[Congressional Record Volume 144, Number 120 (Friday, September 11, 1998)]
[House]
[Pages H7614-H7615]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               THE INTERNATIONAL MONETARY FUND AND RUSSIA

  The SPEAKER pro tempore (Mr. Shimkus). Under a previous order of the 
House, the gentleman from Florida (Mr. Stearns) is recognized for 5 
minutes.
  Mr. STEARNS. Mr. Speaker, this afternoon I come to the House floor to 
talk about the international money fund and Russia. I think many of us 
are very deeply concerned about what is happening in Russia, and there 
have been calls in the land to have Americans continue funding the 
international money fund, and the international money fund should help 
bail out Russia.
  But I come here this afternoon to talk about what we really should 
do. Secretary of Treasury Robert Rubin was quoted recently as saying, 
``At this point, we don't have a Russian economic team. We don't have a 
Russian economic plan.''
  That is unbelievable. We had, in the subcommittee, a hearing on this. 
I did not serve on this, but the chairman invited me to listen, and I 
heard some of the witnesses. I think we all agree that the goal should 
be to find a way to help Russia, but more importantly, what has gone 
wrong with Russia's economy, and how has the IMF's policies affected 
the current economic state of Russia?
  As I have mentioned numerous times in the past here on the floor, the 
economic dilemmas in Asia, in Russia, are not due necessarily to excess 
capitalism but to the lack of controls, the lack of policing in these 
nations, and truly, not putting in place a free market system.
  There is a great book by Michael Novak called The Spirit of 
Democratic Capitalism. Mr. Novak talks about how the need for 
successful capitalism in countries depends upon a culture, a culture of 
honesty and a culture in which, if honesty is not in place, the 
government polices it and makes sure corruption does not exist. It also 
talks about democracy, the freedom of a Nation to elect its leaders, 
and it talks about ownership of property.
  These three components make up every successful Nation that deals in 
the area of capitalism. But in this case, Russia does not have in place 
a policing system to stop corruption.
  Let me quote from Jim Hoagland, who did an article entitled ``Russia, 
a System that Prevailed and Failed.'' He said, ``The fundamental 
problem in Russia, Indonesia, Malaysia, and elsewhere was not that they 
went too far in adopting American style capitalism, but these nations 
did not go far enough.''
  Then he went on later to talk about Russia, and he said, ``Russia 
demonstrates the perils of trying to skim off the cream of a globalized 
economy without adopting the checks and controls needed to restrain 
human appetites and ambitions. Lacking in Russia and Asia was an 
appreciation of the open and fair competition needed to police 
capitalism and to make it work.''
  That is the key. ``Since its 1991 revolution, Russia has not 
developed a risk-based entrepreneurial market economy, and its 
institutions, to allocate rewards and pain through the efficiency of 
the marketplace.'' That has not been in place.
  Mr. Speaker, not only have Russia's leaders failed in developing a 
free market system, they have allowed pure, all-out corruption to guide 
Russia, and allowed the corrupters to steal billions of dollars to 
create their own criminal fiefdoms. Official Russian corruption is 
unmatched anywhere in the world.
  Experts say Russia is being plundered through the sale of its natural 
resources. In a typical scheme, a seller, aided by corrupt officials, 
sells Russian commodities overseas for higher prices than he reports to 
the government, and pockets the difference.
  A Russian scholar compared reports of such sales filed with the 
Russian government with known market prices

[[Page H7615]]

of the same commodities. His findings are related on the chart that I 
have here on the floor, Mr. Speaker. The difference in the chart 
represents the amount believed to have been stolen.
  When we talk about crude oil, petroleum products, natural gas, and 
aluminum, you can see the estimated illegal profits from commodity 
sales in Russia. For 1995 alone, the estimated illegal profits from the 
sale of crude oil were $828 million, $1.5 billion in petroleum 
products, $1.2 billion in natural gas, and $900 million in illegal 
profits from aluminum sales. All told, the Russian government lost $4.4 
billion in revenue in 1995.
  With these facts of how Russia has been plundered, how can the 
Clinton Administration and the IMF continue to justify propping up the 
failed Russian government by demanding more money from hard-working 
U.S. taxpayers. We have seen that the recent Russian bailout by the IMF 
amounting to $22.6 billion has been a failure.
  The IMF should suspend any additional payments to Russia immediately 
and until there can be a consensus built whether any additional funding 
would actually do any good for Russia. Congress should continue 
withholding any additional funding to the IMF itself until Congress can 
determine if the IMF is increasing the ``moral hazard'' by continuing 
its bailouts.
  Let me close, Mr. Speaker, by saying the IMF should suspend funding 
until we find out how to stop corruption, and in fact, Congress should 
not give funding to the IMF until it understands how the IMF works in 
Russia.

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