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Using
the power of money
to
wind back military spending
By JONATHAN
POWER
November 22, 2000
LONDON - The world goes on, even as Al Gore and George
W. Bush compete for the title of head honcho of the
world's only superpower. Powerful one of them will be,
and mighty the U.S. will remain for the foreseeable
future. Yet it is not the only well-built actor on the
stage. Indeed, some argue, quite understandably after the
missed opportunities of the Clinton years, that there is
a lot to be said for trying to ignore the U.S. as much as
possible or, at least go round it.
Just let the U.S. pay as little as it wants to the UN
and rely on the rest of the rich countries to make up the
difference. This will clear the air in the UN, take its
mind of the perennial struggle with Washington over
arrears, and allow its energies to be better concentrated
to how best to make use of the UN without waiting for
Godot.
The Europeans and much of the Third World seem to have
made such a decision over the establishment of the World
Criminal Court. A similar argument is being made about
the International Monetary Fund and the World Bank, two
very powerful institutions. Despite the rapid rate in
growth in the importance of private investment they have
a gravitas that is only matched by the U.S. government
itself.
Needless to say, as with the UN itself, the IMF and
the World Bank are not used to operating without the
sanction of the U.S.. In the UN the U.S. has a veto and
within the IMF and the World Bank its negative vote can
derail most, but not all, initiatives. In fact both
institutions have rather more room for manoeuvre than
current practice suggests. There remains a difference
between courting the U.S. and bowing to its leadership
and simply getting on with business as best one can,
preferably with the U.S. but, if necessary, without
it.
One important area is the whole fraught question of
the relationship between IMF and World Bank credit and
the military expenditures of recipient countries. The
IMF's last director, Michel Camdessus, argued
passionately that in too many cases high military
expenditures were getting in the way of development.
Under his tenure quite a degree of progress was made in
pushing governments to cut back their military outlays,
but there was always the restraining hand of Washington
that, while welcoming toughness in some cases, also had
its own foreign policy agenda that in many cases would
override such concerns and pull the IMF back. With a
fresh face at the helm, Horst Kohler, now is the time to
accelerate the IMF's interest in pushing countries to put
economic growth and social advancement before the often
introverted- and corrupt- interests of military
establishments.
On the easier decisions the IMF has already
established a good track record of productive
outspokenness. Take Romania's decision in 1997 whilst
almost bankrupt to buy 96 Cobra helicopter gun ships from
the U.S.. The IMF representative in Bucharest made it
clear to the government that "Romania's spending
priorities in the short and medium term should be
structural reforms, health and education rather than
military spending". Perhaps because it was such a
provocative case in post Cold War Europe, where Romania
self-evidently had no enemies, the IMF slammed down its
foot.
But less straightforward has been the IMF's dealings
with Pakistan. After Pakistan exploded its nuclear weapon
in May 1998 the U.S. insisted that the IMF and the World
Bank suspend their loans to Islamabad. However,
Washington relented after Pakistan modestly cut back its
defence budget and said it was prepared to sign the
Comprehensive Test Ban Treaty. Yet if ever there was a
country that each year fritters away what it needs for
development, especially for such vital needs as the
education of its women and an improvement in its literacy
for which it lags behind all its neighbours, this is the
one. The U.S. gave it a slap in a moment of anger and
then relented.
Pakistan is allowed to return to the IMF bottle like a
temporarily reformed drunk, whilst everyone is aware of
what the consequences will be. Even one of its recent
finance ministers, the late Mahbub ul Haq, confided to me
that he was embarrassed what his country got away with
and privately wished the IMF and the World Bank had firm,
unbendable rules on over-the-top defence spending. "Then
I would have a position of strength when I go argue with
the president about the need for greater social
expenditure", he told me. Nevertheless, the voices
calling for a less stringent approach are not short of an
argument. They say that if countries are leaned on too
hard they will do anything to avoid hard choices, even it
means cheating on their books. Besides, some of these
countries may truly need a beefed up defence. Are we
outsiders to tell Pakistan it has no reason to fear
India? It is indeed often possible to make a case. But at
the end of the day the argument must be made that the
best long-term way to avoid conflict is to establish
democracy and pursue fast economic growth that is well
enough distributed that it lifts the boats of the poor
too.
The IMF and the World Bank do not need to be party to
judging a country's military vulnerability. But they are
more than capable of having an opinion on whether a high
level of defence spending is contributing to or taking
away from development. If a country wants to ignore that
advice, all well and good. It need no longer receive
money that originated primarily in the tax payments of
the developed countries and is now held in trust for the
citizens of the world by the IMF and the World Bank. A
tough policy, implemented coherently over a long time
period without being buffeted around by the changing
needs of U.S. foreign policy, will like everything else
that is immoveable become to be accepted over time as a
given. But if it can be budged or bent one time then
every country will think it can budge it or bend it when
its turn comes.
If America can't buy this argument, then the other
responsible members of the international financial
institutions should do their damnest to fight to make it
stick. They don't have to go along with Washington unless
they choose to.
I can be reached by phone +44
7785 351172 and e-mail: JonatPower@aol.com
Copyright © 2000 By
JONATHAN POWER
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