The Reagan adminstration yesterday asked Congress to pass two bills authorizing a slimmed-down financial diet for the World Bank and other multilateral development banks and promptly received bipartiasn warnings that depite proposed cutbacks in appropriations, the legislation would have though sledding.
In testimony before a House Banking subcommittee on multilateral development institutions, Deputy Treasury Secretary R. T. McNamar and Deputy assistant Secretary of State Ernest B. Johnston Jr. urged Congress to make good on existing international agreements for the support of these institutions while stretching out appropriations -- in one case over six years -- as part of the Reagan budget-cutting exercise.
Moreover, they confirmed that the administration is undertaking a complete cost-benefit review of future participation by the United States in multilateral lending institutions to see whether they are effectively serving American security and economic interests abroad.
"The Reagan administration is conscious that a number of serious questions have been raised about U.S. participation in the mulitlateral development banks," McNamar told the subcommittee. "These include questions about the size of U.S. contributions, the influence of the United States in the banks, and the size, growth and orientation of bank lending.
In an exchange with Rep. John J. LaFalce (D-N.Y.), McNamar agreed that once focus of the review will be to determine whether the banks are as concerned about human rights when it comes "to the despots of the left" as they seem to be when dealing with "depots on the right." McNamar said: "I can assure you that it is our intention to achieve more balance than there may have been under the previous administration."
No decisions on future participation -- including that for the African Development Bank, for which multilateral negotiations are already in progress -- will be made until the policy review is completed, McNamar told the subcommittee. He added that A. W. Clausen, president-designate of the World Bank, had told him he would conduct his own independent review of World Bank activities to cut out waste and improve efficiency.
McNamar also made clear that there was little chance the administration would reverse a previously announced decision against support of a new energy affiliate for the World Bank, McNamar said there is no indication that another institution is needed to stimulate oil production in the poor countries or that Saudi Arabia "is more amenable" to lending money to an affiliate than to the existing bank structure.
Despite the administration's effort to effect economies in the multilateral bank area, LaFalce warned "you are going to need a big effort" to get these bills through. Subcommittee Chairman Jerry M. Patterson (D-Calif.), and Thomas B. Evans Jr. (R-Del.), joined in reminding the Reagan witnesses that the atmosphere on Capitol Hill is not conducive to passing what conservative legislators on both sides of the aisle tend to consider "foreign aid."
LaFalce predicted that pure supplysiders like Rep. Jack Kemp (R-N.Y.), will argue on the floor of the House that all development aid for the Third World should be halted and that poor countries should generate their own growth through their private economies. He urged the personal intercession of President Reagan to give the legislation a better chance.
One of the two bills that the president wants passed would authorize U.S. participation in a General Capital Increase (GCI) to finance the World Bank's lending program through this decade. But McNamar revealed that the administration is asking for an appropriation of only $109.7 million for fiscal 1982, spreading the balance of $559.3 million (in the Carter budget) over the following five fiscal years.
The other bill is a catchall authorization for a number of development banks, notably the current restocking (known as the sixth replenishment) of the International Development Association, the World Bank's soft-loan affiliate. As has been previously reported, the stretchout device used there is to hold back on 1981 and 1982 appropriations for IDA, allowing a big balance to build up for fiscal 1983.
Both NcNamar and Johnston stressed the critical importance of the multilateral development banks as an effective way of providing economic assistance. They also argued that failure to implement earlier agreements would weaken U.S. influence in the institutions and cast doubt on the U.S. leadership role throughout the world.
But they acknowledged that the stretchouts they were proposing would hurt the Third World economies -- a situation they said is necessitated by budget restrictions at home. They also offered an unmistakable signal to U.S. allies abroad that there could be no further upward negotiation of the amounts. "We have gone as far as possible," McNamar said. "It is the administration's view that further adjustments would be unwarranted and would seriously damage overall U.S. interests."