Tuesday, March 15, 2011

US Treasury Secretary Warns Not To Slash Aid

Two weeks ago, US Treasury Secretary Timothy Geithner warned the Senate Foreign Relations Committee that it was a matter of national interest that the US keeps supporting the World Bank and other multilateral development organizations. These contributions mean just a 5% of the whole foreign assistance budget, but they can mobilize funds that add up more than 150% of the budget. Therefore, funding the World Bank and other development banks such is one of the most cost-effective ways the US has to promote its interests in developing countries.

But there are also main economic security concerns in this warning. According to Timothy Geithner, a real risk can be found in withdrawing US funds from these organizations, (and development aid in general): that the US place can be taken by other countries, like China. Several Senators and Representatives have expressed their concerns about China's quick economical expansion in places like South America, Africa or Asia. A step back in foreign aid funding will inevitably cede influence to China and other rising powers, as for many countries the only alternative to the World Bank is actually China.

- David Nebreda