[Congressional Record Volume 145, Number 104 (Wednesday, July 21, 1999)]
[Extensions of Remarks]
[Pages E1613-E1614]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         IMF GOLD SALE PROPOSAL

                                 ______
                                 

                        HON. BENNIE G. THOMPSON

                             of mississippi

                    in the house of representatives

                         Tuesday, July 20, 1999

  Mr. THOMPSON of Mississippi. Mr. Speaker, on Saturday, there will be 
an historic march in Pretoria, South Africa. For the first time ever, 
gold miners will march shoulder to shoulder with the management of the 
gold mining companies which employ more than 250,000 union miners. They 
will march from the National Union of Mineworkers Building to the 
British Embassy and to the Swiss Embassy to protest gold sales from 
those countries' central banks. Just the threat of central bank gold 
sales has caused the price of gold on the world market to plunge to 20-
year lows over the past two months, endangering more than 80,000 jobs 
and the means of support of almost a million sub-Saharan Africans.
  James Motlatsi, president of the NUM, and Bobby Godsell, head of the 
Chamber of Mines, will return from London--where they are petitioning 
the Bank of England to stop further sales--to lead the march.
  Mr. Speaker, Mr. Motlatsi and Godsell came to Washington two weeks 
ago to warn of the dreadful consequences for their miners and their 
continent of central bank gold sales. They came here to tell us that 
the well-meaning efforts of many of the world's greatest powers, 
including the US, would cause some of the world's poorest countries to 
suffer needlessly.
  The proposal, endorsed by the G-7 last month, to sell some of the 
gold reserves of the International Monetary Fund to provide a token 
contribution to debt relief for the poorest countries, is totally 
misguided and must be stopped. Because of the weighted voting structure 
of the IMF, it cannot sell any of its gold without the support of the 
US representative to the IMF. And, under US law, our IMF representative 
cannot support any gold sale without first obtaining approval of 
Congress.
  Mr. Speaker, we here in Congress do not have the ability to stop the 
sale of gold from other central banks, although we can make our 
disapproval manifest. However, we can stop the sale of IMF gold, and we 
need to do it now. Our disapproval of the gold sale is not an obstacle 
to debt relief--there are many ways to deal with debt relief without 
IMF gold sales.
  Mr. Speaker, Members of the House on both sides of the aisle have 
written to the Treasury Department and to President Clinton stating our 
unequivocal opposition to gold sales by the IMF, and without objection, 
I would like to enter into the record copies of those letters.
  Before the South Africans begin their march on Saturday, I urge the 
President to respond to this crisis by withdrawing his support for IMF 
gold sales, and withdrawing Treasury's request for authorization to 
support it. The countries we are pledging to help should not be cursed 
by our misguided generosity.
  Stop the gold sales now.

