U.S. Taxpayers' Backed IMF Loans

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Sun Apr 15 17:04:55 2001

Experts At Russia Hearings . . .

U.S. Taxpayers' Backed IMF Loans Go
Into Pockets Of Clinton Cronies

(Special to The Wanderer)

WASHINGTON, D.C. - Expert witnesses at House Banking
Committee hearings last week (Sept. 21st-22nd) on
Russian money-laundering through U.S. banks provided
an eye-popping view of the world of runaway capitalism
as practiced today in Moscow and New York, London and
Lugano, Berlin and Beirut.

It's a world where billions of U.S. taxpayer dollars
are transferred to the International Monetary Fund and
then filtered through a small number of well-placed
people - only a few dozen, in Russia, New York,
Washington, and Boston - who launder the money into
private accounts on Wall Street and into the coffers
of some of the world's major banks.

A host of witnesses from government, private
investigation and research firms, former CIA and KGB
agents and other authorities told the committee, whose
ranking members are Republican Jim Leach of Iowa and
Democrat John La Falce of New York, that U.S. foreign
aid policy in Russia is responsible for bankrupting
the nation, facilitating the greatest plunder of the
country's natural and artistic wealth since Lenin and
creating a ruthless class of gangster billionaires.

Among those testifying was noted Russia expert,
journalist, and author Anne Williamson, whose 1998
book How America Built the Russian Oligarchy reveals,
inter alia, how current Treasury Secretary Larry
Summers, chief economist at the World Bank in 1990,
passed the Russian "cookie plate to Goldman Sachs,"
and how Harvard economists created the new Russian

In 1992, Williamson told the committee, President
George Bush initiated the financial plundering of
Russia (estimated at $400 billion by now) by sending a
corps of financial experts under the direction of
Gerald Corrigan of the New York Federal Reserve to
Russia to teach the nomenklatura how to play the bond

"So lush were the bond market's rewards," she said,
"that dubious market participants included the Russian
Central Bank itself through an offshore firm known as
Fimaco. The involvement of the Harvard Institute of
International Development [HIID; the same outfit that
brought `crash capitalism' and poverty to Eastern
Europe] honchos in the same conflict of interest
activities has already been admitted publicly and
remains the object of a Boston grand jury's scrutiny.
. . .

"According to the Russian Interior Ministry's
Department of Organized Crime, Western employees of
Russian banks, Western bankers and consultants,
Russian bankers, and anecdotal evidence, other
participants include certain employees of the U.S.
Treasury, of the multilateral agencies, and policy and
program consultants acting through accounts
established in their wives' maiden names with non-U.S.
reporting brokerages in Moscow. . . .

"One particularly striking aspect of Bill Clinton's
presidency," she continued, "is how aggressively his
administration worked to capture the political support
of the financial sector, offering heretofore unseen
gobs of government favor. (A disproportionate number
of firms receiving OPIC guarantees, Export-Import bank
lending, and IFC and Russian Enterprise Fund
participation were generous contributors to both
Clinton campaign coffers and the DNC). . . .

"The aid program . . . was really only an exotic
venue through which to pass public funds to select
Russians of the Clintons' and HIID's choosing and to
Wall Street investment banks the Clintons hoped to
entice permanently into their orbit of supporters and
contributors. In short, the Russian bond market was
the Arkansas Development Finance Authority gone

Following the creation of the bond market and
"voucher privatization" under the Russian ruling
class, Williamson explained, "there ensued a
years-long highly criminal and oftentimes murderous
scramble for hands-on control of the enterprises.
Directors stashed profits abroad, withheld employees'
wages, and after cash famine set in, used those wages,
confiscated profits and state subsidies to `buy' the
workers' shares from them. The really good stuff - oil
companies, metals plants, telecoms - was distributed
essentially to seven people, `the oligarchs,' on
insider auctions whose results were agreed

Supporting Cast

Williamson's testimony, which followed that of U.S.
Treasury Secretary Larry Summers (who predictably
pleaded for continued U.S. taxpayer-backed IMF loans
to Russia) was filled out and supported in punctilious
detail by other witnesses:

Fritz Ermath, former CIA chief Russian analyst and
National Security Council official, blamed the
"mainstream media and mainstream foreign policy
establishment" for the loss of U.S. taxpayers' dollars
and the establishment of Russia's billionaire

The Clinton administration, he said, "bought into
phony-crony capitalism too uncritically for too long."

