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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

‘Have-Not’ Nations Urge Caution

Associated Press

Developing countries took the podium Wednesday to urge caution on the International Monetary Fund and World Bank in their new crusades to fight corruption and free up the global flow of capital.

Speaking on the second day of the sister institutions’ annual meeting, officials from Iran, Pakistan, the Bahamas and other countries said national differences must be respected and weaker economies must be protected from sudden large movements of foreign funds in currency and stock markets.

Bangladesh, Egypt and India were among countries worried by the recent drop in official aid from richer countries. The World Bank estimated official aid of all kinds at $40.8 billion in 1996, down from $65.6 billion in 1991.

The World Bank, which funds development, and the IMF, which oversees global debts and currencies, have used this year’s meeting to highlight ambitious new agendas that include promoting honesty, openness and social justice among member-nations.

Both have insisted the new policy makes sound economic sense. World Bank President James Wolfensohn told the gathering Tuesday that corruption undermines development and wastes aid, and finance ministers from rich countries generally agreed.

IMF Managing Director Michel Camdessus argued that freeing capital markets offers the best hope of prosperity.

The world’s poorer countries, which dominated the stage Wednesday, agreed in principle with the new goals. But they voiced extensive concerns about implementation.

Iranian Finance Minister Hossein Namazi asked if the two institutions would discourage rich countries from letting their businessmen take tax deductions on bribes they pay in the Third World.

“The briber and the bribee deserve hell,” Namazi said, adding: “Despite all the constructive intentions that might have been behind the idea of requiring good governance, there is a major concern regarding its abuse - that it may serve as a tool to impinge on national sovereignty.”

Sartaj Aziz, Pakistan’s finance minister, warned that nations should be treated equally and that the fund and bank should not venture into politics.

As for lifting national barriers on the movement of capital, he urged the fund to “eschew deadlines or conditions” and let member-governments decide the best pace and approach to take.

Aziz said Southeast Asia had recently “become hostage to the volatile judgments and aggressive activities of foreign portfolio managers. … To argue that there is little or nothing that can be done about them is to accept too quickly the rhetoric of free marketeers” seeking personal profit.

None of the speakers, however, took the extreme position of Malaysian Prime Minister Mahathir Mohamad, who proposed Saturday that currency trading for profit should be banned. Malaysia is among the formerly booming nations that were badly hurt when foreign investors pulled out of their currencies and stock markets over the summer.