LOS ANGELES -- With the free-market Bush administration settling into power, what's to become of those controversial twin pillars of the world economic system, the International Monetary Fund and the World Bank? Those two institutions -- both based in Washington, D.C. and sharing reputations for arrogance and secrecy -- are exactly what critics have their eye on when they discuss reforming the "global economic architecture."
But for the twin pillars, reform may be the least of their worries; it seems the Bush administration isn't sure we need them at all anymore. Paul O'Neill, former head of the aluminum giant Alcoa and now Bush's Treasury secretary, says he is skeptical of the efficacy of any external, institutional intervention in the operation of markets, international or domestic, and doubts whether the World Bank and the IMF can do much good over the long run. Bailouts of any kind, whether by national governments or international agencies, rankle his fundamentalist free-market spirit.
Until recently, this true-blue Republican ideology was most often expressed in academic papers that few people read, and on television talk shows that few watched. Activist Clinton administration officials, like former Treasury Secretary Robert Rubin and his successor, Lawrence Summers, went about the business of utilizing the World Bank and IMF to help bail out one troubled Asian economy after another. But now that Republicans are in power, the dismantling -- or at least the dramatic downsizing -- of the two venerable institutions is suddenly no longer unthinkable.