Israel Matzav: Business is business at the IMF

Thursday, May 03, 2012

Business is business at the IMF

When I worked in New York, and probably still to this day, the phrase 'business is business' was used to justify all sorts of behavior that ranged from nasty and despicable to morally reprehensible. The only similar phrasing that comes to mind is 'boys will be boys,' which was used to justify all sorts of sexist treatment of women.

At the International Monetary Fund, business is business. Despite the flash of 'morality' that led to Dominique Strauss-Kahn losing out as managing director (because he may or may not have had sex with a maid who may or may not have consented in his New York hotel room), when it comes to things that make money for the fund, it digs in its heels and does what's best for business - morality be damned. And so, the fund, and its new managing director Christiane Lagarde, are resisting attempts by United Against a Nuclear Iran (UANI) to have Iran's central bank expelled from membership in the IMF.

In a letter to Ms. Lagarde dated April 26, Mr. Wallace, a former American diplomat at the United Nations, said the I.M.F. should close what he described as an I.M.F. account worth more than $1 billion held in the central bank, which has been penalized by the United States and European Union. Mr. Wallace said the bank had been shown to be untrustworthy, violating the I.M.F.’s own standards and safeguards.

“I don’t have a grudge with the good people of the I.M.F.,” Mr. Wallace said in a telephone interview. But, he said, “it can’t be business as usual anymore.”

William Murray, a spokesman for the I.M.F. in Washington, said in a statement that the fund’s holdings in Iran’s central bank are part of the arrangements made with any member, and that the account is denominated in Iranian currency, not dollars.

“There is nothing in the E.U. or U.S. sanctions regimes that is inconsistent with these arrangements,” he said. As for the call for Iran’s suspension, Mr. Murray said, “This is a matter that is best taken up with the fund’s member countries. We have no comment.”

Under Article 26 of the I.M.F. Articles of Agreement, suspension of an I.M.F. member’s voting rights requires approval from a 70 percent majority of the total voting power among the other members, which is weighted partly according to their economic size.

A Treasury Department spokesman in Washington, John Sullivan, said that the United States regarded the I.M.F. as exempt from sanctions on Iran’s central bank. Michael Mann, a spokesman for the European Union’s foreign policy chief, Catherine Ashton, was quoted by Bloomberg News as saying the I.M.F. is not subject to E.U. sanctions.

YNet adds:

The advocacy group United Against Nuclear Iran, a group of US ex-diplomats and government officials, said that the IMF needed to shut down its account with Bank Markazi, a specific target of the sanctions, or suspend Iran's membership in the fund.

It also criticized the IMF managing director, Christine Lagarde, for meeting with Bank Markazi's chief during the IMF's spring meeting last month in Washington, and for allegedly "lavishing praise on Iran and Bank Markazi."

"The IMF must also stop treating the Iranian regime like a responsible government in good standing at a time when the international community is trying to isolate it."

But IMF spokesman William Murray said the IMF's account at Iran's central bank is simply there to hold the Iranian funds committed to the IMF as an obligation of its membership in the crisis lender.

"According to our constitution... the IMF's holdings of each member's currency are maintained with the central bank of the relevant member, including Iran," Murray said.

So business is business at the IMF... unless you conduct it with your hotel maid.

Labels: International Monetary Fund, Iran sanctions regime, Iranian nuclear threat