- The Washington Times - Thursday, July 19, 2001

Britain and Germany, two of the largest contributors to the World Bank, said yesterday they oppose President Bush's proposal that the international financial institution give away billions of dollars to poor countries.
"It's not something that we agree with," Beverly Warmington, spokeswoman for the British government's Department for International Development, told The Washington Times. "The World Bank is actually a bank and there are development agencies to give grants. It's important that the World Bank work alongside them instead of compete with them."
Michael Hofmann, director general for Germany's Ministry of Economic Cooperation and Development, said Mr. Bush's proposal lacked an important element.
"What was surprising in his speech was I would have expected him to say, 'And I have already asked Congress to increase the American contribution by the number of X,' and then the whole thing would have had a very different melody," Mr. Hofmann told The Times.
"In a time when none of the biggest countries, the G-7 countries if you like, at the moment is indicating that they have greater leeway to increase their contributions, such a suggestion can mean only one thing: reducing the business of the bank," he said.
Mr. Bush proposed Tuesday that the World Bank increase to 50 percent the amount of money it gives in grants to poor countries through its International Development Association (IDA). The bank now lends about $6 billion yearly to poor countries through the IDA. Mr. Bush wants to increase grants — now less than 5 percent of the funds directed to poor nations — to $3 billion annually.
The United States provides the largest amount in contributions to the World Bank's fund for poor countries — $803 million this year — while Germany provides $423 million and Britain $281 million.
White House officials said the president's proposal would cost donor countries no more money for the first 10 years. But loans to poor countries already have a 10-year grace period on repayment, which means the real cost of Mr. Bush's proposal would come well after he is out of office.
Bush spokesman Ari Fleischer said Monday the president did not intend to seek more U.S. funds from Congress.
"If we would have such a high amount of grants involved, that would mean that all of us would have proportionally to increase our contributions," Mr. Hofmann said. "If it doesn't increase the liability of donor countries, where should the money come from?"
Miss Warmington said Mr. Bush's proposal would affect the available balance of the World Bank, which says it gets 40 percent of its loan money for poor countries from debt repayment.
"It would reduce the future capacity of IDA to support poor countries because IDA's partly financed by recouping previous credit," she said.
She also said the proposal defeats the purpose of the "Heavily Indebted Poor Countries" program, under which 23 countries have been relieved of $34 billion in loans.
Countries such as Austria, Denmark, Finland and the Netherlands are also strongly opposed to increasing grants versus loans, Miss Warmington said.
World Bank officials said after Mr. Bush's speech on Monday that donor members — especially the G-8 nations, Germany, Italy, Canada, Britain, France, Japan, Russia and the United States would have to dramatically increase their contributions to the IDA. The bank is seeking a capital increase for the IDA, with final agreement set to emerge in early 2002.
Former Republican presidential candidate Pat Buchanan said the United States should pay more attention to past performance by the World Bank.
"We have wasted or lost hundreds of billions of taxpayer dollars. I've got a lot of respect for Mr. Bush, but compassionate conservatism is starting to sound like Great Society liberalism," he said.
"This would be something you would expect a Democratic administration to do. It really shows a lack of imagination," Mr. Buchanan said.

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