GOOD FOR RONALD REAGAN: he has been under pressure from within and without his administration regarding the World Bank and its affiliates, to conduct a "supply-side foreign policy" -- that is, to turn away from the multilateral development-lending agencies and to let poor countries look for new capital, if they choose to, by making conditions more attractive to private investors. In the least one crucial early test, however, President Reagan has resisted this pressure. In his first personal word on the matter, he wrote congressmen in support of an appropriation to replenish the World Bank's soft-loan fund, the International Development Association. The bane of some conservatives' existence, IDA makes cut-rate loans to the world's poorest countries. The Republican Senate leadership, moreover, delivered a majority of Republicans in support of the IDA bill.
The practical meaning of this step is substantial. Keeping the IDA in business is generally and fairly regarded around the world as the principal and certainly the most visible test of whether the rich certainly the most visible of whether the rich nations intend to serve their interest in helping the poor nations maintain their grip. Jimmy Carter accepted this proposition, and he had no trouble committing the United States to the IDA replenishment. It fell to Ronald Reagan, however, to come up with the money.
Mr. Reagan and a good number of people inside and on the edge of his administration carry an evident baggage of suspicion of the multilateral process. For one thing, the process is by its nature something that no one nation can control. For a second, it can put the United States in a position of sharing in sponsorship of certain economic activities that it might not accept for itself at home. IDA's subsidized loans, moreover, are especially offensive to pure free-marketeers.
But in this instance Mr. Reagan decided that the national interest required him to honor his predecessor's IDA commitment. For $500 million this year, $850 million next year and $1,850 million the year after that -- backloaded for budgetary reasons -- the United States should be doing its part to keep IDA, a proven performer, at work. Furthermore, Mr. Reagan has started out by going along with a previously planned general capital increase that would enable the World Bank to double its regular (market-rate) development lending.
A full-scale review of the United States' participation in the multilateral banks is proceeding under Treasury Department direction. The traditional supporters of these institutions are entitled to their worries, but it is hard to argue that a periodic check should not be made of whether they are serving American interests well. Meanwhile, Mr. Reagan is letting these valuable banks do their work.