Richard Palmer, former CIA station chief in Europe
and founder of the Washington-based Cachet
International, which specializes in international
organized crime, gave a detailed account of how 4.8
billion U.S. dollars ended up in the pockets of a
handful of Russian criminals, courtesy of the Bank of
New York.

He warned that if the Clinton administration does
not investigate the disappearance of this money and
the complicity of U.S. banks and other financial
houses in the scam, "it will be following the policy
that it has established over the last seven years and
which is encouraging and facilitating the continued
growth of organized crime, looting of the Russian
state and at the cost and to the detriment of the
impoverished Russian people."

Arnaud de Borchgrave, noted author and director of
the Center for Strategic and International Studies,
also explained how the $4.8 billion ended up in the
pockets of Russia's 18 oligarchs, and said the Clinton
administration, "like Inspector Renaud in the movie
classic Casablanca, is shocked there is gambling going
on in the Kremlin."

Yuri Shvets, former KGB agent, gave a precise
description of how a young Russian financial swindler,
24-year-old Alexander Konanykhine, and his wife, with
government and KGB connections, set up the All-Russia
Exchange Bank through which he absconded with $300
million, about a third of the billion dollars that
disappeared from the phony bank front.

Shvets described for the committee how easy it was
for Konanykhine to set up operations in Washington's
Willard Hotel and, working with consultants, was able
to bring into the country more than 100 other Russian
"thieves" to launder U.S. taxpayers' dollars through
his phony bank.

Telling The Financial Truth

It was Williamson's testimony, however, which gave
the larger story of how the Russian money-laundering
caper and the Clinton administration's complicity is
part of a bigger financial picture that goes back to
the creation of the Federal Reserve.

In extraordinarily direct language that demands
extensive quotation (and cries for a response from the
public and its politicians), she explained:

"The years-long sugarcoating of what the Clinton
administration's policies have wrought in Russia is
just one more lie bequeathed Americans. . . .

"Turning to the question of the IMF and World Bank
generally and their specific roles in international
finance, much needs to be said. When libertarians say
that government produces nothing, they make a serious
error. Government produces one thing in abundance -
our money. U.S. paper fiat dollars have no intrinsic
value and circulate only by faith and by edict.
Consequently, the dollar in a baby-boomer's pocket is
worth but the penny that was in his grandfather's
purse less than a century ago.

"But granddad's penny was one-hundredth of a
gold-backed dollar's value, while today's dollar is
the product of a government-operated pyramid scheme.
Once the state slipped off the `golden handcuffs' of
budgetary discipline through the establishment of the
Federal Reserve, it gained the ability to create
unlimited debt, thereby claiming for itself what
before had been the purview of tyrants - the ability
to debase the currency.

"It is the slow leaching of value from the U.S.
dollar, not the far lesser sums raised by direct
taxation, which has enabled the political class to
purchase votes for its re-election, The degradation of
American society since 1971 is often remarked upon.

"Any pyramid scheme remains viable only so long as
its base continues to expand and it is that fact which
has driven U.S. foreign policy for much of the past
century. Since politicians and investment bankers both
have an interest in promoting deficits and in forcing
taxpayers to redeem government debt, they were quick
to come to terms with new markets and natural
resources from abroad. Taxpayer-subsidized globalism
then is not a new phenomenon, but it has reached an
apogee of sorts under the guiding hand of the current
Clinton administration. . . .

"The 1930s were the last era in which the
international political and financial elite sought
advantage through control of the global economy. What
economists call `hot money' raced from one nation to
the next throughout that era, leaving a trail of
competitive currency devaluations in its wake. Six
decades ago, as nation after nation was humbled by and
strangled with the manipulations of the financial
world's insiders, history saw fit to serve up Adolf

"A world war and a score of years later, the allies
established the IMF as a prophylactic money bag to
prevent destabilizing trade imbalances and therefore,
they thought, a repetition of the preceding decade's
nightmare. Yet over half a century later, the IMF, the
World Bank, and their similarly U.S.-controlled spawn
- the IFC, the six regional development banks, and the
EBRD - have become 800-pound gorillas of economic
distortion and, over time, of pillage which unchecked
will guarantee extensive international conflict and
broadly based anti-Americanism. . . .

