The British and American delegations have returned home with considerable egg on their faces from the May meeting of the International Monetary Fund in Gabon, humbled by the poor nations with a big assist from IMF Managing Director Jacques de Larosiere.
Anxious for the past year to improve the image of the IMF among the Third World countries, de Larosiere successfully blocked an American initiative to install British Chancellor of the Exchequer Geoffrey Howe as chairman of the powerful IMF Interim Committee.
Sources here report that the poor nations persuaded Canadian Finance Minister Allan J. MacEachen to try for the chairmanship. With the help of some lobbying by de Larosiere, they were successful.
The poor nations within the IMF have become increasingly distressed at what they consider the unsympathetic attitudes of both the United States and Great Britain toward more generous development and other financial aid, and now look to Canada as their champion among the industrial powers.
Canada has been much more supportive than the United States and Great Britain in seeking solutions for critical North-South problems. The Canadians, hosts for the July economic summit in Ottawa, are miffed at President Reagan's insistence that East-West issues be given priority on that agenda over North-South problems.
The minicrisis at Gabon over the selection of an IMF Interim Committee chairman was precipitated by the unexpected defeat of Valery Giscard d'Estaing for the French presidency by Socialist Francois Mitterrand. That also swept out of office Rene Monory, French minister of finance, who was the interim committee chairman.
Under IMF rules, the Interim Committee chairman must be a sitting finance minister -- and there is no automatic transfer of that role to a departing minister's successor. U.S. Treasury Secretary Donald Regan asked Howe to be the candidate -- a token of the Reagan administration's philosophical identity with the Thatcher government.
According to sources here, although Howe was not especially keen to take on the assignment, he agreed nonetheless, assuming there would be no contest. But what neither Regan nor Howe apparently knew was that de Larosiere was working behind the scenes in another direction. When Howe arrived in Gabon, he found that not only was the issue not settled, but in an otherwise lackluster event it was the main topic of interest.
It probably didn't help that Regan himself never showed up for the Gabon meetings, having been called back to Washington by the president to help lobby Congress for Reagan's tax legislation. And West German Finance Minister Hans Matthofer, who might have pitched in for Howe, also decided to pass up Gabon when he heard that Regan was not attending.
The end result is symbolic of two important trends.
First, there is a widening split among the rich and poor nations in the IMF over the reluctance of the First World to provide more aid.
Second, the less-developed countries, long in a back seat at the IMF, are gaining power at the expense of the industrial nations, aided by Saudi Arabia, which is the source of most of the IMF's new money.
De Larosiere's big achievement this year was to persuade the Saudis to lend the IMF $9 billion over the next two years, with the promise of more in a third installment. The managing director also has carried through successfully a reform of IMF lending practices that provides the poor nations with larger sums of money over longer periods of time in a conscious effort to counter the belief that the IMF is a tight-fisted Scrooge.
But borrowers still have to meet strict repayment requirements, and de Larosiere said in a recent press conference that he will need to find another $5 billion to $6 billion in the next few years to supplement the Saudi loans.
"I just don't see where the money is coming from," an influential British banker said in an interview. "The industrial nations are holding back, and the big commercial banks are increasingly reluctant to do more than roll over old loans." Swiss banks have just about closed their doors to new loans to less-developed countries.
Reagan's men have been talking a strict free-market line, arguing that more development aid should come from the private sector rather than from the World Bank, which they think desires to expand its role too quickly. Before Gabon, Treasury Undersecretary Beryl Sprinkel said he had commissioned a study to see whether World Bank loans to member governments were promoting socialism at the expense of private enterprise.
This strong ideological line appears to have soured some of the smaller industrial nations. It was not unnoticed at Gabon that Belgium and the Netherlands, which typically might have gone along with the U.S. proposal, abstained instead of voting for Howe.