Freedom First Society

Issue: H.R. 3326, World Bank Accountability Act of 2017Question: On Passage.

Result:  Passed in House, 237 to 184, 9 not voting. GOP only scored.

Freedom First Society: Although the title for this measure emphasizes accountability, H.R. 3326 would actually authorize $3.29 billion in U.S. contributions to the World Bank’s program to aid the world’s poor.

The Constitution does not authorize the federal government to contribute any taxpayer money to international institutions, let alone provide foreign aid.   We do not score the Democrats on this one, because most who opposed the bill supported the aid.  However, they decided to object to the provisions that might allow President Trump any say in reducing aid to an uncooperative World Bank.

We have assigned (good vote) to the Noes and (bad vote) to the Ayes. (P = voted present; ? = not voting; blank = not listed on roll call.)

Bill Summary:   The Congressional Research Service (CRS) Summary of H.R. 3366 highlighted its accountability provisions, but ignored the underlying authorization for $3.29 billion in additional contributions to the World Bank (actually to its International Development Association (IDA) — the 18th replenishment of the Association’s resources). (See here text of H.R. 3366, as sent to the Senate.)

Here are the two principal accountability provisions comprising most of the CRS Summary:

“This bill provides that for each of FY2018-FY2023, 15% of appropriations for the World Bank’s International Development Association shall be withheld and not disbursed until the Department of the Treasury reports to Congress that the International Bank for Reconstruction and Development: (1) is implementing institutional incentives that prioritize poverty reduction, development outcomes, and capable project management over the Bank’s lending and grant making volume; (2) is taking, or has completed, steps to address the management failures from the Uganda Transport Sector Development Project; and (3) is strengthening its trust fund management in order to increase accountability for poverty reduction and development outcomes.

“An additional 15% of appropriations for such fiscal years shall be withheld and not disbursed until Treasury reports that the International Bank for Reconstruction and Development: (1) is emphasizing its support for secure property rights, due process of law, and economic freedom as essential to sustained poverty reduction in World Bank borrowing countries; (2) has not approved any loans or grants to a country designated by the U.S. as a state sponsor of terrorism and is strengthening the ability of Bank-funded projects to undermine violent extremism; (3) is taking steps to conduct randomized forensic audits of projects receiving Bank assistance; and (4) is working to detect and minimize corruption in projects involving development policy lending.”

A 1999 CRS Report for Congress, entitled “IMF and World Bank: U.S. Contributions and Agency Budgets” explains the IDA program:

“The International Development Association (IDA) is the World Bank affiliate that receives a contribution from the United States each year…. IDA makes loans on highly concessional terms to the world’s poorest countries. It uses money contributed by the world’s most prosperous countries to fund its loan program. Every three years, the IDA donor countries meet to determine how large the next replenishment of IDA’s resources should be and what share of the total each donor should contribute.”

Analysis:   During the “debate” over this measure, congressmen made no mention of the fact that the Constitution doesn’t authorize the federal government to use taxpayers’ dollars to engage in world charity nor even to provide “charity” through the World Bank.

The Republican sponsors made a big issue of the horrible lending record of the World Bank and the need to put restrictions on U.S. aid.  But restrictions and complaints had been ongoing for decades without significant impact.  So without an understanding of the real role of the World Bank, as envisioned by its Internationalist creators, it might seem incredible that the obvious conclusion — simply stop all aid to the World Bank — was never mentioned as an option.

The Democrat critics, however, endorsed the U.S. largesse but seemed to have decided to balk at the new attempts at accountability primarily as a means to blast President Trump’s attitudes and giving this president any authority to restrict the aid.

Bretton Woods

During the “debate” over this measure, there was no mention of the subversive origin and purpose of the World Bank.

The proposals for the World Bank and its sister, the International Monetary Fund (IMF), were developed at the Internationalists’ Council on Foreign Relations (CFR) and presented to President Roosevelt in 1942.  The concepts were adopted at a 44-nation financial conference at Bretton Woods, New Hampshire in 1944, prior to the end of World War II.

The most significant U.S. representative at the conference was Assistant Secretary of the Treasury Harry Dexter White (CFR), who dominated the proceedings.  White was later exposed as a Soviet spy.

