[stop-imf] Sell the Gold, Free the Poor

[robert weissman]

Sell the Gold, Free the Poor
By Russell Mokhiber and Robert Weissman

When historians look back over the last 25 years, one of the great
crimes they will identify is the Third World debt crisis.

Now, finally, the rich countries have agreed to cancel the debts of the
poorest countries to the International Monetary Fund (IMF) and World
Bank. But they continue to differ over how to do it.

It is now clear a compromise agreement among the rich countries over
cancellation of IMF debt can only be reached if sale of IMF gold is a
component of the financing package for debt cancellation.

But a decision to sell some of the IMF's stock of gold is being blocked
by the gold industry, led by the world's largest gold producing
corporation, Newmont Mining Co. Newmont and the industry say that IMF
gold sales will lower the world gold price, but they ignore a proposal
from the IMF itself that would ensure IMF gold sales have no net impact
on the world gold market.

"We are calling on Newmont to reverse its position," says Neil Watkins,
national coordinator of Jubilee USA, the debt cancellation network.
"That will enable progress toward debt cancellation, which is such a
critical piece of efforts to eradicate poverty around the world."

Here's how critical debt cancellation is: Every year, sub-Saharan Africa
pays about $13 billion to the IMF, World Bank and others in wealthy
countries. Poor countries in Africa spend an average of $14 per person
on debt service payments to international financial institutions and
only $5 per person on healthcare.

To qualify for new loans needed to pay off old ones, poor countries must
submit to the policy mandates of the IMF and World Bank. These
pro-corporate, market fundamentalist policies -- things like unqualified
privatization, orienting their economies to exports, downsizing
government, eliminating labor protections, charging user fees for
healthcare -- have further worsened life throughout the developing world.

The situation is so dire that almost everyone agrees that debt
cancellation for poor countries is imperative, and last year the rich
countries in the G7 finally reached consensus on the issue.

But then they embarked on a contentious dispute about how to do it. And
now the dispute about how to cancel the debt may result in no
cancellation whatsoever, or at least no cancellation of IMF debt.

There has been an extensive back-and-forth between the Bush
administration and the Europeans on the issue. Agreement may be near on
cancellation of World Bank debt.

But the sides remain far apart on IMF debt.

Cancellation of IMF debt is in many ways the most strategic step. While
IMF debt represents only 10 percent of total debt from the poor
countries, about one third of these countries' debt payments go to the
IMF. Canceling IMF debt would also reduce significantly the reach of the
IMF -- the harder-line supporter of corporate-friendly economics -- into
poor countries.

The available compromise position for cancellation of IMF debt is for
the IMF to sell some of its gold reserves and use the proceeds to cancel
debt. The UK favors this position. The hold-up is the United States.

The reason for U.S. obstruction is primarily not the administration,
however, but Congress. Gold sales would require Congressional approval.

And the reason for Congressional opposition is the Colorado-based
Newmont Mining Co.

Newmont and the gold industry have lobbied Congress hard on this issue.
Earlier this year, the industry orchestrated a letter signed by 12
Western state senators opposing IMF gold sales.

The reason for industry opposition is the fear that IMF gold sales will
depress the world price for gold. But the fear is misplaced: the way to
do such gold sales, as the IMF itself has stated, is in the context of
the Central Bank Gold Agreement. The European central banks annually
sell a significant amount of gold, according to a schedule that the
market has already taken into account. The IMF sales would be made in
the context of this agreement. The central banks would simply sell less,
so there would be no net increase in gold sales.

We asked Newmont spokesperson Doug Hock: Doesn't the IMF's proposal,
which would preserve the gold price, address the company's concerns?

But an initial comment that it might, in theory, was quickly qualified
by a statement that he hadn't seen the IMF proposal.

So we sent it to him.

Subsequent calls and e-mails haven't been returned.

Meanwhile, the World Gold Council, an industry association, says it
can't comment on the IMF proposal because it hasn't been made public.
But IMF Managing Director Rodrigo de Rato has specified that IMF gold
sales would be conducted in the context of the Central Bank Gold
Agreement to preserve gold price. And while the IMF's technical proposal
hasn't officially been made public, it is widely available. (You can see
it at: <http://www.essentialaction.org/imfgold/imf03112005.pdf>.)

Newmont's misguided and groundless opposition is on the brink of
sabotaging IMF debt cancellation -- thus ensuring millions of poor
people will suffer needlessly. This is a life-and-death matter.

Time is running short for Newmont to reverse its position: A deal on
debt cancellation is likely to be announced at the G8 summit in July,
and if IMF debt is not part of the deal, it may fall of the radar screen
for the foreseeable future.

There is hope. Since Newmont has no discernible, material interest in
opposing IMF gold sales, with enough public outrage, it might be
persuaded to reverse its position.

To contact Newmont, and for more information on the issue, go to:
<http://www.essentialaction.org/imfgold>.

To send a free fax to Newmont via Global Exchange, go to:
<http://www.globalexchange.org/campaigns/wbimf/goldindustryaction.html>.


Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime
Reporter, <http://www.corporatecrimereporter.com>. Robert Weissman is
editor of the Washington, D.C.-based Multinational Monitor,
<http://www.multinationalmonitor.org>, and director of Essential Action,
a corporate accountability group supporting debt cancellation. Mokhiber
and Weissman are co-authors of On the Rampage: Corporate Predators and
the Destruction of Democracy (Monroe, Maine: Common Courage Press).

(c) Russell Mokhiber and Robert Weissman

This article is posted at:
<http://lists.essential.org/pipermail/corp-focus/2005/000205.html>


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