President Carter yesterday pledged the strong commitment of the United States to expansion of aid to the Third World by beefing up the World Bank and the International Monetary Fund, bluntly rejecting proposals that would carry out their loan and development functions through the United Nations.
In a brief address to the opening joint session here of the IMF and the bank. Carter told about 3,500 assembled world financial leaders that they "should not be diverted by extraneous political disputes," an obvious reference to the efforts of the Palestine Liberation Organization to attend this session as an observer.
The session, the 35th annual meeting of the two institutions, will continue through Friday in an effort to seek ways of financing the poor nations' huge balance of payments deficits.
The PLO issue, after tense negotiations last week, has been played down by the mutual consent of the PLO's Arab sponsors and the anti-PLO group led by the United States. The PLO and all observer groups were barred from this meeting, while a Joint Procedures Committee seeks a long-term solution.
The emotional highlight of the day came moments before Carter arrived, when Bank President Robert S. McNamara, who has announced his intention of retiring in mid-1981, called for a 50 percent increase in the bank's lending power. [Details on Page E1.]
His voice breaking, McNamara said that despite efforts to help the poor nations of the world, "it is shocking" to realize that by the end of the century, there will still be 600 million people facing a state of absolute poverty.
Pausing in an effort to regain composure, McNamara said: "I end on a personal note. The past 13 years have been the most stimulating of my life. Despite the many frustrations. I would'nt trade them for anything. I thank you for the privilege of serving you."
Seated in the audience, which gave McNamara a sustained round of applause, Applause, Ahmed A. Seray-Wurie, counselor for the Embassy of Sierra Leone, said: "He is a great guy. If you listen to his pitch he's always harping on the poor." Throughout the day, this sort of tribute, in one form or other, was echoed by all speakers, led by Carter, who addressed McNamara directly, to say:
"Bob, you will leave to your successor a high standard and a firm foundation for the future."
At the moment, according to authoritative sources, four names head the list of possible successors to McNamara: Federal Reserve Chairman Paul A. Volcker; New York Federal Reserve Bank President Anthony Solomon; Lehman Bros. Chairman Peter G. Peterson, and A. W. Clausen, president of the Bank of America.
The main thrust of Carter's address was to endorse a series of moves by the two international leading organizations to expand and to liberalize the terms on which they make credit available to the poor nations. Carter's rejection of the United Nations as the framework for such aid was oblique, but nonetheless clear.
"As you mold and adapt," Carter told the joint session, "you must be confident that your decisions will not be determined or renegotiated in some other setting. Any political pressure or unwarranted influence from any international forum which might undermine your integrity would be neither necessary nor desirable."
Carter's highly complimentary assessment that both the bank and the IMF "are rapidly adapting to challenge," enabling them to "provide for the poor," was dramatically different from the view delivered by the chairman of the meeting, Amir H. Jamal.
Jamal, the Tanzanian minister of finance (who played a leading role in trying to get the PLO into the sesion), leveled sharp criticism at the bank and the IMF, and also charged the richer nations with paying "lip service to free trade" while following protectionist policies.
The Tanzanian welcomed what he said was "a little flexibility" on the part of the IMF, and he paid tribute to the efforts to IMF Managing Director Jacques de Larosiere in trying to meet the needs of poor countries. But somewhat bitterly, Jamal suggested that the IMF does not understand how a poor country operates.
"If in an industrial economy a boiler explodes . . . it can probably be replaced in 48 hours," Jamal said. "With us it can be very different. If the boiler of a large, remote coffeecuring works explodes, it may take 48 week to obtain a replacement. And in the meantime, the effects on overall exports, government revenue and bank borrowing, as well as storage capacity, are significant."
In his own major address to the joint session, De Larosiere reiterated the IMF's gloomy view of the world outlook, saying that he could see "no course of policy that could make the economic situation truly satisfactory overthe next several years." He pointed out that the IMF already had a lending policy geared to "flexibility and realism," which had resulted in loans of $7.7 billion so far this year compared wth $5.6 billion for all of 1979. He implied the totals would be greater in future years.
De Larosiere attempted to strike a balance between some of the rich members, like West Germany, that see the IMF becoming merely another aid institution of questionable financial integrity -- and the pressures, such as those articulated by Jamal, for more aid and a greater role for the less developed nations in the IMF's power structure.
For the first time, the People's Republic of China is attending the session, with representatives of its own on the 22-man policy boards of both institutions. Zimbabwe has also been inducted at this session, making the total number of countries involved 141.