CITY AND SUBURBAN
Say we've lost the money, and go home the world's debtors deserve better
CHRISTOPHER I I LDES
Washington hehe war in Vietnam was going badly wrong. What, asked the President, should be the strategy now? A hand shot up: 'Say we've won, and go home.' This advice has now been taken by the World Bank, the International Monetary Fund and their richer members gathered here. What were they to do about the world's most hopeless debtors? Answer: write off the debt and declare it a victory. The money, after all, is lost and gone forever, and all that remains is to put the best face on loss — to chalk it up to good works and the relief of necessi- ty. Now, the lenders should be asking what went wrong last time. They might then con- clude that there was too much lending, and too much of it was badly conceived and badly managed. The World Bank, in partic- ular, measured success as a development agency by the volume of money it could pump out. That was well meant, but the money found its way into projects which could never earn their keep and left noth- ing behind them but the scars of debt and the slag heaps of compound interest. Much of the lending went wrong for the simplest and saddest of reasons: rich people in poor countries pocketed the money. Now is the lenders' chance to make debt forgiveness conditional on honest and open govern- ment. It would be a pity to muff that chance. Rather late in the day, the World Bank is talking of the need to detect cor- ruption and to stamp it out. I know just the man for this — an investigative accountant who was sent out by Shell to look for a fraud in Nigeria. He told me that it was like looking for a haystack in a needle.
World Chancellor
KENNETH Clarke has been pushing for debt relief ever since he started coming to these meetings, and I have always supposed that Gillian Clarke, who is high in the coun- cils of Oxfam, pushed him. Now he can tick it off on the long shopping list he brought here. I have been monitoring him for symp- toms of Chancellor's Itch — the affliction that drives chancellors abroad to ride in big black cars to endless meetings — and he has me worried. He wants to rewrite the IMF's articles of association. He wants to do some- thing about money laundering, and about surveillance and data standards, and about the management of the World Bank. The world economy is also on his list, and in his new role as chancellor of the world he can say that he is pleased with it Then there is the British economy. His predecessor, speak- ing at these meetings, once forgot to mention it — I can't imagine why. This chancellor remembered to give the drum a good loud thwack for it. His mind is already running on his party's conference next week, when he will bring his drum to Bournemouth and thwack it again. He claims to believe that his party can win the election, and he is sure that if it does he will have won it for them. This is, at least, a healthy reaction to Chancellor's Itch, so there is hope for him yet.
Old school ties
IT WAS World Chancellor Clarke who so happily congratulated Michel Camdessus, the IMF's managing director, now back again for yet another five-year term. To the World Chancellor, this was quite simple: this chap was a good egg. A more worldly chan- cellor might have asked himself whether he wants the French to run the IMF for ever. They have run it, with one brief interlude, since 1963, and M. Camdessus looks set for the millennium. They are as good at fixing these things as the British are bad. They get value for it. They can count on M. Camdessus to whistle the chanson de l'ancien ecole — for instance, on Europe's single currency. Britain has not lacked good candidates for this job, and had a good potential candidate this time. (I spare his blushes, but he already runs an international financial institution.) As usual, we made no organised effort to support him. As usual, we must live with the consequences.
Promises, promises
LIKE the IMF itself, M. Camdessus is a sur- vivor. Long after its original purpose had been buried in the wreckage of the post-war monetary order, he can still find it some- thing to do, and keep himself busy while he is about it. He gets the Americans on-side by bailing out their improvident neighbours across the Rio Grande, and by backing their preferred regime in Russia, hurling money in as if there were no Monday. Bankers, M. Camdessus included, need to remember that there always is a Monday. Across the way at the World Bank, his newish opposite num- ber, James Wolfensohn, continues to promise great things: a focus on results, a determination to get the best out of scarce resources. The Bank's most visible use of those scarce resources is in building offices. Here in Washington, the Bank represents the last and richest flowering of the culture of giant head offices, with a department for everything and everyone at home in a department — a culture which is now almost extinct in the private sector under the pres- sure of necessity and in the face of aggres- sion. How much of the Fund's and Bank's work could be put out to contract? How much needs to be done in Washington? How much needs to be done at all? Bump- ing into Sir Brian Pitman of Lloyds Bank, I suggested that when he has finished digest- ing his latest acquisition, he should bid for the pair of them. I sensed a gleam in his eye.
Bottoms up
PARTY-going and party-giving are compet- itive activities here. Some hosts are pleased to see anyone who has a visiting card and is prepared to leave it in the bowl provided. This gets him the drink of his choice. Some guests are more picky. The most lavish party is given by a New York bank which takes over the National Gallery. (I prefer to go the next day and look at the pictures.) The most enormous is the Fund and Bank's modest soirée for 3,000 people in a room the size of a dry dock. The most restorative is Euromoney's, with its timely midday glass- es of champagne. The party of choice is the British Ambassador's. May the Chancellor, his guest of honour, never cut the Foreign Office budget that sustains it. An interesting newcomer to the list of hosts offers cocktails in the Garbo Room at the Shoreham Hotel. From Moscow, this is the Fundament Bank. Only the other day, I came across the name of this bank's ideal customer — the Turkish construction company, Arcelik. I should introduce them. It would liven up the party.
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