The International Monetary Fund: Doing Well and Doing Good
Bethell, Tom
The International Monetary Fund: Doing Well and Doing Good by Tom Bethell Readers may recall the scene in Tom Wolfe’s Mau-Mauing The Flak Catchers, in which a group of blacks, Chicanos,...
...Last year the General Accounting Office did a study and found that the average World Bank salary was $35,386, which is higher than the United Nations secretariat average ($35,195) and much higher than the U.S...
...What do they do...
...Civil Service average for similar grades ($20,283), even though the U.S...
...said so, can be made because some rather remote and intangible institution called the IMF says so...
...It momentarily distracted me from tranches...
...Thus the IMF’s employees had a job to do...
...After the waiter had brought dessert I asked my friend to tell me about the perks battle I had heard was raging at the Fund these days...
...pays for roughly equivalent positions in its, own government...
...And here we encounter one of the less publicized laws of government: As you move up the hierarchy of governments, from local to state to federal, and then higher still to the quasi-govemmen ts of the in tern ational institutions, the prestige increases, the pay increases, and the problems that government ostensibly sets out to solve become more remote, more invisible, more abstract, more intangible...
...My friend gave me a few insights into the Common Agricultural Policy as it is callled...
...So the EEC dyes the wheat purple and seDs it back to...
...Welllll,” he said, “I’m not sure I can answer all your questions...
...and finding that a gendarme emerges from the: shadows and sticks a machine gun in your ribs for not using the pedestrian, crossing...
...puIP!e.and orange wheat is enough to conVInce one that we stiD do not Jive...
...Mainly it was Brusi' sels itself that bothered him: the requirement, in the D'lxelles section of the city, that all houses have lace curtains in the front windows...
...A large group here feels underpaid...
...It cost $42 million...
...Here are a few facts and figures about IMF and World Bank salaries and expenses: About 25 per cent of World Bank and IMF employees are American...
...The view from his office window is of the Mall...
...still, it is a beginning...
...So when exchange rates are floating, it is better to keep them as steady as possible by using the pool of international currencies at the disposal of the IMF to borrow-or “purchase ”-from...
...It’s a hot issue and a divisive one...
...For instance, he points out, the relationship between country A and country B can be so in one international institution, but not so in another...
...They were womed...
...He tried, but every time he sat down to write about it he foundhimself completely blocked...
...The IMF has only 1,400 employees...
...On average, studies by the Treasury and GAO have found that the World Bank, the IMF, and some other international organizations pay salaries from 30-percent to 40-percent higher than the U.S...
...Not many people understood what was going on...
...But there is a 13story enclosed courtyard, surrounded by one million...
...Just as the different standards of living in the member countries of the multilateral institutions result in all salaries rising to the level of those who are paid the most, so the difference between national and international pay and perquisites tends to create an upward pull on local salaries...
...He took me to a table with white linen, heavy silver, and a sharp pencil beside the plate with which to mark the items of your choice on the menu...
...All right, suppose the loan to Britain had not taken place...
...I've been interested in the European Community ever since a good friend of mine, a journalist, went into a voluntary reportorial exile for a while, traveled to Brussels, and there set about the tasks of reporting on the...
...Last year Secretary of the Treasury William Simon found out that 90 members of the IMF’s professional staff made more than his $62,000-ayear salary...
...which proposal was defeated by a two-~hirds majority when the staffers themselves held a referendum on the matter...
...The window would close and the next window would open...
...Be that as it may, following the breaking of the IMF’s rules by the United States, the other foreign currencies inevitably began to “float” in relation to the dollar...
...with it...
...French...
...The fixed exchange rates of the international currencies can be visualized as piles of money-marks, shillings, francs-which rise to a certain height in comparison to the dollar...
...How much money you make?’ “Now the man is trying to think in eight directions at once...
...The International De v e 1 opment Agency -they make something called “soft loans” (which may not be paid back) to poor countries, the Organization for Economic Cooperation and Development, the Organization of American States, the International Bank for Reconstruction and Development (ie., the World Bank, presided over by Robert S. McNamara), the European Economic Community (or, the Common Market), and many others...
...Of course, the beauty of salaries in international institutions is that, precisely because of the above “divisiveness,” all salaries inevitably rise to the level required to keep staff from the wealthiest countries happy...
