Critics say IMF and United States self-serving
By Rajiv Sekhri
WASHINGTON, April 19 (Reuters) - Financial and development experts on Wednesday accused international lending institutions and the United States of having inefficient and self-serving policies, saying politics hampered help for nations besieged by financial crises.
Eisuke Sakakibara, former Japanese vice finance minister for international affairs, said: "The United States would never agree to establish a global lender of last resort."
While the International Monetary Fund functions as a last-resort lender of sorts, Sakakibara said it did not treat regional or country-specific financial crises promptly or properly, as seen during the Asian financial crisis.
Sakakibara, who was a candidate to head the IMF and worked for it during the 1970s, was trying to convince the institution that Asia should develop its own integrated debt market and an Asian Monetary Fund that could act as a local lender of last resort.
"We need to have a defense. Otherwise, a small country like Thailand or Korea could be ruined" by a financial crisis similar to the one of 1997-99, Sakakibara told a World Bank conference on development.
He said the IMF had partially played the role of a global lender of last resort, but added: "It seems difficult to significantly expand its role because of the reality of international politics."
Another IMF critic, Jeffrey Sachs from Harvard University, complained that the World Bank, the IMF and the U.S. government only provided "high-minded rhetoric" and not enough money to combat global poverty.
"Both the Democratic and Republican administrations, at least since the early 1980s, have put forward an ideological fig leaf for this tragic under-funding, which in turn has become the mantra of the IMF and the World Bank," Sachs said.
The lashing from experts came a few days after the IMF and World Bank conducted meetings in the nation's capital amid raging protests that shuttered offices and shops in central Washington and ended with tear gas, pepper spray and some 1,300 arrests of anti-IMF activists.
Critics at the World Bank's development conference said they were frustrated with the institutions' inability to act quickly -- reflected in the recent meetings where there was a storm of promises and good intentions but not even a trickle of concrete action.
Sakakibara said he did not want to block efforts by U.S. Treasury Secretary Lawrence Summers to make the IMF closer to the genuine international lender of last resort.
"However, my point is that because of the asymmetry in the current global capitalism, countries at the center are less likely to devote their resources to potentially regional crises."
The Asian financial crisis started in Thailand in July 1997, and the IMF and the U.S. Treasury first viewed Thailand's problems as a local phenomenon. But the turmoil soon spread across Asia and beyond, crushing many countries into recession and high unemployment.
Sakakibara said if the group of seven industrial countries and the IMF were prepared to be the global lender of last resort, why didn't they do so during the Asian crisis.
"The answer is very clear," he said. "As long as the crisis remains country specific, or regional, there is not an urgent political need for unaffected countries to pay the significant cost associated with playing the function of international lender of last resort."
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