U.S. Is Looted, Russia Is Lost, Thanks to IMF

Last June, I pointed out that Russia was awash in debts, running a huge deficit and should be allowed to default; not one more U.S. tax dollar should be put at risk by the International Monetary Fund trying to hide Russia’s bankruptcy.

Russia’s chief financial officer, Venianin Sokolov, conceded then that all the IMF billions pumped into his country had been lost, wasted or stolen “at the highest levels” of what he called an “entirely corrupt regime.”

Yet the IMF handed Russia another $4.8 billion in July. What happened to it? According to Sergei Dubinin, Russia’s central bank governor, every last dime of that $4.8 billion was spent propping up the ruble, which Moscow finally cut loose and let fall.

Within days, the ruble fell 30% against the dollar, 40% against the German mark. Again, Russia’s people have been robbed. Again, U.S. taxpayers will have to make good the idiot loans of the IMF.

Friends, this is coming close to indictable criminal fraud.

Yet, according to London’s Financial Times Aug. 20, “The IMF is expected to disburse the second tranche of its $11.2-billion loan in September to replenish the central bank’s reserves and control the slide in the ruble.” If Congress allows this loan to go forward and shovels out the $18 billion demanded by President Clinton for the IMF, it must be considered a moral accomplice to the looting of America.

Russia has admitted it cannot pay its foreign debts and has demanded that short-term bondholders accept long-term paper at 30% of face value. Panicked investors are fleeing Russia and every Third World market. Worldwide, stocks are plummeting and billions of dollars of equity are being wiped out daily. Since mid-July, the U.S. stock market has probably given up a trillion dollars in value.

Who is responsible for this global disaster, which began in Asia? Last week, on CNN’s “Moneyline,” Nobel Prize-winning economist Milton Friedman nailed the villain. Said Friedman: The IMF “is largely responsible for the Asian crisis.”

Instead of letting Mexico default in 1994 and Goldman Sachs take its hit, the IMF rushed in to bail out Mexico City and its New York creditors. That bailout sent a message: The risks of investing billions in emerging markets are minimal. Huge sums poured into these markets. It is those investments that are being wiped out today. To staunch the bloodletting, the IMF, since last summer, has put taxpayers at risk for $130 billion in loans, most of which we will never see again.

Yet, as Friedman says, it is not the Mexican people or the Russian people or the Thai people who are aided by the IMF. “We speak about the IMF bailing out . . . Thailand; the IMF isn’t bailing out the poor people in Thailand now suffering from the recession they’re in. It’s bailing out the bankers in New York and in London and Berlin who made loans to Thailand.” Exactly.

It is time for a congressional investigation that might well be titled: Who Lost Russia? Its focus should be on who got--and who stole--the scores of billions of dollars in Western loans sunk into Russia since 1991, because it surely was not the people of Russia, who are destitute and far worse off than in 1991.

According to the Nation magazine (“The Harvard Boys Do Russia”), Russia’s disaster is the work of three elements. First are the so-called “reformers” like Anatoly B. Chubais, who the New York Times says “may be the most despised man in Russia.” Second is Harvard’s Institute for International Development, which Clinton’s men put in charge of U.S. aid to Russia. Third is the U.S. Treasury.

The “privatization drive that was supposed to reap the fruits of the free market,” writes Janine Wedel in the Nation, “helped to create a system of tycoon capitalism run for the benefit of a corrupt political oligarchy that has appropriated hundreds of millions of dollars of Western aid and Russia’s wealth.”

Moscow’s mayor recently “singled out Harvard for the harm inflicted on the economy by its advisors who encouraged Chubais’ misguided approach to privatization and monetarism.”

In 1991, Russia was pro-American and on the road to freedom. Today, this nation, with thousands of nuclear weapons, is a basket case seething with anti-Americanism and ripe for an explosion.

Meanwhile, Russia’s tycoon capitalists romp on the Riviera, and the geniuses at Harvard, Treasury and the IMF who presided over this debacle have never been called to account. This must be done. But first, let’s take Friedman’s advice and abolish the IMF.