David E. Sanger

This selection was excerpted from an article by New York Times staff reporter David Sanger, "As Economies Fail, the IMF is Rife with Recriminations," published in the Times on 2 October 1998.

Everywhere else in the world, though, politicans and businessmen insist that one of the biggest problems with the IMF is that, contrary to the view of Congress, it acts as the United States Treasury's lap dog. Ask in Jakarta or Moscow, and the response is the same: The fund never ventures far without looking back for the approving nod of its master.

That view may not be far wrong. In ordinary times, the United States largely leaves its hands off, as the fund's executive board -- made up of 24 representatives of the 182 member nations -- delve into the intricacies of budget policy in Greece or banking regulation in Argentina. "Surveillance" of the world's economies is the fund's main activity.

When the United States weighs in, however, is when the fund is called on to rescue a country in deep trouble. Only then does the fund -- and the Treasury -- have the leverage to extract commitments in return for billions in aid. In theory, the American influence is limited: It has an 18.5 percent vote in the fund. Germany, Japan, France and Britain have about 5 percent each. But in practice the United States usually gets its way, exercising its influence behind the scenes, often in interactions between Mr. Fischer and Mr. Summers.

The bailouts of Russia and South Korea were prime examples of how Washington muscles into the fund's turf as soon as major American strategic interests are involved. Last Christmas, as South Korea slipped within days of running out of hard currency to pay its debts in December, it sent a secret envoy, Kim Kihwan, to work out a rescue package. "I didn't bother going to the IMF," Mr. Kim recalled recently. "I called Mr. Summers' office at the Treasury from my home in Seoul, flew to Washington and went directly there. I knew that was how this would get done."

Within days the Treasury dispatched David Lipton, its most experienced veteran of emergency bailouts, who is leaving his post as undersecretary of international affairs this month, to shadow the IMF's negotiations with the Government in Seoul.

Mr. Fischer was displeased. "To make a negotiation effective, it has to be clear who has the authority to do the negotiating." he said.