[Congressional Record Volume 144, Number 137 (Monday, October 5, 1998)]
[Senate]
[Pages S11409-S11411]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             THE GLOBAL CRISIS, BIPARTISANSHIP AND THE IMF

  Mr. BAUCUS. Madam President, in my 20 years in the Senate, I have 
scarcely experienced a more politically trying time than this. As the 
nation decides how to cope with an unprecedented political crisis, 
Congress must not only consider impeachment proceedings but pass 
spending measures to keep our government running.
  More important, a number of serious foreign policy crises demand our 
attention. From Kosovo to Iraq and Tanzania to Latin America, the need 
for American leadership has never been greater.
  To the extent that we can deal with these issues in a reasoned, 
bipartisan fashion, the world and the United States stand to gain.


                             america's role

  Mr. President, we Americans have a unique role. More than at any time 
since the early years of the cold war, the world looks to us as a 
guarantor of peace in regions from Kosovo to Central Africa to Cambodia 
and the Persian Gulf; as a leader in the quest for prosperity, as we 
look toward more fair and open trade and an effective approach to the 
financial crisis; as the pace-setter in science and technology; and as 
an example of effective democratic government and respect for human 
rights.
  This is a demanding role. We may not have sought it. Some of us may 
not entirely welcome it. But it is a role that in this post-cold-war 
world nobody else can fulfill.
  Japan is in the midst of a deep financial crisis; Russia and China 
still in the process of economic reform; Europe concentrated on 
deepening and expanding the EU. Only the United States can lead.
  As the world's largest economy and most trusted trading partner, the 
United States is unique. I find this sentiment continually reinforced 
as I travel to Asia, Europe and South America. My counterparts there 
tell me that there is no one with whom they would rather do business 
than Americans.
  Our openness, respect for the rule of law and willingness to innovate 
mark the United States as the global leader. It's why we won the cold 
war, and it's why we are viewed as a relative safe haven in these times 
of global financial instability.
  Mr. President, we are also the world's foremost cultural power. 
America is the birthplace of the Internet and more than 80 percent of 
World Wide Web material is in English; our movies dominate over 70 
percent of the European market, more than half that of Japan; and there 
are increasingly few countries where one cannot order a Big Mac in 
English, pay for it in U.S. dollars and wash it down with a Coke or 
Pepsi.
  Mr. President, I may sound biased, but I think it appropriate that if 
there is to be a world superpower, the United States should be it. We 
are not an imperialist country; we respect human rights; we have open 
markets; and we are the foremost example of this experiment called 
democracy.
  It has been said that our Founding Fathers envisioned a governmental 
system that is fragmented and dispersed of power. Our Founding Fathers 
succeeded. Neither the President nor the Congress nor the Judiciary has 
an inordinate ability to effect change, and that sets us apart from 
parliamentary systems of government.
  But this is the system we have, and while we must accept its 
limitations, we must also praise its virtues for making us the 
wealthiest and most powerful nation in the history of the world.
  We must also work especially hard to facilitate more contact between 
Congress and the Executive, and between the parties that make up our 
unique political system.
  And we must accept that despite the current political crisis, Bill 
Clinton is still our President. Whatever the outcome of impeachment 
proceedings, crises the world over will not wait.
  Americans have a duty--bipartisan, bicameral, and bi-institutional--
to lead.
  Like or not, this is a role we must fulfill--for the sale of our own 
people, because if we do not lead, Americans will pay the price in a 
more turbulent, dangerous world.
  So while we may at times have differences, as individuals or as 
Democrats and Republicans, we must also at times put these differences 
aside and remember our larger responsibililities.


                         asian financial crisis

  We see this very clearly in the Asian financial crisis. In the past 
eighteen

[[Page S11410]]

months, an event which began with the devaluation of the Thai currency 
has become a crisis threatening nations all over the globe.
  It has brought cataclysmic change to Indonesia, a nation of 200 
million people. It has threatened the stability of Russia--a nuclear 
power whose efforts toward reform will help determine the future of 
Europe. It has shaken the economies of South America and South Africa.
  And this year, it has come home to the farms and the farmers in our 
country. And I can say that particularly of my State of Montana, as our 
export markets have dropped. Asians are not buying our wheat. Prices 
have fallen and families have faced the worst threats they have faced 
in recent years to their future in farming.
  On such an occasion, the United States must lead, both in long-term 
reform and in short-term emergency action.
  In the long run, we need to carefully examine our international 
financial policies. This includes the question of whether the 
international financial institutions have enough capability to monitor 
the health of foreign financial systems.
  And it includes the search for ways to improve our ability to predict 
financial crises and thus prevent them from spreading around the world. 
That must be a careful, deliberate process.
  In the short run, however, we need to do two things.
  First, the Administration should speed up and perhaps augment food 
relief to Indonesia and other countries that may be threatened by 
hunger. The President has committed to provide 2.5 million tons of 
wheat to these people, and the Administration has now disbursed about 
25 percent of that. We need to do better.
  We are already hearing reports of malnutrition in Indonesia; and our 
farmers are watching prices decline by the week. When people need food 
and farmers need relief, we need to act fast and we need to act boldly.
  Second, we in Congress ought immediately to pass our contribution to 
the International Monetary Fund.


