Geithner: Boost global lending or lose face

Reuters News
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Posted: Mar 21, 2011 3:13 PM
Geithner: Boost global lending or lose face

WASHINGTON (Reuters) - Treasury Secretary Timothy Geithner urged lawmakers on Wednesday to approve capital increases for global lending institutions and warned that failure to do so could harm U.S. influence abroad.

"Given China's direct engagement in infrastructure development in developing countries, a reduced U.S. presence in the MDBs (multilateral development banks) will give China a substantial advantage in promoting its own commercial and security interests across numerous regions and sectors," he told a U.S. House of Representatives appropriations subcommittee.

Geithner cited specific areas in which the United States might lose clout if it failed to be generous.

"At the World bank, failure to finance the capital increase would lead to the loss of U.S. power to veto changes to the World Bank's government agreement," he said. "At the Asian Development Bank, if the U.S. does not support this capital increase, we will fall behind countries like China and India."

Geithner's warning that China could gain at U.S. expense was blunt but was in keeping with recent Obama administration comments about the need to keep pace with China's rising global might.

Secretary of State Hillary Clinton recently told the Senate Foreign Relations Committee that it needed to beware the consequences of cutting the U.S. foreign affairs budget. "We are in a competition with China," Clinton said.

Geithner cited another reason for supporting global lenders by increasing their capital, pointing out that there was a chance it could lead to more sales abroad of U.S.-made goods.

"America needs the MDBs to nurture the next group of emerging markets for our exports, to foster peace in countries facing conflict or on the brink of collapse, and to advance our shared values in the world," he said.

(Reporting by Glenn Somerville and Lesley Wroughton; Editing by Padraic Cassidy)