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Mauricio Claver-Carone, president of the Inter-American Development Bank, participates in an official ceremony in Asuncion, Paraguay, Sept. 14, 2021.
Photo:
nathalia aguilar/Shutterstock
Socialist governments in Latin America, along with China, wanted to topple the American president of the Inter-American Development Bank,
Mauricio Claver-Carone.
But the U.S. owns 30% of the bank and the anti-American left in the region needed the Biden Treasury’s help.
They got it on Thursday, when Treasury’s representative on the IDB’s executive board of directors,
Fabiana Jorge,
led a vote in favor of Mr. Claver-Carone’s dismissal. The matter now goes to the full board of governors, which is expected to vote this week to end the tenure of the only American president in the bank’s 62-year history.
One notable element of this story is Treasury’s decision to misrepresent the facts about the case and smear Mr. Claver-Carone in its press release last week—more on that in a minute. Character assassination was undoubtedly necessary to justify the overthrow of someone who was implementing policies beneficial to the U.S. and pushing back against China’s privileges at the bank. It’s a loss for Latin American development and a win for Beijing.
Mr. Claver-Carone took the bank’s helm in 2020, and his success in raising private capital for co-financing of projects allowed the bank to reach total financing of $23.5 billion in 2021, well above historic norms. By boosting market confidence in its policies and project design, the bank was able to tap more private money and rely less on government resources. This is explicitly what the Biden administration has asked multilateral banks to do.
But Mr. Claver-Carone also has been breaking rice bowls. The IDB has long served as a slush fund for Latin governments, a dumping ground for politically connected, mediocre economists, and a source of patronage jobs. He ended the practice of reserving key posts for countries that assumed they were entitled to holding them and maintaining designated slots for their lower-level personnel. His refusal to shovel assets out the door to reform-resistant governments won him no friends.
Mr. Claver-Carone took over the IDB from
Luis Alberto Moreno,
a Colombian, who spent 15 years in the job. In public statements the American claims that in his first year he was able to produce a 30% savings in the office of the president alone.
That’s impressive, although perhaps it wasn’t so hard since Mr. Moreno seems to have enjoyed life on the taxpayer dime. Mr. Claver-Carone claims that in cleaning up after his predecessor, he found, among other extravagances, an $8,114.67 receipt for an 11-person dinner at swanky Cafe Milano in Washington. The tab included two $2,400 bottles of wine.
During Mr. Moreno’s IDB presidency, China had wormed its way into the bank, first becoming a very small nonregional shareholder (0.004%) in 2009. Over the last decade, Chinese firms received 10 times the value of procurement contracts in IDB-sponsored projects as U.S. firms. Mr. Moreno’s effort to hold the IDB’s 2019 annual meeting to mark its 60th anniversary in Chengdu, China—which the Trump administration blocked—was emblematic of the power Beijing had acquired at the bank.
When Mr. Claver-Carone reasserted regional shareholders’ priorities according to their actual paid-in capital, China lost its outsize influence. He also brought Taiwanese financing into the bank, giving Beijing another reason to want his head on a platter.
An anonymous email sent to IDB directors in March alleged that Mr. Claver-Carone has an inappropriate relationship with a staffer and misused funds. The email provided no evidence and both Mr. Claver-Carone and his staffer denied the allegations.
Last week the findings of an investigation into the allegations by Davis Polk & Wardwell were given to the board of directors. Lawyers for the IDB wrote to Mr. Claver-Carone on Sept. 16, telling him that if he formally wants a copy, he has to waive his rights to discuss it with the board, the media or anyone else and waive his rights to take any legal action regarding its content. He was interviewed for more than seven hours by investigators, but his lawyers say his testimony is not in the report. Investigators were also given access to all text messages between him and his staffer.
I have not seen the report, but Mr. Claver-Carone’s lawyers note that it says that there is “no direct evidence” of a romantic relationship. Nor is there evidence he misused funds. Nevertheless, Treasury claims that the investigation found “misconduct that violated the Inter-American Development Bank’s principles and values.” It didn’t say he had violated the bank’s code of conduct. When I asked Treasury to support the accusation with facts from the report, it hid behind “confidentiality.”
It’s an insult to Americans to expect them to buy this hooey. Mr. Claver-Carone is a disrupter and the IDB members, including the Biden Treasury, simply refused to stand for it.
Write to O’Grady@wsj.com.
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Appeared in the September 26, 2022, print edition.
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