There’s a game played by pretty well every banker who frequents development bank meetings. It could be called “What’s the Mood?” Delegates look back on the chaos of the IMF annual meetings in September 1999, when Ecuador defaulted, or the unleavened pessimism of the IMF meetings a year earlier, held in the shadow of the disastrous Russian crisis. This year’s Inter-American Development Bank (IDB) meetings can be summed up by the word “malaise”.
In contrast to the Mexican and Brazilian crises of 1995 and 1999, it seems that there is nothing to be done about Argentina in 2002. US officials – whether from the Treasury, the State Department, or the White House – all leave delegates with the same impression. In brief, there’s no way that Argentina is getting a massive bail-out and the US, though it might not like the Argentine situation, isn’t really going to do anything about it. Without the US on board, of course, nothing is going to happen.
And that’s not all: panel after panel debates the end of the Washington consensus; frets about the rise of populism, from Chávez in Venezuela to Duhalde in Argentina; and bemoans the Bush administration’s decision to impose tariffs on steel imports, aiming straight at one of Brazil’s biggest industries.
Even the parties, the social centre of any annual meeting, are on a much smaller scale this year than in the past.
The feeling is very different from 1998. No-one is saying that the sky is falling, that emerging markets are dead as an asset class, that the global financial system is in mortal danger. Rather, delegates say that the region is “taking a breather” – that there’s not going to be much in the way of reforms in the next couple of years, and that the important thing is to prevent backsliding. Ambitions have been scaled back dramatically, to the point where they comprise little more than holding the fort and keeping the situation where it is at present.
The days when Alan Greenspan, Robert Rubin and Larry Summers comprised the Committee to Save the World are long gone: nowadays the assembled delegates seem to be attempting to put together little more than a General Consensus to Keep a Watchful Eye on Developments in the Region.
Every conference has its defining moment, and this year’s came in the form of a speech by Jorge Remes Lenicov, Argentina’s economy minister. He spoke sitting down, flanked by Francisco Gil-Díaz, Mexico’s finance minister; Enrique Iglesias, the president of the IDB; Nicolás Eyzaguirre, Chile’s economy minister; and Pedro Pablo Kuczynski, the finance minister of Peru. It’s been a long time since any of them were young men. It was hard not to recall the panelists elsewhere in the conference who warned that the fact that two-thirds of the region’s population opposes neo-liberalism is intimately connected to the fact that the same oligarchs and technocrats have essentially been in power for decades.
Remes made as good a speech as could be expected, although it fired up nobody. It wasn’t clear what people wanted from him: the consensus is that his hands are tied and that he has an impossible job. After the panel had finished speaking, the delegates filed out and milled around aimlessly.
Dollar-rich dismal science
One side-effect of the Enron scandal in the US has been the light it has shed on the previously murky world of economists and the fees they charge for sitting on company boards and making speeches. Critics were quick to jump on Princeton economist Paul Krugman after he disclosed that he had received $37,500 from Enron for sitting on its advisory board.
Krugman tried to explain his situation by posting an article on his website saying that “by 1999, 22 years after I got my PhD, having published 15 scholarly monographs and around 150 professional papers, I was certainly in the circle of Those Who Get Money Calls.” In this group he also placed Robert Mundell, Rudiger Dornbusch, Jeff Sachs, Joe Stiglitz, Stanley Fischer and even Larry Summers.
None of them was visible at the annual meetings of the Inter-American Development Bank in Fortaleza, Brazil. Rather, the big international banks, when deciding who they were going to bless with five-figure speaking fees, all seemed to alight independently on the same man. It was Sebastian Edwards, former chief economist for the Latin America and Caribbean region of the World Bank, and now a professor at the University of California, Los Angeles.
As well as popping up on numerous official panels at the meetings’ official venue, a convention centre a couple of kilometres inland from the coast, Edwards said much the same things to banks’ clients in various hotels ranged along Fortaleza’s beaches. The main difference was that he spoke in Spanish to delegates and in English to investors. His fee was said to be $10,000 for a 15-minute speech; it wasn’t obvious which of his many benefactors paid for his airfare and accommodation.
Hot, sticky, hard to get to
The Inter-American Development Bank took a brave decision when it decided to hold its annual meetings in Fortaleza, a tropical city just south of the equator in north-eastern Brazil. The torrential rainstorms abated for most of the meetings but the humidity didn’t. And in order to enjoy the sunshine and 38º temperatures, it helped first of all not to be in a suit, and second not to be in Fortaleza in the first place.
One delegate complained that it took him 28 hours to get to the meetings from Ecuador; another travelling from New York had to change planes in five different Brazilian cities. Many arrived a full day later than they had intended and even more decided not to bother: attendance was markedly lower than normal. The decision to hold next year’s meetings in Milan was universally applauded.
