CITY AND SUBURBAN
Carrying a mighty cargo of hopes, the Washington twins drift down stream
CHRISTOPHER FILDES
DWashington evelopment begins at home. Cranes crowd the Washington skyline as the World Bank pours money into what it needs least, another new head office block. A crater beside the International Monetary Fund's Palazzo conceals the foundations for a new wing. A history of expansion is carved on the IMF's doorpost: 'Phase I 1976, Phase II 1983, Phase III 199 ' — the last digit is waiting, as we all learn to wait, for the builders to finish. To the bankers and minis- ters who gather here like migratory gannets for the annual round of partying and lobby- ing that goes with the Fund's and Bank's meetings, the story tells itself. The world's two great international financial agencies, carrying such a cargo of hopes with them, have been drifting away from their clients and their shareholders upon the currents that propel a self-perpetuating bureaucracy. Now the (mostly poor) clients and the (most- ly rich) shareholders have noticed and are starting to complain. Someone should take these twins up, so they say, or perhaps some- one should put them to sleep.
Mexico rescues the IMF FASTER on its feet than its twin is, the IMF has come up with a bureaucrat's clas- sic response. It has found itself something to do. Last year it failed to spot that Mexi- co's finances were collapsing, so this year it has come to Mexico's rescue. Mexico, with a little help from the ever-hungry Russians, has eaten up all the IMF's spare cash. At last Michel Camdessus, the managing director, has an excuse for saying what he has said for years — that his shareholders must put more money in. He wants to dou- ble the IMF's capital, he wants ten of its big shareholders (Britain included) on standby to lend more, he wants new lenders to go with them. Mexico has rescued the IMF. Now the markets must be persuaded that they cannot rely on the IMF to bale out the next Mexico — but it's actions speak louder than words. This is going to be expensive.
Jim'll fix it
THE WORLD Bank has something gen- uinely new — a chairman wanted the job. Jim Wolfensohn, the American-Australian- Jewish investment banker and world-class fixer, has long aspired to breathe fire and life into the Bank. Its thousands of staff wait apprehensively for him to do it. His most obvious need is to get them out of Washington — some of them closer to the financial markets, others closer to the cus- tomers. The time and money they could save if they did not have to catch a 747 whenever they went to work! The Bank is stuffed full of economists who write splendid reports, and must by now have accounted for several rain- forests. One of its press officers offers a translation: 'The second tranche release was delayed primarily due to the need for the government to prepare and agree with the Bank on a revised Macro economic frame- work' means War broke out in Yugoslavia.' Mr Wolfensohn can help the poor and save the rainforests too. His maiden speech at these meetings was a multi-Kleenex number to rival The Bridges of Madison County 'We can judge development's impact by the smile on a child's face' — but it was, too, a sustained attempt to face the Bank's critics, ranging as they do from charities to congress- men: 'We have to change the way we do busi- ness. We must focus on our clients and results, and break the armlock that bureau- cracy has placed on this institution.' The quickest way to break it, as I have helpfully suggested to him, is to relocate the Bank to Bangkok and see who comes with it.
Ryrie rules
REQUIRED reading for him will be First World, Third World (Macmillan, £12.99) by Sir William Ryrie, the ebullient Scot who put the International Finance Corporation on the world map. The measure of his suc- cess with this World Bank affiliate is that bankers here complain of its unfair compe- tition. The way out of poverty is growth growth, Bill Ryrie says, and the way to growth is through the economics of the market. Aid is no substitute. The flow of aid into the poor countries of Africa now equals 14 per cent of their output but cannot stop them getting poorer. They risk becom- ing aid junkies. Aid can create a dependency culture and the World Bank is like any other bank — if it's only measure of success is how much money it can lend, it will lend badly. In its well-intentioned way it has left the poorest countries with debts they can never service or repay from loans to support projects that could never earn their keep. Kenneth Clarke and Jim Wolfensohn are right in saying that a way must be found to wipe the slate clean. They need to say more loudly that the price of debt forgiveness must be honest and accountable governments. Who has done most to oppress and rob poor Africans? Rich Africans in power. That is one of Ryrie's rules.
Banks in a frenzy
THERE ARE empty saddles in the Wash- ington coral. Bankers look nervously over their shoulders: 'Where's Brian? Where's Nicholas? Is Chris Tugendhat here?' Lloyds Bank's bid for the TSB reminds them all that the worlds banks are in a feeding frenzy, that the strong will eat the weak and even chair- men will find themselves masticated and digested. It is a pity that the trustee savings banks which were in their humble way a dis- tinctive species were ever rolled together to make yet another high street bank. The world's high streets cannot support the banks they have and the TSB, which said that it liked to say Yes, discovered what happens to girls who say that. At last it has found an earnest suitor. It is unkind but true to say that if the TSB can prove attractive to a bid- der, most banks could and all will.
Tea and slumber
THE PER Jacobssen Lecture is the intellec- tual high point of these meetings and is fol- lowed by the only party at which afternoon tea is served. This year's lecturers were three Slovonic professors (one with a beard like a bead curtain) to analyse the conversion of Russia and its satellites into market economies. From the chair Sir Jeremy Morse told us: 'It is just when the attention of the press moves away that the problem becomes deserving of serious study.' Soon afterwards I fell into a refreshing slumber, thus, I sup- pose, making Sir Jeremy's point.
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