The annual Spring Meetings of the World Bank and the International Monetary Fund (IMF) that concluded on Sunday made an elaborate effort to impress the Donald Trump administration that they were of value to his plans for America but there is no evidence that it worked.
Senior WB officials speaking on background told The Hindu that there was a pointed attempt to reassure the largest owner of the bank - the U.S has 16 percent stake — that the institution is not merely relevant, but even essential to tackle many issues that Trump administration finds critical for the country. “On the other hand, countries were also looking for some signals from the Trump administration at the meeting,” he said. Treasury Secretary Steven Mnuchin and White House National Economic Council Director Gary Cohn spoke at the platform, but neither said anything reassuring about the future of the Bretton Woods Institutions.
President Donald Trump’s budget draft proposes to cut U.S support for multilateral development banks over the next three years by $ 650 million. U.S development assistance through the bank has already shrunk to its lowest, before Mr. Trump took over. In September 2016, of the $ 75 billion that the WB raised for development assistance for the next three years, the U.S has committed only $ 7.5 billion, 10 per cent of the total. The U.K is the top donor and after Brexit, the country has only increased its global commitments through the Bank, an official said.
The U.K has committed 60 million UK pounds for the Global Concessional Financing Facility (GCFF) of the total of over US$370 million in donor pledges to Jordan and Lebanon for hosting refugees in the Middle East, the Bank announced last week. The target is to raise over five years US$1 billion for these two countries and an additional US$500 million for potential future refugee crises in middle income countries across the globe. “This is part of of Britain’s ‘global Britain’ approach after Brexit,” the official said.
World Bank President Jim Yong Kim has started emphasizing the ‘humanitarian-development-peace nexus’ in the Bank’s international engagement, in a change from the Bank’s traditional development approach. In tangible terms, this translates into an increased willingness by the Bank to intervene in humanitarian crises, along with UN and non governmental aid agencies. Mr. Kim and U. N Secretary General met over the weekend to buttress the agenda. The second focus point is the getting private funds into development financing. “There are trillions of dollars sitting on the sidelines, earning little interest, and investors are looking for better returns,” he said, of how the Bank could facilitate a global development architecture to tap into these resources. He said he discussed this idea with Mr. Trump and he was very impressed.
IMF Chief Christine Lagarde also expressed confidence that the new administration would be supportive. "From the various contacts that I've had with the (Trump) administration so far, I have every reason to believe that we will make progress, that we will cooperate all together in order to support and indeed improve the system as we have it," she said during the meetings.
The institutions were careful to avoid a confrontation with the Trump administration. In a communique in October - when the U.S was in the midst of the election campaign - the IMF had called all nations to "resist all forms of protectionism.” After the Spring Meetings, it only warned against "inward-looking policies,” taking a milder approach and avoiding a head on collision with the Trump administration. But several participating ministers, including India’s Arun Jaitley, did speak about the risk to global from protectionist policies.
Mr. Cohn reiterated Mr. Trump’s campaign agenda at one of the sessions."If you want to insist on having a tariff on a product - which we prefer you not - the president believes that we should treat you in a reciprocal fashion and that we should tax your product coming into the United States. That is free, that is open, and that is fair."
AIIB
While the Trump administration is noncommittal on its policy towards it, the Bank has firmed up its collaboration with the Chinese-led Asian Infrastructure Investment Bank (AIIB). They both signed a memorandum of understanding instituting an overall framework for cooperation between the two bodies for development financing, staff exchanges, and analytical and sector work. “It paves the way for the two institutions to further enhance coordination at the regional and country levels,” a joint statement said.
