The Professor, the Bank and a McCain Sequel

By Sebastian Mallaby

Washington Post- Saturday , March 11, 2000

 

If you miss the fun and fire of John McCain, then try an ersatz buzz from Prof. Jeffrey Sachs of Harvard. On the day that

McCain suspended his campaign, Sachs was to be found in the wood-paneled splendor of a Senate hearing room, suspending

some of that setting's customary decorum.

 

"The kicking and screaming for the status quo," Sachs declared, should not deter the grand project of reform. No, that would be a surrender to the vested interests of the Washington bureaucracy. The establishment, Sachs continued, is losing touch with the American people; it is polluted by dishonesty and spin, and above all by "tremendous partisanship." Sachs is a proud Democrat, but his message has crossover appeal. The deeply Republican Sen. Phil Gramm listened carefully and then declared, "Dr. Sachs, I wish you were president."

 

The presidency to which Gramm refers is that of the World Bank, and the established bureaucracy against which Sachs rails is the combination of the bank and the International Monetary Fund. For the past six months, Sachs has been part of a congressional commission charged with examining these institutions. But now, as a result of passionate contempt for the usual political rules, Sachs finds himself cast as a McCain-like maverick, campaigning against the power brokers of his own party.

 

Sachs and his colleagues published their recommendations on Wednesday; they are not exactly timid. The bank should cease

lending to countries that are rich enough to borrow in private markets: In one stroke, that would eliminate three-quarters of the

bank's disbursements. Meanwhile the IMF should halt what Sachs calls "gargantuan mission creep." It should stop long-term

lending to poor countries, and leave that to the World Bank; it should restrict itself instead to bailing out countries in crisis.

 

But Sachs and the commission are not merely out to reform the IMF and the bank, just as the McCain phenomenon was not just about the nuts and bolts of campaign finance. Sachs casts his work as an effort to renew Americans' commitment to a cause larger than themselves--namely, to international anti-poverty assistance. To revive that commitment, he argues, you have to fix the institutions that deliver aid. If "you close your eyes and just hold on and don't reform," as Sachs puts it, cynicism will advance inexorably.

 

Reform, however, invites the anger of the status quo, which is no slouch at defending itself. The think-tankers who joined

McCain's campaign came under pressure from the Bush heavies: At least one adviser, who prefers to remain anonymous these

days, was told he might never get another job in Washington. Similarly, Sachs claims to have come under pressure from

Democrats not to sign the commission's report. The administration regards the existing bank and IMF as useful tools of poverty alleviation and foreign policy; it fears that the commission's critical comments will be used by congressional Republicans to undermine the institutions.

 

Sachs signed the report anyway, so its critics decided to proceed by other methods. Officials from the IMF and the U.S. Treasury made sure reporters understood the shortcomings of the report--some of them real, and some of them less so. They claimed that its recommendations would leave the IMF powerless to deal with another Asian-style financial crisis. But the importance of preserving that option is acknowledged in the report's executive summary.

 

In somewhat cruder style, Richard Gephardt, the Democratic leader in the House, put out a statement calling the commission

"neo-isolationist"--even though it actually calls for an increase in grant aid to the poor countries, a cancellation of their debts and a push for scientific research targeted at Third World development. Meanwhile, Fred Bergsten, another Democrat on the

commission, did what Sachs refused to do. He declined to sign the report and issued his own dissenting views. Wherever Sachs and his colleagues appeared to brief congressmen or other interested parties, Bergsten was on hand to deride their

"slash-and-burn" suggestions.

 

None of this means that Sachs is right to recommend an overhaul of the IMF and World Bank. There is a severe risk that, if you open that Pandora's box, Congress will end up cutting back these institutions' lending to the poor world without providing the extra aid grants and debt relief that are supposed to replace it. Some of the conservatives on the commission may actually welcome that prospect.

 

All the same, it is hard not to sympathize with Sachs's fury at the way his report has been spun. "There's a deliberate campaign

not even to read it," he fumes. "If we can't speak honestly in this city, we can never get anywhere." In the battle between

maverick and status quo, the maverick always manages to sound appealing.

 

The writer is a member of the editorial page staff.