Mar 18, 2009, 17:39 GMT
Washington - The International Monetary Fund must be given more money to rescue poorer nations on the brink of collapse because of the financial crisis, US legislators and global lenders said Wednesday, calling the global recession a direct threat to national security.
US Senator John Kerry, a Democrat who heads the Senate Foreign Relations Committee, warned the economic crisis had the potential to create 'failed states' that could become breeding grounds for terrorism, drug trafficking and other security threats.
'In the end, you invite chaos if you don't ... lead in the right direction,' Kerry said after a private committee meeting with the heads of the IMF and its sister organization the World Bank.
IMF Managing Director Dominique Strauss-Kahn said his group 'needs more resources' to help keep developing countries out of bankruptcy, but he also tasked advanced countries with taking more measures to end a banking crisis that has plunged the world into recession.
'Some action has been done, but we need to act much more swiftly' to stabilize the global financial system, Strauss-Kahn said. Leaders of the world's 20 leading economies will meet in London next month to discuss new ways of stabilizing a financial sector that has lost more than 1 trillion dollars.
Kerry and Republican Senator Richard Lugar said they expected bipartisan support for a 100-billion-dollar US contribution to the IMF, which serves as a backstop for governments that need emergency loans.
Both the IMF and World Bank were 'critical to helping us emerge from this global economic crisis,' Kerry said.
Dozens of developing countries around the world - especially in central and eastern Europe - are facing massive budget shortfalls as local banks fail and wealthy investors have pulled out resources due to the financial crisis back home.
President Barack Obama's administration has called for at least 500 billion dollars in extra funding for the IMF, including the 100 billion from the United States.
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