Politics, economics, and U.S. participation in multilateral development banks

Abstract

In the 1970s the U.S. executive branch was forced to make a significant change in the procedure it uses to influence decisions by the multilateral development banks. This procedural change—from exclusive reliance on behind-the-scenes pressure to open voting in bank councils—reflects two more fundamental alterations: the relative diminution of U.S. power in bank councils and, especially, the development of increased congressional interest in formulating U.S. policy toward the banks. As a result of these two changes, the United States has identified publicly many of the policies it seeks to promote through the banks. Taken as a whole, the U.S. voting record indicates an abandonment of the verbal commitment to the liberal concept of maintaining the banks as apolitical financial institutions. Since the concept has never been a reliable guide to U.S. behavior in bank councils, its abandonment does not signify a major change in the relationship between the banks and the United States government. Rather, it signifies an opening of the U.S. political process, one that encourages public debate and multiple advocacy in the making of U.S. policy toward the banks.