Fwd: IMF & Gold sales

Chris Burford cburford at gn.apc.org
Thu Apr 15 14:48:22 PDT 1999

At 12:11 15/04/99 -0400, Doug wrote:

>[More from 50 Years Is Enough, even if they don't meet Chris Burford's test
>of militancy.]

< >

>Under the guise of providing debt relief, the IMF is asking permission from
>it stockholder countries to sell a portion of its gold stocks. The
>majority of that money would actually go not to debt relief, but to allow
>the IMF's ESAF fund to become self- sustaining. This would put the IMF
>permanently in the development arena and remove this program from
>Congressional oversight that comes with periodic authorization.
>Last month, at a HIPC "consultation" in Washington, the IMF one of the IMF
>representative stated that they "would not agree" to gold sales for HIPC
>(debt relief linked to SAPs) without $$ for ESAF.
>We are watching this one very closely. Here is a story from the Guardian
>in London which seems to indicate that an agreement has been reached on
>gold sales.

I am interested in the activist's comments about how this move cuts IMF free from dependence on Congress. Clinton has no doubt noticed that.

Doug's comments about my test of militancy make it relevant to repost my contribution on this subject from last month which received no comment at the time.

LBO-talk 17th March 1999:-

Clinton's statement yesterday marks an important shift towards the likelihood that IMF will sell gold reserves and perhaps even for the benefit of developing countries, as he suggested.

As a result the price of gold dropped to $283 per ounce.

It followed similar remarks on Monday by Jacques Chirac and Gordon Brown. This sounds coordinated. The G7 summit in June may discuss the idea further. The IMF executive board would still need an 85% majority vote at its meeting later this year.

But since France and the US have been the traditional opponents of such a move, success is now thought to be likely.

The IMF expects to phase its sales over 10 years, and it argues that the market could absorb this.

However analysts argue that this shift will influence governments who may also sell.

The World Gold Council, of the producers, says this is a bad idea on the moving grounds that some of the world's poorest nations are gold producers. (But not of course owners of the means of production).

What is the significance of these developments?

The big powers moving away from gold as a store of wealth is a major shift in demystifying money at a global level. The mystery remains but the issues can be posed more starkly about the total volume of global economic activity, and how it is managed. It weakens the domination of dead capital over living capital.

Clinton's proposal that the IMF should sell some of its gold to help developing countries has a contradictory aspect to it. Positively it is a step towards saying that the IMF should create special drawing rights to aid the most impoverished countries and to counteract the powerful centripetal effects of global capital accumulation.

Negatively it is a cheap option for the USA. It appears to say there is this windfall cache of gold, and why should it not be utilised, without addressing the need for systematic policies to reduce the centralisation of capital.

Furthemore it presents this patronisingly as a form of charity, and not a form of socialising the world economy.

Nevertheless consciousness of the complexity of the world economy can only advance step by step, and the terms in which this is argued could be subject to progressive influence. A decision to run down IMF gold reserves from the end of the year would be definitely progressive.

Marxists should urge it is enhanced with other more strategic reforms like a programme to create special drawing rights for a development and environmental fund, and a reform to tax and slow the speed and volatility of foreign exchange transactions.

Chris Burford


More information about the lbo-talk mailing list