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ILRF Seeks Enforcement of Law That Conditions U.S. Support for IMF Bailout of Korea, Indonesia, and Thailand on Improved...
http://www.laborrights.org/print/11499[2/8/2012 2:27:01 PM]
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Home > ILRF Seeks Enforcement of Law That Conditions U.S. Support  for IMF Bailout of Korea, Indonesia, and Thailand on Improved...
ILRF Seeks Enforcement of Law That Conditions
U.S. Support for IMF Bailout of Korea, Indonesia,
and Thailand on Improved...
Date of publication: January 15, 1998
Source: ILRF
Enforcement of Worker Rights
No Fast Track for the IMF Bailouts Bipartisan Forum
Statement of Terry Collingsworth, General Counsel
January 15, 1998
As part of ongoing efforts to ensure that the rights of workers are respected in IMF and World Bank
funding decisions, the International Labor Rights Fund (ILRF) has requested on several occasions that
Treasury Secretary Robert Rubin comply with the express requirements of the 1994 Sanders-Frank
Amendment. The law states that the "Secretary of Treasury shall direct the United States Executive
Directors of the [IMF and World Bank]...to use the voice and vote of the United States to urge the
respective institution to adopt policies to encourage borrowing countries to guarantee internationally
recognized worker rights ..." To date, the Clinton Administration has ignored its obligation under this law to
advocate for the rights of workers.
In an October 27, 1997 letter (attached), when the IMF bailout plan for Indonesia was still in its
development stage, the ILRF specifically reminded Secretary Rubin of his obligation to comply with the
Sanders-Frank provision. Secretary Rubin has never responded to the letter, but ultimately provided a
written reply on December 9, 1997 (attached) to Representative Bernie Sanders' Congressional inquiry.
Indirectly acknowledging that worker rights were not included in the conditions set by the U.S. as part of
the IMF bailout, Rubin claimed that Treasury was reacting in response to an emergency and did not have
sufficient time to address worker rights issues.
Secretary Rubin's failure to include worker rights issues in the IMF bailouts in Asia shows contempt for the
law and for the democratic process. With respect to Indonesia, for example, the ILRF informed Rubin that
Nike is only the most famous of the many foreign companies taking advantage of the atmosphere created
by the brutal Suharto regime that ensures that workers will not complain if they are denied their basic
rights. The foreign companies operating in Indonesia are confident that workers can continue to be paid a
mere pittance as long as Mucktar Pakpahan, virtually the only strong voice for workers, languishes in a
prison hospital for speaking out against the systematic repression of workers. Certainly it would not have
taken an inordinate amount of Secretary Rubin's time to insist upon the release of Mucktar as a condition
to the financial rescue of Suharto's empire. Time constraints did not, however, prevent the IMF, with U.S.
support, from pressuring Korea to relax its labor laws, giving employers greater "flexibility" to terminate
workers. It bears emphasizing that the worker rights issue is the only matter that Rubin was mandated by
ILRF Seeks Enforcement of Law That Conditions U.S. Support for IMF Bailout of Korea, Indonesia, and Thailand on Improved...
http://www.laborrights.org/print/11499[2/8/2012 2:27:01 PM]
law to raise, and it was only raised in an effort to undermine the progress on worker rights made in Korea,
the only country to be bailed out that has a strong labor movement.
The one hopeful result of the Clinton Administration's approach to the bailouts is that it has proven that
conditionality works. Indonesia, Korea and Thailand all agreed to the IMF demand to make comprehensive
changes to their banking regulations. These changes went against the interests of the economic elites, but
they were accepted because the IMF, with firm U.S. support, insisted upon them. When Suharto appeared
to be backsliding on his commitment to financial reforms at the end of last week, President Clinton
personally intervened and called Suharto with a warning. Clinton then dispatched deputy Treasury
Secretary Lawrence Summers to Indonesia to reinforce the seriousness of complete compliance with the
IMF conditions.
What is needed now is to shift priorities so that the Clinton Administration and the IMF take worker rights
and other issues of concern to workers at least as seriously as they take rescuing the investments of
international bankers. The power of conditionality could transform the IMF, and sister institutions like the
World Bank, into instruments for positive change toward poverty alleviation. A necessary first step is to
clarify the requirements of the Sanders-Frank provision. If the Clinton Administration continues to willfully
ignore the law's requirements, then it must be strengthened.
To ensure that the priorities set by Congress in passing the Sanders-Frank provision are given appropriate
consideration by the Clinton Administration, any future support for the IMF must be conditioned firmly on
compliance with the law's requirements. The IMF, and its supporters in the Clinton Administration, will then
be forced to take seriously the input from the democratic process on what the IMF should be doing to
better address the impact of its programs on working people. The IMF itself may lack democratic
accountability, but the working people of the U.S. have a right to insist that their tax dollars are not
squandered by the IMF in bailing out some of the largest banks in the world.
Source URL: http://www.laborrights.org/creating-a-sweatfree-world/changing-global-trade-rules/news/11499


ILRF Seeks Enforcement of Law That Conditions U.S. Support for IMF Bailout of Korea, Indonesia, and Thailand on Improved…

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ILRF Seeks Enforcement of Law That Conditions U.S. Support for IMF Bailout of Korea, Indonesia, and Thailand on Improved…

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