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Global Cheapskates

August 31, 1986

Once again the government of the United States, alone among 33 supporting nations, has resisted a full replenishment for the International Development Assn., the soft-loan division of the World Bank that is of critical importance to the poor nations of the world.

Three years ago the Reagan Administration insisted on a three-year replenishment of IDA at a level of $9 billion when all other donors supported $12 billion. The U.S. share, set at 25% of the total, was $2.25 billion. This time the Reagan Administration has offered an increase in the American share to $2.8 billion, equal to about 25% of $11.5 billion. The other donors may yet make up the difference between this and the $12-billion target.

The success of the three-year replenishment is now further clouded by a demand from Japan for a larger voice in World Bank affairs. Japan pays almost 19% of the current IDA funding, placing it second only to the United States. Japan also is the No. 2 subscriber of capital to the bank itself, but its share in the bank is only a fraction of a percentage point ahead of the third-largest subscriber, West Germany. Votes are in proportion to capital subscription. Japan wants to raise its share in the bank by 3.2 percentage points, to give it the same relative role reflected in IDA pledges. But this has raised complex issues. An increased share for Japan would mean, in all probability, a decreased share for the United States. But Washington would then lose the veto that it now enjoys with the 20% of the shares that go with its contribution to the bank. Never mind that the veto has never been exercised, or that it is almost inconceivable that it would ever be necessary.The veto does not apply to loans or routine business of the bank, but only to charter changes-- of which there has never been one. But that does not diminish the fervor of feeling in both Washington and Tokyo.

For the U.S. Treasury Department there are contradictions. Treasury Secretary James A. Baker III has made increased Japanese support an important element of his plan to spur Third World development. In this case, both in IDA and in the World Bank, Japan has responded affirmatively. But Japan has now responded in a way that challenges the privileged position of the United States at the World Bank.

There remains the possibility that a full replenishment of IDA can be arranged before the annual meeting of the World Bank at the end of September. It is regrettable that Baker could not clear a full U.S. share of the $12-billion replenishment approved by the 32 other donors. And full support will depend on Japan's willingness to withdraw its threat to reduce its support of IDA and to negotiate separately its future contribution to the World Bank.

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