The Carter administration won a significant victory on a foreign aid appropriations bill yesterday as the House rejected an attempt to slash $584 million from the U.S. funding of two international development banks.
Instead, by a 241-to-153 vote, the House adopted an amendment by Rep. David Obey (D-Wis.) making a minor cut of $25 million or 2 percent in the U.S. funding for the two banks.
Lobbying on the issues was intense, with the administration effort to stop the cuts backed by both labor and the U.S. Chamber of Commerce. Former Secretary of State Henry A. Kissinger also wrote a letter to House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) calling on Congress to reject the reductions.
Kissinger said the amount for international banks in the bill was "the absolute minimum needed if the aid program is to support United States foreign policy and economic objectives effectively." The bill allocates $2.6 billion for international financial institutions. The foreign operations subcommittee of the House Appropriations Committee, had already cut $877 million to arrive at the figure.
Though it was feared that the $7.3 billion foreign aid appropriations bill was in grave jeopardy this year because of a spending cut trend set off by Proposition 13, the rejection of the cuts, plus rejection of restrictions on indirect aid to Communist-dominated and other countries in House action more than a week ago, left the bill "in pretty good shape," according to a White House lobbyist.
Foreign operations subcommittee chairman Clarence Long (D-Md.) offered the $584 million cut.
Long would have cut $254 million for the Interamerican Development Bank and $330 million for the International Development Association. Obey's amendment cut $16.3 million from the IDB and $8.6 million from IDA, the soft loan window of the World Bank.
Long argued that the banks were "the fat belly of foreign aid." He argued that the money did not go to the poor but to those with "political clout" and those offering the "highest bribes." He said the banks were "taking money from poor people in rich countries and giving the money to rich people in poor countries." He also said staff salaries of top professionals at the banks were in the $70,000 to $100,000 range, so they've "managed to solve the poverty of their top professionals."
Obey said the question is "whether or not we believe America ought to keep its word." He said the country was "committed" by Presidents Ford and Carter to meet America's share.
Reb. Silvio Conte (R-Mass.) said large cuts could have "dire consequences," leading other countries to default on their contributions or asking the United States to give up the veto power it has over loans. If the funds weren't allocated, Conte said, our influence would be at an all-time low.
Though Long said the money for the two banks amounted to a 14 percent increase over what they got last year, Obey said the entire aid bill with the increase amounted to only an 8 percent rise over last year, an increase he said would take care of "nothing but inflation."
Obey said for every dollar we contribute to the banks, they spend $2.60 in this country.
The bill provides $2.6 billion for six international banks, which make low-interest, long-term loans to developing nations.Of the $2.6 billion, nearly $1 billion is in loan guarantees that require no budget outlay. The remaining $1.6 billion is appropriated.
Though the bill prohibits direct aid to Uganda, Cambodia, Loas, Vietnam, Angola, Mozambique and Cuba, the House has refused to prohibit indirect aid, through the banks, to those countries, as well as some Latin American and other countries with right-wing dictatorships.
The World Bank has just approved a $60 million loan to Vietnam, and Rep. C.W. (Bill) Young (R-Fla), argued yesterday that was an example of how the banks ignored American fellings about such loans. He said the loan to Vietnam would not be used for rice to feed the poor but for rice to export. Long said the bank (IDA) was "so arrogant" it made the loan "in the middle of the congressional debate."
Young said there were "four more loans to Vietnam pending."
Obey said he offered the 2 percent cut as a way of allowing those who wanted to say they voted for some cut to do so without doing serious damage to the banks.
The bill now goes to the Senate, which has not yet acted on its foreign aid appropriations bill.