Whether in Mexico in 1994, Asia in 1997 or Russia throughout the 1990s, the institutions have become a more explicit tool of western, and particularly American, foreign policy. Only this week the two bodies were using their economic muscle to pressure the Indonesian government into accepting an international peacekeeping force in East Timor. Such politicisation, many feel, threatens their credibility in handing out disinterested policy advice. Almost a decade after reforms began, the place is a mess. Around 60m people, almost half the population, live below the poverty line.
Corruption is massive and endemic.
Mr Stiglitz says much of this dismal performance stems from the intellectual inadequacies of the previous approach. There was, he argues, too much emphasis on macroeconomic stabilisation at the expense of institution-building. Privatisation was pushed too far too fast, and, without the right regulatory framework, was bound to fail. Western advisers wrongly thought that privatisation would create a demand for protection of property rights. Instead, new owners stripped the assets and transferred the money abroad, helped by a misguided liberalisation of capital flows.