Finance chiefs sound cautious note

IMF and World Bank begin annual meeting in Istanbul while protesters clash with police.

    Strauss-Kahn, right, has said there is still 'a big unemployment problem in front of us' [AFP]

    Police also charged a crowd of more than 1,500 protesters in Taksim Square when they tried to march on the conference hall venue for the meeting.

    Talking to demonstrators in the Turkish capital, Al Jazeera's Anita McNaught reported that unemployment was the word on everyone's lips.

    "Everyone here knows that there is a huge immediate and future cost in allowing unemployment figures to remain high. And it may be that the IMF now focuses more on the social aspects of its policies, and less on the economic philosophy", McNaught said.

    Reflecting economic fears, finance chiefs have also sounded a cautious note.

    "There are many risks out there. These include growing unemployment lines, rising protectionism and still-large output gaps," Robert Zoellick, the World Bank president, said in Istabul.

    "The global economy could still suffer a setback, not least in 2010 when governments plan to withdraw much of their economic stimulus and debt rollovers could be combined with a rise in interest rates."

    'Crisis not over'

    Dominique Strauss-Kahn, the IMF chief, sounded a similar note.

    "There is no way to say the crisis is over when we still have this big rise in unemployment in front of us," he said.

    Many Turks living in Istanbul have not welcomed IMF and World Bank officials to their capital.

    "The IMF provides the cheapest loans with the longest terms. And it is not a financial institution that might run away one day"

    Deniz Gokce,
    Bahcesehir University

    "Many protesters feel that they [IMF and World Bank] have kept Turkey looking stable - with fiscal track records acceptable to foreign investors and foreign governments - but the price the people of Turkey have paid has been far too high," our correspondent said.

    But expert opinion is divided.

    Hayri Kozanoglu, an economics professor at Marmara University, told Al Jazeera: "For them [IMF and World Bank], after the development of a country, the improvement of the living standards of its people is not so important.

    "What is important is that a country can pay back its foregin debt and it can shape its economy in a neo-liberal way."

    However, Deniz Gokce, an economics professor from Bahcesehir University, says Turkey and the world would be a lot worse off with the IMF.

    "The IMF provides the cheapest loans with the longest terms. And it is not a financial institution that might run away one day," Gokce told Al Jazeera.

    End to boom and bust?

    The IMF and World Bank are also looking beyond the crisis at ways of managing a global economic system in a way that will make it less prone to downturns and at a world where US consumer spending will no longer play such a dominant role.

    World leaders of the Group of 20 (G20) major developed and emerging economies last month entrusted the IMF with monitoring economic and financial stability around the world in order to help spot problems early.

    Developing nations are also to be given greater voting rights in both the IMF and World Bank under complex reforms that are still being thrashed out as emerging economies like Brazil, China and India lobby for a bigger role.

    SOURCE: Al Jazeera and agencies


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