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Latin America Report

Is The Western Hemisphere's Most Important Development Bank Headed For A Radical Change?

Mauricio Claver-Carone arriving for a meeting in Bolivia earlier this year.
Juan Karita
/
AP
Mauricio Claver-Carone arriving for a meeting in Bolivia earlier this year.

As the Inter-American Development Bank prepares to help Latin America rebuild post-COVID, will an American take over, breaking one of its core traditions?

When the COVID-19 disaster finally eases in Latin America and the Caribbean – and the region starts rebuilding its shattered economies – few institutions will play a more key role than the Inter-American Development Bank, or IDB. And that makes it all the more intriguing that so many countries in the Western Hemisphere are set this weekend to approve one of the most radical alterations in the IDB’s 61-year history – a change engineered by the Trump Administration.

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Since the Washington D.C.-based IDB was founded in 1959, and because the bank does almost all its business in Latin America and the Caribbean, its president has always been from that region. But in June the White House broke with this unwritten rule and nominated an American – President Trump’s top Latin America advisor, Mauricio Claver-Carone, a conservative Cuban-American best known for his hard line against communist Cuba – to become the IDB’s new president.

The bank's board votes September 12-13 to replace outgoing chief Luis Alberto Moreno.

“One of the biggest complaints about the U.S. among Latin American countries is that we don’t care about the IDB,” Claver-Carone, currently the National Security Council’s senior director for Western Hemisphere affairs, told WLRN from Washington. “But we want to make the IDB a financial heavyweight, first and foremost.”

The Miami-born Claver-Carone looks to have enough IDB shareholder votes in his camp – including those of Brazil and Colombia, whose presidents are both strong Trump allies – to secure election. More than 15 countries in the hemisphere have endorsed him – despite what are often perceived as Trump's anti-Latin American policies and rhetoric. But a dissenting IDB cohort, including Mexico and Argentina and backed by several former Latin American presidents condemning the U.S. move, may try to postpone the balloting until after the November U.S. presidential election.

READ MORE: Has Latin America's Tragic COVID Year Created Another Economic 'Lost Decade'?

Claver-Carone calls that an “obstructionist” ploy. And he insists it would set the IDB back in its efforts to help Latin American and Caribbean economies rise from the ashes after suffering some of their worst nosedives in decades thanks to the coronavirus disruption. That’s especially important, he adds, because he feels there is already too large a gap between what the region needs and what international financial institutions like the IDB deliver.

“Latin America and the Caribbean has the largest financing gap in the world, especially for small business,” says Claver-Carone. “For so many years, China filled that gap. Now, Chinese lending to the region has decreased dramatically and we have the opportunity to step up or sit back and see who else fills that gap.”

One of the biggest complaints about the U.S. in Latin America is that we don't care about the IDB. But we want to make it a financial heavyweight.
Mauricio Claver-Carone

The IDB is the largest source of loans and grants to Latin American and Caribbean governments – $13 billion last year. But Claver-Carone argues that discarding the IDB's presidential rule will give it new energy – and that he can make the bank more effectively governed, more robustly capitalized and, he says, more democratic. In its six-decade history, the bank has had only four presidents – Moreno, from Colombia, has held the post for 15 years – and Claver-Carone has promised to serve just one, five-year term.

He also says he’d make the IDB more inclusive for the region’s smaller member countries.

“In 61 years – including the vice-presidencies, senior leadership – there’s never been anyone from the Caribbean, from Central America, from the smaller South American countries,” he says. “That’s not inclusive.”

Mauricio does not have a history of listening – the most important thing for this position. He lives in a bubble.
Christopher Sabatini

Some top IDB management posts have actually been held by people from those countries. But Claver-Carone’s campaign message has struck a chord with their governments – like Haiti’s which is backing his candidacy even though it’s one of the bank’s biggest recipients. After the catastrophic earthquake there a decade ago, the IDB pledged $2 billion to help build new homes, roads, schools and industrial parks.

“That relationship is very important,” says Gilbert Saint-Jean, a Haitian-American biologist and development expert in Miami who is part of an expat NGO group, led by the Ayiti Community Trust, that recently submitted its own IDB grant proposal to help rebuild Haiti’s battered tourism sector.

