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World Bank Dissenter Sticks to His Guns. On Eve of Davos
Forum, Departing Official Chides Russia and IMF. By Alan Friedman,
International Herald Tribune, Paris, Thursday, January 27, 2000
ROME - The outgoing chief economist of the World Bank has not relented
from his criticism of the international financial community, which he accuses
of excluding poor countries from the decision-making process.
The economist, Joseph Stiglitz, also restated his disapproval of Russia's
privatization program, saying the system encourages ''asset stripping'' that
has seen ''billions and billions of dollars'' taken out of the country.
Mr. Stiglitz, who announced his resignation unexpectedly late last year
after a string of public statements at odds with both the International
Monetary Fund and the economic policies of the Clinton administration, spoke
by telephone to the International Herald Tribune as he was preparing to
attend the annual meetings of the World Economic Forum in Davos, Switzerland.
The Davos gathering, scheduled to begin Thursday, is to be his last public
appearance as a World Bank official before leaving his post Feb. 1.
The world's poor countries, Mr. Stiglitz said, are being denied a seat
at the table where key international economic decisions are made even if
those decisions hurt them.
As for Russia, Mr. Stiglitz said that privatization had gone ahead without
a sufficient legal framework. As a result, he said, ''rather than providing
incentives for wealth creation, there have been incentives for asset stripping.''
''Providing free capital mobility,'' he said, ''has been an open invitation
for people to take out billions, in fact billions and billions, of dollars
out of the country.''
Asked why he was leaving the World Bank, Mr. Stiglitz, 56, said that he
believed he could make ''a more effective contribution'' from a position
outside the bank. In an interview with The New York Times late last year,
Mr. Stiglitz said that he wished to speak out publicly on a variety of issues
and felt he could not do so from inside the bank. ''Rather than muzzle myself,
or be muzzled, I decided to leave,'' Mr. Stiglitz said at the time.
In the interview with the International Herald Tribune, Mr. Stiglitz cited
in particular his concern about whether the interests of poor countries had
been ''adequately represented in a lot of the international fora.''
Commenting on the way the IMF and other institutions handled the Asian
financial crisis of 1997-1998, Mr. Stiglitz said that ''decisions were made
in the last crisis that really adversely affected working people, small businesses.''
He said that many people were thrown out of jobs ''even though it was
international financial markets that were at the root of the problem.''
''It was small businesses that faced interest rates that put them into
bankruptcy, in some countries more than 50 percent of the firms being put
into bankruptcy,'' Mr. Stiglitz said. ''Yet these people whose interests
were vitally at stake did not have a seat at the table when those important
decisions were made.''
Mr. Stiglitz said that one of the challenges for the international financial
community was ''to establish a framework in which economic policies are made
which affect everybody,'' and to make sure that all those affected ''can
have a voice in those policies.''
The willingness of Mr. Stiglitz to criticize financial markets, and to
even suggest that limited government intervention could be positive, puts
him at odds with the Washington policy consensus led by the IMF and the Treasury.
Despite his decision to leave the World Bank, Mr. Stiglitz maintains cordial
relations with James Wolfensohn, the World Bank president. Mr. Wolfensohn
is widely regarded as a champion of the poor, but he has couched his views
in more diplomatic terms than those used by his outspoken chief economist.
Mr. Stiglitz said that he would spend a few months at the Brookings Institution,
a Washington research group favored by former Democratic officials, before
returning in the autumn to Stanford University. He took leave from Stanford
seven years ago to serve as chairman of President Bill Clinton's Council
of Economic Advisers, a post he held for four years before moving to the World
Bank in 1997.
Explaining his concerns about Russia, Mr. Stiglitz said the West assumed
that a rules-based legal and financial infrastructure would emerge ''spontaneously''
and ''that all we needed to do was privatize.''
But he said that ''privatization by itself has not been a guarantee for
success.'' Rather than becoming wealthier, he said, Russia has become poorer.
Mr. Stiglitz is clearly unrepentant for his outspokenness, even though
some of his comments about Russia were criticized by Mr. Wolfensohn last
year as being ''not wholly correct.''