There's nothing like the smell of tear gas in the morning. Paired with the sight of riot-ready troops marching from the sickly yellow fog, the acrid scent evokes Orwellian visions of a New World Order among even the least paranoid citizens.
Even the most optimistic might raise an eyebrow at one deal that went down behind the barricades during the Battle of Seattle this week.
As critics besieged the third ministerial meeting of the World Trade Organization, the leaders of the world's most powerful financial institutions -- the World Bank and the International Monetary Fund -- took another small step toward consolidating their global power with that of the burgeoning WTO.
"We shall build on the strong collaboration between our three organizations to enhance the capacity of developing countries -- to foster their economic and social development," a joint statement released Tuesday declared, "and we will continue to work together closely, under our Cooperation Agreements, to help them increase the coherence of economic policy-making."
Drafted in the flowery form of understatement that is the lingua franca of trade negotiators, the Seattle statement obscures its functional significance. Confidential memoranda distributed within the World Bank and leaked by the Center for Economic and Policy Research provide a far more revealing view of the institutions' shared interests.
A 1998 report states: "The globalization of economic activity has made it useful to put the existing structures of cooperation on a more formal basis." A 1999 paper concludes: "The intertwining of the development and trade agendas provides important opportunities to cement our shared commitment to making the international trade regime an effective path to development and poverty alleviation."
WTO Director-General Mike Moore flatly denies all accusations that the organization is forging any world order. The former prime minister of New Zealand asserted: "The WTO is not a world government, a global policeman, or an agent for corporate interests."
But critics of the powerful institutions see New World Disorder in the making.
"The IMF, the World Bank and the World Trade Organization are in the process of creating an international iron cage," says Walden Bello, an economist who heads Focus on the Global South, a Bangkok-based think tank. Bello fears the fund and the bank will become de facto enforcers of WTO policy.
Under current provisions, when two member countries can't settle a trade dispute, they take their quarrel to a WTO dispute settlement panel in Geneva. Many of the WTO's 134 member nations complain that the dispute system is already rigged in favor of big countries, especially the United States, since it allows the victor to impose trade sanctions against the other country. While a U.S. trade sanction could smash a small nation's exports, the same sanction applied by a developing country wouldn't make a dent in the massive Western economy.
Bello and other critics fear that in the near future, this inequality would be widened through cooperation among the three institutions. In addition to punitive sanctions, small nations that dare to defy the U.S. or the European Union could be denied loans by the World Bank or could become the victims of endless structural adjustments imposed by the IMF.
IMF spokesman William Murray accused Bello and others of blowing the so-called "cohesion" agreements out of proportion, saying that coordination is both benign and necessary.
"You don't want competition among the institutions," Murray said. "Otherwise, if a country doesn't like what the World Bank or the IMF says, it would simply go to the other institution -- like a child shopping for favors between his parents."
Stanford University economics professor Gerald Meier said such collaboration is inevitable. "The World Bank and IMF are working much more closely together with the WTO now. Many of their financial problems have a trade component, so it's only natural," Meier said.
The bank and the fund -- both created at the close of World War II as part of an effort to rebuild Europe -- have coordinated their efforts for decades. Developing nations rarely receive loans from the World Bank without satisfying the fund's strict demands for fiscal discipline. A maze of tariff and trade agreements was also forged at the 1944 summit at Bretton Woods, N.H.. But there was no central institution to enforce those deals, and therefore no organization with which the bank or the fund could coordinate their policies, until the General Agreement on Trade and Tariffs was replaced by the WTO in 1995.
The bank and the fund embraced their new sibling at the 1996 WTO ministerial meeting in Singapore, and the three have cooperated unofficially -- by sharing information and policy advice -- ever since.
With this week's agreement, the three horsemen of Bretton Woods come closer to riding in step.
Meanwhile, criticism of each group in the alliance is mounting. A growing number of economists blame IMF policies for both causing the Asian financial crisis. Discord rages within the World Bank in the wake of the resignation of chief economist Joseph Stiglitz, who has concluded that much of what the bank does is not helping the world's poor.
"All three of these institutions have suffered a degrading of their image," says Mark Weisbrot, an economist who co-directs the Washington nonprofit that leaked the World Bank memos.
"There is a real divide within the bank over whether to band together in defense of their traditional agenda of trade and investment liberalization, or whether to admit that mistakes have been made," Weisbrot said.
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