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Submitted by Robert Naiman on 20 May 2009 - 4:31pm
It would be an exaggeration to say that Congress has a once-in-a-lifetime opportunity this week to reform the policies of the International Monetary Fund. If the future is like the past, if Congress misses this opportunity, another one will come along - in about 10 years or so.
This week, House and Senate leaders are meeting in a conference committee to work out the differences between the House and Senate versions of the supplemental appropriations bill. The Senate version of the bill is likely to include $100 billion and new authorities for the IMF, but the House version of the supplemental bill did not include funds for the IMF. The Senate is debating amendments now as I write. The conference committee will almost surely meet soon after Senate passage; the stated goal is to pass the supplemental before the Memorial Day recess.
Concrete, observable reforms of the IMF’s policies in poor countries should be part of any agreement: there should be no “blank check” for the IMF. The IMF is imposing policies in developing countries we wouldn’t accept in the U.S. - when we have a recession, our government spends money to help the economy recover, as we did in President Obama’s stimulus package. When developing countries have a recession, the IMF demands budget cuts. With Democrats in charge in Washington, the IMF - in which the United States has overwhelming influence - should not be imposing Republican economic policies. In particular, the IMF should not be imposing Republican economic policies in Pakistan and Afghanistan, since that fundamentally undermines the quest for political stability in these countries. It’s the height of self-defeating absurdity to appropriate US tax dollars for reconstruction and development in these countries while with the other hand - the IMF hand - we tell them that their governments can’t stimulate their economies.
Submitted by Robert Naiman on 15 May 2009 - 4:08pm
Almost completely lost in the drama over the war supplemental for Afghanistan, Iraq and Pakistan is a sneaky play by the U.S. Treasury Department to get $108 billion in U.S. tax dollars for the International Monetary Fund through the supplemental. Of course, if Treasury can get the money through the supplemental, it can avoid any Congressional debate over the policies of the International Monetary Fund and whether this is a wise and just use of U.S. tax dollars; and whether Congress should insist on meaningful, observable reforms of IMF policy as the price of new U.S. funding.
After 1980 the IMF became one of the most powerful institutions in the world. The IMF’s power largely derived from the fact that it headed a “creditors’ cartel” that included the World Bank and other multilateral development banks, and as a result developing countries that didn’t obey the IMF’s policy “advice” could face a cut-off of international credit, a powerful disincentive. This power was used to impose an agenda of privatization, cuts in social spending, and removal of policies deemed obstacles to profit by foreign banks and corporations. The power of the IMF in middle-income countries has waned in recent years, as Venezuela, Brazil, Argentina and other countries broke free, repudiating a legacy of policies that failed to promote economic growth and reduce poverty. But in the poorest countries, especially in Africa, the IMF’s abusive reign has largely continued. Now, rich countries are trying to strengthen the influence of the IMF, using the “opportunity” of the global economic crisis - that’s the context of Treasury’s request for more U.S tax dollars.