After Washington in early March blocked German candidate Caio Koch-Weser for the job, European Union finance ministers unanimously endorsed Horst Köhler, Germany's new candidate to head the International Monetary Fund (IMF). At a meeting in Brussels March 13 they pledged to stand by their candidate whether or not he met Washington's approval.

Köhler heads the European Bank for Reconstruction and Development, an institution that mainly provides loans to the workers states in the former Soviet Union and eastern and central Europe.

An article in the New York Times noted that American officials remain unenthusiastic about the new nomination, and described the European Bank for Reconstruction and Development as a small version of the World Bank, devoted largely to lending money to countries for public projects. One of the "objections to Mr. Koch-Weser was his background with the World Bank and a suspicion that he would support development projects rather than straightforward economic assistance," the Times said.

The Portuguese finance minister who presided over the meeting in Brussels told the press that the EU governments agreed not only to support Köhler, but to also campaign to get the necessary support from developing countries and the United States.

"When the French government takes a decision, France does not need to consult the Americans," the French minister of finance Christian Sauter said after the meeting, noting Köhler's experience and expertise in negotiating with Russia and eastern Europe.

This is in contrast to the lukewarm support Caio Koch-Weser earlier got, especially from Paris.

The German government has campaigned vigorously for their candidates, marking a shift from what the Times called its "chronic postwar shyness" in diplomacy. But the conflict shows what is at stake for Germany's rulers if the Clinton administration's proposed policy shifts for the IMF are implemented. The proposals will make it much harder for Berlin to collect debt, especially in the former Soviet Union and eastern and central Europe.

Tensions have grown to the extent that the March 14 International Herald Tribune quoted an unnamed official in Brussels saying that another effort by Washington to block the European candidate would cause a major international crisis.

Hours later, Clinton endorsed Köhler in a phone conversation with German Chancellor Gerhard Schröder. The next day, Tokyo, whose candidates have never been given consideration for the post, withdrew its nominee Eisuke Sakakibara.  
 

Growing rifts in U.S. ruling class

The Republican-led Congress in Washington set up an 11-member panel more than a year ago to develop proposals on how to change the practices of the IMF and World Bank. This was agreed to in exchange for Clinton's move to add $18 billion to the IMF during the financial crises that began in Asia.

This move by the U.S. Congress was a reflection of the growing disorder of capitalism, in which IMF demands for austerity in countries like Indonesia and south Korea have deepened economic turmoil and led to increased resistance by workers and peasants there.

It also reflects the inability of the imperialists to make much headway in overturning the workers states in Russia and throughout eastern Europe.

The commission, headed by Prof. Allan Meltzer, split along partisan lines. Among the proposals that the majority endorsed was that the IMF stop lending to the poorest countries. Instead, the agency would specialize in emergency lending to countries that lose access to private financial markets, with a stipulation that the governments in these countries meet requirements to prequalify for such loans. This proposal would drastically reduce what the IMF is doing today and limit its engagement to a few countries.

The majority also recommended that the IMF and World Bank write off all loans to the poorest, most heavily indebted countries if they carry out imperialist dictates on economic policy, a proposal that goes well beyond the debt relief plan endorsed last year by Clinton and his imperialist allies.

The dissenters described some of the commission's proposals as "reckless" and "cavalier," arguing that withdrawing most of the IMF's funding from governments that have some access to private money would leave them vulnerable to the kind of "investor nervousness that caused so much havoc during the Asian crisis," commented an article in the Wall Street Journal.

The Clinton administration's plans to change the IMF and World Bank are more limited than those proposed by the Congressional commission. In his report late last year Treasury Secretary Lawrence Summers proposed that the IMF focus on emergency loans, eliminating most of its long-term lending, but continue to offer such loans to the poorest countries, including in Africa.

London's Financial Times carried an editorial March 10 entitled, "Vexed politics of U.S. aid." It noted "just how poisonously partisan U.S. policy-making has become." It worried over "the collapse of bipartisanship in crucial areas of foreign policy...The response in Washington to the report from the international financial institutions advisory commission is a perfect--and disturbing--case in point."

The editorial says that the ideas in the Congressional report go "too far, but they are not crazy. Given willingness to compromise, they could be the basis for discussion between the two sides. The alternative is certainly worse. Continued bitter partisan disagreement, with one side committed to defence of the status quo and the other to radical transformation, must make the environment for these institutions extraordinarily difficult."

But the laws of motion of the capitalist system goes in the other direction: more disagreement within the imperialist ruling classes and more rivalry among the imperialist powers as they respond to the crisis their system is heading into.

Carl-Erik Isacsson is a member of the Metalworkers Union in Södertälje, Sweden.  
 
 
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