                        results of imf programs

  Last year, the IMF organized recovery programs for Thailand, 
Indonesia, Korea, the Philippines, and Russia. And while even the best-
off among these countries still face difficult times ahead, it's clear 
that those which have implemented IMF programs most efficiently now 
have the best prospects for early recovery.
  The Philippines, which under Presidents Aquino and Ramos carried out 
financial reform monitored by the IMF, has suffered less than any other 
affected country.
  Thailand, where the present Democrat Party government has overseen 
the closure of 56 finance companies and the nationalization of four 
banks, has seen the baht recover from a low of 57 to the dollar this 
February to a stable band around 40 since March. This means a reduced 
debt burden for Thai companies and an earlier recovery.
  Korea, where President Kim Dae-jung has committed to breaking up the 
monopolies and closed markets many of us have protested in the past, 
has also seen currency rates rise.
  By contrast, those countries which did not implement reforms early--
in particular Russia and Indonesia--now face a far more difficult 
future.
  The Indonesians--including the government as well as the citizen 
movements which sparked last spring's ``reformasi''--have on the whole 
peacefully changed a 30-year-old government; and moved on to open the 
press, set an election time-table, and begin economic reform. They 
deserve our support.


                       criticisms of imf funding

  Some of course have criticised the IMF programs on the merits. And it 
is true that these programs have not always been flawless.
  For example, some have criticised them as ``austerity programs'' 
requiring too much economic sacrifice. To some extent I have shared 
that criticism. For example, I said last February that their Korea and 
Southeast Asia programs were mistaken in asking for budget cuts during 
a deep recession.
  But they have learned and improved over time. In Thailand, the 
initial IMF requirement for a budget surplus at 1 percent of GDP has 
been dropped and replaced with a deficit of 3.5 percent GDP.
  And in a larger sense, had the IMF not been there to provide loans 
when Thailand and Korea were threatened with default, we would be much 
worse off today.
  Others have expressed fears that these programs will create a ``moral 
hazard.'' That is, emergency IMF loans will encourage other countries 
to make the same types of mistakes later. I find this theory completely 
untenable.
  A glance at daily papers--let alone a visit to Southeast Asia or 
Korea--will show you families pulling their children out of school 
because they can't afford to pay tuition; men spending all day in local 
parks because they are ashamed to tell heir families they have lost 
their jobs; governments choosing between money for schools and money 
for food relief.
  No country anywhere in the world will want to repeat their 
experience.


                            need to act now

  Thus, our experience with these programs is clear. Those countries 
which have implemented reforms are by no means in good shape, but their 
situation is much better than those which have not.
  And as we face the prospects that the crisis may spread beyond Asia, 
we must make sure the IMF has the resources it needs to address any new 
emergencies. If we do not, we run a tremendous risk.
  Imagine how much worse, for example, the crisis in rural America will 
become if we do nothing in the face of threats to Mexico, Brazil or 
other critical Latin American markets. The pressure we are under 
because of the decline in our Asian markets could double overnight.
  After bailing out Russia, the Fund's coffers are nearly empty, the 
IMF having had to draw on a credit line not used since 1978. If the 
House does not act soon, it risks jeopardizing global and American 
economic viability by rendering the IMF broke and unable to deal with 
future crises.
  To quote the Economist Magazine:

       If the Fund runs out of money--a real possibility if 
     Congress remains obdurate--the next emerging market collapse 
     could trigger a default that would spill over, fatally, to 
     all other emerging markets. And since rich countries now 
     account for barely half of world output, that could easily 
     mean a global slump. Even the most isolationist congressman 
     would hardly welcome that.

  Madam President, it should be noted here that allocating funds for 
the IMF has no budgetary impact. A capital increase in the IMF is paid 
for with an exchange of assets, not cash. Any country has a right to 
demand that its contribution to the Fund be returned--at any time.
  So we need to act now. We need to put political disputes aside and 
focus on our larger responsibilities. Thus, on a bipartisan basis and 
with particular credit due to Senator Hagel, the Senate has now twice 
voted to approve our full IMF quota. The House, however, has approved 
only a bill providing $3.4 billion for the IMF's New Arrangements to 
Borrow.
  This is very disappointing in itself. And I am even more troubled 
that some in the House have apparently decided to link this issue to 
support for family planning overseas. That goes beyond disappointing to 
irresponsible.
  Abortion is, as we all know, among the most heated and emotional 
issues we have. We can debate our views and the right way to support 
family planning on its own merits. But to link this question to IMF 
funding threatens our ability to address a financial crisis of world 
magnitude.


                         u.s. responsibilities

  Madam President, those affected by this crisis are democracies and 
treaty allies: Thailand, the Philippines, and Korea. They are countries 
attempting to build democracy in the face of enormous challenges: 
Indonesia and Russia. They are Montana farmers and factory workers. And 
we must do the right thing.
  As Surin Pitsuwan, the immensely capable Thai Foreign Minister, said 
in his recent visit to Capitol Hill:
  ``We look to Washington for leadership. We need the dynamism, the 
energy, the focus from Washington. There is a need for leadership, and 
that leadership is only here.'' That is the United States. ``That is 
the expectation of the world.''
  Madam President, let us prove him right. It is time to act; it is 
time to lead.

[[Page S11411]]

  Let us search, carefully but seriously, for financial reforms that 
will create a more stable world economy.
  Let us push ahead more quickly and globally with food relief, pay our 
U.N. dues, pass fast track, and, above all, I urge the House to act 
without any further delay to pass our IMF quota. That is the very least 
we can do now in exerting responsible American leadership in the world.

                          ____________________