...I know who works at this Equal Emlpoyment Opportunity..Commission...
...I happened to look up from my Saumon Parisienne at this moment and noticed that windows were being opened high up across the courtyard and a hand emerging to fluff up the tendrils and foliage and spray them with water...
...The U.S...
...They sell the butter to the Russians at half price, they tum the milk into powdered milk and feed it back to the cows...
...They have to move their families here...
...crossing a deserted street at 2 a.m...
...Inside Eurastat, you find that economic matters are often discussed in terms of a currency called UA: Unit of Account In the corridor you encounter 'Fernand Spaak, the European ambassador His father was one of the original dreamers of the European dream...
...With pressure coming from the IMF, Callaghan can depict himself as reluctantly responding to the inevitable and impartial dictates of international finance, and that makes the changes politically easier for him...
...So there are barns full of purple wheat 40tted around Europe now...
...In other words, domestic changes that would be hard, politically, for James Callaghan to make on his own initiative, or that would seem like bowing to foreign pressure to make because the U.S...
...the farmers...
...Simon promptly lobbied to hold down one more proposed pay increase, which resulted in a tentative “walkout” by the IMF’s staff...
...That struck me as the best argument in favor of international institutions I had heard in a long time, and it depends on precisely the remoteness of the institution from the problem...
...How much can it borrow...
...And this one people who didn't feel like going to work sometimes would anonymously phone in bomb scares...
...THE VAGUE AND HAPPY LIFE OF THE EEC Another interesting multilateral organization that has gained a toehold in Washington is the European Economic Community, or the Common Market, as it .is generally called here...
...There’s the GATT-the General Agreement on Tariffs and Trade...
...For example, Britain borrowed the maximum amount allowable-225 per cent of its quota, and this means it is into its fourth tranche, but we’ll skip tranches...
...those countries where the salaries they could be making if they stayed at home are as high or higher than they are here...
...The EEC occupies a comfortable suite of offices atop one of the city's many anonymous office buildings in the M Street vicinity...
...There is no doubt that it is the foremost jewel in the multilateral crown...
...That is corporate and wicked...
...Foreigners’ salaries are tax free (or “net of tax,” as they like to put it...
...And the bureaucratic ambiance of the Berlaymont Building, described recently in The New York Times as a "13.-story complex that makes the Pentagon look like a two-room bungalow...
...In return the French keep their tariffs low and so permit an expansion of the potential market for German industrial goods...
...The ostensible purpose for which it was set up was, almost overnight, taken away...
...Imagine if that tactic spread to Washington...
...His salary went from the $38,000 at Treasury to an adjusted annual income at the World Bank of $74,060...
...The international bureaucracies do not convene in Calcutta...
...But clearly that cannot go on forever...
...But the cows don't mind...
...This is called their quota...
...The door clicks locked behind you and in a library there are shelves of a publication called Eurastat...
...That’s the last time that sucker is gonna try to urban-factor and pre-fund and fixedasset with us,” the Mau-Mauers conclude as they depart...
...He has a really heavy accent...
...And it certainly is .3rt Improvement over Normandy and the Somm.es~ even if the lira has broken frqm . the snake and the mark' is floating and the British are Jnto their fourth tranche, and even if we would be bett~r off if most of those overpaid inted4~onal bureaucrats one encounter So often at the cocktail hour were harvesting the wheat .ratherthaa dyeing it...
...Washington is considered a hardship post...
...But if he makes his way to Washington the Flak Catcher will disappear into Federal Building Number Four, with a guard at the door, and he will catch flak no more...
...These little linguistic mannerisms don’t make it any easier to understand the Fund, I must admit...
...What do they do with the unsold wheat that they buy...
...How much do I make?’ “ ‘Yeah, Brudda, you...
...However, in the course of foreign trade these I relative heights continudly get slightly out of line as, say, one country imports more than it exports, or as one country’s inflation rate increases faster than another’s...
...I had already paid a visit to the IMF’s public information office a day or two earlier...
...He paused for a moment and said, “Well, that’s not surprising, they don’t know what they’re supposed to be doing themselves...
...It js clear that we still have a way to' go in perfecting international relations...
...But they walked back in again the next day, no doubt fearing thay they might not be missed...
...The Law of the Sea, “within the U.N...
...suspended the convertibility of gold, followed shortly thereafter by first one, and then a second devaluation of the dollar...
