The Rosett Report

The IMF, Rio, and the UN's Tax-Exempt Elite

Christine Lagarde, managing director of the International Monetary Fund, recently gave an interview to a British newspaper, The Guardian, in which she criticized tax dodgers in Greece. Then Lagarde became a target of criticism herself, when The Guardian reported on Tuesday that as head of the IMF she paid no taxes on her yearly salary of $467,940, or her accompanying annual allowance of $83,760.

The next day, CNBC rushed to Lagarde’s defense, with an article pointing out that Lagarde’s tax-exempt status is standard for employees of the United Nations family of organizations, which includes the IMF. Quoting the Vienna Convention on the immunities of “diplomatic agents,” CNBC noted that, like her predecessor, Lagarde was merely enjoying privileges that were hers by right:

“Protest against her, and you protest against thousands of UN employees throughout the years.”

Well, come to think of it, what a great idea!

Diplomatic immunities have their place. But they derive from an earlier age of the world, when diplomats concerned themselves chiefly with representing their own countries, and there was no vast family of globe-girdling multilateral organizations trying to cook up rules for all, while draped in diplomatic privileges. Today, in the age of the UN alphabet soup, and a global hive of “international civil servants” plotting 5 and 10 and 15 and 50 year plans for the planet, diplomatic immunities have come to provide cover for a growing elite bureaucracy — the 21st century version of the old Soviet nomenklatura, communism’s administrative patrons, who dished out to the peons the stifling rules from which they themselves were substantially exempt.

The problem is not just the lavish salaries and benefits these multilateral “diplomats” enjoy, though these do tend to be plush. The deeper problem is that diplomatic immunity means that international civil servants are shielded from the effects of the endless rules and guidelines they love to crank out. Staff of the IMF dispense tax prescriptions hither and yon, but they themselves are exempt from the pinch. Lagarde has a point, that a great many Greeks have been ducking their responsibilities. But the IMF has a long record of favoring “austerity” policies, including tax hikes, which too often further damage the economies they are meant to fix, and inflict the most pain on the people who can least afford it. The collapse of the Indonesian economy, in 1997-1998, comes to mind.

Likewise, UN legions of international planners have made stock practice of enjoying privileges they keep trying to deny to the common folk. It is by now a classic of the genre that UN climate-crats jet around the globe for conferences in Bali, Durban, and — coming up, again, next month — Rio, at which they prescribe a lot less travel, to be enforced by de facto taxes, for everyone else.

Systems in which rule-makers are exempt from the rules have a built-in problem for those who live under them. In a democracy, there is the vital feedback of elections, in which the mightiest can be held to account. But the UN, and its affiliates, are not democracies; they are collectives, populated by governments and staffed by diplomatically immune bureaucrats who are increasingly in the business of inventing rules, taxes, and costly self-serving programs for people who have no clear way to vote them out.  That is the real cost of  the UN elite, exempt from taxes but chronically seeking ways these days to tax the rest of us — Lagarde and the IMF being the least of it, as Fox’s George Russell recently chronicled in his article on the potential multi-trillion-dollar tab for the UN’s imminent Rio summit.