The United States has enjoyed the privileged position of largest shareholder and donor at the World Bank and IMF since the institutions’ founding 70 years ago. But this week’s congressional elections, which delivered more Republican control on the Hill, may well determine whether the political coalition behind US leadership in the Bretton Woods institutions collapses entirely or reasserts itself during a period of ever more deeply divided government. While it’s easy enough to imagine partisan divisions standing in the way of renewed leadership, there are some grounds for hope for a different path.
The World Bank and IMF have always attracted controversy, and no less so in recent decades, from the “50 Years Is Enough” movement on the left to the scathing attacks of the conservative-leaning Meltzer Commission. The attacks have sometimes been grounded in a broader sense that the institutions themselves had steered off course. But even during these periods, both institutions could count on a base level of political support from whoever was in the White House and key leadership of both parties in Congress.
Yet, political support for the World Bank and IMF has become increasingly strained in Washington, ironically at a time when the institutions’ missions and performance arguably are less controversial than they’ve been in many decades. To some degree, we can blame the tenuous support on divided government. Is it any wonder the Obama administration has failed to convince House Republicans on IMF reform, when they have yet to be convinced on virtually anything coming from the White House?
But attributing purely partisan motives to the IMF failure ignores some signs of hope—namely, key players like Senators Corker and Graham, both of whom supported the IMF legislation and appealed to their Republican colleagues in the House to do the same. As both move into key committee chairmanships, they will have leadership platforms to pursue a positive multilateral agenda.
Ultimately, though, the key post-election test continues to be in the House, where Republican control has only deepened. What will convince House Republicans on the World Bank and IMF? Probably not an appeal to humanitarian instincts or business interests. The evangelical roots that generated Republican support for multilateral debt relief over a decade ago never really translated into widespread support for the multilateral institutions themselves, and if anything, may have generated more suspicion of them as lenders to poor countries. And while US business groups have been consistent, albeit low key, supporters of these institutions, the firms that deploy lobbying dollars will never make the World Bank or IMF a top priority on the Hill.
So what’s left? Most importantly, there is the appeal to US strategic interests globally, a lofty sounding notion that might seem pretty far removed from the district-based politics of the House. But thinking of these institutions as their founders did at Bretton Woods in 1944—that is, as instruments to shape the world according to some version of American economic and political values—is exactly the way the party of Reagan did think about them over many decades. President Reagan himself called the Bretton Woods institutions “true missionaries” for peace and prosperity.
In fact, the United States has enjoyed tremendous benefits from these institutions as “strategic assets” in the multilateral realm. Just look at the speed and scale of support the IMF provided to the US-backed government in Ukraine earlier this year, something that would have been impossible for the United States to pull off on its own.
The relationship between the United States and the Bretton Woods institutions has functioned in this manner for so long that it is easily taken for granted. At least it was until China decided to make a major play in the multilateral space through the Asian Infrastructure Investment Bank (AIIB). It’s not surprising that US officials would react negatively to China’s multilateral overtures in Asia. While US concerns are expressed around issues of environmental safeguards and anticorruption standards, the unspoken fear is about loss of US influence in the region.
House Republicans ought to share this fear. And we don’t need to make a villain of the AIIB in order to appeal to House members’ sense of the US position in the world. Do they want that position to be one of retreat, with US-led multilateral institutions shrinking in the global landscape? Or, will they now revisit the value proposition of the Bretton Woods institutions, where relatively small US investments ensure global reach and influence in regions and countries that matter to us? The choice seems obvious. Let’s hope the new majorities on the Hill take the first big step forward with swift passage of the IMF reform package.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.