The former International Monetary Fund Managing Director Michel Camdessus, visiting Cornell as this year’s Henry E. and Nancy Horton Bartels World Affair Fellow, lectured on “The IMF in World Affairs: Balancing Economic, Political, and Social Objectives,” yesterday in the Alice Statler auditorium.
Camdessus extensively addressed the power and limitations of the global organization, born in the wake of the 1944 Bretton Woods agreements, which defined monetary relations for the rest of the century. The goal of the organization is to foster “growth and stability” for its 183 member countries.
Describing the IMF as a “world credit union,” Camdessus, a Frenchman whose three terms as managing director spanned 13 years, was hailed by Provost Biddy (Carolyn A.) Martin as someone “who held one of the most powerful positions in the world,” and whose “experience and perspectives are invaluable to the Cornell community.”
Camdessus first addressed the perceived image of the institution, one of paradox between those who accuse the organization of losing sight of its “primary monetary mandate” in the policies it implements, and the side which considers the IMF responsible for solving “with its narrow mandate all the problems the word is confronted [with].”
According to Camdessus, the IMF’s essential responsibilities are the needs of its members and fostering “the order of the monetary system.”
“It is deeply stated that all countries must always be able to rely on the fund to attain their objectives of stability and growth,” which members in difficulty can achieve by borrowing from the fund at low interest rates of approximately 4 percent.
And in order to achieve better results from the funds, Camdessus felt there were four areas which “justified particular attention” on the organization’s part, such as “how to improve economic management of countries in normal time.”
The former director stressed the importance of realizing that “poverty in a globalized context is the ultimate threat,” even for the most affluent members of the institution, including the United States, the largest contributor to the fund last year. The U.S. supplied about 18 percent of the IMF budget last year.
Crisis management is also a key goal for the IMF, exemplified in the organization’s handling of the Asian financial crisis of the late 1990s.
In 1998, Camdessus was named “the most important man in Asia” by Asia Weekly after the IMF implemented a rapid aid for the stricken countries. In Camdessus’s opinion, Korea was the most successful country in its recovery from the crisis, an achievement he linked to “the fact that this country took the lead and took ownership for these policies.”
In the same way, the fund’s role to help those countries met with “totally unexpected challenges,” such as the fall of the centrally planned economies at the beginning of the 1990s. Successful economic growth is only achieved if the IMF’s aid is used with well-planned policies to reform and reduce compressible expenses while increasing social expenses, such as health care and education.
Member countries have the ultimate responsibility to carry out these goals, Candessus said, adding that it was also “the responsibility of the public to pressure governments into honoring their pledges” to development, the commitment they make to the fund when they request a loan.
But the fund boosted some of the world’s poorest countries who were targeting poverty in their policies, granting the 75 poorest an interest rate of 0.5 percent, and also wiping out 75 percent of the debt for the 30 poorest.
Nonetheless, Camdessus raised the question of the world’s ambivalent attitude towards destitute nations, when the World Trade Organization didn’t remove trade barriers last September to help these countries export their products.
Some Cornell students organized a well-attended protest outside Statler Hall, welcoming the former managing director with chants of “We’re here, we’re wet, so cancel all the debt!” critiquing the IMF for its supposed disregard of political or democratic standards. To those critics, Camdessus replied that although his heart was into the preservation of democracy, the goal of the IMF remained to promote monetary stability, and could not substitute for environmental watchdogs, trade organizations or other world institutions.
Students will have a chance to interact with Camdessus at a question and answer session in Goldwin Smith Hall’s Hollis E. Cornell Auditorium at 4 p.m. today.
Archived article by Ariane Bernard