The World Bank (and IMF) were publicized as a means to aid post-war recovery.  But the World Bank was actually designed as a permanent pipeline to transfer wealth from the developed countries to the poor countries, while serving the purposes of those seeking to control the world politically.

Long History of Abuse

One reason the Insiders decided to channel U.S. wealth to “poor” countries through international institutions was precisely to avoid accountability.  Direct bilateral foreign aid to oppressive regimes would be unpopular with voters, but if international institutions dispense the aid, the institutions could be blamed.

Bretton Woods propounded the phony principle that poor nations would develop if they were given enough aid and that the “developed” countries had the moral responsibility to provide that aid.  But the “underdeveloped” nations remained so because they were socialist.  In fact, World Bank loans and aid often served to expand government power and bureaucracy in the Third World rather than aiding the world’s poor.

Contrary to the Establishment-created image of Ronald Reagan as a great conservative leader, Reagan merely served as a front-man for his administrations.  He gave great conservative speeches, but his administrations were run by Internationalist Insiders, such as Secretary of State George Pratt Schultz (CFR).

In 1988, Reagan’s Treasury Secretary, James A. Baker III (CFR in 1998), asked Congress to approve an additional $70.9 million per year for the World Bank for the coming six years.  In opposition, Senator Steve Symms (R-Idaho) offered an amendment to delete the six-year authorization from the Fiscal 1989 foreign aid appropriations bill.  Conservative Republican Senator Jesse Helms argued on behalf of the Symms amendment: “[W]e do not have the money; if we go deeper in debt to get the money, it will be thrown at Socialist regimes, nationalized industries, corrupt foreign officials, and over-paid bureaucracies.”  The Symms amendment attempt failed.

Excerpts from Congressional Record (1-17-18) [Emphasis added]:

Rep. Jeb Hensarling (R-Texas), Chairman, Financial Services Comittee:

“H.R. 3326 makes a share of future World Bank appropriations  contingent upon vitally needed reforms, with focus on the World Bank’s  International Development Association, known as IDA, which is the World  Bank’s concessional lending window, dedicated to 75 of the world’s  poorest countries.   Mr. Chairman, the reforms in this bill have emerged from five different oversight hearings held in our committee over the past 2  years and they all enjoy bipartisan support.   The bill also supports the administration’s goal of ensuring that the World Bank’s work is consistent with U.S. priorities that are,  obviously, financed by the U.S. taxpayer….

“H.R. 3326 would  enact the administration’s request for a 15 percent reduction on authorized funds for IDA.   In addition, Mr. Barr’s legislation contains crucial national  security provisions, including a prohibition on World Bank assistance to countries that knowingly violate U.N. Security Council sanctions on  North Korea.  Also, safeguarding our national security is a provision that helps ensure World Bank assistance won’t be used for state sponsors of  terrorism.   Mr. Chairman, this is a commonsense requirement that benefited from the input of our democratic colleague on the committee: again, Mr.  Sherman from California.

“So, again, Mr. Chairman, it does kind of beg the questions: Why are  we here today? Why are we debating a bill that received support from  every single Republican and Democrat on the committee?  As some who may be viewing our proceedings know, there is such a  thing known as a suspension calendar for relatively noncontroversial  items. This bill should have been dispensed with on what is known as a  suspension calendar since it passed our committee 60-0.

“But now, apparently, the ranking member has had a change of heart on opposing a bill that she voted for on committee. So some may be  confused, and indeed we are confused. It is interesting that we now see opposition to linking these IDA payments to reforms, but that is  exactly what Democrats on the Financial Services Committee did in 2005.  It is exactly what they did when they voted to withhold 25 percent of  IDA funds in a foreign operation’s appropriations bill. Last July, the ranking member, the gentlewoman from California (Ms. Maxine Waters),  consistent with her earlier vote, voted in support of H.R. 3326 as well. So, again, some of us are confused as to why it is being opposed now if she has voted for the policy of withholding twice, including  voting for the very bill we are debating today.

“It is also important to note, Mr. Chairman, that the reforms included in this bill are those that the World Bank itself deems are important.  As far back as 1992, a bank management review highlighted its perverse staff incentives that made pushing money out the door more important than making a dent in global poverty. And as recently as 2014, a bank evaluation report confirmed that these very same perverse incentives  are still in place….

