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Yesterday, while the International Monetary Fund and the World Bank met in Prague, the capital of the Czech Republic, tens of thousands of demonstrators held rallies and blocked streets to protest these organizations. Just as in Washington, D.C., in April, representatives of the IMF and the Bank reaffirmed their commitment to economic policies that, in the view of anti-globalization activists, are responsible for the impoverishment, exploitation and neocolonial status of most of the Third World. Once again, mainstream media fixated on violent street battles and downplayed the protesters' message, leaving independent sources to discuss the serious issues at stake. Only a few observers, however, have focused on probably the most significant aspect of this latest showdown: its location. Before 1989, the Soviet Union and its Eastern European satellites presented the major obstacle to Western efforts to create a "global economy." The collapse of the communist bloc and disintegration of the U.S.S.R. presented the West with a historic opportunity to extend its economic and political influence eastward. Freed from Soviet oppression, Eastern Europe's new leaders -- many of them suspect "reformed Communists" -- adopted Western advice on restructuring their economies and civil societies. Many citizens expected that the overthrow of Stalinist dictatorship would soon lead to the wealth of Western Europe's "social democracies." Ten years later, an increasing number of disillusioned Eastern Europeans have begun to ask difficult questions. The overt political repression of the Cold War years may be gone, but that wealth has not been forthcoming. Instead, thanks to the dictates of the IMF, governments from Warsaw to Sofia have been encouraged -- sometimes pressured -- to make drastic cuts in vital social services, privatize entire industrial sectors and open their economies to investment from Western multinationals. Under such austerity measures -- or "shock treatment" -- the living standards of the majority of the population have sharply declined. Families that had managed for decades thanks to state subsidies suddenly found themselves unable to pay for rent, utilities and public transportation; massive layoffs at "inefficient" businesses left hundreds of thousands out of work. In 1989, many Eastern Europeans were willing to put up with temporary hardship as long as they could see a light at the end of the tunnel. Over the last decade, according to some estimates, the poverty rate in the Czech Republic -- the richest of the ex-communist states -- has increased tenfold. And anyone who has traveled in Poland or Hungary knows that poverty, homelessness, drugs and despair are far from uncommon. Why, then, did the U.S. and other industrialized powers who control the IMF prescribe such policies for Eastern Europe -- and for Russia and the other republics of the former Soviet Union? Economic domination is an obvious answer. Under IMF-imposed free-market measures, these countries have become instant sources of cheap labor. True, wages are rarely as low as in Central America, Southeast Asia or other parts of the Third World, but highly educated Eastern Europeans constitute an irresistible labor pool for, say, German auto manufacturers or U.S. computer companies. But behind economic control lies a greater design: political and military expansion. Contrary to widespread hopes, the end of the Cold War did not bring about a new era of international cooperation. Instead, Western elites have been preoccupied with "containing" a weakened Russia by incorporating Eastern Europe and ex-Soviet states such as Ukraine into their sphere of influence. The IMF has become one of the primary instruments of this policy. In 1991, for instance, Slovene and Croatian secessionist leaders were promised that their share of Yugoslavia's foreign debt would be erased if they declared independence. Last year's war against remnant Yugoslavia -- the only state in the region that has refused to subject its economy to an IMF structural adjustment program -- demonstrated that Western leaders are willing to use their military arm, NATO, to enforce their political hegemony. Against this background, the setting of yesterday's protests is no accident. Today, as so often in the past century, Eastern Europe holds center stage in world affairs. The IMF and the World Bank have raised the stakes by bringing their circus across the old Iron Curtain. A new generation of Eastern European activists has made it clear that they do not wish to trade one master for another -- that, just as they defeated the Soviet army and state socialism, so too will they stand up to the rapacious interests of corporate globalization.

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