"The ascendancy of Treasury in foreign policy at the
State Department's expense is the result of a
neo-mercantilist foreign policy in which enterprise is
to be subject to direction from the presidential
administration it is to serve. By expanding mandates
and accelerating the use of a host of international
agencies in which the U.S. is dominant - the IMF, the
World Bank, the EBRD, the regional development banks,
the IFC - and combining their efforts with those of
the Commerce Department, the Export-Import Bank, OPIC,
and USAID-financed Enterprise Funds, the Clintons
succeeded in constructing an international patronage
machine in which the American executive stands
supreme. . . .

"Taking the IMF's behavior in Russia as a guide . .
. we can expect a rapid escalation of taxpayers'
liabilities in the service of failed policies. . . .

"The `new paradigm' economy concocted by the
Harvard-connected Clinton administration appointees in
the U.S. Treasury, was designed to extend the federal
government's meddling hand worldwide through its
control of the multilateral and bilateral public
lenders. . . . The overall scheme works as follows:

"Sell assistance programs on an alleged `free
market' and `humanitarian' basis by awarding
government grants to those academics who can be relied
upon to supply the intellectual camouflage politicians
and journalists then repeat ad nauseam to a distracted
public, move the IMF and the World Bank to target,
induce target to raise taxes, fine tune target's
government banking operations, encourage borrowing and
debt creation through the target's government and
national banks, allowing IMF funding to pay yields if
necessary; induce target to privatize national
property while building a flimsy, artificial
`infrastructure' for an equities market good enough to
attract high risk foreign investors. Once the target
nation's government flounders, step back and watch
speculators assert discipline through a run on the
target's currency. The subsequent devaluation
delivers, in turn, a flood of cheap imports to
American manufacturers and producers.

"The finishing touch on the swindle is to confiscate
more money from G-7 citizens (the lion's share from
Americans) to pay for what is said to be an
`essential' IMF bailout; thereby allowing Uncle Sam's
IMF minions to entrench themselves more deeply in the
target's government. Taxes are raised, the population
struggles beneath indebtedness, government funding
demands, and the inevitable domestic inflation a
devaluation delivers.

"Western neocolonialists then bully the target over
its rapidly compounding debt in order to extract yet
more property. Once successful, the world's insiders
then turn around and deliver cheap shares from
privatizations and initial public offerings into the
maw of U.S. mutual funds and portfolio investors.

"U.S. taxpayers get hit coming (foreign aid) and
going (bailouts) and innocent foreigners' property is
finagled away either from, or on account of,
inattentive and corrupt leaderships. The big winners
are the world's increasingly corrupt and cozy
governing class, international bureaucracies, and
global banks.

"What U.S. policy has wrought across much of the
post-cold war landscape in a moral, political, and
financial abomination based on fraud, theft, and
deceit. In Russia, the results of the Clinton
administration's policies are the perpetuation of the
longest depression of the 20th century in what is
increasingly an unpoliced deadly weapons dump, the
biggest swindle of national property since Vladimir
Lenin muscled the country early in the century and the
discrediting of the ideas of free markets and
democracy. . . .

"It doesn't take a conspiracy theory to observe that
the downward arc of citizens' liberties, independence,
and civic competence and of American culture generally
parallels the declining value of the U.S. dollar,
which has lost 99% of its value since the founding of
the Fed, and 75% of that debasement has occurred since
the last link with gold established by Bretton Woods
collapsed [under Nixon]. From that perspective, it's
really not surprising that at the end of the century,
not quite a century after America instituted the
Federal Reserve and thereby began that process that
would deliver the power of creating unlimited debt to
the political class, the White House is occupied by a
couple who share not so much a marriage as they do a
collection of felonies."

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