|January 9, 2007||Posted by Staff under Archive, Progress Report, The Progress Report|
IMF Bailouts Under Attack
At a recent hearing of the House Banking Committee, here’s how one Congressperson, Bernard Sanders, criticized the Administration for its support of the IMF (International Monetary Fund).
And for our last statement, we’ll have Mr. Sanders.
SANDERS: Thank you, Mr. Chairman, for holding this hearing and welcome to our guests.
I have some concerns. I am always amazed at how quickly the United States Congress can move to protect the interests of the largest banks in this country — banks which are enjoying huge profits — and at the same time protect the interests of people like General Suharto, a cruel, authoritarian dictator whose own family is worth between $40 and $50 billion.
Boy, we move pretty quick. And yet, when some of us say — How about building some affordable housing? How about policies to raise the minimum wage — which Mr. Greenspan opposes? How about problems — How about proposals to deal with the fact that 22 percent of our children live in poverty, the highest rate of childhood poverty in the industrialized world?
My goodness, how slow we are to move.
[The] Bottom line for me [is] that large banks have made billions of dollars investing in corrupt dictatorships like Indonesia — made billions of dollars. Now, they are about to lose some money. And instead of proclaiming that goal of personal responsibility and the virtues of the free enterprise system that we hear so much about, by goodness, these multibillion-dollar institutions are running to the middle class taxpayers of this country and saying — Bail us out.
Some of us have real concerns about that process.
Thank you, Mr. Chairman.
LEACH: Well, thank you, Mr. Sanders.
Later, during question and Answer Period:
LEACH: Thank you. Mr. Sanders.
SANDERS: Thank you Mr. Chairman. What I’d like to do is just ask a few questions and then wait for the responses and mostly what I’d like to do is pickup on a few of the points that folks like Barney Frank and John Lafalce and Maxine Waters and Jack Metcalf made and just maybe carry it a step further and maybe add one or two points from Bernie Sanders as well.
Point number one. General Suharto is a corrupt dictator, who among other things happens to be worth some $30 billion. He has a habit of putting in jail political opponents of his. Including leaders of the trade union movement who have the strange idea that workers have a right to organize and stand up and fight for their rights.
Muchtar Pakpahan, who is the leader of the Indonesia Free Trade Union movement is now rotting in jail. Several years ago, Barney Frank and I passed legislation which said that the United States must amend from recipient countries and IMF deals. That they guarantee internationally recognized workers rights.
The Treasury Department has not done that. You have not obeyed the law. So, Mr. Rubin, I’m giving you the opportunity now to tell General Suharto that the people of the United States will not sit back and participate in loans to a corrupt dictatorship unless leaders in their country who are fighting for democracy and for workers rights, are set free.
Tell the world now that no more IMF money goes to their country, nor goes to Suharto, tell the people of Indonesia that we are on their side.
Free Mr. Pakpahan, tell Mr. Suharto that’s what you’re going to do. That’s question number one.
Number two, picking up on a point that Mr. LaFalce made a little while ago, generally speaking and historically, when businesses and large banks made bad loans, when they screw up, where they invest where they shouldn’t have invested and the people they lend the money to can’t pay it back, what historically happens is people sit down and then the banks write off some of it, they forgive some of it — that’s the way it goes.
I find it ironic that the taxpayers of this country who are going to have to bail out banks that have made billions and billions of dollars investing in Asia — huge profits. I find it ironic that IMF austerity programs are not going to affect General Suharto, who’s worth $30 billion — he’s got his money abroad — but it’s going to affect the poor people of Asia who are going to see higher unemployment and lower wages.
So I would suggest that maybe instead of coming to the people of the United States for a handout, why don’t you get Chase Manhattan Bank and General Suharto in a room and help them negotiate so that these guys can take responsibility for their own bad business practices, rather than the middle class or the working families of this country?
Third point — picking up on a point that Ms. Waters made. ”New York Times” today. It says — A study done by the banks about what happened in Asia, it shows how quote, “How foreign banks, including American banks, fell over themselves” — fell over themselves — “to lend more money year after year in Asia.”
I agree with Ms. Waters. In my state of Vermont, we have mayors, we have the governor who went down on their hands and knees asking corporations and banks to re-invest in our country. Workers today in this country are earning substantially less in real wages than they did 20 years ago working longer hours. Women have got to work rather than stay home with the kids.
