'What Washington Consensus? I never signed any' - Camdessus

In what was perhaps his final act as the IMF chief, Michel Camdessus delivered a speech to the UNCTAD gathering in which he evinced a new-found concern for 'human development'. At least some members of his audience found his apparent 'conversion' somewhat unconvincing!

by Chakravarthi Raghavan

'WHAT Washington Consensus? I never signed any,' Michel Camdessus, IMF Managing Director, said on 13 February at UNCTAD X in one of its 'interactive sessions' in responding to an NGO representative.

In 1988, soon after Camdessus took over as Managing Director of the 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 his return, agreed with much 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 (13 February), a day before his laying down office as the IMF head.

Sunday homily

The fact that it was a Sunday and his imminent retirement perhaps encouraged Camdessus 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.' Some lessons in development economics after 12 years on the job.

Or: 'It is recognised 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 centre.... 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....'

'(S)ystematically 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 globalisation is emerging ... a call for common action to transform globalisation into an effective instrument for development. Globalisation 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, Camdessus peppered his speech with a mixed bag of old and new IMF virtues - liberalisation of trade and capital movements but with an orderly approach, need for transparency, accountability, democratic governance, fighting corruption, poverty alleviation as the centrepiece of economic policy ('we cannot ignore poverty'), need for gender equality, increasing aid, debt relief, market access to developing countries, support for UN Secretary-General Kofi Annan's recommendation for a ceiling on national military expenditures - a reinvigorated multilateralism so that globalisation is no longer operated by autonomous technological and financial forces, but towards world unity in the service of humankind, etc. etc.

The South African Trade Minister Alec Erwin referred to IMF-World Bank proposals for multilateral debt relief and IMF gold sales (to finance the relief) and the 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 relief, while the President of the UNCTAD Trade and Development Board Amb. Philippe Petit of France asked Camdessus to amplify some of his personal views now with those of the IMF.

Then came some comments and questions from Martin Khor, Director of the Third World Network, that clearly upset the IMF head.

Genuine conversion?

It was almost touching, Khor said, to see Camdessus, at the end of his IMF career, born again as a 'human development advocate' talking about health, education, poverty and the 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 and Latin America and how the IMF's structural adjustment policies had caused cutbacks in health and education budgets. In Asia, the IMF's earlier advice for financial liberalisation had created the conditions that 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.

'Wall Street-US Treasury-IMF complex'

Yet, said Khor, Camdessus does not draw lessons from IMF mistakes but continues to dole out advice to the victimised countries, and with double standards, since the advice for transparency etc could have equally applied to international market players, the hedge funds etc. And while Camdessus said the reform process in the affected countries was 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 the big players there. NGOs of the South were fighting corruption and cronyism in their countries. But what about corruption and cronyism in the North, and what Prof Jagdish Bhagwati had called 'the Wall Street-US Treasury-IMF complex'?

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

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


The large videoscreens in the hall showed Camdessus, while replying, was clearly upset - though part of the reason lay perhaps in the fact that before he entered the hall in the morning, another NGO activist had splattered his face with a cream-pie.

Camdessus started off by 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. Thus, it has become easy for first the Bank and now the Fund to deny authorship, though in its heyday neither repudiated it or distanced itself from the consensus.

'You are more interested in the mistakes of the past than in exploring paths for the future,' Camdessus told Khor, refusing to make any mea culpa. 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 institution of capital and exchange controls, which were no panacea, Camdessus claimed. Liberalisation 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!

The above article appeared in the South-North Development Monitor (SUNS # 4606).