[Congressional Record Volume 144, Number 115 (Thursday, September 3, 1998)]
[Senate]
[Pages S9943-S9944]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      INTERNATIONAL MONETARY FUND

 Mr. KYL. Mr. President, yesterday, I led an effort during 
consideration of the FY99 foreign operations appropriations bill to 
tighten the conditions under which additional funding is made available 
to the International Monetary Fund (IMF).
  Although the bill included provisions to prod the IMF into making 
badly needed reforms of its operations, it stopped short of actually 
requiring the implementation of those reforms. Instead, it merely 
conditioned the release of funds on the IMF making a public commitment 
to reform. That, in my view, was not good enough.
  The IMF has not effectively used the funds that have been allocated 
to it in the past. According to Johns Hopkins University economist, 
Steve Hanke, few nations have actually graduated from IMF emergency 
loans. Most have stayed on the dole for years on end. One study found 
that, of the 137 mostly developing countries from 1965 to 1995, less 
than a third graduated from IMF loan programs.
  The Heritage Foundation has found that, of the IMF's borrowers during 
1965 to 1995, no more than half were better off than when they started 
the loan programs. Almost all were actually poorer, and almost all were 
deeper in debt.
  The IMF's failures are apparent even today. Just a few months ago, 
the IMF orchestrated a $22.6 billion bailout package for Russia, yet 
that country's economy shows no signs of improving. In fact, it is 
growing worse every day. And all of the experts agree that, unless 
Russia establishes the kind of rules of law required for a functioning 
economy, all the money in the world will not help it. We would be 
fooling ourselves to think otherwise.

[[Page S9944]]

  Although my amendment failed on a vote of 74 to 19, I am heartened by 
two things. First, we won more votes for effective IMF reform yesterday 
than we did when the question was first put to the Senate back in 
March. And second, the issue is far from settled in the House, which 
has been more skeptical of providing the IMF with any additional 
resources. In other words, this issue is far from settled, and my hope 
is that the final version of the foreign operations bill will either 
include the more effective reforms I have proposed, or will scale back 
IMF funding altogether.


                       FY99 FOREIGN AID SPENDING

  Mr. President, pending a final resolution of the IMF issue, I think 
it is important to consider what else is accomplished by this bill, 
because there are some very good things about it. First, I would note 
that the cost of the bill, aside from the IMF, is nearly $600 million, 
or 4.5 percent, less than last year's measure. That is significant.
  Second, this bill contains $2.94 billion in aid to Israel: $1.08 
billion in economic assistance and $1.86 billion in military 
assistance. I would note that this amount is $60 million less than was 
appropriated for Israel last year, and it is consistent with the United 
States' agreement with Israeli Prime Minister Benjamin Netanyahu to 
phase out U.S. economic assistance to Israel over ten years. These 
funds are crucial to ensuring that Israel's economic and security 
concerns continue to be adequately addressed.
  The level of support for Israel that is contained in this bill sends 
a clear message to the people of Israel and the world that the world's 
greatest democracy remains committed to supporting the only democracy 
in the Middle East, a critical ally that supports American values and 
interests in a critical region.
  Third, the bill contains other provisions that I believe will serve 
to protect our values and interests in the Middle East. For example, 
the bill makes clear that the Palestine Broadcasting Corporation is an 
organization that restricts fundamental press freedoms and broadcasts 
material that is inimical to U.S. interests, and is therefore unworthy 
of U.S. assistance.
  Fourth, the legislation includes an amendment offered by the Majority 
Leader--an amendment I cosponsored--that will provide $10 million to 
support the Iraqi opposition. Saddam Hussein's recent decision to halt 
all cooperation with U.N. arms inspections and recent revelations that 
Iraq had developed the capability to load deadly VX nerve gas in 
missile warheads is a reminder of the continuing threat posed by this 
rogue regime to U.S. forces and friends in the region. The additional 
funding in this bill is intended to reinvigorate the Iraqi opposition 
as part of an overarching strategy that is aimed at replacing the 
current government in Iraq.
  Fifth, the bill provides clear and strong support for the Agency for 
International Development's efforts to ensure that the countries of the 
former Soviet Union develop effective legal systems capable of 
addressing the many challenges facing these states as they continue to 
build stable democratic societies. One area of particular concern is 
the troubling amount of domestic violence in Russia. This bill makes 
clear that the active support of women's crisis centers in Russia 
should be a priority.
  Additionally, the bill makes clear that no funds should be provided 
to Russia if the government of Russia implements any statute, executive 
order, or regulation that would discriminate against religious groups 
or communities in Russia.
  Sixth, I am pleased that this bill conditions assistance to Russia on 
Moscow's termination of financial and technical support for Iran's 
nuclear program. Iran's ongoing efforts to acquire nuclear weapons are 
a threat to our security; it would be the height of irresponsibility to 
send American taxpayers' dollars to a country that is assisting a rogue 
state such as Iran in developing these dangerous weapons.
  Along similar lines, the bill wisely restricts aid to North Korea 
unless the President can certify that it has ceased its efforts to 
develop nuclear weapons and that it has also stopped assisting the 
ballistic missile programs of states that support terrorism.
  Seventh, the bill takes steps to ensure that American interests in 
Central Asia are protected. In the next few years, a massive pipeline 
will be built to transport the vast oil and natural gas resources of 
the Caspian Sea region to the Mediterranean sea for export to the West. 
The bill states that an East-West pipeline that travels through 
Turkey--as opposed to a Northern pipeline through unstable regions of 
Russia--will provide a secure energy transport system that will support 
stability and democracy in the region.


                               CONCLUSION

  Mr. President, given that the IMF issue has yet to be resolved--House 
approval is tenuous at best--I ultimately based my vote on the initial 
version of the FY99 Foreign Operations bill on the balance of factors I 
have just discussed. Should it turn out that the IMF funding is 
ultimately included, particularly without a mechanism for ensuring the 
implementation of effective reforms of the way the international agency 
does business, I may well reassess my vote on the final conference 
report. For now, I am supporting the bill.

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