The Carter administration yesterday launched its foreign aid program with a pledge to "play a fair and agreed share" in world development, accompanied by an assurance to Congress that it would seek its cooperation in the formulation of policy.
In an effort to restore a sense of credibility in American commitments, Treasury official C. Fred Bertgsten told a congressional subcommittee that the Carter administration backs a full U.S. contribution to the "ongoing activities" of international lending institutions.
Bergsten, Assistant Secretary of the Treasury - designate for International Affairs, said he was speaking on behalf of the administration.
He testified before the Senate Appropriations Committee's Subcommittee on Foreign Operaions to ask appropriations for the fiscal year of $540 million, much of it for the Inter-American Development Bank.
Also included is $55 million to make up a shortfall in the $375 million American contribution to the fourth replenishment of the International Development Association, the soft-loan affiliate of the World Bank.
It has been this shortfall in the U.S. pledge to IDA, more than anything else, that "has caused some doubt around the world about U.S. credibility," Bergsten said.
Without quantifying it, Bergsten indicated that the administration believes in increasing its foreign aid, quoting the President as saying "we must do much better in terms of providing foreign assistance to the poor countries and particularly (the U.S.) must filfill the pledges it has made in the past, albeit under a different administration."
In a briefing session prior to his testimony, Bergsten elaborated on President Carter's belief that foreign aid would be given "a high priority" and that foreign economic relations would be an important part of the formulation of overall American foreign policy.
Bergsten stressed the administrations commitment to an expanded role for various multilateral lending institutions such as the World Bank. He revealed at the same time that the administration would begin "a full review of the lending policies and practices, and the internal administration, of all international institutions of which the United States is a member."
He said the purpose of this review "is to make sure that we are clear in our own minds that we are satisfied" with these institutions. One specific matter to come up in this review: the ruling of the Ford administration that put a lid on World Bank capital increases over the objection of its president, Robert S. McNamara.
Bergsten also said the administration has begun a new look at all suggestions for helping the poorest nations, and hoped that the North-South (rich nation-poor nation) dialogue, "which has come to a screeching halt," can be resumed soon.
Although decisions are far from final, Bergsten gave reporters one important clue to the administration's thinking. "We're drawn to the merits of official development assistance, that is, direct resource transfers, rather than indirect (methods) such as commodity price-propping," he said.
When asked for a reason, Bergsten responded that direct aid would assure "better distribution," whereas aid linked to commodity prices might help only those who deal with particular products. He would not flatly preclude steps to relieve poor nations' debt, but said "direct assistance flows from the public sector, buttressing the flows from the private sector, look like a sensible approach."
To help cement better relations with Capitol Hill, Bergsten said he welcomed formal hearings prior to negotiations in Vienna in mid-March on the fifth IDA replenishment. Oil-cartel nations, whose contributions to IDA have been solicited, will attend the Vienna session.
Bergsten said that, for the moment at least, that Carter administration was making no change in the Ford projection of a $2.4 billion U.S. contribution to the 5th IDA replenishment over a three year period. The first budget instalment would be $800 million in fiscal 1978.
The administration also agreed to a number of technical steps abandoning procedures that had irritated Congress. One change makes U.S. contributions to the international lending agencies "subject to appropriation." Another provides that beginning in fiscal 1978, capital contributions that are "callable" (subject to call rather than immediate cash deposit) are to be backed by an actual appropriation rather than merely an authorization.
Apart from the $55 million requested to catch up with the overdue payment for the 4th IDA replenishment, $460 million (to be expended over a number of years) was asked for the IADB, and $25 million to complete the U.S. contribution to the Asian Development Fund. Without the money for the IADB, its loan programs in Latin America would soon grind to a halt, Bergsten said.