Fast Track Derail New IMF Funding

Vol. 1, No. 1

January, 1998

by Soren Ambrose
Nicaragua Network

To judge from the tactic he has chosen to try to secure a staggering $18 billion for the International Monetary Fund (IMF) in the wake of the East Asian bailouts, it looks like President Clinton has learned one major lesson from the Congressional defeat of "fast-track" negotiating authority for international trade agreements. That lesson is that the American public has gotten a whiff of the kind of global economy he wants, and they don’t like it.

So instead of going the usual route on securing funding for the IMF -- a year-long process of committee hearings and votes -- the President has elected to try to sneak it through, buried in an unrelated bill (probably the one to extend the stay of U.S. troops in Bosnia). In gambling that legislators will bend to his will when faced with the choice of having to vote against a priority, high-profile bill, Clinton has devised another form of fast-track to keep in place a global economic model that coddles wealthy investors at the expense of workers and the poor worldwide. There are even rumors that the President is planning to use his State of the Union address to make the exorbitant and fallacious claim that funding the IMF is a matter of "national security."

Critics from across the political spectrum have pointed out that the IMF was until very recently a big fan of the East Asian economies, even holding them up as models of what poorer Third World countries, the IMF’s usual clients, could hope to achieve if only they would follow the IMF’s advice. And the concessions the IMF has demanded in return for its bailouts have been criticized for attacking the wrong culprits by insisting on cuts in government spending and growth when most of the problems stem from lax banking regulations, excess production capacity resulting from an export-oriented economy, and, as in the Mexican crisis of 1994-95, over-dependence on foreign short-term investment that can be pulled out abruptly at the first hint of panic. But the IMF is unlikely to identify these last two reasons in its diagnosis, since they are the centerpiece of its prescriptions for most of the developing and emerging economies around the world.

The IMF would be reluctant to question these prescriptions, since it has become the chief architect of the new global economy. If President Clinton will not take steps to halt the reign of incompetence and moral bankruptcy at the IMF, then Congress must. We must make every effort to use our democratic processes to prevent the structural adjustment, and systematic impoverishment, of the rest of the world, ourselves included. It is imperative that Congress stand up to the President and insist that any request for IMF funding go through the committee hearings and open debate it normally would. Economic democracy should not be sacrificed in the name of "expertise," especially when the experts’ advice has proven so disastrous for so many. Just as democratic governments long ago recognized that war was too important to be left to the generals, we must now assert that the economies of the world are far too important to be left to the economists at the IMF.

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