"The big issue is whether there should be controls on the global movement of capital," says TIME U.N. correspondent William Dowell. While the U.S. officially favors open financial markets, a major debate is afoot behind the scenes. "A number of key figures are starting to agree on the need for ways of slowing down the volatile movement of capital in and out of emerging markets, which threatens global growth." The U.S. wants the fund to intervene early to forestall financial collapse in emerging markets, but that would require, among other things, that House Republicans release Washington's $18 billion commitment to the cash-strapped IMF. And President Clinton may struggle to get congressmen beset with impeachment to discuss the world economy.
When the die-hard Pollyannas of the IMF admit that "the outlook for the world economy has worsened considerably," you can be sure the situation is grave indeed. Japan over the weekend let slip that many of its banks face a serious liquidity crisis, and the Nikkei concurred Monday by sinking to a 12-year low. So what are the world's finance ministers, gathered in Washington this week, going to do about the crisis? Nothing, so far -- they can't agree on any path that would take us from the brink of a global economic collapse.