LONDON (CNNfn) - From as far back as the fifth century, through the rise and fall of the Habsburg Empire, two World Wars, Soviet communist rule and an eventual revolt, Prague has always managed to keep its pretty face.|
Ask almost anyone who has been there and they'll tell you that the city is stunningly beautiful - a jagged skyline dotted with castle spires and centuries-old turrets, and an urban center unscathed by hundreds of years of change in one of the most volatile regions of Europe and the world.
That's why the image of 11,000 Czech police decked out in riot gear awaiting the arrival of thousands of politicians and businessmen and even greater numbers of protesters is a strange dichotomy.
In a city that has managed to remain relatively unscathed by violence, the idea of an all-out fight between police and protesters, a la Seattle and Washington D.C., has by far overtaken the major economic issues expected to emerge from next week's International Monetary Fund and World Bank meetings.
"It will be a significant challenge for the authorities," said Zdenek Hruby, the Czech government's specially appointed commissioner for the annual meetings. "The Czech police are taking the possibility of protests extremely seriously and are preparing more seriously for this event than any other in the last 10 years."
As the 182 member countries of the International Monetary Fund and World Bank gear up to begin their discussions, the city's police are gearing up for what could be the largest protest seen in Prague since the 1989 Velvet Revolution, when citizens of the 10-million-population country took to the streets to overthrow the communist government.
The plan, according to the activists, is to force the organizers to delay or suspend their meetings, in a repeat of the street demonstrations that delayed the opening of the World Trade Organization meetings in Seattle last November and disrupted the IMF-World Bank spring meetings in Washington last April.
In Seattle's case, thousands of protestors representing a list of causes broke windows, looted stores and disrupted the city for several days, leaving images of police in riot gear splashed across newspapers' front pages. In Washington, the action was a little more subdued, though police arresting more than 1,500 protesters before the meetings even began.
Davos, the upscale Swiss ski resort that hosts the annual World Economic Forum, also saw battles between police and opponents of free-market capitalism in January this year.†
And now it could be Prague's turn.
"I'm certainly expecting a similar kind of cacophony in Prague that we witnessed in Washington, Seattle and almost every other major economic and political event in recent memory," said Jerome Booth, head of research with Ashmore Investment in London and a former senior planning officer with the Inter-American Development Bank.
A classic division
"From a business point of view, what people really want to see emerge from these meetings is some strong direction from the IMF on global development, and some support from politicians to allow that to happen," he said. "That is, in fact, the whole point of the meetings -- not the protests themselves."
Indeed, what it's all about is as classic as it can get -- a difference of opinion between politicians and activists.
For their part, both the IMF and World Bank want to bring as many countries together to provide aid, debt relief, trade and education to help the world's poorer nations create a better standard of living for themselves, and participate in the riches that most take for granted in the First World. They also want to come to some kind of agreement on how to help avert the next financial crisis that impacted the Czech Republic through the latter part of the 1990s.
From the demonstrators' viewpoint, the meetings are a closed-door assembly of politicians and wealthy business leaders trying to figure out how to maintain the privileged positions of wealthy multinational companies at the expense of poor people, labor unions and the environment.
"We think this will be the biggest thing to happen to the IMF in its history," said Scott Nova, director of the Citizens Global Trade Watch, one of the many protest groups that were in Washington for the previous IMF-World Bank meetings and now plan to be in Prague. "It will serve like Seattle did for the WTO -- to put the IMF on the map for people to notice; the IMF is doing some very bad things," he said.
Flower or power?
Organizations ranging from the more subdued Friends of the Earth and Jubilee 2000 CZ to Czech environmental group INPEG to more radical Marxist and communist organizations will all be there in one form or another attempting to make their voices heard to the 15,000-plus delegates who will be attending meetings, conferences and likely one or two dinner parties. The round of chin-wagging starts next Tuesday and continues for nine days.
There is even an organization, called Destroy IMF, dedicated to the destruction of the institution, which has created its own Web site, www.destroyimf.org.
While some protestors are focusing on destroying the IMF, Czech† authorities' aim is to make sure their city isn't pillaged. The government plans to alter some transportation routes to avoid the area of the Prague Congress Centre, where the meetings are taking place; they have also closed all kindergarten, elementary and secondary schools within the city for the duration of the meetings. Local people have been encouraged to leave town until they end.
To be sure, there is business to attend to, and business is interested in seeing what kind of commitments emerge from the IMF and the ministers of some of the world's powerful - and not-so-powerful - economies.
The meetings also present the first opportunity for the IMF's new top dog -- German national Horst Kohler -- to meet with representatives of other member countries and begin developing a plan for the agency. Kohler succeeds Michel Camdessus as managing director and chairman of the IMF's executive board. Camdessus resigned from the post on Feb. 14.
"The big issue as far as I'm concerned is getting a sense that the new managing director is going to stand up to the (Group of Seven industrialized countries) and exert independence," Booth said. "The IMF has been abominably treated by its shareholders who have used it to gain some share of popular opinion, but I think it needs to fight back."
Flush with cash
Another significant theme likely to emerge at next week's meetings is the IMF's now-bloated coffers, and what they should be used for.
The fund is flush with cash after huge repayments and a steep drop in the number of new loans, according to the agency's annual report, released Friday. The report said that new lending had fallen to $8.3 billion in the fiscal year ended April 30, about a third of what was doled out the previous year. Just $1.6 billion in new lending was approved between May and September.
Even so, it's highly unlikely that the IMF will hand back cash to member countries, said Stanley Fischer, the fund's chief economist.
"The financial position of the IMF is much stronger than it was two years ago, even stronger than it was four months ago. And that is very important good news," Fischer said. "It is also an indication that the concept that the fund should be a crisis lender is fundamentally the way we have been behaving. When there is trouble we lend a lot. As the crisis ends, the money comes in, and it comes in pretty fast."
The IMF put together emergency rescue packages worth well over $120 billion for countries swept up in the world financial crisis of 1997-99. The largest single loan, for some $21 billion, went to South Korea in December 1997. Fischer said the IMF's liquidity ratio -- the ratio of money available to lend, against the money members could draw on at short notice -- had now reached an all-time high of 178 percent, up from 30 percent at the height of the crisis.