While the Reagan administration may ultimately squander billions in seeking an elusive military solution in Central America, it is trying to save chicken feed by paring back subsidized loans to Africa, Asia and other poverty- stricken areas around the globe.
When writing out checks for the military, Uncle Sam willingly plays the role of Santa Claus. When it comes to showing compassion for the less fortunate--even when our own self-interest is tied up in their welfare--we turn into Uncle Scrooge.
The latest evidence of this penny- wise pound-foolishness is a rigid ceiling of $750 million a year that the Reagan administration is placing on its commitments to IDA, the soft-loan affiliate of the World Bank. Because more attention has been focused on the debate over an extra $8.4 billion for the IMF, the shortchanging of IDA (although just as important to Third World survival) has been obscured.
IDA, which stands for the International Development Association, makes long-term, no-interest loans with just a small service fee to the money pool, three-fourths of which is contributed by other rich nations, is the main source of subsidized official aid to these countries.
Now the Reagan administration wants to cut 25 to 30 percent from the $1.1 billion annual level the Carter administration agreed to for the last IDA program. And under the burden-sharing agreement with other donors-- roughly 25 percent for the United States, 75 percent for all others--every $1 slashed by the United States means a $4 total reduction in the lending pool.
World Bank President Tom Clausen correctly says that to ignore the massive economic problems of the Third World by cutting IDA funds is to invite global political instability. "Almost every flashpoint of East-West confrontation in the last 20 years has been in the Third World," Clausen argues.
Yet, in Tokyo last week for a meeting of IDA donor nations, such instability and confrontation are exactly what Treasury Assistant Secretary Marc Leland risked, pleading that Congress would never appropriate more than $750 million a year for IDA.
This ceiling would effectively limit the total IDA program beginning in mid- 1984 to $3 billion a year, or $9 billion for a three-year term. Leland's arrogant take-it-or-leave-it attitude (he didn't even stay for the full meeting) was bitterly resented by the others, who had come prepared for a real negotiation.
Leland's message was that the Reagan administration's mind was made up: if the other donors wanted to put in more than their usual shares, that was up to them. But that, of course, would undercut the concept of fair burden- sharing, which underlies all multilateral lending programs.
Snapped the French delegate--who noted that France's economic problems were at least as bad as the United States': "This is a disastrous message for developing countries."
The U.S. contribution to the current three-year IDA program (known as IDA-6) was originally budgeted at $3.124 billion, or 27 percent of a $12 billion total. But so far, Congress is short $1.1 billion on its $3.124 billion promise.
In Tokyo, the World Bank proposed $16 billion for a three-year IDA-7 program, barely enough, considering inflation over the past three years and the need to help a new client, China, with its more than 1 billion people.
As against the rigid $9 billion proposal by the United States, all of the other donors said they were willing to discuss a replenishment ranging from $12 billion to $16 billion over three years--assuming that the United States carried its proper load.
In the real world, the Reagan administration can force the total down to $9 billion if it adamantly clings to its $750 million annual ceiling. Congress may not approve such a low figure for five years, as Leland suggested the administration would like. But historically, Congress doesn't top an administration's money recommendations.
The result would be to create extreme hardship in Bangladesh and sub-Saharan Africa. It would slow down the ability of India and China to attack poverty. All over the Third World, it would harden and confirm existing harsh views about the United States.
But Democrats in Congress think that the Reagan crowd is prejudging the issue. What Congress may understand better than the troglodytes in the Reagan administration is that larger appropriations for IDA are in the self-interest of the United States.
In 1981, nearly 40 percent of U.S. exports went to developing countries. Since then, sales to the Third World countries have been shrinking. Thus, cutbacks in aid affect our own economic well-being, in addition to ensuring a continuation of human misery that could be alleviated.
Why is that so hard for the Reagan administration to understand?