Dismantle the World Bank and IMF

Do you know what the World Bank does? How about the International Monetary Fund? Have you ever heard of the Inter-American Development Bank, or the European Bank for Reconstruction and Development? How about the Asian Development Bank, the African Development Bank or the International Finance Corporation?

Each of these institutions says they fight poverty in developing countries, but that is not what they do. Instead, they use our capitalist system to further government control of the economies of Third World countries. They support whomever is in power despite how corrupt, incompetent or dictatorial they are. And you and I, my friends, pay for this.

The World Bank makes more than $17 billion in medium-to-long-term loans to developing countries each year. The IMF advises developing countries on their economic policy and makes more than $25 billion in short-term loans to bail them out.

One of the largest recent recipients of the IMF largess was Indonesia, a true bastion of democracy. The IMF also helped Argentina. Argentina is again bankrupt and this week's president says he is going to do away with capitalism.

The most prosperous countries in the world finance both organizations, with the United States paying the largest percentage of the bill. For the World Bank, the United States is responsible for 16.95 percent of the bill and gets 16.49 percent of the votes. We also host the 8,000+ World Bank employees in Washington, D.C.

Since the IMF and the World Bank are UN-affiliated agencies, all of their foreign employees have diplomatic status. That means that they pay no sales taxes, no property taxes and no income taxes to the United States. They also are not responsible for obeying American laws because of their "diplomatic immunity."

Unelected boards control the World Bank, and the other multilateral institutions. Twenty-four executive directors "govern" the World Bank. The executive directors for the United States, Japan, Germany, France, the United Kingdom, China, Saudi Arabia and Russia represent the interests of their countries and have 46 percent of the vote. The other 16 executive directors represent groups of countries, and have 54 percent of the vote.

The job of the executive directors from developing countries is to get as much money for their regions as possible. The business model is "see no evil and grab the cash." As a result, the World Bank has financed many projects that have severely damaged the environment, supported corrupt governments and perpetuated poverty.

Nevertheless, that's not the worst of things. The executive directors don't control the World Bank. The staff, which does, is riddled with various power-mad cliques. There are French "mafias," Pakistani "mafias," Indian "mafias" and other groups determined to benefit their country's men and women. What you won't find is an American "mafia," because getting a job at the World Bank is very hard for an American.

What you also won't find is a commitment to market forces or excellence. Far too many World Bank employees come from countries that do not have open markets. Far too many of them have Ph.D.'s in classical economics. They simply don't have a clue about what real business men and women do or how market-oriented economies work. One of my colleagues once said that these economists wouldn't recognize a market even if they ran into the side of one. It is not surprising, then, that many policies and programs that they develop make things worse, not better, for citizens of poor countries.

IMF and World Bank employees who are not Americans earn far more than they could earn in their country of origin. Since they are exempt from all taxes, most of them earn more and live better than most Americans. As a result, they will do anything to keep from going home.

What they won't do is ask hard questions about projects that don't make business sense. What they won't do is fire colleagues who are incompetent, because if foreigners lose their special visas, they have to leave America in 30 days.

In theory, the IMF and World Bank have some of the best and the brightest minds in the world. In reality, they have filled them with people who can't get a job any place else because real companies do not need their skills.

What should we do? First, the United States Congress must hold "sunset hearings" on the IMF and World Bank. We need to invest in the development of Third World countries, but the IMF and the World Bank have proven that they can't do the job.

Second, we must reform the United States Agency for International Development. This is America's "world bank" and it is in serious need of reform. Its mission, in the future, must be to further America's political and economic interests. All development activities must meet these goals.

Third, it is time for all Americans to recognize that America's foreign policy is vitally important to their daily lives. As 9-11 showed, our very lives are dependent upon what our diplomats do. In addition, many of our jobs depend on what we export.

A foreign policy that supports the development of capitalism, democracy and equality helps citizens of Third World countries create vibrant markets for our products and services. And, by the way, vibrant markets in free, capitalist countries, are unlikely breeding grounds for future terrorists.