At the last annual meeting of the International Monetary Fund and the World Bank in Seoul, South Korea, a year ago, U.S. Treasury Secretary James A. Baker III announced an ambitious plan to resolve the Third World's $960-billion debt problem.
The three-pronged initiative was designed to foster economic growth in indebted countries, expand the influence of international agencies such as the World Bank and encourage commercial banks to provide new loans to the Third World.
"The strategy was right and it is indeed working," James Conrow, the Treasury Department official in charge of developing nations, said in an interview last week.
"Incomplete," said one of Baker's more generous critics, Peter Hakim, staff director of Inter-American Dialogue, a Washington group that promotes cooperation between the United States and Latin America.
"What Baker plan?" asked a cynical East Coast banker, who said the Baker speech in Seoul was intended primarily to quiet Latin American calls for debt repudiation and coerce reluctant banks into lending more billions to their heavily indebted clients.
Debate over the success or failure of the initiative will be one of the themes of this year's IMF-World Bank annual meeting, which brings financial and economic officials of 151 member countries to Washington this week.
But many expect the Third World debt crisis to be overshadowed by serious conflicts among the major industrial nations over currency fluctuations, interest rates, protectionism and trade. Japan and West Germany will come under vigorous U.S. pressure to stimulate their economies and increase their purchases of American goods.
Dominating the cloakroom sessions and cocktail party talk will be speculation about who will succeed IMF Managing Director Jacques de Larosiere, who said last week that he will step down at the end of the year after eight years in the visible and difficult post.
Closely watched also will be Barber Conable's first major address as president of the World Bank. He took over the international development bank in July after the departure of A. W. Clausen, the former Bank of America president whose five-year tenure as head of the bank was considered administratively competent but less than successful in enhancing the bank's stature.
The appointment of Conable, a former congressman from New York, was welcomed by Third World delegates to the bank because of his knowledge of official Washington and his presumed ability to persuade U.S. policy-makers of the need for additional resources for the bank. His speech will be read as a blueprint for bank policy and emphasis over the next several years.
The IMF and World Bank are sister agencies that grew out of the Bretton Woods international monetary conference in 1944.
The IMF was created to ensure orderly exchange rate and balance of payments systems among member states, while the World Bank, formally known as the International Bank for Reconstruction and Development, would finance the postwar rebuilding of Europe and Japan and modernization of the Third World.
The role of both agencies has shifted markedly in the intervening years. The IMF today is the lightning rod for foreign debt issues, enforcing austerity programs on heavily indebted nations as they try to balance their external accounts.
The World Bank is shifting its emphasis from strictly development projects--ports, irrigation systems, highways--to lending conditioned on Third World countries' adopting major market-oriented structural changes.
The meeting of the IMF and World Bank is the most important yearly gathering of world economic policy-makers.
The speeches and plenary sessions often set the tone for the coming year's discussions of global monetary issues.
Baker's speech last year, for example, was the pivotal event of the Seoul meeting and dictated the terms of policy debate for months afterward.
Key Private Sessions
But as important as the public meetings and the formal discussions are the private sessions and social functions that are read for clues to shifting ties and strategies.
Guest lists are studied for indications of possible future alliances. The declining lavishness of the receptions given by major banks is seen as a sign of increasing unwillingness to lend to the Third World. The appearance of Federal Reserve Board Chairman Paul A. Volcker can make or break a party.
In those private, informal discussions, two issues are expected to dominate: speculation about De Larosiere's successor and industrial country coordination--or lack of it--on economic and monetary policy.
"All the substantive issues will be overshadowed by the fact that De Larosiere is resigning," said Christine A. Bogdanowicz-Bindert, an international investment banker with Shearson Lehman Bros. and a former IMF official. "There'll be a lot of talk in the corridors, but I think it would be premature for the U.S. government to announce who is the replacement."