...There’s a tremendous debate about perks,” he said...
...and of course the United Nations itself...
...This is referred to as the ‘liquidity problem.’ When it crops up we-and here we go again-‘activate the General Arrangement to Borrow,’ which means we tap an additional reserve of hard currencies...
...There is one important point we have not touched on...
...A plaque on the wall reminds him who he is...
...Admittedly, we do run into a problem here, however, because if certain currencies are weak, or soft, meaning generally undesirable, such as the pound or lira, and others are hard, such as the dollar or mark, the Fund is continually being asked to exchange its hard currencies for soft, and soon there is not enough hard currency in the pool...
...It’s difficult to write about the Fund while it’s in flux...
...It is a scene that is hard to imagine in those remote, 12th floor aeries where international civil servants sit pondering the problems of the world behind a safe barrier of secretaries, outer offices, carpeted anterooms, and upraised copies of The London Financial Times...
...Now I was to have lunch at the IMF’s terrace dining room with an employee who promised to be more im formative...
...And the problem that he has to solve is not a contingent from the ghetto but the piece of paper that is uppermost on his desk...
...And getting more complicated all the time," he says...
...The State Department last year sent representatives to over 600 meetings of multilateral organizations, for example...
...A year or two later he returned and told fascinating stories about the experience, which P urged him to write down because i0 seemed at the time that they deserved to be recorded in the annals of bureaucracy...
...The large building that houses it looks like any other granite governmental redoubt from the outside, but step inside and you are in an environment approximately resembling the Atlanta Regency Hyatt House, although at the IMF they don’t have external elevators...
...This increased remoteness is of course true in the most literal way...
...Well, you can borrow various multiples of your quota under varying degrees of conditionality...
...miners...
...They're been closed down seven or eight times by bomb scares, and th,e·'funny thing...
...Then came the horrible day in 1971 when the U.S...
...Nationalism always takes precedence over internationalism, a fact of life that perennially works to make such institutions as the UN and the European Community, as well as the IMF, monuments attesting primarily to human optimism rather than realism...
...They were continually carrying cash about from one pile to the next, making sure that everything was as agreed upon at that famous conference at Bretton Woods in 1944 (masterminded by John Maynard Keynes), when it was concluded that unilateral actions by governments (specifically, competitive devaluations, to make exports cheaper) had been an important factor in the 1930s depression, and should ever after be avoided...
...This helps the French farmers...
...For example, they set a certain price for milk and butter...
...So they are considering an expatriate allowance for people from countries where local salaries are high...
...This, of course, is lovely for the British and the Papuans and such...
...Thus the piles of money were now “floating,” and bobbing up and down quite happily in relation to one another...
...Scandinavians...
...But recently he was in Washington and I got him to tell me about it once again over lunch...
...The EEC sets a minimum price for certain agricultural products," he said...
...Then take wheat...
...So the International Monetary Fund consisted of a pool of different foreign currencies (to which all member countries had contributed at the inception of the Fund) that would be shifted about from one money pile to another, to maintain them at the “par” values agreed upon...
...There is a large rhetorical difference between multilateral and multinational, the latter (which labor to keep money out of the ever-expanding public sector) having been subjected to a hostile media campaign...
...but at any rate somewhere pleasant...
...They are not hardship posts...
...Please note, not multinational...
...He can now begin to relish the luxury of solving problems from a distance...
...Civil Service is regarded as the highest paid in the world...
...The vision of barns fuU of...
...The Fund calls this purchasing, by the way, not borrowing, and when you repay the loan, that is repurchasing...
...But let us pay a visit to the International Monetary Fund, its headquarters in Washington, just off Pennsylvania Avenue, a few blocks from the White House...
...An air conditioner hums quietly . look out of a window and there are similarly shaped office buildings across the way...
...It is a find in that its 130 member countries made a contribution when they joined...
...restaurant...
...This happened in the case of the British loan...
...That way they can't resell it to the...
...to prevent a third .~)ltb betwe~n, . primarily ,GermaJiy·,..l7an and Italy: it mustn't happen again But as things have turned out, all attempts at a political hegemony have failed, attempts to maintain the European currencies within a certain "bahd" in relation to each other called " the snake" in Common Market parlance-also have failed...