“Mr. Chairman, if the World Bank thinks these reforms are necessary,  shouldn’t we all think these reforms are necessary?   And how about the testimony of Sasha Chavkin, a reporter for the International Consortium of Investigative Journalists, who testified  before our committee?   Sasha said:  We found that, over a decade, spanning from 2004 to 2013, projects financed by the World Bank physically or economically displaced an estimated 3.4 million people around  the world.    Mr. Chairman, these are some of the world’s most vulnerable displaced  by the World Bank that screams out for more reforms.

“Mr. Chairman, I thank Mr. Barr for saying with his legislation that enough is enough. He has produced a serious, long overdue reform bill,  one that was supported in our committee unanimously 60-0. We typically could not get a 60-0 vote on a Mother’s Day resolution, yet we have it  for this bill. Again, it just begs credibility and credulity as to why  are we here today debating a bill that was passed unanimously in  committee.” 

Freedom First Society:  It’s sad that all 60 members (GOP and Democrat) of the Financial Services Committee supported this measure.  It is not “commonsense,” as Chairman Hensarling claims.  H.R. 3326 is unconstitutional and subversive.  And 16 Republicans, not on the committee, took the opportunity to vote against H.R. 3326 on the floor, although they were not among those who spoke.

Rep. Maxine Waters (Calif.), Ranking Democrat on the Financial Services Committee:

“Mr. Chairman, I rise in opposition to H.R. 3326, the World Bank  Accountability Act of 2017.   Last year, Democrats on the Financial Services Committee joined our  Republican colleagues in favorably reporting H.R. 3326 out of committee  to support the bill’s authorization of a U.S. contribution of $3.29  billion to multilateral development efforts and to enforce the  importance of U.S. leadership at the international financial  institutions, but the favorable report in committee came with clear  conditions for the future of the bill.

“Democrats made it clear during consideration of this bill in  committee that our ongoing support for the measure would depend upon  changes to provisions in the bill moving forward that put critical U.S.  funding at risk. But here we are today and Republicans have not made  any effort at all to address our very specific concerns.  Namely, the bill would cut up to 30 percent of the U.S. contribution  to the International Development Association — IDA — in any year in which  the Treasury Secretary does not certify to Congress that the World Bank  has adopted or is taking steps to implement two sets of reforms  mandated in the bill.

“IDA is the arm of the World Bank that provides grants and other  assistance to the world’s 77 poorest countries, which are home to more  than 450 million people living in extreme poverty. Cuts to U.S. funds  to IDA would punish millions of children and other vulnerable people in  Africa, Latin America, and Asia, who are living in extreme poverty, who  are suffering from famine, or who are emerging from conflict.   Democrats do not believe that cutting U.S. funds for, and diminishing U.S. influence at, the international financial institutions is an  effective approach to reform….

“For many years, the Financial Services Committee has worked in a bipartisan fashion to achieve a number of important reforms at the World Bank, including increased transparency, the creation of the  inspection panel, more disclosure of information, and closer  consultation with local communities most affected by World Bank  projects.  We were able to successfully advance these policy goals through  serious and direct negotiations and sustained engagement with both the  Department of the Treasury and the World Bank itself, not by threatening to walk away from our commitments, but the Trump  administration has consistently demonstrated troubling attitudes toward  the role of the U.S. in the world….”

“Today, I stand with Africa, and I urge my colleagues to oppose  this legislation and its misguided, cynical approach to  multilateralism…..

“Let’s see what Jessie Duarte, Deputy Secretary General of the [FFS: terrorist] African National Congress, has to say. He said,  He said, ‘Ours is not a s—-hole  country, neither is Haiti or any other country in distress.’”

