House Committee Finds Common Ground Supporting Multilateral Development Banks

October 4, 2011 By Steven Myers

While Capitol Hill struggles to find  a long-term solution for deficit reduction, members of the House Financial Services Subcommittee on International Monetary Policy and Trade have found an area of bipartisan agreement: the need to maintain our commitment to multilateral development banks (MDBs), including the World Bank.   Hearings over the recent weeks have affirmed the need to support MDBs, with Members on both sides of the aisle agreeing that the relatively small investment the United States makes in these institutions pays large dividends in preserving our national security and strengthening our economic competitiveness.

On September 21, the Subcommittee held a hearing on the impact of MDBs on national security where committee members highlighted the role of international financial institutions in fostering international stability.  Representative Robert Dold (R-IL) argued, “We simply cannot have any meaningful impact on our deficits and national debt by relinquishing American MDB world leadership to China and other emerging nations. Relinquishing that leadership will diminish our economic prosperity and, I would argue, our national security interests as well.” In a May 2010 letter to Secretary of the Treasury Timothy Geithner, General David Petraeus supported the national security value of MDBs, stating that “these projects are vital to the success of U.S. strategy.”

By contributing to MDBs, the U.S. can share the burden of stabilizing countries abroad and enjoy greater security gains at home.  Former ambassador and congressman Mark Green, Senior Director for the U.S. Global Leadership Coalition, also submitted testimony for his October 4th appearance before the House Financial Services Committee, arguing that “modern national security means that our leaders must have a wide-ranging and well-resourced set of leadership tools — military and civilian, hard power and soft — if we are going to be truly secure and truly strong in this challenging, ever-changing world. The programs of the World Bank and the MDBs are an important part of those tools.”

This was one of three subcommittee hearings aimed at providing a forum for discussing America’s commitment to these institutions. During a June 14th hearing, Undersecretary of the Treasury for International Affairs Lael Brainard testified that we must “not allow U.S. leadership to wane” regarding a proposed capital increase for the World Bank.  Subcommittee Ranking Member Carolyn McCarthy (D-NY) agreed, adding, “We receive a great deal of value from our contributions to these institutions, such as increased markets for U.S. exports and enhanced national security.”  In the current economic climate, creating new jobs domestically will depend on the development of new markets abroad.  During a July 27th hearing on the impact of the World Bank and other MDBs for U.S. job security, Subcommittee Chairman Gary Miller (R-CA) pointed out that “half of all global growth is expected to be in the developing world, which is estimated to lead to over $3 trillion in infrastructure spending.”

Treasury Secretary Timothy Geithner recognized the importance of MDBs during a USGLC and US Chamber of Commerce sponsored event on September 27th stating, “we want to concentrate our firepower on the relatively small slice of that budget that goes to the World Bank and the multilateral development banks because they come with leverage.”  Contributing to the development of growing markets will create destinations for U.S. goods and services, generating jobs at home.  Working through MDBs like the World Bank allows the United States to ensure its national security, create new jobs and exercise its global leadership, all while leveraging resources with partners abroad.  Representative Barney Frank (D-MA) described our commitment to MDBs best, saying, “It is the most efficient use…of our dollars, to alleviate misery in the world, and at the same time protect security…That’s a pretty good bargain.” As budget battles continue, the ongoing work of the House Financial Services Committee sends a strong bipartisan message of support for the strategic investments we make in MDBs and the International Affairs Budget.