Foreign Policy
Summer 1998

Ignorance versus Hyperbole

The United States is the IMF’s greatest financial supporter, with a quota—or "membership fee"—that accounts for roughly 18 percent of total IMF funds. But lately U.S. leadership has seemed to be at best a mixed blessing. The acute hostility of the U.S. Congress toward the IMF (indeed, toward almost all multilateral institutions) is matched only by its abysmal ignorance of how the fund actually works.

Congressional attitudes are driven by an idée fixe that these institutions impose significant costs on U.S. taxpayers. Yet, as Secretary of the Treasury Robert Rubin recently pointed out, U.S. participation in the imf "has not cost the taxpayer one dime." In fact, IMF managing director Michel Camdessus argues that over the last 15 years, the United States has actually made a small profit (of a little under $100 million annually) from membership in the institution.

Republican Senate leader Trent Lott’s characterization of Camdessus as "a socialist from France" (who should hence be fired) and his insistence that U.S. contributions to the IMF waste "taxpayers’ money" could be dismissed as uninformed demagoguery, if such comments did not have major repercussions for imf funding and policy. But not only does Congress have the power of the purse over U.S. quota increases, it can—and increasingly does—use that power to attach conditions (such as a ban on funding organizations that support the right to an abortion overseas) to U.S. legislation that would finance the IMF. Recent debate over the "abortion provision" in the House of Representatives, for example, has stalled U.S. approval of $18 billion in new financing for the IMF.

Meanwhile, in order to sell quota increases to Congress, the U.S. Treasury (and the allies it marshals to buttress its case) exaggerates what the fund can do not just for developing nations but for the "national interest." As one such booster recently testified before the Senate, the imf "is in fact one of the best possible deals we could ever imagine: Its programs cost us nothing yet it provides enormous benefits for our economy and our foreign policy." This kind of rhetoric hardly helps policymakers in crisis-ridden countries who must defend fund programs to suspicious nationalists who deplore U.S. hegemony. And later, when these unrealistic expectations are not met, the imf’s credibility suffers.

—D.K.