imf/indonesia talking points

[Robert Weissman <rob@essential.org>]

Dear friends,

	With all the press attention that has been focused on Indonesia,
we are keen to bring some attention to the role of the IMF in hurting the
poor so much through its program there that it sparked revolt.  The
following are talking points we have prepared.  They could be useful for
dealing with press, radio shows etc.

Carol Welch, Friends of the Earth
cwelch@FOE.org



		INDONESIA CRISIS AND THE IMF
	TALKING POINTS



 	The role of the IMF in contributing to Indonesia's political and
economic crisis has been overlooked.  The political and social crisis has
escalated ever since the IMF entered the picture.  The situation began to
spiral downward after the IMF's conditions were imposed.

 	In early May, IMF resumed its loan payments and imposed new
conditions on Indonesia but the burden of these conditions is felt by the
poor and working classes and small/medium businesses, not the rich, elite
ruling class of Indonesia.  IMF resumed the loan even though the
monopolies are not broken up.

 	The IMF's answer to the economic crisis is misguided because it
places the costs on the poor, working class people of Indonesia while
protecting the rich ruling class and bankers

 	The IMF made promises to do away with corruption of the ruling
class, which is desperately needed, but that rhetoric never became
reality.  Suharto and his family are still benefitting from corporate
deals and monopoly ownership and IMF still gave Indonesia the latest
installment of the loan.  

 	Despite evidence that these monopolies have not been dismantled,
the IMF went ahead and administered its new loan package in early May,
sparking the latest protests.  

 	What the IMF has done is imposed new conditions that have fallen
on the backs of the poor.

 	The IMF's bailout conditions required huge price hikes for food
and fuel and cuts in subsidies for the poor. The cost of gasoline and food
prices went up 25-75% in 1-3 days, leading many people to protest such
rapid price increases for basic staple products.

 	The story about the IMF over and over again is that when the IMF
gets into a country, the situation often worsens for the poor, creating
social strife and wreaking environmental havoc.

 	In an internal IMF report, leaked to the NYTs in January, their
own assessment is that the IMF's involvement in Indonesia has just made
things worse.  

 	Friends of the Earth, an international environmental organization,
is concerned about the IMF and its approach to dealing with these global
economic crises because the impact is disproportionately suffered by the
people and the environment.    

 	The IMF's advice for countries in an economic crisis is to
increase prices on the general population, cut subsidies which benefit the
poor and to extract natural resources quickly for export and immediate
cash.   

 	Indonesia is a good example of how this approach was applied and
what has gone wrong.

 	In addition to the social crisis and protesting of rising prices,
the environment has also suffered.  One of the IMF's loan conditions was
for Indonesia to open up its timber and palm oil industry for foreign
investment.

 	In February, the IMF required Indonesia to open up its palm oil
plantations to foreign investment. One month later, by March, the forest
fires had spread by tenfold.

 	The result has been disasterous from the point of view of
ecological biodiversity and climate change.

 	Indonesia contains about 10% of the world's tropical rainforests
and probably has the most biologically diverse flora and fauna in the
world.    Investment in Indonesia's forests have escalated.  At the urging
of the IMF, Indonesia is liquidating its forests.  Timber and palm oil
companies have come in and cleared the land using slash and burn
techniques, causing some of the worst forest fires in the history of the
region.  80% of the forest fires last year began on timber and palm oil
plantations which are controlled by a few politically connected timber
barons.

 	The fires forced schools to close, health warnings were issued to
advise people to stay indoors, respiratory ailments are now on the rise.
The forest fires have contaminated the air in the region 
 	The forest fires also destroy valuable natural resources that are
economically important for the country, not to mention the value for
biological diversity.

 	But the forest fires are not only a national environmental problem
for Indonesia.  It is an international problem.  The forest fires are
releasing carbon dioxide, a greenhouse gas which contributes to global
warming.  

 	Last year, the fires on the island of Sumatra released more
greenhouse gas emissions into the atmosphere, contributing to the problems
of Climate Change, than the emissions of all of Europe last year.  This
year, the forest fires are much worse and already expected to release more
greenhouse gas this year than last.

 	The estimated cost of the 1997 fires cost over $1 billion.



 	The point is that the IMF is charged with responding to economic
global crises, but it is just administering more pain, not a cure.  

 	Even traditional supporters of the IMF's approach are now joining
the call for the IMF to be reformed.  Economists like Jeffrey Sachs of
Harvard and former Treasury Secretary George Schultz have said that the
IMF's solutions are causing more of the problem.

 	The IMF needs to be more open and transparent in its decision
making.  Right now, the IMF is more closed and secretive than the CIA.  It
is impossible to find out what it is doing and saying to governments.

 	The IMF needs to consult with the majority of the population of
countries where in intervenes to determine what they need and how they
want to respond to economic crises.  Its current modus operandi protects
the ruling classes and their needs.

 	The IMF needs to place the burdens of dealing with economic crisis
equitably on a population, not burden the poor and working classes, those
segments that did nothing to create the economic crisis.

 	Finally, the IMF cannot bailout bankers and reckless speculators.
The Indonesian financial crisis is a banking crisis.  Investors made bad
decisions but they should suffer the consequences, not get bailed out by
the IMF and taxpayers who are contributing money to the Fund.

 	The Clinton Administration is using the Indonesian financial
crisis to argue that the IMF needs more money and is asking Congress for
$18 billion this year.  It is wrong to give the IMF more money now, when
that money is being used to bailout reckless bankers, hurt the poor and
destroy the environment.  The IMF has a track record of failures.