Third world gains a little in money men's parley
An any diplomat knows, there is more than one way to avoid a roadblock. So when the dispute over the request of the Palestine Liberation Organization (PLO) for observer status at the annual meetings of the International Monetary Fund and the World Bank ended with the ban on all observers this year, that didn't quite end the matter.
For one thing, there is still the possibil
For another, many of those banned observers showed up anyway at various functions as "guests" or "visitors." They only changed the color of their badges. These nonobserver observers milled about freely with the central-bank governors, finance ministers, and hundreds of other officials at an opening reception Sunday night in the Shoreham Hotel. According to one Arab journalist, there was even a PLO sympathizer present, though perhaps not a "genuine" PLO representative.
It may even be possible for the two international organizations to duck the threat of some Arab oil-exporting countries, such as Kuwait, Saudi Arabia, and the United Arab Emirates, to refuse to channel new funds to the bank and the fund until the PLO is represented. Since the oilsurplus OPEC countries have to invest their excess money somewhere, these institutions could get it anyway in the socalled Euromoney markets -- the international market run by commercial banks and investment banks. That market channels petrodollars and other funds into bonds or short-term certificates of deposit.
Of course, there are technical differences between the IMF and the World Bank , which get money directly from the members of the Organization of Petroleum Exporting Countries or indirectly through the international capital markets. But either method helps recirculate petrodollars -- the surplus $100 billion or so being piled up by the OPEC nations as they get paid for their expensive oil.
Diplomats -- and the world's top financial people here are at least half-diplomats -- have also learned an old technique for resolving disputes. They compromise.
The main conflict at this IMF-World Bank session is an old theme: The poor, developing countries want more money and power, and the established industrial nations want to limit the creation of new international funds and retain their dominance of the world economic scene. Over the last 10 or 15 years, the influence of the developing nations has increased in these two United Nations-affiliated institutions. But the United States, Western Europe, and Japan still basically run the show, reflecting their massive economic might.
The new demands of the poor countries were spelled out at a meeting of the socalled Group of 24 on Sunday. In a communique, these finance ministers from 24 countries of Asia, Africa, and Latin America spoke of the "adverse implications" for the developing countries of the recesions and inflation in the industrial countries. They noted their "grave concern"" for the developing countries of the recessions and inflation in the industrial countries. They noted their "grave concern" for the widening international payments deficits of the nonoil-exporting poor countries, from $56 billion last year to $80 billion this year and a projected $80 billion in 1981.
The cure for these deficits is not deflation, they aruged. Nor should the industrial nations try to reduce their balance-of- payments problems by trimming aid flows and increasing trade and financial barriers.
Rather, the Group of 24 maintained, the well-to-do countries should provide more financial aid in various ways.
The group said the IMF should increase its resources through a substantial increase in quotas. The IMF lends they are having trouble paying their bills. The amount available is partly determined by the size of a nation's quota.
Moreover, these developing nations said that IMF loans should be made with a "minimum of conditionality," That means they don't want the IMF telling them to reduce budget deficits and government subsidies, to print less money, or otherwise show economic restraint. Many developing countries feel the IMF has been too tough.
The Group of 24 also suggested that the developing countries' share of total quotas be increased from 33 to 45 percent. Since voting is weighted according to quota size, that would give the poor countries greater power within the IMF.
Another point was a call for an allocation of at least 10 billion special drawing rights (SDRs) annually over a five-year period beginning in January 1982 .The poor countries could use their allocation of these SDRs, a form of international money created by the IMF, to pay their bills.
(Since the allocation of SDRs also hangs on the size of a nationhs quota, an enlarged quota means extra money in a nation's pocket when more of this "paper gold" is created on the books of the IMF.)
The Group of Ten countries, the main industrialized countries, had met a day earlier. Its communique, anticipating the demands of the developing countries, sounded fairly accommodating.
When the powerful Interim Committee met Sunday afternoon, a group that includes both rich and poor countries, the compromise process was working. There was also the delay process at work.
For instance, the committee endorsed a conclusion of the IMF executive board which said that amounts of up to 200 percent of quota per year for three years could be lent to a nation in financial trouble. (The IMF has already agreed to give Turkey some 625 percent of quota.) This new "principle" may make it easier for nations to get big loans.
The committee acknowledged that quotas may have to be changed to reflect changing economic positions. But any change was put off to the next general review of quotas in 1982.
The committee also asked the executive board to "give active consideration" to the "appropriate level" of SDR allocations.
The committee further spoke of "a great and urgent need" for more foreign aid. However, aid increases would have to be approved by national governments, which lately have usually been tighter rather than more generous.
So the purse strings of the rich countries have in some ways been loosened, but not by much.