IMF releases portion of dire World Economic Outlook

Two out of four chapters of the IMF's major World Economic Outlook are available -- the other two are expected on April 22. 

The short of it? Bad news.

Chapter three includes a long comparison of the current Great Recession with the Great Depression of the 1920s. Ours is now a global down-turn, a "synchronized downturn," the paper argues -- that makes it worse. The only available counterballast lies in coordinated, synchronized governmental spending. Nevertheless, there are worrisome parallels.

There is continued pressure on asset prices, lending remains constrained by financial sector deleveraging and widespread lack of confidence in financial intermediaries, financial shocks have affected real activity on a global scale, and inflation is decelerating rapidly and is likely to approach values close to zero in a number of countries. Moreover, declining activity is beginning to create feedback effects...

The fourth chapter takes a look at how the crisis originated in advanced economies, and spread like wildfire to emerging economies.

As the crises in advanced economies continue to deepen, and trade and capital flows decline further, exchange rates and financial systems in emerging economies could come under more severe pressure. In turn, a broad-based economic and financial collapse in emerging economies would have a significant negative impact on the portfolios of advanced economies....

In light of such cross-country spillovers, there is a strong case for a coordinated approach to a range of policies...

 So, some predictions for chapters one and two, and for the IMF in general. 

  • We hear that IMF is forecasting a one-percent shrinkage in global GDP in 2009, the first shrinkage since World War II. It expects a recovery of around 1.8 percent of GDP next year, a third of that recovery due directly to governmental stimulus.
  • And we hear that the IMF intends to play a much larger "macroprudential" regulatory role in the future, possibly by creating a new board with many more members from emerging markets and new voting rules.
  • We're looking for more details on the expansion of the IMF's special drawing rights, high-access precautionary arrangement, and flexible credit line programs -- the latter two will be more important than the former one, we think. The report warns strongly that simultaneous recessions require coordinated and simultaneous responses -- the IMF is playing a huge role there.


Torture memos make U.S. foreign policy stronger?

I asked Tom Malinowski, the Washington advocacy director for Human Rights Watch and a former Clinton administration official, to work through some of the foreign policy implications of the newly released torture memos with me.

We discussed whether the Bush administration memos encouraged other countries to torture, or led to any global uptick in "enhanced interrogation" practices. "I've always tried to be careful not to suggest that countries like Egypt or China or Uzbekistan would be torturing more because the United States was setting a bad example. Obviously, dictatorships torture for their own reasons, and they didn't need [former U.S. President] George W. Bush to show them how," he says.

But, the Bush administration torture of detainees and disavowal of the Geneva Conventions did preclude diplomacy on many occasions, Malinowski says. He testified before the Helsinki Commission in 2007 to make the point:

A couple of years ago, Human Rights Watch was meeting with the Prime Minister of Egypt, and we raised a case in which hundreds of prisoners rounded up after a terrorist bombing were tortured by Egyptian security forces.   The Prime Minister didn't deny the charge.  He answered, "We're just doing what the United States does."  We've had Guantanamo and the administration's interrogation policies thrown back in our face in meetings with officials from many other countries, including Saudi Arabia, Jordan, Pakistan and Lebanon.  U.S. diplomats have told us they face the same problem.  A U.S. ambassador to a leading Middle Eastern country, for example, has told us that he can no longer raise the issue of torture in that country as a result. 

Malinowski says the detainee abuse made it difficult for the White House to negotiate any human rights provisions or issues, broadly. "Issues beyond torture were effected, because it enabled authoritarian governments to say, ‘You have no right to lecture us,'" he says. "They were delighted to tweak the United States on it."

The biggest offender? Russian Prime Minister Vladimir Putin, who Malinowski described as a "world champion" of chiding the United States via its own policies.

Nevertheless, Malinowski thinks that, despite the horrible details revealed by the Bush administration and International Committee of the Red Cross memos, ultimately their release is a very good thing for the Obama administration.

[Obama] can go to a country like Turkey or Indonesia or Egypt and say, "Look, I know what it's like to face real security threats, and we as Americans understand the temptation to give up some of our liberties and principles to defend ourselves against those threats. But what we've learned the hard way in the last eight years is that those liberties and principles actually make us stronger. You could learn from our example."

That's a much more effective way of arguing the point than going to those same countries and saying, look at our perfect system and our glorious morality, and maybe someday you can be as good as we are. So I think if he uses the experience as a cautionary tale, it will actually make our country a more effective and compelling champion of human rights around the world, ironically.

Here's to hoping so.

Photo: Entrance to Bagram Air Base by Spencer Platt/Getty Images