...But in 1971 the United States stopped converting dollars into gold, and after that foreign currencies began to “float” in relation to the dollar (and to one another...
...Any milk or butter not sold at that price, the Common Market buys...
...He tries out a new smile...
...Just let the pound sink lower in value in relation to the other currencies...
...That one meets in Geneva...
...Not really,” my friend said...
...in the best of all possible worlds...
...Let me try to explain the Fund...
...This has been the principal area of success of the EEC...
...The International Monetary Fund: Doing Well and Doing Good by Tom Bethell Readers may recall the scene in Tom Wolfe’s Mau-Mauing The Flak Catchers, in which a group of blacks, Chicanos, Filipinos, and Samoans go downtown to the poverty office to give the front-line bureaucrats a hard time : “‘Hey, Brudda,’ the main man says...
...This is true to an even greater degree when you enter the august realm of the international civil servant...
...They could, again, seD it back to the farmers...
...This leaves us with 8,000-9,000 international civi lservants working primarily on agricultural matters...
...But the multilaterals remain comfortably obscure, anonymousalthough numerous...
...It was deprived of its main function...
...It was time to go...
...Hey, Brudda, how much do you make?’ ‘Me?’ says the Flak Catcher...
...Someone is dusting and washing a rubber tree, leaf by leaf...
...Once again national interests have overriden multilateral ones...
...A year later its grandiose new building was completed, however, and it is not known that anyone lost his job...
...European," his assistant points out to me...
...It’s not their native language here, remember...
...Here he would encounter his sources, who would slip him top secret memos on the potato...
...There's a wheat 'support price...
...It is presided over by Jay Reid, whose job, I was told by a journalist who covers the financial beat, “is basically to make sure that nothing appears in the papers...
...words' would not flow from his pen...
...This very high official gestured across to the IMF and said, “Doesn’t anyone here know what they do at the IMF...
...But it won’t be approved because it treats staff members differently on the basis of nationality...
...Then there were the Christmas presents provjded by the, Eut~pean taxpayerS for Common Market staffers: lnllealleratje~y presents like .typewriters and' ·filing cabinets .that, it...
...Exports would increase because British goods would now be cheaper, but imports would become more expensive, which fuels inflation and makes the currency more volatile, not more stable...
...was proposed, should be· given instead to· .. unemployed workers in Brussels...
...What, then, was the IMF’s function until 1971...
...Or, as they are sometimes called, multilateral institutions...
...The Flak Catcher in the San Francisco poverty program has an office within walking distance of the ghetto, if not actually in it...
...Well-tailored managers of mysterious international money stroll in and out for lunch in a cloud of cologne and continental perfume...
...They really get complicated...
...But whether it was sufficient to justify all the lavishness I saw around me and the $54-million administrative budget (according to the 1976 Annual Report), I could not say...
...My friend paused to order coffee from the waiter...
...And they hate it here...
...The IMF was set up in 1946 to maintain international currencies at fixed rates relative to the dollar, and the dollar at a fixed rate in relation to gold...
...And limited to democracies...
...When he had gone I asked my friend if he could give me a general outline of the IMF’s activities...
...He tries it out on the bloods, the Chicanos, the Filipinos, as if to say, ‘As one intelligent creature to another what do you do with dumb people like this?’ But all he gets is the glares . . . . make $1,100 a month.’ “ ‘Well,’ says the Flak Catcher, ‘I “ ‘How come you make so much?’ “ ‘Wellll1’-the grin, the last bid for clemency...
...Anyway, in 1971 the IMF underwent the most serious crisis that can befall any bureacracy...
...broke with the Bretton Woods agreement, and here we immediately see the major shortcoming of all multilateral institutions...
...framework,” I was told...
...Even though the class of international civil servants in Washington is small, the inflated salaries they are paid no doubt play a subtle role in escalating the already very high salaries in the city...
...Question: Did this not deprive the cashcarriers at the IMF of their main function...
...Brazilians...
...When it makes a loan, as in the British case, the IMF can bring pressure to bear upon the government in question to make changes in its economy or method of governing that would seem intolerable if it came from another country...
...If a country runs into trouble, instead of adopting a policy harmful to the rest of the world it goes to the IMF and gets a loan...
...at a lower price to use as cattle feed, but the fanners would then be in a position to sell it to the millers to make bread, and that would undercut the price of wheat...
