WSJ: IMF, World Bank Face Mounting Attacks (fwd)

[Robert Weissman <rob@essential.org>]

IMF, World Bank Face Mounting Attacks --- House Presents Bills to Alter
Debt Plan to Poor Nations Wall Street Journal; New York; Oct 26, 1999; By
Michael M. Phillips;

WASHINGTON -- Lawmakers on both ends of the political spectrum are
intensifying their attacks on the International Monetary Fund and World
Bank, whose loans to Russia, China and Chad have been mired in
controversy.

In the past month alone, House members have introduced five bills designed
to force the IMF or World Bank to radically alter the way they aid
developing countries. The assault comes from both conservatives, who see
the IMF in particular as a waste of taxpayers' money, and from liberals,
who would like less emphasis on painful economic reforms and more on
environmental and social issues.

"The institutions have promised changes, but changes have been slow to
come," says Andrea Durbin, director of international programs at Friends
of the Earth, an environmental group. "It has reached the point where
Congress is ready to put its foot down and say enough is enough."

The conflict has even leaked into the 2000 presidential campaign, where
two Republican hopefuls, Steve Forbes and Gary Bauer, have said that, if
elected, they would shutter the IMF.

The timing couldn't be much worse for the Clinton administration. It wants
$370 million from Congress to pay the U.S. share of an international
effort to reduce as much as $90 billion in debt that poor nations owe rich
countries, the IMF, the World Bank and other aid agencies. The
administration also seeks congressional permission to use IMF gold to
finance some debt relief. Already, Congress has slashed 22% from the $803
million White House request for the World Bank's low-interest loan
program. President Clinton has since vetoed the funding bill as
inadequate.

On Friday, Treasury Secretary Lawrence Summers urged Congress to meet the
president's request. "By supporting these programs," he said, "we help to
sustain American global economic leadership, and to promote changes
overseas that reflect core American values like free markets, strong
property rights and open borders."

Foreign aid "is probably the least popular part of the budget
politically," says Matt McHugh, a former Democratic congressman who now
advises World Bank President James D. Wolfensohn. "It's always a tough
sell, especially when domestic programs are in danger for one reason or
another." He blames this year's troubles on partisan wrangling over
broader spending caps.

But the World Bank and, even more so, the IMF have come under increasing
criticism since the bipartisan consensus over the value of U.S. foreign
aid broke down at the end of the Cold War. These days the assault is
particularly heavy. That is partly due to opposition to two World Bank
loans: One to resettle ethnic Chinese on traditionally Tibetan lands, and
another to build an oil pipeline connecting Chad and Cameroon.

IMF criticism has centered recently on loans to Russia, although no
evidence has surfaced confirming claims that corrupt officials stole IMF
money.

"The IMF is a force promoting the wrong economic advice around the world
as a condition for financial aid," says Mr. Bauer. "And I think that with
the fiasco in Russia -- where money has been clearly ripped off and ended
up in the pockets of thugs -- that the desire for reform is even greater."

But while Mr. Bauer describes IMF policy advice as "socialist," critics on
the left accuse the lender of excessive orthodoxy for the austere monetary
and fiscal prescriptions it has urged upon countries from South Korea to
Brazil.

"I don't count myself among the number ganging up on foreign aid," says
Rep. Cynthia McKinney (D., Ga.), whose bill would cut U.S. funding for the
IMF until it forgives debt from the poorest countries and abandons harsh
economic medicine. "I believe in the role of multilateral institutions,
but that role doesn't need to hamper the development of basic institutions
and values that I believe we as Americans ought to foster," including
human rights and equal economic opportunity.

Despite the ferment on Capitol Hill, the administration still hopes to
secure substantial help for the IMF, World Bank and debt relief, while
trying to rebuild the collapsed foreign-aid consensus. "Our strategy is to
work for broader reforms in the IMF and World Bank that will help ensure
that these countries are able to allocate scarce resources to reducing
poverty and delivering health care and education," says Treasury
Undersecretary Timothy Geithner.

One likely vehicle is a debt-relief bill sponsored by Reps. Jim Leach (R.,
Iowa) and John LaFalce (D., N.Y.), which could come to a committee vote in
the next few weeks. TEXT BOX ACCOMPANYING ARTICLE: ---

                      Under Attack
  Key provisions and main sponsors of recent House bills affecting the
World Bank or IMF
  -- Ecosystem and Indigenous Peoples' Protection Act 
     Rep. Christopher Cox (R., Calif.) 
  Requires U.S. to cut funds if World Bank violates environmental and 
social policies 
  -- Debt Relief and IMF Reform Act of 1999 
     Reps. Jim Saxton (R., N.J.) and Dennis Kucinich (D., Ohio) 
  Forces U.S. to oppose IMF's low-interest loans to poor countries 
  -- Debt Emancipation to Enable Democracies Act 
     Reps Cynthia McKinney (D., Ga.) and Dana Rohrabacher 
      (R., Calif.) 
  Forces IMF to forgive debts owed by poorest nations without tough 
economic reforms 
  -- Foreign Money Laundering Deterrence and 
      Anticorruption Act 
     Rep. Jim Leach (R., Iowa) 
  Forces U.S. to oppose IMF and World Bank loans to corrupt countries 
  -- Russian Economic Restoration and Justice Act 
     Reps. Curt Weldon (R., Pa.) and Neil Abercrombie (D., 
      Hawaii) 
  Creates joint U.S.-Russian push for IMF reform

Credit: Staff Reporter of The Wall Street Journal