It's not charity
From the time he came into office President Reagan has made no bones about how he thinks the poor nations of the world can best be helped. Stress the private sector and shift the balance from multilateral aid to bilateral agreements with countries deemed important to US strategic interests. It is therefore noteworthy that experts in his own administration have found the international development organizations to be far more useful than some might have thought. A study by the Treasury Department released recently gives the World Bank, the Asian Development Bank, and other multilateral lending institutions high marks for efficiency and effectiveness. So high, in fact, that it should prod the President to alter his perceptions - and foreign aid policies.
Among Treasury's findings:
* Bilateral aid and multilateral aid complement each other. Multilateral assistance primarily serves long-term US interests, is cost-effective, and encourages market-oriented policies in the developing countries. It will remain ''highly important'' for the 1980s.
* The ''soft loan'' activities of the MDBs (multilateral development banks), which are targeted on the poorest countries, are particularly effective in promoting US humanitarian interests.
* The MDBs have served US commercial interests well.
* Contrary to critics, the MDBs do not ''bail out'' the commercial banks by providing debt relief; their lending is tied primarily to the foreign exchange costs of specific projects.
* A high proportion of the lending is not competitive with the private sector , and the policy prescriptions recommended for poor countries are along market lines.
* Private capital markets by and large cannot substitute for MDB financing. Relying fully on private lenders, moreover, would favor the more advanced developing nations and be a ''serious disadvantage'' to the poorest and middle-income countries.
* World Bank aid emphasizes primarily economic growth through capital investment and not ''redistribution'' of income.
* MDBs have made major efforts to ensure that the poor - not the rich - receive a greater proportion of benefits from aid projects.
* Loans for MDB projects in general are well prepared and the projects themselves well supervised.
To be sure, the Treasury probers did find some areas warranting criticism. For one, they recommend more emphasis on loan quality rather than loan quantity, i.e. more selectivity and a closer link between loan programs and effective economic policies in the countries being helped. They also call for improving ''maturation/graduation'' policies - that is, phasing out hard loans to borrowers no longer in severe need and nudging the ''richest'' of the poor soft-loan borrowers (India, say) into the hard-loan category. But the overall conclusion is a positive one. The World Bank and others are not, it turns out, socialist organizations.
In light of the Treasury report, one hopes that in the years ahead it will be reflected in the administration's actual policies. It is not at the moment. Present US foreign aid policy is heavily weighted in favor of the Middle East and countries where the US has political and strategic interests. Meantime such an essential aid tool as the World Bank's soft loan agency, the International Development Association, has fallen under the budget ax. The US is way behind in its commitments to IDA, providing less money [750 million in fiscal 1982 as against $1.08 billion pledged under the current replenishment] and stringing out the payments over longer periods (five years instead of three). The pity of it is that the needs of the poorest countries remain immense and that, under the present IDA replenishment agreement, the other donor countries must scale back their own contributions in proportion to the US reductions. The crucial leadership which America has provided in the aid field since World War II thus risks being eroded.
Ironically, the slippage in US support comes at the very time when there is solid evidence of progress in the developing world. The very fact that administration officials can urge some countries to ''graduate'' out of the MDB system is heartening evidence of such growth. It bears reminding, too, that multilateral development assistance to poor nations is not a charitable giveaway. It is sound investment for the future. Some 40 percent of all US exports now goes to the third world and trade is growing by leaps and bounds. Yesterday's impoverished nations are today's healthy competitors. Lifting countries economically, furthermore, can be the best way of fostering political stability and preventing the kind of revolutionary turmoil now rampant in Central America.
Can the United States afford not to be a weighty participant in multilateral aid for the up and coming nations of tomorrow?
