Congress’ Refusal to Pay U.S. Dues Could Be a Costly Move

President Clinton’s new push to pay $1 billion in U.S. arrears to the United Nations would cover only part of the mushrooming U.S. backlog in payments to various international organizations.

Washington owes even more in back dues--a hefty $1.562 billion--to international financial institutions including the World Bank and the three major regional development banks that lend to countries in Asia, Africa and Latin America.

Like the U.N. backlog, the arrears accumulated gradually as Congress, intent on cutting foreign affairs spending, refused to appropriate the full amount that the United States had agreed to contribute.

But analysts say it is likely to be far more difficult for the administration to persuade Congress to pay off the U.S. arrears to global lending organizations than it will be to eliminate the backlog to the United Nations.

The unpaid U.N. dues have a far higher profile. Other countries have been vocal in complaining about the situation. And Congress knows that Washington needs the support of the U.N. Security Council on key issues such as Bosnia and Iraq.

In contrast, the debts to the World Bank and other lending organizations have captured only scant attention outside the world’s finance ministries. Moreover, Congress is skeptical--in some cases, downright hostile--toward more lending to financially troubled countries.

Administration officials say the issue is important because the United States relies on its influence in the international lending institutions to promote American foreign policy, from financing reconstruction in Bosnia to reducing trade barriers around the world.

Although no country has yet sought to challenge the large U.S. share of voting power in any of the international lending institutions, U.S. officials say that the presence of the backlog has encouraged some members to stiffen their resistance to American proposals.

It also has cost U.S. firms millions of dollars in exports. Much of the lending that these global institutions do is in the form of credits that borrowing countries can use to buy equipment from donor countries. How much each donor may sell depends on its contribution.

Finally, other countries’ commitments to support these institutions traditionally have been linked to the U.S. contribution.

The U.S. refusal to pay up its contribution to the International Development Assn., a branch of the World Bank that makes interest-free loans to poor countries, has prompted other donor countries to set up a temporary trust fund to finance IDA without U.S. participation.

Negotiations are to begin later this year for a new round of IDA lending. Failure of the United States to take part could prompt other donors to cut back as well.

After years of allowing the cuts to go unchallenged, the administration is asking lawmakers to pay $862 million in arrears over the next three years. It also wants them to give a final OK for another $700 million approved tentatively in 1996.

Treasury Secretary Robert E. Rubin, who has begun a quiet lobbying campaign, hopes to win initial approval before the annual seven-nation economic meeting in Denver in June. U.S. officials fear that failure to erase the amount the United States owes will undermine American initiatives on other economic issues.

But there is no question that the administration will have a tough job. Not only are lawmakers likely to be preoccupied with paying up the arrears on the U.S. contribution to the United Nations, but many are also opposed to such lending.

David Gordon, a policy analyst for the Overseas Development Council, says that the outlook for the Clinton proposal is particularly bleak in the House, where many key committee chairmen oppose contributing to IDA.

“It’s a very serious problem,” Rubin said in an interview. “Our leverage in these institutions depends on our willingness to play a major role.”

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Running Up the Bill

U.S. arrears to international lending institutions, in millions of dollars:

World Bank:

International Development Assn.: $934.5

Global Environment Facility: $140

*

Inter-American Development Bank:

Fund for special operations: $21.4

Multilateral investment fund: $178.8

*

Asian Development Bank:

Asian Development Fund: $237.0

*

African Development Bank:

African Development Fund: $50

*

North American Development Bank: $0.3

Source: U.S. Treasury Department