INVESTORS BUSINESS DAILY JUNE 11, 2009
U.S. Bailout Of Tinhorn Dictators Sacrifices Taxpayers On IMF Altar
By JAMES BOVARD
The Obama administration wants to pledge $100 billion in U.S. taxpayers’ money to the International Monetary Fund. This provision is included in an appropriations bill containing supplemental funding for military operations in Iraq and Afghanistan.
Luckily, many Republicans and Democrats are vigorously opposing Obama’s effort to sacrifice American taxpayers on an IMF altar.
The IMF is currently bailing out some of the world’s most corrupt regimes. Instead of curing the global downturn, giving the IMF more resources will guarantee more instability, more oppression and bigger losses in the future.
The IMF was created in 1944 to shore up currencies and help nations with temporary balance-of-payment problems. In the decades since the IMF’s founding, global capital markets and fluctuating currency exchange rates have made the IMF a relic. But too many people have gotten rich from IMF largesse to permit the curtain to be closed on this institution.
Actually, the IMF has accomplished many things private markets never could. During the 1970s and 1980s, the IMF was a cheerleader for Third World countries and some communist regimes. The surge in Western lending to such countries helped cause the great debt crisis of the early 1980s.
Treasury Secretary Paul O’Neill denounced the IMF and the World Bank in 2002 for driving many poor nations “into a ditch” with excessive lending that governments wasted.
Regardless, the Obama team believes the IMF deserves far more money and power, tripling its war chest to $750 billion from $250 billion.
The U.S. government contributes roughly 20% of the IMF’s capital.
IMF resources are being squandered. Consider some recent bailouts of floundering regimes:
• The IMF just approved a $116 million loan for the government of Tajikistan — even though that government admitted last year that it had brazenly lied to secure previous IMF loans.
• On May 29, the IMF approved a $209 million loan to the government of Kenya — despite previous perennial IMF complaints about pervasive corruption in that country.
• In January, the IMF approved a $2.5 billion loan for the government of Belarus — one of the most oppressive regimes in Europe, and one that retains many Soviet-style economic policies.
• The Ethiopian government received a $50 million loan in January despite its recent brutal oppression of political opposition.
• The Democratic Republic of the Congo will receive $195 million from the IMF — even though that government is rated by Transparency International as one of the 10 most corrupt regimes in the world.
IMF aid allows politicians to entrench themselves and scorn their own people. IMF loans to bad governments are “odious debts” for the people in those nations. The downtrodden masses will be taxed to repay loans that their rulers pocketed, squandered, or used to tighten their fetters.
IMF supporters insist that any increased aid will be used well because the IMF will impose strict conditions on how governments use the largesse. But IMF conditionality is one of the biggest frauds on the international landscape.
Foreign governments continue getting windfalls regardless of how they betray their reform pledges to the IMF. And the IMF often pressures governments to adapt foolish policies that sacrifice the private sector to maximize government revenue.
While Obama proclaimed his devotion to “transparency” in government, the IMF is a secretive organization. The U.S. will be committing $100 billion to a giant black box — and average Americans will never know who reaped the profit of their sacrifice.
The Obama team wants to bloat the IMF in part because it believes that government spending is the magic bullet against the current economic downturn. Supposedly, American taxpayers will benefit from government waste anywhere in the world. But it makes no sense to increase the U.S. budget deficit to allow foreign governments to shovel out more money for every scam under the sun.
Vastly expanding the IMF will make U.S. taxpayers liable for the mistakes and abuses of tinhorn dictators all around the world. Instead of plowing in another $100 billion, the U.S. government should pull the plug on its involvement in the IMF.
Permitting politicians to spend willy-nilly is a fool’s recipe for prosperity.
Bovard is a former World Bank consultant and the author of “Attention Deficit Democracy” (Palgrave, 2006) and eight other books.