Members of the International Monetary Fund meet with officials in the Maldives.
The battle over America’s pledge of new funds to the International Monetary Fund is shaping up and will play out in Congress this week during the negotiations over the war supplemental. Recall that the G-20 nations agreed in April to boost IMF lending capacity by $500 billion.
This extra capital is necessary because, in an effort to stem the economic crisis, the IMF bailed out a number of countries such as Pakistan and Iceland that may have otherwise gone belly up. Now the IMF needs additional funds that it can loan to other countries on the brink.
Opposition is coming from both sides of the political spectrum. There is the usual neo-con fearmongering that this money is a “giveaway”—more on why this is silly below.
There are also progressives who argue, with reason, that the IMF should be less strict in its demands from poor countries because past IMF conditions on loans to developing economies often caused great pain and were ultimately unproductive. All sides are demanding greater transparency in the IMF’s lending practices and governance.
Much room remains for improvement at the IMF, but we need to ante up. Congress should deliver the funds we’ve pledged, while also keeping up the pressure for reform. Here are five reasons why:
1. The IMF extends our dollars. Our share of the additional $500 billion pledged—$108 billion—is less than 22 percent of the total. That means that for every one dollar we contribute, other countries are putting in about $3.50. Japan already signed an agreement with the IMF to provide its promised $100 billion, and their economy is at least as bad as ours, and much smaller. The amount we owe is significantly less than what we needed to bailout one U.S. company (AIG), and these are countries at stake.
2. We are going to pay one way or the other. Let’s be serious. We aren’t going to let Pakistan’s economy collapse, or for that matter Hungary’s, Romania’s, or Guatemala’s. The potential national security consequences of any of those countries failing are too dire, not to mention the ultimately higher economic costs to America. Better the IMF prop them up — as they have — than us shoulder an even higher burden in funds and hassle.
3. This is a chance to show leadership again. American economic leadership has taken a serious beating lately. The world blames us for this crisis. This is a chance to do the right thing when countries are in need and gain back some credibility as an economic leader. Let’s not be the last country to pay what we pledged.
4. China is increasing its influence at the IMF. That’s largely good, because it comes with an increased contribution from them, and the IMF is developing into a forum to talk about their undervalued currency. But America will want to maintain significant influence at the IMF, too. We can’t have leverage if we don’t pay up. China has committed $50 billion of the $500 billion total.
5. The IMF will pay us back. These are bonds we are buying. And they’ve got gold to back them up.
– Nina Hachigian
This post originally appeared at The Center for American Progress.
Photo courtesy of Flickr user Presidency Maldives under a Creative Commons license.
June 11, 2009
Its official — the world is experiencing a pandemic for the first time since 1968, the World Health Organization declared today.
The USG talking points seem to be “reassure, reassure, reassure.” Their take is basically right, for now — though it has spread rapidly, H1N1 is not a particularly lethal flu.
But the virus is affecting many young people who are otherwise healthy. More troubling is that its future course is completely unpredictable. With Tamiflu-resistant influenza circulating — as well as the H5N1 avian flu pathogen out there, which IS incredibly deadly — and the potential for recombinations, I worry. Practice the elbow cough and teach it to your kids. Wash your hands for a really long time. And stockpile food.
June 10, 2009
Retired military officers urge support of Obama, Gates defense budget
Thirteen former Generals and Admirals — representing the Army, Navy, Marine Corps and Air Force — today asked Congress to support the 2010 Defense budget that Defense Secretary Robert Gates and President Barack Obama developed. The retired officers “urge members of Congress to support the Obama administration’s efforts to move in a new strategic direction that will better ensure the safety and security of this country.” I couldn’t agree more, as I wrote in this piece.
Dear Member of Congress:
As former commanders in the United States military, each one of us deeply understands what our troops need to defend and protect America’s national security. The most important imperative is to both ensure that these men and women have the proper equipment they need to protect themselves from harm as well as defend against and defeat our enemies. But it is clear that over the past several decades, the nature of those enemies has changed. The threats against America have undergone a monumental shift, as dangers emanating from traditional Cold War adversaries have given way to challenges from terrorism and other transnational entities. While we must always remain vigilant against the many large-scale conventional challenges that still persist to this day, we must also ensure our military strategy reflects the realities of 21st century. And it is essential our defense budget matches this new reality.
That is why we stand in support of the new direction put forth in the Obama administration’s defense budget. The budget laid out by Secretary Gates will help bring the military into the 21st century and move us beyond the legacy of the Cold War. We commend the decisions by the Secretary to cut unnecessary and wasteful programs and to emphasize systems that will not only help the United States win the wars it is in but will better prepare it for the wars of the future.
To this end, we urge members of Congress to support the Obama administration’s efforts to move in a new strategic direction that will better ensure the safety and security of this country. For too long our military’s budget priorities have been beset by an out of date mentality, creating a chasm between what the needs of our military actually were and what Congress actually funded. This budget is an essential course correction, and will bring our military hardware up to date. It will go a long way in ensuring that the men and women who fight on the front lines have the essential training and tools to successfully execute the sworn oath they took to defend and protect this nation.
Brigadier General John Adams USA (Retired)
Rear Admiral Jamie Barnett USNR (Retired)
Lieutenant General John Castellaw USMC (Retired)
Brigadier General Tom Daniels USAF (Retired)
Major General Paul D. Eaton USA (Retired)
Lieutenant General Al Edmonds USAF (Retired)
Lieutenant General Robert Gard, Jr. USA (Retired)
Brigadier General John Johns USA (Retired)
Lieutenant General Donald L. Kerrick USA (Retired)
Brigadier General Samuel L. Kindred USA (Retired)
Rear Admiral Rosanne “Rose” LeVitre USN (Retired)
Brigadier General Earl Simms USA (Retired)
Brigadier General John M. Watkins USA (Retired)
June 9, 2009
One more reason to get a Mac
It’s a game of cat and mouse between China and its Internet users.
In another chapter of the story about how well Beijing is managing to manage Internet use in China, regulations issued yesterday require computers sold there to come with a program that blocks access to porn sites (no version is available for Linux or Macs so far). Though it’s targeted at porn — and, as a mother, I can imagine wanting this software myself one day — the concern is that “Green Dam” will be used for other sites also and may serve as a Trojan Horse for the authorities. At the moment, I have it on good authority that computers don’t have to come installed with this program. It can be shipped on a CD and the user can easily toss the CD into the circular file.
If Green Dam ends up being used for political sites, I have confidence that any one intrepid netizen will still be able to figure out how to circumvent it and the myriad other blocks the authorities put between him and information about Tibet, Taiwan and other “sensitive” issues, if he really wants to. The thing is, most are not so determined, and a highly complex and layered system of censorship ensures that no casual user will ever bump into such information by accident. Still, in this ongoing game of cat and mouse, I will always bet on the mice.
– Nina Hachigian