...Perhaps that is why such institutions as the IMF and the World Bank are (while envied) also welcome in Washington, and why they are not likely to move to Calcutta or Djakarta-closer to the problems they have supposedly set out to solve...
...I was tom between Egg a la Russe, 50 cents, smoked salmon, 70 cents, and Le Pate de Foie de Strasbourg, 60 cents, finally settling for the latter, followed by Casserole de Saumon Parisienne, $3.15...
...Many of them are living in boxes in the suburbs...
...Try to think 6f a ~ett~r scheme...
...So it could be argued that the detachment of government sometimes has its role to play...
...There are many international institutions...
...That is easy to explain...
...governmentemployed next-door neighbor of the IMF grandee soon wants to know why he too can’t enjoy the same standard of living...
...Imagine that...
...As he walks away he adds as an afterthought, "Of course, we're not an international institution...
...A nearly invisible waiter took our orders and disappeared...
...Just inside the IMF entrance there is a sign announcing a forthcoming concert by the “Bank-Fund Chamber Music Performers...
...Thus the problems of government are converted into abstractions...
...Tom Bethel1 is a contn‘buting editor of The Washington Monthly...
...People wouldn't buy purple' bread...
...Common Market...
...The member country will agree to the multilateral rules only so long as it is in the country’s interest to do so...
...I was reminded of a comment imputed to a “very high official” of the World Bank, which is across the street from the IMF...
...square feet of office space...
...The millers' would wait for it to come round the second time-cheap-from the Common Market, rather than the first time from the fanners at the suppo·rt price...
...It is true this might be selfcorrecting in the long run...
...I was reminded, as another international civil servant had told me, that when the currencies began to float in 1971 there was the atmosphere of “crisis” at the IMF-for a while...
...Americans pay income tax, but their salaries are increased commensurately...
...He knew one man there who asked for an adding machine but was told he couldn't have one because he was too senior...
...Thus it is admired for its leanness, its capacity to withstand the usual bureaucratic pressures to expand (in contrast to the World Bank, which has quadrupled both its loans and its employees since McNamara took over in 1968...
...His headquarters are likely to be in Washington or Manhattan or Geneva or Strasbourg or Pans...
...You wouldf;l't know they weretir~e' •. ~): you set out to look for them/.-an:~· once you found them you would have a hard time figuring out ·wnat·!';th'ey were doing: As with the IMF and the World Bank, life in these quiet corridors tends to be serenely undisturbed by the outside world...
...I think they're changing over to orange," my friend said as we left the...
...Now take the business of floating exchange rates,” my friend was saying...
...the knock on the door by the policeman pointing out that it was against the rules to have books on window sills, visible from the street...
...is' it always happens on a Friday afternoon) The European Comniumty . came into being after World war II,) and it represented, my friend . told.' me, ttWmPt...
...The Fund is in the midst of an amendment process of its articles of agreement,” Reid told me...
...It’s getting hard to recruit some nationalities...
...But still, it.' is a start...
...When huge Samoans come swinging in through the doors, beating their Tiki sticks on the floor in unison, it becomes much harder to talk away the problem...
...That is, their value was not fixed by agreement, but by the market, with every buyer and seller trying to get the best price he could...
...Weather isn’t too good in the summer...
...Photographs of his children are on his desk...
...But the guidelines are being rewritten, as Reid told me...
...She said it had already spread there...
...There is a need for institutions like the Fund to provide financing for countries to get their balance of payments under reasonable control...
...But, as we shall see, this sometimes has its uses...
...You are inside this soaring, spacious environment (many of the windows facing out onto the courtyard have tropical greenery, foliage, and tendrils dangling outside, creating the atmosphere of a resort...
...These international institutions are complicated, you tell him...
...Thus the U.S...
...But the institution kept a low profile and talked about tranches and “S.D.R.’s” and “paper gold...
...Salaries are on a par with the IMF or the UN, I am assured...
...He asked me if I had any expertise in international finance and seemed quite reassured when I said I did not...
...William Chapman wrote in The washington Post last fall that a “Senate subcommittee focused on one example of the gap between civil service and multilateral salaries in the case of Charles A. Cooper, who went from a post of assistant secretary of the Treasury to an executive-directorship at the World Bank...
Vol. 9 • May 1977 • No. 3
