Administration officials have warned that the World Bank and other "development" banks normally supported by the United States could lose a large part of their leading ability if a recent House vote on foreign aid appropriations is upheld in the Senate.
The House, in passing a $7.75 billion fiscal 1980 foreign aid appropriations bill on Sept. 6, forbade the use of U.S. funds for "indirect aid" to Vietnam, Cambodia, Laos, the Central African Empire, Angola and Cuba.
The House action -- backed by congressional critics of the World Bank and by conservatives who would like to limit all aid programs -- is parallel to similar efforts last year and the year before, both of which were reversed in the Senate.
Since the World Bank and the so called "regional development banks" -- such as the Asian Development Bank -- cannot accept funds with conditions attached to them, the House action would have the result of pulling the United States totally out of these international lending operations.
Treasury Assistant Secretary for International Affairs C. Fred Bergsten said that if the policy voted by the House prevails, an immediate result would be to end the lending operations of the International Development Association (IDA), the soft-loan affiliate of the Bank.
According to a burden-sharing understanding, contributions by other countries to IDA are keyed to those of the United States: If the U.S. monies are pulled out, "we let all the others off the hook," Bergsten said.
This devastation to IDA, World Bank President Robert S. McNamara told The Washington Post, "would literally destroy the largest single source of economic assistance to the 1.25 billion people living the the poorest nations of the world.
"I can not believe the United States -- itself the principal founder of IDA -- wants to do that."
Although the House as moved to put conditions on the appropriation before, officials in the administration and in the World Bank seem to be more worried this time than they were last year.
Emotions in the Congress against Vietnam are running higher because of that country's attitude toward its "boat people." An amendment by Rep. C. W. Bill Young (R.-Fla.) banning indirect aid to Vietnam and other countries was passed by an overwhelming vote -- 281 to 117 -- just after Congress returned from a recess, during which the plight of the "boat people" was in the news. The ban on such aid to Cuba came in a separate voice amendment proposed by Rep. John M. Ashbrook (R-Ohio).
So far, the Bank has made only one loan to Vietnam -- $60 million for food production increases. Recently, McNamara has felt constrained to say that no other loans are in the offing.
Even if the Senate removes the conditions attached by the Young and Ashbrook amendments, U.S. officials are distressed by the fact that their original appropriation request for $3.6 billion in fiscal 1980 for the international development banks was trimmed to $2.5 billion. Only half of the $3.6 billion has a budgetary impact, which is stretched over at least eight years.
A big part of this reduction is for U.S. participation in the World Bank itself, which further threatens U.S. voting power in the bank. Reduced U.S. funds would limit the bank's overall flexibility, including its ability to fund new energy developments in the less developed world.
Two years ago, U.S. participation in the international lending agencies was salvaged with an understanding that U.S. representatives would vote against international loans to the specified countries. (In practice, there was only one -- the $60 million loan to Vietnam -- that required a negative U.S. vote.)
Last year, the Senate defeated a companion piece to the restrictive House amendment by a single vote after the administration warned it would lead to restrictions placed by other nations on their contributions.