A. W. (Tom) Clausen, president of the World Bank, is on a spot: a firm believer that rich nations, in their own self-interest, must keep a flow of concessional aid to the poor "at realistic levels," Clausen is under pressure from Uncle Sam--his biggest stockholder--to trim sails.
Later this year, he's likely to be the first World Bank president to go to an annual meeting and be required to report that in the years ahead, there will be a sharp decline, in real terms, in the aid to be offered by the International Development Association (IDA), the bank's soft-loan affiliate.
From the very start, the Reagan administration has been suspicious of the World Bank and the other multilateral lending institutions. Its major spokesman on these issues, Treasury Undersecretary Beryl Sprinkel, trotted out the idea that there was a socialist drift in the bank, leading to a redistribution of the world's wealth.
Treasury Secretary Donald Regan thus commissioned a year-long study of how U.S. policy toward the banks might be resolved. Although this tome, just released, finds the bank innocent of any such socialist taint, the Reagan administration nonetheless is planning to cut its funding of subsidized multilateral aid by 30 to 45 percent in real terms. Since U.S. cuts will trigger reductions by other contributing rich nations--unless the IDA succeeds in a heroic effort to get other nations to increase their shares--that means only the desperately poor countries will get subsidized loan money from the banks in the future.
IDA apart, the United States is trying to clamp down on regular loan activities of the bank, pushing Clausen to "graduate" regular clients into the commercial world when they hit a $2,180 per capita income level. Bank officials take a $2,600 figure as the right break-point in today's inflationary environment. But more basically, they don't see "graduation" as a money-saving formula: they don't want to sever the umbilical cord too early.
Clausen has said forthrightly that a pennypinching U.S. policy will be "a heavy blow." In a recent speech to foreign diplomats, the former Bank of America chief said that "if the poorest nations are to become stronger participants in global economics, then they must have adequate resources available to them."
In a Feb. 26 memo to the staff, Clausen admitted that IDA is in trouble, and launched a major survey of IDA's accomplishments in the past and prospects for the future, designed to make a "very strong case" in time for circulation at the annual meeting in Toronto.
Privately, Clausen is upset because Sprinkel has implied in a patronizing way that the World Bank is coming around to the U.S. view that the role of the multilateral development banks should be circumscribed. "We haven't turned the corner yet in relations with the bank ," Sprinkel said. "There are always differences of opinion. But we will push with a coherent thrust."
It is true that Clausen, a private banker for 31 years, sees a major role for private companies in boosting their Third World investments. He is also a big booster of "co-financing"--joint relationships through which a bank "umbrella" encourages private companies to take a risk about which they might otherwise think two or three times.
What Clausen really resents is the drive by the United States to use his and other multilateral development banks to carry out American foreign policy. The Treasury report is almost embarrassingly plain about the linkage between U.S. strategic objectives and the way it hands out foreign aid. Major European governments, also important "owners" of the bank, are equally distressed by the Reagan administration's narrow-minded approach.
It's painfully clear that the United States, by and large, prefers bilateral to multilateral aid. The highly-publicized Caribbean basin package suggests the way the United States likes to deal, keeping an ideological string on the money it hands out.
It's not been reported, but on Jan. 12 the United States opposed a $16 million World Bank loan to Nicaragua for a project to prevent flood damage to transportation systems in 26 low-income areas.
A U. S. representative at the bank's executive board meeting said the United States is opposed "because the current macroeconomic environment (in Nicaragua) is not conducive to economic development at this time."
That is pure baloney. The United States opposed the loan because it believes Nicaragua is helping the rebel troops in El Salvador. A vote against a piddling $16 million loan was a political signal to Clausen, because board votes are merely pro forma ratification of what the bank has already decided to do.
What is equally interesting, and perhaps more revealing as evidence of the somewhat contemptuous attitude of the United States toward the bank, is that a year has gone by, and the Reagan administration has yet to name an executive director for the bank.
When votes are taken at the board they are cast by Matthew Hennessy of the U. S. Treasury, listed as "temporary alternate executive director." Under the rules, Hennessy can't drop the "temporary" from his title until an executive director is named. But that doesn't seem to be a top Reagan priority.