                                 Congress of the United States

                                    Washington, DC, June 30, 1999.
     Hon. William Jefferson Clinton,
     President, U.S. Of America, Washington, D.C.
       Dear President Clinton: South Africa has just inaugurated 
     its second democratically elected President, Thabo Mbeki. 
     Among the many challenges he faces is an immediate crisis--
     the terrible shock to his country's economy caused by the 
     dramatic drop in the price of gold over the past three 
     months. The many other gold-producing countries in sub-
     Saharan Africa are struggling with the same blow to their 
     emerging economies.
       Ironically, tragically, the $30 decline in the price of 
     gold can be traced in part to announcements of support for 
     the sale of some of the IMF's gold reserves to fund debt 
     relief for some of these very countries. The IMF 
     announcement, coupled with the proposal by the British 
     government to sell some 14 million ounces of their gold 
     reserves, saw the price of gold plummet in just a few days 
     from nearly $290 an ounce to below $260. This drop has 
     already reduced the export earnings of the gold-producing 
     Heavily Indebted Poor Countries (HIPCs) by more than $150 
     million per year.
       While we cannot change the decision of the British 
     government to sell its gold reserves, we can prevent the IMF 
     from further damaging the economies of the very countries it 
     seeks to help. The IMF cannot sell any portion of its gold 
     reserves without approval of the US representative to the 
     IMF. And the Treasury Department must obtain Congressional 
     authorization before the US representative can approve such a 
     sale. When this proposal comes before Congress for 
     consideration, we will oppose it vigorously. Make no mistake, 
     we believe strongly in debt relief, and we intend to pursue 
     every avenue to provide as much real relief as quickly as 
     possible. However, selling gold reserves is the worst 
     possible method of financing debt relief.
       Gold mineral reserves are a large part of the natural 
     wealth of many poor countries, and is therefore one of the 
     few avenues for economic development. More than three-fourths 
     of the HIPC nations targeted for the IMF debt relief plan are 
     gold producers, and gold plays a crucial role in the 
     economies of 10 of those countries. Since the mining industry 
     draws much of its workforce from the poorest and most rural 
     communities in the subcontinent, often 10 people or more are 
     dependent on the earnings of each miner. If the price of gold 
     remains at the current 20-year low price of about $258, 40% 
     of South Africa's gold production will become unprofitable, 
     more than 80,000 miners will lose their jobs, and upwards of 
     800,000 Africans will be plunged into absolute poverty.
       Debt relief does not require IMF gold sales in order to be 
     effective. In fact, the proceeds from the gold sales which 
     are actually targeted to debt relief are virtually nil. 
     According to one calculation, there would be less than $60 
     million per year available to retire the estimated $220 
     Billion HIPC debt. There are alternatives to gold sales which 
     would provide more debt relief in a shorter period of time.
       We will not support central bank gold sales; we will oppose 
     them in whatever form they are presented to the Congress. We 
     intend to examine more realistic, more productive, and less 
     harmful alternatives. We hope you will join us.
           Sincerely,
         James Clyburn, Sanford Bishop, Eva M. Clayton, Robert 
           Scott, Bennie G. Thompson, Albert R. Wynn, Eddie 
           Bernice Johnson, Melvin Watt, Edolphus Towns, Bobby 
           Rush, Carolyn Kilpatrick, Danny K. Davis, Elijah E. 
           Cummings, John Conyers, Juanita Millender-McDonald, 
           Harold Ford, Jr., Earl Hilliard, Gregory Meeks, Carrie 
           Meek, Charles B. Rangel, Major R. Owens, Stephanie 
           Tubbs Jones, Alcee L. Hastings, Julian Dixon, Sheila 
           Jackson-Lee, John Lewis.


[[Page E1614]]

           
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                                             United States Senate,


                               Committee on Foreign Relations,

                                    Washington, DC, June 21, 1999.
     Hon. Lawrence Summers,
     Deputy Secretary, U.S. Department of the Treasury, 
         Washington, DC.
       Dear Mr. Secretary: We join a bipartisan group of Senators 
     who are opposed to the International Monetary Fund's proposal 
     to sell a portion of its gold reserves to fund debt relief 
     for countries under the Heavily-Indebted Poor Countries 
     (HIPC) Initiative.
       We are unalterably persuaded that selling IMF gold reserves 
     would adversely affect the very countries the Administration 
     intends to assist and further damage the U.S. domestic gold 
     industry.
       As is well known, gold prices are depressed--prices dropped 
     more than $25 per ounce since Great Britain announced it 
     would sell a portion of its holdings. During the past month, 
     the price of gold has plunged to a twenty-year low.
       Since the U.S. is the world's second largest producer of 
     gold, we are concerned that American companies and the jobs 
     of thousands of working Americans will be at risk if prices 
     continue to fall.
       Thirty-six of the 41 nations slated to benefit from the 
     HIPC program are gold producers. If sales further depress 
     gold prices, it is questionable that benefits from debt 
     relief would outweigh the harm done by falling gold prices. 
     We cannot support a proposal that could very well damage 
     viable private businesses and free markets in developing 
     countries in exchange for relieving a portion of a country's 
     sovereign debt.
       We are fully confident that creative minds at the Treasury 
     Department and the IMF can come up with alternatives to gold 
     sales, and the Foreign Relations Committee stands ready to 
     work with you.
       Kindest regards.
           Sincerely,
     Jesse Helms.
     Chuck Hagel.


