The IMF Corporate Welfare Machine

[Robert Weissman <rob@essential.org>]

In a Congress eager to do the bidding of Big Business, an item atop the
Chamber of Commerce's corporate welfare agenda is in serious jeopardy.

The Establishment leadership of the House of Representatives has delayed
consideration of a gigantic funding request for the International Monetary
Fund (IMF), fearful that it cannot muster the votes for passage. The
insatiable IMF -- a multilateral institution that lends money to countries
when they are unable to pay foreign creditors -- is asking for $18 billion
from the United States, part of a $90 billion proposed expansion.

Now Big Business is growing increasingly worried that IMF funding, which
it once considered a lock, may not be approved. In an effort to solidify
support for IMF corporate welfare, the National Association of
Manufacturers, the U.S. Chamber of Commerce and the Business Roundtable
are all stepping up their lobbying efforts.

In a letter to members of Congress, the Chamber even alleged that
"continued U.S. economic prosperity may hinge on Congressional backing of
the IMF." 

That is quite an astounding claim. The basis of the Chamber's argument is
that the IMF helps foreign economies, which in turn buy from the United
States. But the IMF has an abysmal record in promoting growth in countries
whose economies it has supervised. In order to receive loans from the IMF,
countries have to agree to the Fund's conditions, including sharp budget
cuts, increased interest rates, regressive tax increases, currency
devaluation and other measures which typically throw poor countries into
recession.

No, Corporate America is not backing the IMF for the good of the U.S
economy. When the IMF forces Third World countries to become low-wage
exporters of manufactured goods, that does not help the U.S. economy. IMF
policies help shift manufacturing jobs out of the United States and put
downward pressure on the wages of jobs that remain in the United States.

Big Business has made IMF expansion a priority because, for them, the IMF
is a multi-pronged welfare machine.

First, the IMF bails out big banks and foreign investors when they make
bad loans in developing countries -- investments that are understood to be
risky at the time they were made, and earn more as a result. 

In 1995, the IMF contributed almost $18 billion to a Clinton
administration bailout of the Wall Street interests who stood to lose
billions with the peso devaluation. Last year and early this year, the
Fund orchestrated a massive bailout of the big banks that made bad loans
to Asian countries. About the only pain felt by the banks was the need to
reschedule short-term loans. Now the IMF has done it again, bailing out
foreign investors in Russia with an $11 billion package that will go
straight into the pockets of foreign lenders.

Second, the IMF forces poor countries to discard economic policies and
regulations that limit the power of domestic and especially foreign
corporations. That makes it easier for U.S. and other multinational
companies to benefit from low wages and other perks -- like weak
environmental regulations -- of operating in much of the developing world.

And finally, the IMF is intent on expanding its powers, so that member
countries remove all restrictions on the inflow and outflow of money --
what the IMF calls "capital account liberalization." This will help banks
and financial corporations make super-profits in troubled economies like
Russia's. Such assistance would be especially perverse given the fact
that, in the event of a troubled economy's collapse, the IMF provides
those investors with free, de facto insurance.

Increasingly, members of Congress are coming to see the flaws in the IMF.
Many Republicans in the House of Representatives have seen the flaws in
the IMF bailouts -- they understand that each bailout enables more
imprudent behavior by Wall Street -- and are opposing IMF expansion. Now,
a growing number of Democrats are coming around to the view that an
institution with such a horrid record does not merit a $90 billion
expansion, with the United States footing the bill for $18 billion.

The challenge now is for the bipartisan group of IMF opponents to maintain
their strength in the face of the Big Business lobbying blitz to come.

Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime
Reporter. Robert Weissman is editor of the Washington, D.C.-based
Multinational Monitor.

(c) Russell Mokhiber and Robert Weissman

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