Rep. Andy Barr (R-Kentucky) (sponsor of the legislation and chairman of the Financial  Services Subcommittee on Monetary Policy and Trade):

“As Chairman Hensarling has already noted, H.R. 3326 passed the House  Financial Services Committee by a unanimous vote of 60-0. No amendments  were offered by any of our Democratic colleagues during that markup. So  it is disappointing to me that the ranking member is standing in  opposition today, despite voting for this bill in committee and then  waiting half a year before proposing any changes.   Nonetheless, I want to address the gentlewoman’s criticism of the withholding mechanism in this legislation, because she seems to share a philosophy endemic at the World Bank, which basically says this: money  equals impact. But this runs counter to the evidence we have heard again and again during multiple oversight hearings.   It also runs counter to how the World Bank itself operates with its borrowers. The World Bank lends to poor countries by attaching conditions. People can disagree if that conditionality is too much or  too little, but the World Bank affects behavior by telling governments that there are no blank checks.

“The ranking member knows this, and it  goes without saying that there are many elements to World Bank conditionality that the ranking member and her Democratic colleagues passionately support, but if the gentlewoman from California would never tolerate the World Bank writing blank checks to governments, it  is odd that she wants Congress to write a blank check to the World  Bank….

“Here is how a former, longtime senior staff member of the World Bank  put it in testimony before our subcommittee last Congress:  ‘… the  reality is that bank staff are assessed by the volume of their lending, dollars of money lent. And that is just a poor indicator of impact on  poverty. You have impact on poverty sometimes when you don’t lend at  all.”   This perverse lending culture at the World Bank has been documented  for at least a quarter century and documented by the World Bank itself.  Mr. Chairman, I want to draw your attention to a 1992 bank management  review entitled, ‘Effective Implementation: Key to Development Impact,’ commonly known as the Wapenhans Report, which details a  pressure to lend that distorts staff incentives at the expense of  management and project implementation. Again, this is from 1992.   Well, fast forward to 2014, and a report by the bank’s own evaluation office entitled, ‘Learning and Results in World Bank Operations: How  the Bank Learns,’ concludes that the pressure to lend is alive and  well….

“As  distinguished academics such as Nobel economics laureate Angus Deaton,  New York University’s William Easterly, and the University of Chicago’s  James Robinson have found, foreign aid makes little positive difference  if we are indifferent to the poor’s right to exert control over their  livelihoods, own land and other assets, and be free from arbitrary  government interference.    Now, Mr. Chairman, if the World Bank supports a corrupt government, that doesn’t mean that it is going to help the condition of the  impoverished in that country that is denied economic freedom.”

Rep. Nydia Velazquez (D-New York):

“Mr. Chairman, I rise in opposition to H.R. 3326, the World Bank  Accountability Act of 2017.   Let me be clear, from the outset, that I support the World Bank and  its mission. The World Bank is a vital source of financial and  technical assistance to developing countries. It works to reduce  poverty and support development around the globe.   Let me also be clear that I support this bill’s authorization of  $3.29 billion to the World Bank’s International Development Association, which provides grants and very low-interest loans to the  poorest 77 countries on the planet.” 

Rep. Bill Huizenga (R-Michigan), Chairman of the Financial Services Subcommittee on  Capital Markets, Securities, and Investments:

“Having had the opportunity last Congress to chair the subcommittee that Mr. Barr now leads, I can tell my colleagues that the reforms in this bill are real and they’re urgent.   Let me highlight one case of management failure at the World Bank  that I focused on last Congress, alongside with my ranking member, the distinguished gentlewoman from Wisconsin (Ms. Moore).”

Rep. Gregory Meeks (D-New York):

“Today, I rise in opposition to H.R. 3326, the World Bank  Accountability Act of 2017.   Let me start by stating how important our Nation’s contributions are  to the World Bank’s International Development Association, IDA. Those  funds support the largest source of development finance for the world’s  poorest nations, including those in Africa, Latin America, and Asia.

“That is why, at the committee level, I voted in favor.   Both Democrats and Republicans agreed that funding the World Bank’s  development finance for poor nations represented America’s highest ideals and interests. And, naturally, I would support a bill like this,  but we had agreed that it wasn’t the last word, that we would work and there would be additions thereto and/or subtractions in reviewing the bill.

