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The World Bank's Lonely Defender


Washington Outlook

THE WORLD BANK'S LONELY DEFENDER

When it comes to global networking, new World Bank President James D. Wolfensohn is in a class by himself. Good thing, because he'll need every golden connection in his Rolodex to stave off an assault on the beleaguered international lending agency by Capitol Hill Republicans.

As head of his own Wall Street investment bank until last spring, the 61-year-old Australia native rubbed elbows with potentates of commerce and government alike. So he'll feel right at home when officials from 178 nations converge on Washington for the World Bank's annual meeting on Oct. 10-12. But much of Wolfensohn's schmoozing will be aimed at shoring up global support for the International Development Assn., a $5.7 billion, interest-free lending program for the world's poorest nations. Why? GOP budget-cutters in Congress are likely to halve the $1.2 billion annual U.S. contribution to IDA--a move that Wolfensohn warns could throw "the whole field of development in turmoil."

MANY CASUALTIES. Such warnings matter little to Hill conservatives, who are salivating at the chance to weaken multilateral institutions such as the World Bank. Many Republican lawmakers are neo-isolationists who view the bank as a tool of world-government types. As avid free-marketeers, they also resent government lending. And given the current imperative to rein in spending, foreign aid is a prime candidate for cuts.

But the casualties go beyond IDA. Congress also plans to cut off U.S. funding for the African Development Bank and sharply reduce pledges to a similar Asian fund. "We can't ask the people in this country to sacrifice while we're fully funding the needs of Third World countries," says Representative Sonny Callahan (R-Ala.), who chairs the House appropriations subcommittee for foreign operations.

To Wolfensohn, much more is at stake than federal dollars, however. Since the end of World War II, there has been a bipartisan consensus in the U.S. to be the lead sponsor of international lending institutions, if for no other reason than to assert American influence around the globe. Now, if the U.S. abandons its commitments, other donor nations will follow suit, Wolfensohn fears. Already, France and Germany are threatening to cut off future IDA funds and form a Eurocentric program--which could cut U.S. suppliers out of procurement contracts. That scenario gives World Bankers the willies. "This could be disastrous," frets Eveline Herfkens, a Dutch member of the bank's executive board. "If the U.S. is not going to foot its share of the bill, it could be impossible to sustain the framework for multilateral lending."

NEW PET. Congress' reluctance to cough up aid for IDA also may spell trouble for a new Wolfensohn pet project. He had hoped to use the annual meeting to lobby for a debt-forgiveness fund for the poorest nations, such as those in sub-Saharan Africa. But the new plan is drawing flak from bank and government officials who fear that financing for a new aid project would simply suck funds from existing programs, including IDA.

Democrat Wolfensohn has lined up one powerful ally: Bill Clinton. When Senate GOP leaders asked the Administration how it would allot an uncommitted $440 million in foreign aid, the President suggested that nearly half go to IDA. Hill staffers see Wolfensohn's velvet touch at work: In August, he threw a bash for Clinton's 49th birthday at his vacation home in Jackson Hole, Wyo. "Now we know the value of hosting a birthday party for the President," muses one House GOP staffer.

But Wolfensohn, an accomplished cellist, will find Hill Republicans much harder to play. Wolfensohn's success at the World Bank depends on his ability to win over critics--who increasingly think the bank is out of tune with the times.EDITED BY OWEN ULLMANN By Dean Foust


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