Daily Press Cuttings

 

Friday 3^rd September 1999

IHT: Congo: A cease-fire to end the war in Congo appears to be on the brink of collapse as rebel faction leaders have failed to agree on how the truce should be supervised.

Russia: The Clinton administration has said it wants assurances that international financial aid already sent to Russia was not lost to corruption, but it stopped short of calling for a halt to future loans from the IMF.

Angola: Catherine Bertini of the UN warns of a `humanitarian crisis in Angola', and calls for `firm commitment from the international community to bring an end to 25 years of carnage'.

Ecuador: The US Treasury department and IMF remain fixated on Ecuador's debt problems for reasons that go beyond the ordinary duty to help out a distressed economy. This week Ecuador became the first country to skip interest payments on Brady bonds – issued by Latin American countries during the debt crisis of the late 1980s and 1990s. Some fear that Ecuador's potential default may contaminate financial markets in Latin America and beyond. The country spends over 30 per cent of its budget on interest payments, and few experts believe the country can repay all of its debt. The IMF is negotiating a bailout package of $1.2bn. The fund would insist that Ecuador negotiate debt relief from its private creditors – a new direction for the IMF, designed to insulate it from criticism that the money it would pump into Ecuador would flow right back out to pay off private creditors.

Times: Gold sales: The paper's City Editor attacks Gordon Brown's plan to auction IMF gold `to help the poorest countries to write off debt. It made sense only because for political reasons, the IMF still values its gold at a sixth of its market price.' The proposed recipients `were soon up in arms because they would lose money on their own gold production. South African bankers forced the IMF's number two to concede that alternatives would be considered. A defensive IMF report seen by Reuters suggests that 5 HIPC countries would lose $380 million over five years.' However, the Independent's financial editor presents a different view: `The IMF's planed sales have played no more than a tiny part in the recent decline in the gold price. The need for the Fund to sell gold only ever arose because members refused to contribute generously enough to debt relief in the first place.' The paper also reports that the fund is planning to sell part of its gold reserves to central banks rather than going ahead with a controversial sale on the open market. The rethink has been forced by lobbying from producing countries and hostility in the US Congress, which would have to approve the sale.

Guardian: Russia: Mikhail Zadornov, Russia's envoy to the IMF and other foreign lenders, resigned suddenly yesterday. He gave no indication that his action was connected to the inquiry into money laundering allegations, which have included claims that IMF aid to Russia was illegally diverted through US banks.

FT: Africa: Foreign direct investment flows to Africa increased last year but still represented only 5 per cent of all FDI into developing countries, according to the UN.

Switzerland: Switzerland, one of the world's richest countries, wants to shed its reputation as one of the least generous. It plans to raise its financial help to impoverished nations by a quarter to 0.4 per cent of GNP.

WTO: In an interview with the newspaper, Mike Moore, head of the WTO, highlights the need to promote the benefits of globalization for poor as well as rich countries. He speaks of the `burning sense of unfairness and injustice' which he feels, and says that all tariffs on poor country exports should be abolished.

The Economist: In response to Jeffrey Sachs' piece on developing countries, a reader writes that `if poor countries are not willing and able to control their population growth, it may not be possible to convince the rich ones to make the effort to save them'.

Thursday 2nd September

FT: WTO: Mike Moore yesterday took office as director-general of the World Trade Organisation with a pledge to make the expansion of trading opportunities for the world's poorest countries a top priority during his three-year term. He urged the WTO's rich members to grant unrestricted access to the goods and services of the least developed countries. His call has strong support from the EU, but the US reaction has been lukewarm. He said it was vital that WTO members at Seattle find solutions to the problems of the poorest nations. He intends to mould an organisation `where the little guy can protect and defend his trading rights'. Anti-free trade activists are planning huge demonstrations in Seattle for the ministerial meeting, but Mr Moore said trade had brought great benefits in raising living standards and promoting development.

IHT: Biotechnology: Peter Rosset, director of the Institute for Food and Development Policy, argues that `biotechnology won't feed the world'. The `real problems' are not net food production or overpopulation, but `poverty and inequality'. `A true solution to the problem of hunger depends on attacking poverty and inequality among both producers and consumers of food. A food system increasingly dependent on genetically altered seeds takes us in the wrong direction.'

