JANUARY 1982 - VOLUME 3 - NUMBER 1
U.S. wants say in banks' foreign loans
If the State Department has its way, U.S. banks will become greater partners in the development of U.S. foreign, policy. Or so it seems after a recent speech by Myer Rashish, undersecretary of state for economic affairs.
At a gathering of the Carnegie roundtable on banking and foreign policy on November 17, Rashish urged "closer coordination between banks and government" in lending money abroad.
Behind the State Department's overture lies the increasingly central role that banks have assumed in international lending since the oil shock of 1973. "Like it or not, bankers are now playing a role which, for the pre-1973 World War II period, was largely reserved to official lenders," Rashish told the bankers who attend the monthly dinner meetings the Carnegie Endowment sponsors. "This new development - and equally the predominant status of U.S. banks in the balance-of-payment financing of other countries - has particularly influenced U.S. policies."
In the process of asking for mare cooperation between private banks and the U.S. government, Rashish admitted one striking fact: the past and current practices of joint policy-making between the two groups. "Banks and the U.S. government have pursued complementary courses of action," Rashish pointed out. "Banks have provided a substantial share of the financing; government has taken action in areas where it has a comparative advantage to affect economic adjustment and reforms. The IMF (International Monetary Fund) and the World Bank are the principle vehicles available to us for this purpose."
Bankers responded cooly to Rashish's speech, questioning whether they would allow the U.S. government to have a say over their lending polcies. ,, "Are we going to give a loan to a country because the State Department wants us to? I doubt that very much," says Bill Koplowitz, Citibank's vice president for public relations. "And are we not going to give a loan because the State Department doesn't want us to? I doubt that very much."
While bankers were loathe to have the U.S. government interfere with their lending policies, they readily acknowledged that the government - through the multilateral lending institutions which it dominates - provides assistance to them. We have "close coordination with the IMF and the World Bank" in formulating our policies, says Ray Toman, public relations officer for the Bank of America.