By Russell Mokhiber
and Robert Weissman
WASHINGTON — In a Congress eager to do the bidding of big business, an item atop the Chamber of Commerce's corporate welfare agenda is in serious jeopardy.
The establishment leadership of the House of Representatives has delayed consideration of a gigantic funding request for the International Monetary Fund (IMF), fearful that it cannot muster the votes for passage.
The insatiable IMF — a multilateral institution that lends money to countries when they are unable to pay foreign creditors — is asking for $18 billion from the US, part of a $90 billion proposed expansion.
Now big business is growing increasingly worried that IMF funding may not be approved. In an effort to solidify support for IMF corporate welfare, the National Association of Manufacturers, the US Chamber of Commerce and the Business Roundtable are all stepping up their lobbying.
In a letter to members of Congress, the chamber even alleged that "continued US economic prosperity may hinge on Congressional backing of the IMF".
That is quite an astounding claim. The basis of the chamber's argument is that the IMF helps foreign economies, which in turn buy from the US. But the IMF has an abysmal record in promoting growth in countries whose economies it has supervised.
In order to receive loans from the IMF, countries have to agree to the fund's conditions, including sharp budget cuts, increased interest rates, regressive tax increases, currency devaluation and other measures which typically throw poor countries into recession.
When the IMF forces Third World countries to become low-wage exporters of manufactured goods, that does not help the US economy. IMF policies help shift manufacturing jobs out of the US and put downward pressure on the wages of jobs that remain.
Big business has made IMF expansion a priority because, for them, the IMF is a multi-pronged welfare machine.
First, the IMF bails out big banks and foreign investors when they make bad loans in developing countries — investments that are understood to be risky at the time they were made, and earn more as a result.
In 1995, the IMF contributed almost $18 billion to a Clinton administration bailout of Wall Street interests who stood to lose billions with the peso devaluation.
Last year and early this year, the fund orchestrated a massive bailout of the big banks that made bad loans to Asian countries. About the only pain felt by the banks was the need to reschedule short-term loans.
Now the IMF has done it again, bailing out foreign investors in Russia with an $11 billion package that will go straight into the pockets of foreign lenders.
Second, the IMF forces poor countries to discard economic policies and regulations that limit the power of domestic and especially foreign corporations. That makes it easier for US and other multinational companies to benefit from low wages and other perks — like weak environmental regulations — of operating in the "developing" world.
Finally, the IMF is intent on expanding its powers, so that member countries remove all restrictions on the inflow and outflow of money — what the IMF calls "capital account liberalisation". This will help banks and financial corporations make super-profits in troubled economies like Russia's. Such assistance would be especially perverse given that, in the event of a troubled economy's collapse, the IMF provides those investors with free, defacto insurance.
Many Republicans in the House of Representatives have seen that each IMF bailout enables more imprudent behaviour by Wall Street and are opposing IMF expansion. Now, a growing number of Democrats are coming around to the view that an institution with such a horrid record does not merit a $90 billion expansion, with the US footing the bill for $18 billion.
The bipartisan group of IMF opponents must now face the big business lobbying blitz to come.
[Abridged. Russell Mokhiber is editor of the Washington, DC-based Corporate Crime Reporter. Robert Weissman is editor of the Washington, DC-based Multinational Monitor.]