“In my estimation, looking at the bill, it also cedes too much  authority to the executive, and those concerns have not been addressed in the final bill. For me, particularly in light of this  administration’s statements just a few days ago, it is troubling that it could be misused by this administration.   As written, the President, who has indicated a complete disdain for poor nations and people of color, could withhold foreign assistance if  the World Bank does not conform to his administration’s policies. It  would be a mistake to allow the President to coerce the World Bank to fit his flawed world view, especially this President whose world view is inconsistent with America’s past leadership around the globe, and  that is whether it was a Democrat or Republican President.”

Rep. Roger Williams (R-Texas), Vice Chairman of Financial Services Subcommittee on Monetary Policy and Trade:

“Mr. Chairman, I rise today in strong support of H.R. 3326, the World Bank Accountability Act. I would like to thank the chairman of the Subcommittee on Monetary Policy and Trade, Mr. Andy  Barr, for his hard work on this piece of legislation and for his  leadership on this important issue.   H.R. 3326 passed through the Financial Services Committee unanimously, with an overwhelmingly bipartisan vote of 60-0.   Mr. Chair, right now, the World Bank’s International Development  Association, IDA, is an irresponsible benefactor for the world’s neediest nations.”

Rep. Bill Foster (D-Illinois), senior member of the Subcommittee on Monetary Policy and Trade of the Financial Services  Committee:  

“Mr. Chairman, I rise today in opposition to H.R. 3326 as  it currently stands.   This is a disappointment to me. I, like many of my colleagues,  originally voted to support this legislation in committee, with the understanding that both sides of the aisle would continue to work to allay the concerns that elements of this bill would give the Trump administration new and disruptive tools that would likely be used to  the detriment of the World Bank’s mission and our relationships with  other countries….

“This bill does have elements that are important to our country’s obligation to some of the poorest countries in the world.  The World  Bank provides grants and highly concessional loans through the International Development Association, the IDA, to the world’s 77  poorest countries. This money goes a long way towards raising the standard of living, public health, and economic growth for the 450 million people who live there….

“But our confidence that this administration’s broad discretion to  defund the IDA — provided in the bill we will be voting on — would not be  abused, frankly, was not improved by the President’s recent racist  remarks last week.”

From Rep. Hensarling’s concluding remarks:

“First, Mr. Chairman, let me get the whole process debate out of the way. Anybody who is watching this debate has got to be scratching their head at the proposition that every single one of my Democratic  colleagues who come to the floor to denounce H.R. 3326 have already  voted for it. They voted for it 60-0 in committee.  Mr. Chairman, do you know how many amendments they offered in that  markup, their opportunity to refine the legislation, their opportunity  to improve the legislation, their opportunity to put their imprimatur  on the legislation? Do you know how many amendments they offered? Zero. Zero amendments were offered by the minority who now claim that somehow  they were cut out of the process.

“For 6 months, we have been waiting, waiting to bring this bill, waiting to hear about these improvements, and only three legislative  days ago did, finally, the Democrats deign to offer any new improvement  to this bill.    So I think, Mr. Chairman, she doth protest too much.

“And now what I  don’t understand, Mr. Chairman, is how my Democratic colleagues can defend some of these rogue regimes and some of the activities of the  World Bank.  Dr. Jean Ensminger, Edie and Lew Wasserman professor of social  science at Caltech, testified that there is corruption throughout World  Bank projects in remote areas of Kenya near the Somali border.   She said: ‘As I dug more deeply, it became apparent that corruption  had been entrenched in the project since 2000.’ And we are talking  about the poorest of the poor.  She goes on to say:  As the board was about to renew the project for 5 years, finally, the internal investigation showed that 62 percent of the transactions were fraudulent. Except my friends on the other side of the aisle: It doesn’t matter.  Don’t worry about the fraud. Just send them U.S. taxpayer money. It  doesn’t matter that the poor aren’t actually helped. Just send them  money because it makes us feel good.

“Sasha Chavkin from the International Consortium of Investigative  Journalists testified — and I alluded to this earlier about the forced  displacement of the poorest of the poor caused by projects financed by  the World Bank.   He went on to testify: ‘We found, instead, that the bank repeatedly  funded governments that not only failed to adequately resettle communities, but, in some cases, were accused of human rights abuses  such as rape, murder, and violent evictions associated with bank projects. We found in several cases that the World Bank continued to  bankroll these borrowers even after evidence of these abuses came to  light.’”

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