The Reagan administration has a love-hate relationship with the World Bank: It loves to say in international meetings how much it depends on the World Bank (and the International Monetary Fund) to manage the international financial system. But, some say, it hates to to put its money where its mouth is.
Thus, the administration asked Congress for $237 million in supplemental funds for the World Bank and other multilateral development banks (MDBs) for the current fiscal year. But it hasn't worked hard enough, so far, to get the money.
"I think they don't care," said Rep. Dave Obey (D-Wis.), chairman of a House Appropriations subcommittee on the international lending institutions. As a result of the evident disinterest, "There is no support at all in this Congress to fund these banks," Obey said in an interview. "I think they have run out of gas."
A senior Treasury official brusquely denied Obey's charge, asserting that "the administration and the Treasury strongly support their request for the initial MDBs." He added that "we have been lobbying and will continue to lobby for it."
While Treasury Secretary James A. Baker III and other officials were at the Bonn summit, Obey led a revolt that had the effect of at least temporarily blocking the $237 million in funds that the Reagan administration had proposed for past commitments to the World Bank, the Inter-American Development Bank and the Asian Development Bank.
The IADB, which makes loans to Latin American countries, is clearly in trouble in Congress. But some observers feel that Obey may be exaggerating the problems for the World Bank, whose officials are known to feel that Baker and his staff are trying to give funding for their operations a high priority.
The irony in the present legislative imbroglio is that Obey is a strong supporter of getting this money to the Third World through the MDBs. But when Rep. Jack Kemp (R-N.Y.) introduced a surprise amendment to the appropriations bill knocking out the $237 million, Obey took a quick canvass of his subcommittee to see whether the Republicans would stay with the administration, or follow Kemp's effort to substitute his own version of foreign policy.
When Obey determined that the Republicans were deserting Reagan and lining up with Kemp, Obey cast the first ballot, voting to knock out the money. Other Democrats abstained. When all except one of the Republicans voted with Kemp, the other Democrats then also voted "aye," refusing to bail out the administration. The final vote was 8-to-3 for the Kemp amendment.
Kemp is trying to signal the administration that he wants it to induce some changes in the lending policy of the lending banks and at the IMF. He believes these institutions should press client-nations to cut tax rates -- as the Reagan administration did -- to increase productivity.
"I'm not opposed to the MDBs," Kemp said in a telephone interview, "but I am concerned about policy. In some cases, they set conditions that are so austere that the growth potential can't expand. And neither the State Department nor the MDBs do much to advance output or productivity. They engage these countries in huge infrastructure projects that just increase their debt burdens. So I wanted to see a little more debate before this supplemental is approved."
Kemp also was worried about reports that the IABD is readying a big loan for Nicaragua, but said Baker has reassured him that the American representative at that bank will vote and work against such a loan.
The senior Treasury official who pledged support for the lending institutions said: "We have been working closely with Congressman Kemp to bring him around to the point that he can support the administration's request in the full committee."
There is a lot more at stake here than a mere $237 million, most of which was slated for the IADB. Obey said that he had warned Baker earlier that, "Unless there is bipartisan support for the multilateral development bank appropriations, there won't be any support at all." Baker will be testifying before the Obey committee on Thursday.
Democrats charge that the Reagan administration pays only lip service to the money requirements of the international lending agencies, and is conspicuous by its absence on Capitol Hill when it comes to lining up Republican votes. "I see them up here when it comes to anything they're really interested in, like Nicaragua," Obey said, "but I don't see White House lobbyists up here on World Bank or IMF issues. I see no real effort at any significant level."
Washington experts on Third World affairs feel that Baker will have to work hard to convince Obey that the development banks have a high priority. A litmus test on real American attitudes will come when World Bank President A. W. Clausen proposes a hefty new general capital increase in Seoul at the annual World Bank/IMF meeting.
Meanwhile, Obey said that, if the administration doesn't roll up its sleeves and fight for it, the second-year, $750 million appropriation for the International Development Association for fiscal 1986 will be defeated. Kemp, however, told me he will support the IDA appropriation, although "I'd like to see those loans a little more market-oriented. I have some problems with the way the World Bank puts that money out."
In addition to the IDA money, there is another $600 million in other bank appropriation bills to be voted on for fiscal 1986 that also could be in trouble.
"This doesn't make any moral or economic sense at all," Obey said. "While the administration is pumping billions of dollars of economic aid into the Middle East, we are reneging on our commitments to the poorest countries."
The Reagan administration appears to be facing a choice in this area: to actively support what it says it believes in, or to yield effective control of international agency funding to Jack Kemp's ideology.