386. Letter From Secretary of the Treasury Baker to Representative Jamie Whitten1
I want to take this opportunity to explain the importance of this year’s authorizations for the multilateral development banks (MDBs).
The MDBs are a key part of the President’s approach to the world debt situation and are fundamental to U.S. foreign policy. The Administration believes that the MDBs play a central part in U.S. assistance programs because of these institutions’ cost-sharing advantages and their substantial experience in supporting development. These institutions finance necessary development projects and promote sound economic policies that foster sustainable economic growth.
The International Development Association (IDA), the World Bank’s concessional lending window, is particularly important in this regard. IDA recipients are the very poorest countries; over 96 percent of IDA lending goes to countries with annual per capita incomes of $400 or less.
In addition to providing financial support, IDA is also a catalyst for needed economic reform. With IDA’s encouragement and support, many countries have undertaken politically difficult reforms to lessen government involvement in their economies and place more reliance on the private sector. Hence, IDA’s lending in support of economic [Page 938] reforms will make borrowers more resilient and better able to promote long-term stable economic growth.
IDA is the largest component of the Administration’s request for MDB funding, and is properly subject to close scrutiny. Other aspects of our FY88 authorization request are important as well. The fifth replenishment of the Asian Development Fund, a capital increase for the African Development Bank, and U.S. participation in the Multilateral Investment Guarantee (MIGA) each provide a key component of U.S. foreign policy.
I particularly want to call your attention to the importance the Administration places on securing authorization for the MIGA.2 The MIGA will begin operation in 1988, with or without U.S. participation. We believe that the MIGA will encourage growth and strengthen the private sector in developing countries. Provision is made in the Senate language for the protection of workers’ rights. Of equal importance, if the United States does not join, foreign firms will be able to gain greater access to potential U.S. markets abroad, U.S. jobs will be lost, and in the long run U.S. exports will be sacrificed.
The MIGA convention is also a major breakthrough in several areas. It marks the first time developing countries have agreed to settle investment disputes through provisions of international law and international arbitration. The MIGA has a clear, strong international mandate—which similar bilateral agencies such as the Overseas Private Investment Corporation do not—to promote reform of developing country investment policies. It is, therefore, important that the full appropriation be made in order for the U.S. to gain maximum influence in the institution.
In closing, I urge you to support the MDB authorizations which are included in the Senate Continuing Resolution. The valuable work of these institutions, which serve U.S. interests, requires our full backing, and I hope that you will support the action of the Senate.
Sincerely,
- Source: Washington National Records Center, RG 56, Executive Secretariat, Congressional Files, 1987, 56–90–29, Box 35, Group Letters s/ Congressional Leaders Support for IDA/MIGA Legislation, 87–58923. No classification marking. Similar letters were sent to the following members of Congress: Sidney Yates III, William Lehman, Robert Mrazek, Julian Dixon, Matthew McHugh, Charles Wilson, John Edwards Porter III, Jerry Lewis, David Obey, Silvio Conte, Mickey Edwards, William Gray III, and Jack Kemp. (Ibid.)↩
- The United States signed the Convention establishing the Multilateral Investment Guarantee Agency on June 18, 1986. In a June 16, 1986, memorandum to Baker, Mulford recommended signing the MIGA Convention at that time because of positive congressional responses to U.S. participation in the Convention. Mulford also communicated that, despite congressional support for U.S. participation in the MIGA Convention, it seemed unlikely that funds for U.S. membership would be appropriated in FY 87. On June 17, Baker approved the recommendation in the memorandum that the United States sign the Convention establishing the MIGA. (National Archives, RG 56, Records of the Office of the Secretary of the Treasury, Correspondence Files, 1986, UD–13W, 56–89–13, Box 30, Memos to the Secretary, International Affairs, Jan–Feb ’86)↩
- Baker signed “Jim Baker” above his typed signature.↩