US TRIES TO INCREASE CONTROL OF ASIA BANK By Tony Tassell and Peter Montagnon in Manila
The US is stirring up controversy among its Asian partners with an attempt to exert greater control over the policies of the Asian Development Bank.
Edwin Truman, a senior US treasury official, shocked many delegates at the ADB annual meeting at the weekend with a blunt public demand for the bank to "accept a common set of norms and standards" in development policy. His speech was widely seen as an attempt to bring an increasingly independent ADB back in line with the Washington consensus.
Delegates said the US comments reflected concern that recent increases in bilateral funding from Japan were giving Tokyo more influence over the institution. Japan, which usually imposes fewer conditions on loans than the US, recently extended a $3bn (£1.8bn) three-year facility to the ADB for the provision of guarantees for crisis-affected countries. It is providing extensive co-financing of the bank's project and programme loans in Asian countries under the $30bn Miyazawa initiative.
Mr Truman said the ADB should sign a formal agreement with the World Bank setting out its place in a "common framework" of multilateral institutions. He added that the institution needed to "adhere to and promote" the features of the international financial architecture. Some US officials went further in private at the meeting, telling delegates the ADB should not be seen as "solely Asian".
Also in the background is US concern that the ADB staff, taking its cue from Asian countries, may adopt a more independent policy stance in the future, at odds with the Washington orthodoxy.
The early actions of the Washington-based International Monetary Fund in tackling the Asian economic crisis have, in particular, been widely criticised in the region. Recently the ADB has also hinted at some sympathy for controls on capital flows and supported the creation of an Asian Monetary Fund, ideas that have been strongly opposed by the US.
The controversy overshadowed preliminary talks to replenish the Asian Development Fund (ADF), which provides loans on concessional terms to the region's poorest countries. Formal negotiations to raise an additional $6.3bn at least start in October. They are likely to involve tough bargaining with donor countries seeking changes at the institution in return for financial support.
There is now only $2.1bn remaining for ADF lending until the end of 2001, after a shortfall caused partly by the inability of the bank to transfer some of its profits to the fund in the wake of emergency loans to crisis-stricken countries.
Developing country members said poorer countries were being disadvantaged by assistance to richer countries such as South Korea. Many argued at the meeting that the ADB should also not provide liquidity support in times of crisis and should instead focus on its traditional role of project financing and medium to long-term development.
China was also among the critics of an ADB plan to increase loan rates as a means of boosting the bank's income and reducing its need for extra capital.