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Terra Lawson-Remer

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U.S. Security and the Multilateral Development Banks

Posted: 11/22/11 06:11 PM ET

The "super committee's" apparent failure to cut a deal to trim $1.2 trillion in federal spending over the next decade is set to trigger blanket budget cuts, including $500 billion from the Pentagon's budget. In the face of looming cutbacks, maintaining cost-effective investments in the multilateral development banks (MDBs) -- World Bank, Asian Development Bank, African Development Bank, Inter-American Development Bank, and European Bank for Reconstruction and Development -- is critical.

U.S. security hinges on the success of stability and counterinsurgency operations in weak or failed states like Afghanistan and Pakistan. As former General and current CIA Director David Petraeus reiterated in testimony before the U.S. Senate Armed Services Committee last spring, long-term security requires far more than a military strategy; it requires confronting poverty and deprivation where despair breeds fanaticism and violence. Economic development counters bankrupt agendas of extremism with hope and opportunity.

The groundbreaking 2011 World Bank report on Conflict, Security & Development outlines the critical role that the MDBs can and will play in helping citizens rebuild economies and institutions, and forge confidence and cohesion out of crisis. Given their mandate and expertise, the MDBs are uniquely positioned to nurture stability in fragile and conflict-torn states, and confront poverty and deprivation around the world.

In Afghanistan the World Bank and Asian Development Bank are the second and fourth largest donors -- working closely with the U.S. and other bilateral donors to build critical infrastructure like the Ring Road and the Uzbek-Afghan railroad, and strength governance, transparency, and accountability.

The Asian Development Bank (ADB) has committed more than $2 billion to support Afghanistan's stability and reconstruction since 2002. ADB investments have rebuilt over 1,100 km of roads, so security forces can access remote regions, and farmers can bring their products to market; improved irrigation and water infrastructure, so staple crops like wheat, maize, and barley can compete against opium; repaired power transmission lines, so young girls can study at night; and expanded the rail transport network, so Afghanis can access routes for national and international trade. The World Bank has committed over US$2 billion to finance 41 projects and 4 budget support operations since 2002 -- building nearly 800 miles of village roads and 30,000 of cross drainage, disbursing more than 1.6 million microfinance loans worth US$908 million to 429,989 clients, and rehabilitating 762 irrigation systems serving more than 1,697,000 acres of land. These investments in Afghanistan have generated over 2 million days of employment for unskilled laborers throughout the country and considerably improved crop yields for poor farmers -- expanding opportunities and undermining the recruitment efforts of opium cartels and violent extremists.

Again in Pakistan, the World Bank and the Asian Development Bank are crucial partners in stability operations -- confronting poverty to counter extremism with hope. After the August 2010 monsoons, which displaced nearly 10 percent of Pakistan's population, the World Bank and ADB together provided over $1 billion in emergency assistance for flood recovery and to help Pakistan rebuild vital infrastructure. Between 2004 and 2011, the World Bank invested over US$1.1 billion to construct primary schools and pay schoolteachers in the remote regions of Punjab and Sindh -- increasing student enrollment from 45 to 62 percent. The work of the MDBs extends into the Federally Administered Tribal Areas, where ongoing low-intensity conflict has displaced millions and severely disrupted lives, livelihoods, and the provision of public services. Investments by the MDBs in these conflict-torn corners of the country improve stability and enhance security.

Investments in the MDBs are one of the most cost-effective strategies to protect U.S. security over the long-term. Each $1 dollar the U.S. contributes to replenish the African Development Bank and the World Bank leverages $25 dollars of multilateral development investments to tackle poverty and deprivation, nurture global integration, and support freedom and democratic transitions. And the multiplier effect of capital contributions is even more dramatic. A U.S. contribution of $420 million to the World Bank in 1988 has enabled $383 billion in investments over the last two decades.

In the increasingly constrained U.S. fiscal environment, a prudent Congress should take extra care to safeguard U.S. investments in the MDBs.