they represent -- like the 1963 civil rights march on Washington -- one wave in an accumulating, rippling cascade of specific, local, hard-nosed campaigns. "Only connect," the novelist E.M. Forster once demanded. Water in Cochabamba, sweatshirts in New Haven, loans in Washington -- if last fall the world came to Seattle, this weekend in Washington marks the moment that Seattle goes global, connecting and unleashing worldwide anti-corporate passions whose outcome cannot be foreseen.

Bruce Shapiro

Bruce Shapiro is national correspondent for Salon News.

MORE FROM Bruce Shapiro

Related Topics ------------------------------------------