WASHINGTON, Oct. 4 (UPI) -- Increased capital funding to multilateral development banks will promote economic prosperity and national security, witnesses told a U.S. House of Representatives committee Tuesday.
In a hearing on international monetary policy and trade, U.S. Rep. Bob Dold, R-Ill., said there are domestic economic benefits that come at a low cost with the authorization of the Obama administration's $3.3 billion request for multilateral development banks in 2012.
Multilateral development banks, which provide financial support and assistance to developing countries, typically refer to the World Bank and four regional development banks: the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development and the Inter-American Development Bank Group.
A large percentage of investment opportunities for the United States lie in the developing world, said Mark A. Green, former U.S. ambassador to Tanzania and senior director of the U.S. Global Leadership Coalition.
"The World Bank and the MDBs are vital in helping these nations that are friendly to American involvement, including business investment," Green said.
"For our job creators to be able to invest overseas, to invest overseas, there are certain foundational needs," Green said, citing that investment in the World Bank is necessary for these efforts to be meaningful because there is a lack of transparency and rule of law in developing countries that U.S. investors shy away from.
The capital increase for multilateral development banks is an investment that will open up export markets, said John Murphy, vice president for International Affairs at the U.S. Chamber of Commerce.
"At a time when demand is slack in the U.S., this is very welcome to American companies," Murphy said.
U.S. Treasury Secretary Timothy Geithner has shown support for the financing of multilateral development banks. He called them "vital contributors" to global economic growth in a Sept. 27 speech at the U.S. Chamber of Commerce.
Geithner also said the banks are helping support the transitions of the Arab Spring, which pegs to the issue of national security brought up at Tuesday's hearing.
Increased funding for the World Bank and regional development banks is not just about the stabilization of economic markets, said Daniel Runde, director of the Project on Prosperity and Development and the William A. Schreyer chair in Global Analysis at the Center for Strategic and International Studies in Washington.
"In situations where there is a conflict, such as Libya and Afghanistan, the United States needs to build up and support local institutions as quickly as possible and do so in a way where we burden share with other donors," Runde said in his testimony. "One of the most effective ways is through the MDBs."
Eli Whitney Debevoise II, former U.S. executive director of the World Bank Group and senior partner at Arnold and Porter LLP in Washington, reminded Congress that the current World Bank president, Robert Zoellick, will finish his term by June 2012.
"If we want an American to continue in the position, we need to be seen contributing our share," Debevoise said. He urged the House finance committee to move the authorization of capital increases for the World Bank and other multilateral development banks.
"It is the right decision for U.S. national and economic security," he said.