Cato Daily Dispatch for December 3, 2001
Iraq Oil-For-Food Program ExtendedArgentina On Brink Of Financial Collapse, Dollarization
Congress Rushing To Subsidize Insurance Industry
Iraq Oil-For-Food Program Extended
Iraq will sign a memorandum of understanding with United Nations officials to extend the oil-for-food program for another six months, according to The Washington Post.
The oil-for-food program allows Iraq to sell oil despite sanctions, with proceeds placed in an account administered by the United Nations. Iraq averages crude oil exports of about 2 million barrels a day, or 4 percent of the world's daily demand.
President Bush said last week Iraq must allow U.N. weapons inspectors to return or face the consequences. Iraq has been mentioned by some Bush administration officials and others as a possible target of the U.S. war on terrorism.
Earlier this year the Cato Institute hosted the policy forum "Ten Years after the Gulf War: The Lessons and Future of Washington's Iraq Policy," featuring former U.S. ambassador to Iraq Edward Peck and Middle East expert Laurie Mylroie. The future of sanctions and U.S. policy toward Iraq were debated.
On Thursday, Dec. 13, the Cato Institute will host the policy forum "Should the United States Go To War against Iraq" featuring former CIA Director James Woolsey and Cato Chairman William Niskanen.
Argentina On Brink Of Financial Collapse, Dollarization
With an alarming run on banks hurling the Argentine financial system toward collapse, the near-bankrupt government today moved to partially freeze bank accounts while taking a major step toward adopting the U.S. dollar as the national currency, according to The Washington Post.
In the past 24 hours, thousands of Argentines have rushed in record numbers to pull their savings from banks. Worry has deepened as roiling political and economic crises here have worsened, leading to rumors that embattled President Fernando de la Rua may be forced to resign. Fears mounted on Friday that the International Monetary Fund would hold back a scheduled cash infusion next month that Argentina needs to avoid a broad default on its $130 billion foreign debt.
In "Argentina's Boom and Bust," Steve H. Hanke recounts that country's recent economic freefall. He concludes that the best way to allay the market's fears and provide stability would be for Argentina to dollarize its economy. In "Is There a Need for an International Lender of Last Resort?" Anna J. Schwartz shows that International Monetary Fund meddling proves to be counterproductive, in fact hurting the countries it is trying to help.
Congress Rushing To Subsidize Insurance Industry
A day after the House passed legislation to subsidize the insurance industry so that it may pay claims arising from future terrorism, the Senate remained far from a compromise with the introduction of a third competing proposal by Sen. Phil Gramm (R-Tex.), according to The Washington Post.
Gramm, the ranking minority member of the Banking Committee, followed fellow Republican John McCain (Ariz.) and Democrat Ernest F. Hollings (S.C.), who introduced separate terrorism insurance bills on Thursday.
"Everybody and their brother is dropping bills at this point, and everybody is trying to figure out what it means," an aide to Senate Majority Leader Thomas A. Daschle (D-S.D.) said.
In "Asking Uncle Sam To Share Their Risks," Senior Fellow Doug Bandow writes, "Insurance will always be available. People want subsidies to make it cheaper. But if the cost becomes prohibitive, then it would be best to abandon the activity, not subsidize it."