US initiative melts 'glacier' in debt talks

The North-South dialogue between the rich and poor nations will resume next spring in a modest way. At the surprise initiative of the United States, a group of finance ministers from both industrial and developing nations agreed on a special global conference in Washington next April to consider world economic issues.

The gathering could be the most ambitious of its kind since the conference of heads of state in Cancun, Mexico, three years ago.

''It is a movement in what had become a bit of a glacier,'' said an Australian official.

Since Cancun, the Reagan administration and the leaders of other industrial nations have avoided other such wide-ranging parleys on North-South issues. They have preferred to deal with international economic issues through regular bilateral channels or existing multilateral institutions, regarding these as both more effective and more controllable.

Next spring's meeting was approved over the weekend by the Interim Committee of the International Monetary Fund. The Development Committee of the IMF and the World Bank was expected to follow suit by late Sunday. These groups meet twice a year, once before the annual meetings of these powerful institutions and again each spring. This year's annual meeting begins today.

Next April's sessions of these groups will be different in that the subject matter will be somewhat broader than usual. They will discuss not only external debts of the developing countries, international capital flows, and the economic disciplinary role of the IMF, but trade.

Some developing countries see the get-together as preparation for another economic summit of heads of state, on the order of Cancun.

Bernardo Grinspun, Argentina's minister of the economy, spoke of the need ''to put all these things together'' with the aim of modifying the framework of the international monetary system to give the poorer countries a better deal. He called the weekend agreement on the April meeting a ''compromise.''

At a gathering a week earlier in Mar Del Plata, Argentina, 11 Latin American nations had urged a high-level meeting with Western governments in a forum other than the IMF-World Bank one. These two organizations, especially the IMF, often impose uncomfortable economic discipline on developing countries. The Latin American nations preferred a meeting in a ''different atmosphere,'' as one delegate put it.

The finance ministers of the Commonwealth nations, meeting in Toronto last week, sought to have the discussion in the Development Committee where a minister from a developing country holds the chair.

In the Interim Committee, an industrial-country minister presides. The proposal further called for an expansion of the committee to include officials of the United Nations Conference on Trade and Development and others considered more sympathetic to the developing countries.

Pranab Kumar Mukherjee, India's minister of finance, objected to the weighted voting in the IMF and the World Bank, which favors the economically powerful industrial countries. Further, he would prefer a universal body where all nations are represented for a renewed North-South dialogue.

The industrial countries favor continuing the discussion in the IMF-World Bank system. There they have control, having sufficient voting power to veto any plan they dislike, such as any tendency toward a debtor's cartel.

The American initiative is considered to be an attempt to make amends for its unpopular position on population issues at the recent population conference in Mexico City.

The Interim Committee was also marked by the usual struggle between those nations advocating more financial discipline, and those urging greater generosity in the provision of international reserves and thus more time for economic adjustment when a nation gets into balance-of-payment difficulties.

In one area, the disciplinarians clearly won. The industrial nations (except for France) blocked a new issue by the IMF of $15 billion of special drawing rights, an international currency. The SDRs were sought by the Group of 24, representing the developing nations. A portion of that ''new money'' could have been used to pay their bills with the industrial nations.

In a second area, the US and some other industrial nations got only a symbolic victory. The amount nations could borrow from the IMF under an ''enlarged access'' program was trimmed by a net amount ranging from 7 to 15 percent. The US also succeeded in having it noted that this program was ''temporary.''

However, in real terms the change is not expected to mean much. An escape clause will permit the IMF to provide more money to a nation in serious balance-of-payments difficulties if the IMF's directors decide it has tackled its economic problems in a way that deserves special help.

On Sunday, the World Bank issued a special report on sub-Saharan Africa. It spoke of the need for a joint program of action to prevent continued deterioration in the economic and social conditions of the black African nations.

With US elections coming up, the World Bank did not propose any dollar numbers for the program. But it indirectly suggested that at least $2 billion extra would be needed if the resources flowing to the sub-Saharan nations (excluding South Africa) are not to shrink.

The Reagan administration has its own $500 million ''action program'' for black Africa now before Congress. Some $75 million of the extra money would be allocated in fiscal 1985, which begins at the end of this month. The rest of the sum would be spread over the following three or four years.

A State Department official said he expected Congress to act on the proposal this week.

If it is approved, he said, the US would welcome the World Bank coordinating the use of the money in Africa with the aid programs of other donor countries.

The US plans to use the funds as an incentive to African nations to improve their domestic economic policies. The money will be given to only four or five countries making reforms that the US wants to encourage.

France had earlier proposed a new separate fund for Africa. But this was rejected by the United States and some other industrial nations as an unnecessary proliferation of international development agencies.

The United States has been suggesting that a World Bank special agency, the International Development Association, reallocate money from India and China to African nations.

However, this is not expected to go over well with Japan because of its special interests in China, or with Britain, which has a special relationship with India.

About these ads
Sponsored Content by LockerDome

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...

Save for later

Save
Cancel

Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items

OK

Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items

OK

Failed to save

You have already saved this item.

View Saved Items

OK