USA: World Bank and IMF Have Stake in Elections

Publisher Name: 
Inter Press Service

WASHINGTON -- The differences may not be much, but it will matter for developing countries which of the candidates -- Vice President Al Gore or
Texas Governor George W. Bush -- becomes the next US president.

Bush, the Republican candidate for the Nov. 7 US presidential elections, is
more leery of the current role of the International Monetary Fund (IMF) and
the World Bank, analysts say.

This may lead his administration to push for a scaling down of the institutions' roles in developing countries, especially if he obtains a
Republican majority in both houses of Congress.

''The Bank and IMF have increasingly become unpopular, it is taxpayers who
finance these organisations, but activists hope they will have more powers to
clip the institutions' influence, especially under a Republican administration,'' says Robert Naiman of the Centre for Economic and Policy
Research (CEPR).

Naiman points to the passage of a law in late October, which restricts the IMF and World Bank from insisting that countries charge user-fees for certain
social services, as a sign of things that may come under the more conservative
Republicans.

The 2001 foreign-aid bill freed 435 million dollars to pay for US obligations under the IMF and World Bank's Heavily Indebted Poor Countries Initiative
(HIPC). Under the bill, the US representative on the IMF and Bank
boards is required to oppose user fee conditions for basic health care or
education services. Congress also increased funding for HIV/AIDS prevention
programmes to about 300 million dollars -- a 50 percent rise.

Bush has said that while the IMF has a role to play it must not be viewed
as a way to say to world bankers, '' 'If you make a bad loan, we'll
bail you out.' It needs to be available for emergency situations''.

Gore has been less clear on how his administration will relate to
the Bretton Woods institutions, but it appears he will continue the current
relationship. He said during one of the presidential debates, however, that he
would look at curbing corruption in the agencies.

He has said he may consider increasing US funding to the agencies
which are currently at an all-time low in popularity as activists, opponents
of globalisation and poor people in developing countries increasingly
question their role.

Gore says he will seek greater efforts, through the Bank and the other multilateral development banks, to provide adequate social safety nets for
economies facing turmoil. Gore also supports calls by the Group of 7
industrialised nations for stronger IMF efforts to contain financial crises.

The vice president has come out in support of the Asian Growth and
Recovery Initiative, a multilateral initiative involving the World Bank and
Asian Development Bank to promote financial restructuring in the region.

''There is potential for more movement towards reforming the international
financial institutions with either of the candidates,'' says Naiman.

But how the developing world will fare during the next US presidency does not
depend only on who occupies the White House, according to Barry Bosworth of
the influential Washington think-tank the Brookings Institute.

What matters most for developing countries is whether the
president has a Republican or Democratic Congress, he says.

''Perhaps the worst-case scenario for developing countries would
be Gore as president, with a Democratic majority in Congress,'' says
Bosworth. ''Such a
combination would push for global labour and environmental
standards in trade
deals more than was true of the Clinton administration or
presumably more than
would be true of Bush and a Republican congress.''

An announcement by President Bill Clinton at the failed World
Trade
Organisation (WTO) summit in Seattle last year that the United
States could
sanction countries that violate labour standards was one of the
factors that
led to tensions at the negotiating table.

A Gore/Democrat administration would likely have to accommodate
its powerful
trade union constituency and the green lobby, analysts say. Gore
has said in
trade he will push for ''standards to end child labour, to prevent
the
exploitation of workers and the poisoning of the environment''.

Analysts say this could lead to less favourable trading
arrangements for a
number of major emerging economies that rely on cheap labour and
use under-age
workers to compete in the global market.

A Gore/Republican combination would be an extension of the present
status quo.
The House of Representatives consists of 222 Republicans, 211
Democrats and 2
Independents. The Senate comprises 55 Republicans and 45
Democrats.

''With a Republican Congress, Bush would not be felt, there are
more stronger
Republican characters than Bush and he would be led by Congress,''
says
Bosworth, an international trade specialist.

Bush too would be under pressure to accommodate conservative
Republicans some
of whom welcomed the Meltzer Commission's recommendation for a
reduced role
for
the Bretton Woods institutions. The commission was set up by
Congress to
report
on the reform of the Bank and IMF.

The Commission said the Bank should pull out of developing
countries and
abdicate its role to regional banks such as the Asian Development
Bank. One of
the arguments it used was that 70 percent of the Bank's non-grant
lending is
concentrated in 11 countries, with 145 other member countries left
to scramble
for the remaining 30 percent.

It noted that the failure rate of Bank projects was 65-70 percent
in the
poorest countries and concluded that the institutions were not
efficiently
executing their roles.

On the campaign trail, Bush lashed out at the IMF for misusing
taxpayers'
money
to finance corrupt regimes. During the second of three
presidential debates,
Bush pointed to Russia as an example of a country that has
squandered IMF
funds
and charged that aid money ''ended up in Viktor Chernomyrdin's
pocket''.

Former Russian prime minister Chernomyrdin denied these claims and
threatened
to sue Bush for slander. While the IMF admitted it had mishandled
its 25
billion dollars in loans to Russia during the 1990s, it dismissed
the charges
against Chernomyrdin.

In the area of trade, both candidates have promised to seek fast-
track trading
authority from the US Congress as soon as they come to power. The
authority
facilitates presidential negotiations of trade agreements through
expedited
congressional approval, limiting amendments.

The House of Representatives defeated President Bill Clinton's
request in 1998
- the first time in 25 years a president has not had such powers.

The two candidates have not been specific on their future trade
preferences,
but both want to see China enter the WTO. The Texas governor also
supports
Taiwan's early entry into the WTO.

If he seeks new trade arrangements Bush is expected to place
priority on Latin
America, although he will have to go past the isolationist
sections of his
party. Bush has said in trade, he would be led ''by US
interests''.

Both candidates support the expansion of the North American Free
Trade
Agreement (NAFTA) with Canada and Mexico, to accommodate the
entire Western
Hemisphere.

But because US foreign relations have hardly appeared on the radar
of the
campaign for the 43rd US president, both major candidates have
given little
detail on their pronouncements. It is also unclear how much of
what they are
saying is campaign talk.

Gore is expected to continue the policy of the Clinton
administration that saw
the approval of 270 US trade agreements including NAFTA, the
establishment of
permanent normal trade relations (PNTR) with China and efforts to
increase
trade with Africa.

But Bosworth warns that if the Democrats take over Congress with
representative
Richard Gephardt as speaker, he may choke the passage of trade
agreements
judging from his record of protectionism.

Bush, on the other hand, has said that Africa ''doesn't fit into
the national
strategic interests''. His campaign has described HIV/AIDS, which
is ravaging
sub-Saharan Africa and which the Clinton administration has said
poses a
threat
to the United States, as among the soft issues in his foreign
policy thrust.

But, it remains to be seen whether as president, he will be
indifferent to the
fact that India, China and Russia may soon have rates of HIV
infection
approaching Africa's.

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