Commission To Report On International Financial Institutions
March 8, 2000
Today, Congress will receive the report of the International Financial Institutions Advisory Commission, which it established last year to recommend changes in U.S. policy toward the international financial institutions. These include the International Monetary Fund, World Bank, World Trade Organization and others.
The commission report comes at a time when the IMF is roiled in controversy over a new managing director. Historically, the director has always been a European; similarly, the president of the World Bank has always been an American. However, this year the U.S. Treasury Department rejected the European choice, Caio Koch-Weser, a senior German finance ministry official. [Editor's note: Yesterday, Caio Koch-Weser withdrew his name from consideration to head the IMF; Horst Koehler, head of the European Bank for Reconstruction and Development, is expected to be Chancellor Schroeder's new choice.]
- The stated reason for Treasury's objection is that Koch-Weser does not have sufficient "stature" or "gravitas" for such a high level post -- an implausible reason.
- Moreover, German Chancellor Gerhard Schroeder, a political soul-mate of Bill Clinton, invested an enormous amount of effort and prestige in getting Koch-Weser installed.
- With the stakes so high, the Treasury must have another reason for its actions.
One thought is that the U.S. has used the IMF as a private piggy bank in recent years to help bail out Mexico. It is said that Treasury's real objection to Koch-Weser is that he fought U.S. efforts to get the World Bank to aid in the Mexico bail-out.
The IMF's standing in Congress has probably never been lower. Just last week, Rep. Jim Saxton (R-N.J.) introduced legislation that requires the Treasury Secretary to take back the U.S.'s financial contribution to the IMF unless fundamental reforms are implemented immediately.
The commission's report could trigger some action. For example, it may increase pressure to merge the World Bank and IMF, since their efforts frequently overlap and often work at cross purposes.
Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, March 8, 2000.
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