The Wrong Kind of Assistance
DURING the recent World Bank and International Monetary Fund annual meeting, President Clinton chastised Congress for reducing the US contribution to the International Development Agency (IDA), the soft-loan window of the World Bank.
The president joined French and Swedish officials in accusing Congress of turning its back on the poorest countries. He argued that funding IDA is one of the administration's priorities because it serves US interest and ''is the right thing to do.''
Serious issues, however, relating to IDA's use of US dollars should be reviewed - and not just as a budget exercise. The US should consider whether it is in its interest to lend money to countries that proceed with costly nuclear programs that fly in the face of US efforts to reduce nuclear proliferation.
The agency virtually gives away money donated by developed countries to the world's poorest countries to help alleviate global poverty. Through the IDA, the World Bank provides, interest-free, 35- to 40-year credits to the most impoverished countries; these loans have a 10-year grace period before repayment begins. Extended to democratic and nondemocratic governments, these loans are directed toward basic investments in farming, health, clean water, primary education, and other sectors to promote sustainable economic growth.
Under an agreement known as the Tenth Replenishment (IDA-10), 34 donor countries agreed to provide IDA with $18 billion to fund its operations for three years beginning July 1993. With $4 billion that IDA is expected to receive from repayments, the agency has a total of $22 billion to lend between 1993 and '96. The US is the largest donor to IDA-10, providing $3.75 billion - more than 20 percent of total funding. Over 70 percent of the funding is provided by seven top donors: the US, Japan, Germany, France, United Kingdom, Italy, and Canada.
Who gets IDA money? In 1994, nearly 40 percent of the 84.4 billion Special Drawing Rights in total cumulative IDA credits granted through June 31, 1994, went to China, India, and Pakistan - all nations with nuclear- weapons programs. If China, India, and Pakistan are classified among the poorest countries in the world based on population/GDP measurements, then how do they have the cash for nuclear-weapons programs?
By approving these interest-free credits, the United States and other countries are helping nuclear-capable nations finance the expansion of their nuclear industries. These countries don't have to choose between guns and butter when they spend their own money, because our money fills the gap.
Through implicit and explicit approval of the IDA credits, the US is financially supporting a threat to our own security. Is this in our national interest?
I have long supported advancing US interests in the world through trade, assistance, and international exchanges. I understand the difficult task developed nations share in improving lives and economies in the developing world. This is not only in our strategic interest, it is a moral imperative as well.
International leadership, however, involves more than simply spending money. Leadership is action based on realistic understanding of often complex strategic and economic relationships. Rather than vilifying his own country's Congress, the president should send a strong message abroad that the US will not send money to countries that underwrite their nuclear industries at the expense of their own people.
IDA may be one small program, but the message it sends undermines our national interest - and the world's interest - in securing global peace and prosperity.