The House Financial Services Committee passed the World Bank Accountability Act of 2017 today, authorizing U.S. participation in IDA, the World Bank’s fund for the poorest countries. The bill funds IDA at the level recently requested by the Trump administration, but conditions that funding on whether the Bank adopts certain reforms, which the bill’s sponsor, Rep. Andy Barr (R-KY) called “long overdue.”
The first set of conditions in the bill would allow the U.S. to withhold 15% of its annual contribution if the Bank fails to adopt institutional reforms related to staff incentives, gender based violence, and accountability for its myriad trust funds. The provision on staff incentives emphasizes the need for the Bank to prioritize poverty reduction and development outcomes over the volume of Bank lending. Rep. Jeb Hensarling, the Chairman of the full House Financial Services Committee acknowledged that, “the World Bank in some instances has contributed and exacerbated poverty as opposed to remedying the problem. And so there has to be some level of accountability here.”
In his opening statement describing the bill, Rep. Barr stated the condition related to gender based violence was aimed at “correcting management failures that led to one of the worst bank scandals in history,” referring to the devastating Uganda Transport Sector Development Project that led to the sexual abuse and exploitation of dozens of teenage girls. Several other Committee Members mentioned the case in their statements, including Rep. Huizenga (R-MI) who acknowledged it was a “tough bill.” He also clarified the type of action the committee is looking for from the Bank, saying the Gender Based Violence Task Force it created in response to the Uganda case was “not enough,” but that “staff must implement the policies.”
A second set of conditions in the bill requires the Bank to focus on certain themes in its programmatic work and apply stronger standards to its projects, including: supporting basic rights, minimizing corruption in its development policy lending, conducting forensic audits of its projects, denying support to state sponsors of terrorism, and doing more to address violent extremism. Rep. Barr defended the provision requiring the Bank to emphasize “support for secure property rights, due process of law, and economic freedom as essential conditions for sustained poverty reduction” by saying, “such freedoms should be at the center.”
Rep. Gwen Moore (D-WI), the Ranking Member of the subcommittee responsible for World Bank oversight, expressed support for the bill, but also reservations about potentially withholding funds, which she said “undercuts credibility and leverage we have at the Bank to get reforms enacted and implemented.” She reminded colleagues of ”the power we’re ceding if in fact we continue to cut our obligations,” and that America’s leadership at the World Bank is “one of the major tools in our soft power arsenal.”
In addition to conditions on future funding, the bill also includes instructions for the U.S. Executive Director at the World Bank to oppose any assistance for countries that fail to enforce sanctions against North Korea.
The authorization bill was passed less than a week after the House Appropriations Committee passed a bill that would contribute only half of what the President requested for IDA—which was already $580 million less than what the Obama administration pledged to the institution last year. In support of the bill’s passage Chairman Hensarling stated that, “It is critical that America lead. It is critical that America reform this institution if we’re going to truly help those who are intended to benefit.”
The full text of the bill can be found here.