FIRST, A WORD in defense of the Reagan administration, currently in the role of the nay- sayer at the international money meetings in Toronto. Despite all its strictures against intervention, it intervened rapidly, skillfully and successfully last month when Mexico fell into serious currency troubles. It is difficult to imagine what might have happened if the United States had not acted.
And now a question for the Reagan administration: would it not be wiser, from the American point of view, to run rescue operations on an international basis in the future, drawing immediately on all the rich countries' resources? And would it not also be better to try to anticipate this kind of emergency with some judicious lending guided by an international consensus?
The World Bank and the International Monetary Fund are the two international agencies that the world's governments have developed over the past 38 years to deal with the kind of strains that are now developing. The United States is currently resisting the necessary exansion of lending authority for the Bank and the Fund, on grounds that too much lending might set off another inflationary spending spree. That risk is not negligible. But it is very small compared with the cost of having inadequate resources to meet the demands ahead.
In the first wave of oil price increases in 1974-75, the OPEC surplus shot up to $68 billion a year. If you've been following the arithmetic of American budget deficits, that may not seem dramatically high. But it was nearly twice the total of all the current deficits of all the developing countries put together, from India to Haiti. The OPEC surplus, money that the oil exporters took in but didn't spend, fed the pool of capital from which the commercial banks lent to the developing countries -- whose deficits were rising sharply because of the higher costs of oil.
Over the next several years, as the OPEC governments learned to spend faster, their surpluses fell. But their customers' deficits didn't. With the next rise in oil prices in 1979, the OPEC surpluses shot up higher than ever, to $116 billion, but are now falling, astonishingly, to zero. That great stream of money into the world's banking system has gone dry. But the price of oil is still high, the developing countries' deficits are enormous and the loans that got them through the last recession are coming due.
The world's trading and banking system is not self-stabilizing. It requires leadership and intelligent tending. The secretary of the Treasury, Donald T. Regan, was saying plaintively in Toronto this week that the United States can't do it all. How true. That's the case for strengthening the World Bank and the IMF.