Colombia: A general strike was called by public sector unions to protest at policies that they say have impoverished workers. Their demands include a public-debt moratorium and the breaking off of negotiations for a $3 billion line of credit from the IMF.

Russia: Columnist William Pfaff writes that `international lending institutions have swindled the Russian people, and also the Western taxpayers who have provided the estimated $10 billion in international aid money now diverted to private accounts.'

The Times: Russia \ IMF loans: American and Russian officials were at odds yesterday after Lawrence Summers, the US Treasury Secretary, said that the Clinton administration would not support any more IMF credits without safeguards to assure that funds are used properly, as well as adequate accounting of previous loans. Since 1992 the IMF has lent Russia more than $20 billion. Michael Camdessus, head of the IMF has stated that the IMF had always intended to be cautious in its stance towards the Russians but had come under `pressure' from member countries. “I warned Yeltsin that we looked at Russia in exactly the same way as we looked at Burkina Faso,” he insists. For some reason, though, Russia got the money and Burkina Faso, one of the poorest countries on Earth, didn't.

Independent: Congo: The belated signing by rebels of a cease-fire accord to end the year-long fighting in the Congo raises more questions than it answers, and peace remains a distant prospect, diplomats agreed yesterday.

Guardian: China: China has begun to confront poverty and the seamy side of society – including Aids and trafficking in women and children – with an openness which international aid experts say was unthinkable only a few years ago.

Arms trade: Richard Norton-Taylor argues that Britain should pull out of the arms trade altogether.

Wednesday 1^st September 1999

Times: Russia: Despite the burgeoning money-laundering scandal, a delegation from the IMF began talks in Moscow yesterday on lending more to Russia. IMF officials have said that they have no evidence that IMF money was sent abroad illegally. Nevertheless, the allegations will make any decision on funds extremely sensitive. Meanwhile, the head of the US Congress committee investigating money-laundering allegations has claimed that the sums involved could total more than $100 billion.

FT: Russia: One of Russia's largest regions said yesterday that it would seek to postpone the next interest payment on its only outstanding international bond. Although economists fear a string of Russian defaults, most still believe that the $16bn worth of Russian sovereign international bonds will continue to be serviced. Some investors have nevertheless expressed concern that Ecuador's recent postponement of interest payments could be the first of what will be a standard formula for resolving emerging market debt problems. This would involve more `burden-sharing' between private sector and official creditors under debt rescheduling programmes.

MAI: Columnist Martin Wolf claims that `the ill-fated multilateral agreement on investment shows the need to confront the claims of pressure groups hostile to globalisation.' The `rising anxiety of a host of non-governmental organisations' who saw the agreement as `a totem of the loathed cause of globalisation' were partly responsible for its failure. `The enemies of the liberal international economy have found new arguments and new ways of organising. Both need to be resisted.'

UK foreign policy: Robin Cook, foreign secretary, faced fresh embarrassment over his so-called ethical foreign policy yesterday after it emerged that UK-manufactured military aircraft had been deployed in East Timor.

US \ developing countries trade: Fears are growing that US tariff benefits for poor countries may fall foul of Congress antagonism on trade issues. The Generalised System of Preferences was introduced in the US in 1974 to encourage trade and development in poor countries. It permits items produced by eligible states to enter the US duty free, with the poorest countries qualifying for the widest range of goods. The programme has broad support from both parties, but as it needs to be approved on a year by year basis, delays often occur, causing uncertainty for third world exporters.

Congo: Rival leaders from factions of Congo's main rebel movement finally signed an accord yesterday in Lusaka to end the country's year-long war.

Japan-Russia lending: Japan will resume loans to Russia which have been stalled since last summer when the Russian government defaulted on some of its debts. Last year, Japan froze its loan programme along with the IMF and World Bank. The decision comes in spite of allegations that IMF money may have been included in Russian funds allegedly laundered via the Bank of New York.

IHT: Russia: Enquiries into the Russian money laundering scandal may uncover corruption at the top levels of Russian government, including illegal diversion of loans from the IMF.