What are you doing to get these banks and corporations to re-invest in the United States of America, pay workers here a decent wage, rather than investing in Indonesia, where they pay people 20 cents an hour?
So that’s the point that Ms. Waters makes. I think it’s an excellent point.
Last point, Mr. Metcalf touched on this point. The IMF historically does not have a good record in terms of the poor people of various countries. You mentioned Mexico, Mr. Summers, and your pride that Mexico repaid their loan. And we got a big interest rate back. Boy, we made money.
Do you know what’s going on in Mexico today? Do you know that working people have seen a significant decline in their wages, they’ve got millions of kids who are working for no money at all, and you’re sitting here telling us how proud you are that we made money so the suffering children and the unemployed workers of Mexico have paid us back and we’re gloating about it.
Some of us think that maybe the function of the IMF or the United States government should pick up the poor people of the world, not push them down further. I would appreciate a response to those questions.
RUBIN: Let me try to go through some of them, if I may. In terms of Indonesia, this administration has an exceedingly strong commitment to human rights. The secretary of state has re-articulated that commitment in all sort of fora, and as you know, has had a personal history of being deeply committed to these issues.
As you also know, it is very complicated and difficult to accomplish the purposes that we would all have in that respect. Now, wait a minute, let me finish and I’ll respond to your question. I think it is overwhelmingly in the interest of the Indonesian people and overwhelmingly in the interest of American workers to have an IMF program that prevents Indonesia from dissolving into financial instability, and that is what we are about in Indonesia.
Separately from that track, because I do not think we could accomplish the purpose that you very correctly say should be accomplished on this track — very substantial efforts have been made, predominantly through the State Department to try to accomplish the purpose that you’ve raised.
Question one — I apologize, I can’t read my writing. The workers of these countries bearing the cost of this. I think these countries basically face two possible tracks. One is that they put in place reform programs, they go through a difficult period — inevitably, they will — and then they come back out and they get back into a mode of growth. And if you look at these Asian countries, they have had remarkable rates of growth over the last, say, 20 or 30 years. And with all of the problems that exist in these countries, the average incomes and standards of living in these countries have increased very substantially as a result thereof.
The other possibility is that these problems not be addressed, the confidence not return, in which case the workers of those countries — and also, our own workers — but the workers of those countries will be vastly worse off than they would be if in fact reform and stability are accomplished.
On the question of inner cities, I guess my answer would be the same to you as it was to Congresswoman Waters. I totally and completely agree with the importance with respect of these — the problems of the inner cities with respect to all of this. And I think we actually have accomplished a lot in this administration, but I have no question that there’s room to continue focusing and tried everything more that we can possibly do. And I think that we — not I think — we are committed to doing that.
I may have missed something, but those are the…
SANDERS: Once again, I gather you’re not telling General Suharto to free the leader of the union movement who’s rotting in jail know, despite the fact that our law requires us to do that. You’re not saying that?
RUBIN: I — well, I could repeat what…
SANDERS: You’re not saying that.
RUBIN: I am sticking with what I just said.
SANDERS: So, I’m sure the people of Indonesia do not appreciate that.
RUBIN: Well, you know, it’s interesting, Congressman Sanders, I think there are very serious issues affect human rights in many places and I think probably — I agree with the fervor with which you deal with them. The people of Indonesia are going to be vastly worse off if we can’t, working with the international community, help Indonesia solve the problem that they now face.
SANDERS: The people of Indonesia have the right to stand up and fight for their rights, and their leader is in jail now and you’re tolerating that situation.
RUBIN: I certainly agree they have a right to stand up and fight for their rights and I think inappropriately jailing people — and I actually don’t want to comment on the particular — of inappropriately jailing people — is something that should — is most reprehensible and we view with the greatest concern.
SANDERS: But we are giving him billions of dollars and not asking to free his political prisoners.
RUBIN: Well, we have not actually — just as a matter of fact, the United States has not disbursed a nickel to Indonesia. The IMF has disbursed some funds and we’re trying to accomplish what we can within the context of the IMF program.
I think you’ve got another issue, which I think — which has gotten enormous attention. I understand that the secretary of state and others at the State Department have raised this in many fora with Indonesians. I don’t think you can effectively accomplish that in this context.
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