The Reagan administration yesterday officially confirmed that it opposes an annual appropriation for subsidized World Bank loans exceeding $750 million, which would force a sharp curtailment in Bank programs for the neediest Third World countries.
A statement to this effect by Deputy Assistant Treasury Secretary Tom Dawson to a closed House Banking subcommittee briefing was the first formal revelation of the administration's position.
After a session that aides called "stormy," subcommittee Chairman Jerry M. Patterson (D-Calif.) denounced the administration proposal as "short-sighted," and said he shortly would announce an open hearing on the issue.
"This policy of cutting economic assistance is buying trouble for the future," said Patterson. "It can only bring on even greater security assistance requirements."
Because the U.S. share would be about 25 percent of the total, the net effect of a $750 million U.S. annual limit would be to hold the total lending program of the International Development Association--the World Bank's soft-loan affiliate--to $3 billion a year.
For the three-year IDA-7 lending program, scheduled to begin in mid-1984, that would provide the poorest nations with only $9 billion, compared with $16 billion suggested by the World Bank. IDA commitments are long-term, no-interest advances, with only a small service fee charged the recipients.
World Bank officials have argued that $16 billion over three years is barely larger, after inflation is taken into account, than the $12 billion for IDA-6. Moreover, IDA-7 must take care of a major new client, China.
Patterson challenged Dawson's assertion that Congress would balk at an annual figure larger than $750 million for IDA, noting that the Reagan administration had never tested the willingness of Congress to do more. Dawson suggested that this limit apply for five years, a recommendation strenuously resisted by Democrats who point out that a five-year program would tie the hands of whatever administration comes into office in 1985.
Rep. Sander M. Levin (D-Mich.), told Dawson that the Reagan administration is showing "no sense of strategy or real commitment" to the multilateral lending institutions. He added he had not heard the same passion in Dawson's presentation that is voiced by administration backers for the Caribbean basin initiative.
The lone Republican present at the subcommitte session, Rep. Douglas Bereuter of Nebraska, said later in a telephone interview that he thought it would be "better to be realistic" than to offer an unrealistic proposal that would force another stretchout of IDA funds, causing further resentment among American allies called on to make up the difference.
Bereuter said that "unfortunately," he couldn't argue with the $750 million figure Dawson presented. But Bereuter called attention to Patterson's comment that any administration sets the tone for Congress in making such requests--that Congress rarely, if ever, appropriates more than is requested.
In effect, Patterson and other Democrats claim that by setting out the $750 million number, the administration is effectively putting a ceiling on appropriations for IDA.
The IDA-6 program, originally for three years ending in fiscal 1983, was budgeted at $12 billion, with an extra $2.2 billion volunteered by non-U.S. participants when the Congress stretched IDA-6 to a minimum of four years. Of the $3.24 billion U.S. share--27 percent of the original $12 billion--Congress to date has approved only $1.9 billion.
Assistant Treasury Secretary Marc E. Leland, who gave the Patterson committee on Wednesday the same message delivered by Dawson, is en route to Tokyo for a July 19-21 discussion among deputy finance ministers of IDA donor nations on the overall size of IDA-7.