By Jim Lobe
WASHINGTON, Oct 9 1995 (IPS)

In a rare joint appearance, the head of the World Bank and three major international non-governmental organisations (NGOs) will appear at a news conference Wednesday to plead for the life of one of the Cold War’s most venerable institutions.

The International Development Association (IDA), born in the thick of the East-West conflict as a means by which the West could funnel more aid to shaky clients in the Third World, is on the edge.

The largest source of concessional loans to the world’s poorest nations, IDA is now threatened with death. Its executioner: the same U.S. Congress which gave it birth 35 years ago.

“IDA is going to be the big news,” says World Bank external affairs chief Mark Malloch-Brown of this week’s annual meeting of the Bank and the International Monetary Fund (IMF) which will include talks among representatives of IDA donors. The problem is, it may be too late.

During the last two years, almost half of IDA’s funding has gone to countries in sub-Saharan Africa, about a quarter to South Asian nations, and another 17 percent to East Asia, primarily China.

The remaining seven percent has gone to a smattering of poor countries in Latin America, the Caribbean, Eastern Europe, and Central Asia.

The concentration of IDA lending on Africa may help explain the interests of the three NGOs which will join Wolfensohn Wednesday.

They include the Forum of African Voluntary Development Organisations (FAVDO), Oxfam International, and InterAction, a coalition of 160 U.S. relief and development groups, some of which work closely with the Bank in Africa.

But other NGOs argue that the multilateral institution uses IDA funds to impose structural adjustment and should therefore be abolished.

Randy Hayes of the U.S.-based Rainforest Action Network says “IDA should be completely abolished because its policies hurt the poor and the environment. New mechanisms should be devised.”

Republican-led lawmakers are about to cut the U.S. contribution to the last year of IDA’s three-year, 18-billion-dollar Tenth Replenishment by about half — from a request by the President Bill Clinton of almost 1.4 billion dollars to somewhere between 550 and 750 million dollars.

Exactly how much will be cut may be announced on the same day that the Bank and the NGOs, are planning their joint appeal.

Worse, the Republican leadership has so far shown no inclination to even consider funding for IDA-11, which is supposed to take effect Jul. 1, 1996.

Because Washington is IDA’s single biggest donor, providing 20 percent of its resources, a major cut in its contribution could spell disaster, especially in view of the right of the other 31 donors to reduce their own contributions proportionately.

“Instead of six billion dollars (per year), we could only get 2.7 or 3.7 billion dollars,” warns the Bank’s new president, James Wolfensohn. That is, if the agency survives at all.

Citing Washington’s failure to meet its full obligation, Germany and Canada, two other major donors, have already limited their own contributions for the second year of IDA-10. Other countries are likely to follow suit in the third year, according to Bank sources.

But if Congress fails to appropriate anything for IDA-11, the result could be catastrophic. Contingency plans, which call for using almost four billion dollars in non-donor contributions, such as repayments on past loans and diverting funds earmarked for large borrowers who have failed to meet loan conditions, are being prepared.

Almost 80 countries with a total population of about 3.2 billion and per capita annual incomes below 865 dollars, are eligible to borrow IDA credits, which charge an annual fee of 0.75 percent. Repayment terms are generous — up to 50 years.

Despite the graduation over the last generation of 20 countries from IDA to the World Bank’s normal lending window, IDA’s ranks continue to grow.

Since 1993, seven new countries have joined, including two African nations — Cameroon and Congo — whose per capita incomes had plummeted to below-IDA levels, and two older members, Cambodia and Vietnam, restored their eligibility after long being denied funding.

Even war-ravaged Bosnia-Hercegovina may now be eligible to receive IDA loans.

That has made demand on the agency higher than ever. But the political will for providing the aid in donor countries, especially in the United States, is lower than ever.

The U.S. attitude earned Congress an unprecedented appeal by the group of Third World finance ministers (the Group of 24) who caucused here this weekend in advance of this week’s IMF-Bank meeting.

In its final communique, the G-24 “urged the U.S. Congress to reconsider the magnitude of U.S. contributions to IDA-10 in order to attain the level originally committed. Such reconsideration should take into account not only the enlightened long-term self- interest of donor countries, but also the moral and social issues involved.”

The Third World will not be entirely isolated. Both Bank President Wolfensohn and his IMF counterpart Michel Camdessus are warning that a sharp reduction in IDA could have disastrous consequences, especially for those poorest countries which are shouldering huge debt burdens.

Europeans and other donors are also expected to hector the United States during next week’s meetings. “There is a feeling that if the U.S. doesn’t want to pay, it should go play in another sandpit,” Malloch-Brown told reporters last week.

When last the United States fell short on its IDA obligations during the administration of former President Ronald Reagan, the other donors set up a special fund within IDA which barred the United States from procurement. Bank officials think something similar may still be possible but worry that the U.S. shortfall then was much smaller than now and thus far easier to make up.

Similarly, foreign aid is less politically popular today among virtually all donor electorates than it was 10 years ago.

That is in part why some NGOS will join hands with the Bank.

“It would be one thing if they opposed IDA because its adjustment policies are unfair to the poor,” says one NGO lobbyist on Capitol Hill. “It’s something else when they oppose it because they just don’t like multilateral institutions and foreign aid.”

“We’ve had a lot of input from our colleague organisations, especially in Africa,” says Paul Nelson, an analyst of Church World Service/Lutheran World Relief, which is part of InterAction.

“They say that ‘if they don’t see any other source of concessional aid on the horizon, they don’t want us to take a position that could undermine IDA.”

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