President Bush, cementing a new and closer relationship that has developed between his administration and the World Bank and International Monetary Fund, said yesterday that the two lending institutions should play the "central role" in managing economic affairs in the post-Cold War era.
"In a world where ideology no longer confronts, and big-power blocs no longer divide, the bank and the fund have become paradigms of international cooperation," the president said in a speech to the institutions' joint annual session at the Sheraton Park Hotel.
Bush noted the emergence of Eastern European countries toward democratic rule and hailed representatives of new member countries from Czechoslovakia, Bulgaria and Namibia, along with special invitees from the Soviet Union.
"Your presence here reminds us all of how events of the past year are producing a ... fundamental, indeed inspiring, change in the world's political and economic order," he said.
But he warned that Iraq's aggression against Kuwait threatens to interrupt the process of change, causing a staggering burden, especially for the "front line" countries of Turkey, Egypt and Jordan.
To marshal financial resources for these countries, and to make sure the burden is shared, Bush announced the creation of a Gulf Crisis Financial Coordination Group, including the United States, Japan, West Germany, Britain, France, Italy, Canada, Saudi Arabia, Kuwait, Qatar, the United Arab Emirates and the European Community.
American officials are seeking between $13 billion and $15 billion this year and next, but European Community officials reportedly think around $9 billion may be more realistic.
Bush said that the greatest contribution the United States "can make to the health of the international economy is to get our own house in order. Our budget deficit must be brought under control and reduced."
Bush's tribute to the IMF and World Bank was in marked contrast to the often hostile and suspicious attitude during the earlier years of the Reagan administration. In recent years, as American budgetary stringencies have limited the administration's ability to make global financial commitments, it has come to understand that its contributions to the IMF and World Bank go a long way.
Because the United States contributes just under one-fifth of the IMF's and World Bank's capital, the spending programs of the two agencies -- for purposes the United States approves -- give it a lot of leverage.
Personal relations between the IMF and the Bush administration, occasionally tense, have improved with the strong endorsement by IMF Managing Director Michel Camdessus of the Brady debt plan. And Bush and World Bank president Barber Conable are old friends, having served together in the House of Representatives.
Despite his tribute, Bush did not hesitate to remind the IMF that in the U.S. view, the agency should be tougher in trying to collect arrears on its loans.
At yesterday's opening session, both Camdessus and Conable offered sober assessments of the new problems created for the world economies and their institutions because of the Iraqi invasion of Kuwait, but both pledged that their agencies would not be deterred from basic objectives. Like Bush, they both stressed the urgency of completing the latest round of trade negotiations.
Camdessus raised the prospect that an evolving international monetary system, broadened to include Eastern Europe and the Soviet Union as their currencies move toward convertibility, will focus on more stable exchange rates.
Conable also suggested that the bank has adequate resources with which to cope with the added demands stemming from higher oil prices and other dislocations and said the bank would pursue is basic mission of reducing poverty.