We live in an increasingly dangerous world, facing more flash points than at any time since World War II. China, Russia, North Korea, Iran and terrorism are threats that feed off growing instability. As we learned in the post-World War era, the key to protecting our security is to invest in promoting economic stability and prosperity.
To accomplish that goal, we need security alliances like NATO and economic institutions like the World Bank and the International Monetary Fund (IMF). Both are in need of additional funds if democracies are to compete with the growing influence of autocracies.
China’s check book has been working hard to win over hearts and minds in the Global South over the past decade. Through its Belt and Road Initiative (BRI), China has signed Memorandums of Understanding with more than 140 countries and provided more than $1 trillion in loans for infrastructure projects, including ports, rail systems and roads. Since its launch in 2013, the initiative has helped China surpass the World Bank and the IMF to become the world’s largest provider of development credit.
Unlike World Bank and IMF financing, Beijing negotiates behind closed doors and BRI loan terms remain hidden from public view. Beijing sells the infrastructure projects as a way for funding recipients to deepen trade and strengthen economic ties with China, though these mega projects frequently leave vulnerable countries with unsustainable debt burdens.
This increases their economic dependence on China and opens them up to political coercion. BRI loans have tested recipients’ economies: In March, The Wall Street Journal reported that China had issued $230 billion of emergency funds in the last 10 years to shore up BRI loan recipient countries like Angola, Pakistan and Sri Lanka.
With the emergence of China as a major lender to developing economies, we are increasingly fighting with one hand tied behind our back. To counter China’s predatory lending and to strengthen the World Bank and IMF, the Biden administration has requested $3.3 billion for these institutions as part of its supplemental budget request to Congress. Lawmakers should prioritize fully resourcing these multilateral development banks, as they align closely with American values and support U.S. strategic interests.
The World Bank and IMF have played a key role in providing funding to Ukraine as it has defended itself against Russia’s invasion over the past 18 months. As of June, the World Bank had sent $37.5 billion in emergency funding to provide Ukrainians with essential services and goods. In March, the IMF approved its latest package of $15.6 billion to help stabilize the economy.
Without these, Ukraine’s economy would crater, leaving its citizens to suffer even more. These institutions have also provided much needed resources for affected countries on Ukraine’s borders as well as states suffering from food shortages as a result of Russia’s blocking Ukrainian grain exports from the Black Sea.
The additional funding for the World Bank and IMF will help them continue to support Ukraine, but also increase access to transparent, well-governed, concessional financing — below market rates — for countries that might otherwise turn to China and the BRI. This aligns with the goals of new World Bank President Ajay Banga, who took office in June 2023 and has vowed to “write a new playbook” for the bank.
Banga, an accomplished American businessman who served as Mastercard president and CEO from 2010-2021, is currently on a travel schedule this fall visiting countries in every region where the World Bank operates. Congress should help by approving the supplemental request and give Banga good news to share on the ground regarding increased opportunities for high quality, concessional infrastructure project financing.
As leaders gather in New Delhi on Sept. 9-10 for the Group of 20 Summit, which China’s leader Xi Jinping will reportedly skip, U.S. allies and partners must keep in mind that more than 40 countries applied to join the BRICS (the political grouping of Brazil, Russia, India, China and South Africa) ahead of the group’s Aug. 22-24 summit. Xi has sought to position BRICS as a Beijing-led counterweight to the U.S.-led Group of 7. While Washington might view the BRICS as a political curiosity, the high volume of member applications indicates plenty of countries see value in associating themselves in a China-led bloc.
U.S. funding for the World Bank and IMF is a worthwhile investment. Through these institutions, the United States, its allies and partners have provided a lifeline to Ukraine and countries affected by Russia’s heinous war. In the longer term, a strong and well-resourced World Bank and IMF provide sustainable funding for low- and middle-income countries to realize their economic potential instead of falling into Beijing’s debt traps and coercion. Every dollar channeled into these institutions helps to foster sustainable economic growth and strengthens U.S. global leadership.
Leon E. Panetta is chairman of the Panetta Institute for Public Policy. He was the 23rd U.S. secretary of Defense from 2011 to 2013, and CIA director from 2009 to 2011. He previously served as member of congress, director of the Office of Management and Budget, and White House chief of staff.
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