Mon, Oct 04, 1999 page18

• Power shifts among financial stars

  AT LAST WEEK'S JOINT MEETINGS OF THE IMF AND WORLD BANK, IT WAS

  • By Alex Brummer / THE GUARDIAN
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  Amid the array of financial superstars addressing the financial officials and bankers at this year's meetings of the International Monetary Fund (IMF) and the World Bank, only one has played to a packed house.

  When the owlish Federal Reserve chairman addressed a World Bank seminar on the less than memorable theme of "Lessons From the Global Crisis," the Bank had to resort to the unusual tactic of issuing tickets and setting up overflow areas to hold the spectators.

  It was the biggest crowd-puller for the World Bank and IMF since financier George Soros squared off against the Malaysian leader, Dr Mohammed Mahathir, over East Asia at the Hong Kong meetings in 1997.

  

  Federal Reserve Chairman Alan Greenspan delivers the keynote address to open the annual meetings of the International Monetary Fund and the World Bank in Washington last Monday.

  PHOTO: AP

  In contrast, the first official appearance at a joint seminar by the president of the European Central Bank (ECB), Wim Duisenberg, did not prove a crowd pleaser. The European market is as large as the US in terms of its ouput, but Duisenberg -- a large shambling man with a shock of white hair -- does not yet appear to have captured the public's imagination.

  His grandiose vision of the ECB as a unifying force for the divided Europe of two world wars, and his explanations of the European bank's monetary stance was plainly a big yawn to bankers and delegates, who stayed away in droves.

  So blase, in fact, has the world become about the ECB chief that when he was seen wandering into the media area last Sunday evening, there was little enthusiasm about attending the hastily convened press briefing.

  What would it be? Another tedious explanation of why the ECB's long-term bias was towards tightening interest rates? But no -- this time, Duisenberg had real news. As spokesman for all Europe's central banks, he announced to a slightly startled audience the details of a plan to put a safety net under the gold price for the next five years.

  A move on behalf of holders of 77 percent of the world's official gold, it was to have an immediate impact on the markets, pushing the gold price up above US$300. It also reminded people of the fact that the ECB is a central bank which has as much potential effect on global markets as the Federal Reserve. The warning was clear, despite the fact that Duisenberg has yet to assume the near-omnipotence of Federal Reserve chairman Alan Greenspan.

  The bullion price revolution was greeted quietly but with glee by the British delegation, who saw it as offering the Bank of England the best of all worlds. It had secured the right to continue with its auction schedule, as had the National Bank of Switzerland, and could enjoy the windfall of selling into a rising, rather than falling, market.

  Overall last week's meeting was terrific for the UK. As the newly installed chairman of the IMF's renamed steering committee -- the International Financial and Monetary Committee -- the chancellor, Gordon Brown, has been a strong focus of attention.

  No sooner had he completed a press conference with IMF managing director Michel Camdessus about the advances on the enlarged debt initiative for the world's poorest than Brown was off to the airport and Bournemouth, to deliver a speech attacking the old boy networks and cartels of Britain's financial system.

  It was the kind of speech which might have been made to the IMF delegates, given the tendency of finance ministers at such meetings to spout self-justifying, pacifying homilies on how well their economies are performing.

  Take the Malaysian central banker, Data'Mustapho Mohamed, whose country last year was widely criticized for going it alone and imposing capital controls to prevent New York investment banks from stifling the economy.

  He told delegates: "Despite the severe criticism levelled at us when we first adopted selective exchange controls, the unorthordox measures have yielded positive results." Given what happened to his predecessor, Anwar Ibrahim -- now serving a prison sentence -- this presumably is all that could be said.

  On Tuesday morning the energetic Brown was back at his post as the IMF's top elected official, ready to deliver a couple of speeches -- the first as an IMF leader and the second as British chancellor and a senior IMF shareholder.

  To underline the importance of what he was saying -- especially regarding Uganda's fast track to extra debt relief -- Brown scheduled a press conference on the seventh floor of the Marriott Wardman Park hotel, the architectural monstrosity in which the main meetings have been taken place.

  The elevators were so full of bankers and delegations that the treasury press office bravely led complaining reporters up the stairs.

  The conference room adjoining the chancellor's chambers had been occupied by British reporters and officials before they were ejected by the Mexican delegation, which claimed to have bagged it first.

  Another room was hastily found, but that too proved only temporary. Finally, the Brown train ended up up in governor of the Bank of England's suite, vacant because he was in the city.

  The speech of the conference was that of World Bank president Jim Wolfensohn. His assault on corruption in developing countries and the need for police forces which keep states clean was a breath of fresh air.

  It was then back to the finance ministers of Indonesia and Russia, saying their economies were back on track.
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