Credibility of IMF and World Bank may be a war casualty
Heavily influenced by Washington, international financial institutions may be irresistibly drawn in by the US-led coalition's war on terrorism. Their performance was already under scrutiny. Now it's likely they will favour countries that are strategically crucial, paying less heed to their records in economic governance and financial sector reform. Shrinking private capital flows to emerging markets may allow the IMF and World Bank to regain some lost prestige. But if they lend to uncreditworthy coalition partners, private creditors may not follow.
|The war in Afghanistan pushes more people into poverty.
Politics may decide which get help from the World Bank
and the IMF
Will president George W Bush risk the already fragile reputation of the IMF and World Bank to secure his war aims? On the face of it, he has already decided that he must. In an address to Congress on September 20, he declared: "We will direct every resource at our command - every means of diplomacy, every tool of intelligence, every instrument of law enforcement, every financial influence, and every necessary weapon of war - to the disruption and to the defeat of the global terror network". Country-wide, Americans lapped it up - in their homes, in briefly hushed restaurants and even sports arenas - but it set off deep and sober reflection in the international financial institutions' headquarters on H Street and 19th Street in Washington, DC.