     
                                  ____
                                          House of Representatives


                                  Office of the Majority Whip,

                                                     May 12, 1999.
     Hon. David Dreier,
     Chairman, Committee on Rules,
     Washington, DC.
       Dear Chairman Dreier: I am writing to bring to your 
     attention my strong opposition to an Administration request 
     to sell a portion of the gold reserves held by the 
     International Monetary Fund (IMF) to provide debt relief to 
     certain nations within their Heavily-Indebted Poor Countries 
     (HIPC) initiative. I am concerned that the Administration has 
     not taken into account the economic and financial issues 
     involved that are likely to pose serious policy concerns.
       As you know, I have been an outspoken critic of the IMF 
     with respect to how it conducts its mission, including the 
     management of its resources. Given the current credit risks 
     at the IMF, the maturity mismatch between its liabilities and 
     assets, and its concentration of loans to five nations, I am 
     concerned that if this ill-conceived proposal were 
     implemented, the direct result would be a further weakening 
     of the IMF balance sheet.
       In addition, the sale of IMF gold reserves would 
     significantly harm the U.S. gold mining industry by leading 
     to the further decline in the price of gold. The mere 
     discussion alone of a possible IMF gold sale has contributed 
     to a more than 3.5 percent drop in the price of this 
     commodity over the last few weeks.
       The gold industry provides thousands of high paying jobs in 
     this country and a valuable U.S. export commodity that 
     substantially benefits our balance of trade. Yet, the current 
     depressed price of gold on world markets has resulted in 
     major job losses and hardship in the mining sectors of the 13 
     states that produce nearly 15 percent of the world's output 
     of gold annually. Continued declines in the price of gold 
     would be devastating to the rural communities in this country 
     that rely on the stable price and production of this precious 
     commodity.
       With regard to the HIPC initiative, IMF gold sales actually 
     could result in greater harm than assistance to these 41 
     nations. Indeed, gold mining is a viable and productive 
     sector in the economies of well over half of the HIPC 
     nations. In 10 of those countries, gold mining accounts for 
     between 5 and 40 percent of exports and, as a result, is 
     crucial to national economic well being and employment. In 
     certain other HIPC countries, which do not presently mine 
     gold to any significant extent, there are advanced plans for 
     major gold mining development. Thus, while it is my view that 
     U.S. support for the HIPC initiative not be provided at the 
     expense of an important sector of our economy, the 
     justification for IMF gold sales becomes even less compelling 
     with the possibility that HIPC nations could be harmed--not 
     helped--by such sales.
       It is my understanding that congressional authorization is 
     required prior to U.S. representatives to the IMF voting in 
     favor of transactions involving the sale of its gold 
     reserves. As matters involving the IMF come before you, 
     particularly as they relate to the sale of IMF gold reserves, 
     I hope you will consider the risk of harm posed by such sales 
     to a vital sector of our economy.
       Finally, Majority Leader Armey has correctly requested that 
     Joint Economic Committee Vice Chairman Jim Saxton direct the 
     JEC to examine the full context of this IMF gold sales 
     proposal along the lines to these same concerns. As such, 
     nothing should proceed on this proposal until the JEC has 
     completed its examination.
       Thank you for your attention to this matter.
           Sincerely,
                                                        Tom DeLay,
                                               Member of Congress.
       Similar Letters Sent To: Jim Leach, Chairman, Committee on 
     Banking and Financial Services; Ben Gillman, Chairman, 
     Committee on International Relations; C.W. Young, Chairman, 
     House Appropriations Committee; Sonny Callahan, Chairman, 
     Subcommittee on Foreign Operations; Spencer Bachus, Chairman, 
     Subcommittee on Domestic & International Monetary Policy; Ed 
     Royce, Chairman, Subcommittee on Africa; and Jim Saxton, Vice 
     Chairman, Joint Economic Committee.

     

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