CBC letter opposing IMF gold sales (fwd)

[Robert Weissman <rob@essential.org>]

The following letter was sent to President Clinton by 26 members of the
Congressional Black Caucus


June 30, 1999

Dear President Clinton:

South Africa has just inaugurated its second democratically elected
President, Thabo Mbeki.  Among the many challenges he faces is an immediate
crisis - the terrible shock to his country's economy caused by the dramatic
drop in the price of gold over the past three months.  the many other
gold-producing countries in sub-Saharan Africa are struggling with the same
blow to their emerging economies.

Ironically, tragically, the $30 decline in the price of gold can be traced
in part to the announcements of support for the sale of some of the IMF's
gold reserves to fund debt relief for some of these very countries.  the IMF
announcement, coupled with the proposal by the British government to sell
some 14 million ounces of their gold reserves, saw the price of gold plummet
in just a few days from nearly $290 an ounce to below $260.  This drop has
already reduced the export earnings of the gold-producing Heavily Indebted
Poor Countries (HIPCs) by more than $150 million per year.

While we cannot change the decision of the British government to sell its
gold reserves, we can prevent the IMF from further damaging the economies of
the very countries it seeks to help.  The IMF cannot sell any portion of it
gold reserves without approval of the US representative to the IMF.  And the
Treasury Department must obtain congressional authorization before the US
representative can approve such a sale.  When this proposal comes before
Congress for consideration, we will oppose it vigorously.  Make no mistake,
we believe strongly in debt relief, and we intend to pursue every avenue to
provide as much real relief as quickly as possible.  However, selling gold
reserves is the worst possible method of financing debt relief.

Gold mineral reserves are a large part of the natural wealth of many poor
countries, and is therefore one of the few avenues for economic development.
More than three-fourths of the HIPC nations targeted for the IMF debt relief
plan are gold producers, and gold plays a crucial role in the economies of
10- of those countries.  Since the mining industry draws much of its
workforce from the poorest and most rural communities in the subcontinent,
often 10 people or more are dependent on the earnings of each miner.  If the
price of gold remains at the current 20-year low price of about $258, 40% of
South Africa's gold production will become unprofitable, more than 80,000
miners will lose their jobs, and upwards of 800,000 Africans will be plunged
into absolute poverty.

Debt relief does not require IMF gold sales in order to be effective.  In
fact, the proceeds from the gold sales which are actually targeted to debt
relief are virtually nil.  According to one calculation, there would be less
than $60 million per year available to retire the estimate $220 billion HIPC
debt.  There are alternatives to gold sales which would provide more debt
relief in a shorter period of time.

We will not support central bank gold sales; we will oppose them in whatever
form they are presented to the Congress. We intend to examine more
realistic, more productive, and less harmful alternatives.  We hope you will
join us.

Sincerely,

(Signed:)

James Clyburn
Bennie G. Thompson
Sanford Bishop
Albert Wynn
Eva Clayton
Eddie Bernice Johnson
Robert Scott
Melvin Watt
Edolphus Towns
Harold Ford Jr.
Bobby Rush
Ealr Hilliard
Carolyn Kilpatrick
Gregory Meeks
Danny K. Davis
Carrie Meek
Elijah Cummings
Charles Rangel
John Conyers
Major Owens
Juanita Millender-McDonald
Stephanie Tubbs Jones
Alcee Hastings
Julian Dixon
Sheila Jackson-Lee
John Lewis