With the repercussions of the Asian financial
crisis now spreading to Latin America and now beginning to be felt in
the United States, American taxpayers are being asked to make a sucker’s
bet. Just give the International Monetary Fund $18 billion, so the Clinton
administration says, and this global financial crisis will simply disappear
with the wave of a magic wand and plenty of austerity measures for the
But doesn’t the United States,
along and other nations, give billions of dollars to the IMF and the World
Bank to prevent this sort of crisis from happening in the first place?
What are the IMF and the World Bank doing with all that money anyway?
Where does it go?
It goes to some of the most corrupt
governments in the world. A recent report by Transparency International
tells much of the story; its 1998 Corruption Perceptions Index tracked
the relative corruption of nations around the world based on how investors,
risk analysts and public opinion evaluated the countries.
And what do you know, the two nations
that received the most aid from the IMF, Russia and Indonesia, also scored
as two of the most corrupt nations in the world. Russia came in at 76th
and Indonesia at 80th out of 85 countries that were considered at least
moderately corrupt. For those keeping score, the West Africa nation of
Cameroon came in dead last as the most corrupt nation in the world.
But the World Bank and IMF tend
to turn a blind eye toward corruption occasionally to the point
of denying it exists even when their own reports document massive corruption.
It recently came out, for example, that the World Bank buried an internal
report citing Indonesian corruption at the same time its officials were
publicly denying accusations that officials in that country were skimming
large sums of money from World Bank projects.
That August 1997 report concluded
that up to 20% of money the World Bank gave to Indonesia for various projects
was skimmed by Indonesia’s political class. But what was its official
line at the time? In July 1997, Jean Michel Severino, World Bank vice
president for East Asia, responded to allegations of Indonesian corruption
by saying, “We know exactly where our money is going. We do not tolerate
corruption in our programs.”
Is this a case of the blind leading
So after these corrupt governments
have skimmed and diverted funds, and in the process driven their national
economies into the ground, what are taxpayers expected to do — why let
the IMF and World Bank give them even more funds as a reward. Of course
in return the IMF and World Bank will ask for “reforms” such
as raising taxes on the poor to pay for the largesse of the political
In July, House Majority Leader Richard
Armey addressed an audience on the proposed IMF funding saying, “We’re
being asked to shell out $18 billion of your money for a pig in a poke.”
It’s about time the U.S. put at an end to its participation in this ongoing