“Especially for a country like Haiti,” says Saint-Jean, “as far as rebuilding, becoming a sustainable emerging economy – IDB support, yes, is one of the essential components.”

DELIVERING DEVELOPMENT

Guyana’s new government is another in the Caribbean supporting Claver-Carone’s bid. Skeptics suggest President Irfaan Ali is simply repaying the Trump Administration for siding with him in this year’s disputed presidential election. (His predecessor, David Granger, finally stepped down last month.) But Foreign Secretary Robert Persaud says Guyana trusts Claver-Carone will give Caribbean countries a greater voice on issues critical to them such as climate-change mitigation.

“We are small economies, but we do have big solutions to global problems,” Persaud told WLRN. “And we believe Mr. Claver-Carone’s leadership will strengthen the IDB’s ability to deliver development impact to countries such as ours.”

IDBHaiti.png
Current IDB President Luis Alberto Moreno (left) talks with Haitian President Jovenel Moise in Haiti this year.

Claver-Carone’s critics also suggest that, rather than resisting IDB patronage, what he’s been delivering so far are "vote-buying" promises of top IDB positions to countries like Guyana, as well as to larger nations like Brazil. He and government officials like Persaud deny the charge; Claver-Carone calls it “ridiculous,” though he does point to younger officials like Jamaican Finance Minister Nigel Clarke as a “new generation of talent in the region we’d like to recruit.” (Jamaica has also endorsed Claver-Carone.)

Either way, it’s the larger shareholder countries like Brazil that will wield the most clout in this weekend’s IDB election. Right now it's uncertain if Claver-Carone will be voted in, or if countries like Argentina – which has put forward its own candidate, Strategic Affairs Secretary Gustavo Beliz – will force the postponement. (Both Brazil and Argentina hold 11 percent IDB shareholder stakes, second only to the U.S.)

The latter cohort reasons that if Joe Biden defeats Trump in November, enthusiasm for Claver-Carone’s candidacy will wane since his and Biden’s outlooks on hemispheric policy will be too opposed to make the U.S.-IDB relationship workable. Claver-Carone insists it will work “no matter what happens November 3," but Biden's campaign said last month the former U.S. vice president opposes Claver-Carone's IDB candidacy.

CUBA OBSESSION

“The vote postponement is the best way,” says Christopher Sabatini, a senior Latin America fellow at Chatham House, an international affairs think tank in London, and one of the most vocal critics of Claver-Carone’s IDB candidacy.

Many Latin America experts like Sabatini question Claver-Carone’s international finance experience. In that arena Claver-Carone, a lawyer, has only served as U.S. representative to the International Monetary Fund, or IMF, though under Trump he helped create agencies like the U.S. International Development Finance Corporation and programs like América Crece, or Growth in the Americas.

They also insist he’s uninterested in if not hostile to the sort of environmental issues that preoccupy the Caribbean. But Sabatini says the biggest concern is what he calls Claver-Carone’s extremist “obsession” with toppling Cuba’s communist regime.

COVIDCaracas.jpeg
Ariana Cubillos
A young Venezuelan girl helps push her family's goods to a street market in Caracas this summer during the country's coronavirus lockdown.

Cuba is not an IDB member. But Claver-Carone’s detractors have long complained that he sees every issue through a narrow Cuba prism – and as a result, Sabatini fears he’ll politicize the IDB and base loan decisions on loyalty to that particular agenda.

“He has pursued a very Manichean, us-versus-them policy throughout his career when it comes not just to Cuba but to any country that consorts with Cuba,” says Sabatini. He warns “the moment anyone of leftist leanings in the Caribbean makes overtures to Cuba, they will have to pay” when it comes to a relationship with the IDB.

Sabatini also points to what he says is Claver-Carone’s reputation in Washington for tuning out other viewpoints.

“Mauricio does not have any history of listening – which is the most important thing for this position,” says Sabatini. “He lives in a bubble.”

The Biden campaign too says it believes Claver-Carone is "overly ideological" and "underqualified" to head the bank.

Claver-Carone denies he’d push a political agenda as IDB president. “I will be a steward of the IDB’s agenda, not my own,” he says. He also insists his temperament will be an asset for the bank.

“You can be passionate about democracy and human rights and also about economic growth and development,” he says.

Depending on what happens this weekend, Claver-Carone’s passions may well become the Inter-American Development Bank’s passions.