Shut Down the Wasteful IMF

American Spectator
Doug Bandou

The International Monetary Fund often is in the news, but rarely in the U.S. That changed when Managing Director Dominique Strauss-Kahn ended up at New York's Rikers prison charged with rape. Strauss-Kahn's travail well symbolizes the IMF: an institution of entitlement and privilege focused on mulcting the rest of us.

The leading contender to replace Strauss-Kahn, who resigned while proclaiming his innocence, is French Finance Minister Christine Lagarde. The board plans to make its selection by June 30, but instead should shutter the organization.

The Fund was one of the "Bretton Woods" institutions created in 1945. Its purpose was to stabilize exchange rates. When the system of fixed exchange rates collapsed in 1971, the IMF effortlessly found a new job, promoting development. The Fund created a generous dole for Third World governments.
After Communism fell, such east European nations as Romania, Ukraine, and Hungary became major borrowers. The IMF now is a leading lender to Greece, Ireland, and Portugal. In fact, before his arrest Strauss-Kahn was heading back to Europe for talks on expanding the Greek bailout arranged last year.

The IMF is funded by its member governments, which also back its large-scale borrowing. The organization has steadily increased lending over time. In 1989 the IMF pressed to double its capital which, explained Managing Director Michel Camdessus, would be "the cheapest way for taxpayers in the richer countries to come to the aid of the poor." In 2009 the heavily indebted industrial states agreed to an immediate $100 billion increase in Fund resources in response to the financial crisis and approved the objective of trebling the Fund's $250 billion in resources. (The organization has a multitude of "credit facilities," credit "arrangements," and "credit lines.")

The IMF famously imposes policy changes as part of its lending programs. Unfortunately, there is no evidence that the organization has effectively promoted economic growth. Even its advocates can point to few successes.

Two decades ago Richard Feinberg and Catherine Gwin concluded that "the record of IMF-assisted adjustment efforts in Sub-Saharan Africa is discouraging." Back before he thought foreign aid could end poverty, economist Jeffrey Sachs warned that most agreements "are now honored in the breach."
The Fund spent decades subsidizing the world's economic basket cases, including Egypt, pre-reform India, Sudan, pre-reform Turkey, communist Yugoslavia, Bangladesh, Guinea-Bissau, Pakistan, Zaire (now Congo), and Zambia. None advanced because of Fund programs. In contrast, expanding private investment and trade offered development opportunities for countries that adopted sensible economic policies.

Now the IMF has become the bailout king. There always were better alternatives to throwing cash at countries suffering economic and financial crashes: bankruptcies, debt reschedulings, and forced work-outs. The common panic fomented by the Fund was rarely justified. Former Treasury Secretary and Secretary of State George Shultz opposed an earlier proposal to increase IMF resources: "typically crises are overrated in prospect and used to justify things that have big, big downsides, and in which the downsides are not quite seen at the time the intervention is being proposed."

However, the organization gloried in finding another purpose. Mexico became the Fund's biggest borrower. Then there was Asia.

Emails Expose BP's Attempts To Control Research Into Impact Of Gulf Oil Spill

Free Internet Press

BP officials tried to take control of a $500 million fund pledged by the oil company for independent research into the consequences of the Gulf of Mexico disaster, it has emerged.

Documents obtained under the Freedom of Information Act show BP officials openly discussing how to influence the work of scientists supported by the fund, which was created by the oil company in May last year.

Russell Putt, a BP environmental expert, wrote in an email to colleagues on June 24,  2010: "Can we 'direct' GRI [Gulf of Mexico Research Initiative] funding to a specific study (as we now see the governor's offices trying to do)? What influence do we have over the vessels/equipment driving the studies vs the questions?".

The email was obtained by Greenpeace and shared with the Guardian newspaper.

The documents are expected to reinforce fears voiced by scientists that BP has too much leverage over studies into the impact of last year's oil disaster.

Those concerns go far beyond academic interest into the impact of the spill. BP faces billions in fines and penalties, and possible criminal charges arising from the disaster. Its total liability will depend in part on a final account produced by scientists on how much oil entered the gulf from its blown-out well, and the damage done to marine life and coastal areas in Louisiana, Mississippi and Alabama. The oil company disputes the government estimate that 4.1 million barrels of oil entered the gulf.
 
There is no evidence in the emails that BP officials were successful in directing research. The fund has since established procedures to protect its independence.

Other documents obtained by Greenpeace suggest that the politics of oil spill science was not confined to BP. The White House clashed with officials from the National Oceanic and Atmospheric Administration (NOAA) and the Environmental Protection Agency (EPA) last summer when drafting the administration's account of what has happened to the spilled oil.

On 4 August, Jane Lubchenco, the NOAA administrator, demanded that the White House issue a correction after it claimed that the "vast majority" of BP oil was gone from the Gulf.

A few days earlier, Lisa Jackson, the head of the EPA, and her deputy, Bob Perciasepe, had also objected to the White House estimates of the amount of oil dispersed in the gulf. "These calculations are extremely rough estimates yet when they are put into the press, which we want to happen, they will take on a life of their own," Perciasepe wrote.

Commenting on BP's email discussions about directing research, a spokeswoman for the oil company said: "BP appointed an independent research board to construct the long-term research programme."



Kert Davies, Greenpeace U.S. research director, said the oil company had crossed a line. "It's outrageous to see these BP executives discussing how they might manipulate the science programme," said Davies. "Their motivation last summer is abundantly clear. They wanted control of the science." 


The $500 million fund, which is to be awarded over the next decade, is by far the biggest potential source of support to scientists hoping to establish what happened to the oil.

A number of scientists had earlier expressed concerns that BP would attempt to point scientists to convenient areas of study – or try to suppress research that did not suit its business.

The first round of funds were awarded last May to a consortium of gulf coast researchers. "The rest we are all waiting with bated breath," said Ajit Subramanian, a marine scientist at the Lamont Doherty Earth Observatory. "A lot of the funds might be for understanding future spills. It is also unclear what kind of strings will be attached with that money." 


Another email, written by Karen Ragoonanan-Jalim, a BP environmental officer based in Trinidad, contains minutes of a meeting in Houma, Louisiana, in which officials discussed what kind of studies might best serve the oil company's interests. 


Under agenda item two, she writes: "Discussions around GRI and whether or not BP can influence this long-term research programme ($500 million) to undertake the studies we believe will be useful in terms of understanding the fate and effects of the oil on the environment, eg can we steer the research in support of restoration ecology?" 


Ragoonanan-Jalim acknowledges that BP may not have that degree of control. "It may be possible for us to suggest the direction of the studies but without guarantee that they will be done." 


The email goes on: "How do we determine what biological/ecological studies we (BP) will need to do in order to satisfy specific requirements (legislative/litigation, informing the response and remediation/restoration strategies)."



Intellpuke: You can read this article by Guardian U.S. environment correspondent Suzanne Goldenberg, reporting from Washington, D.C., in context here:
 
www.guardian.co.uk/environment/2011/apr/15/bp-control-science-gulf-oil-spill