IDB's Claver-Carone outlines plans for COVID-19 recovery, capital increase

Our COVID-19 coverage is free. Please consider a Devex Pro subscription to support our journalism.
Mauricio Claver-Carone, president at the Inter-American Development Bank. Screengrab from: IDB via YouTube

WASHINGTON — Despite regional opposition to the nomination of an American, new Inter-American Development Bank President Mauricio Claver-Carone said he has united its members around his vision for the multilateral development bank.

In a wide-ranging interview with Devex, Claver-Carone described his plans for the bank as Latin America and the Caribbean reels from the impacts of COVID-19 and he seeks a capital increase to ensure that IDB can maximize regional job creation during recovery.

The bank has traditionally been led by a president from the region, and a group of countries opposed the Trump administration nomination of Claver-Carone on the grounds that that precedent should remain. But efforts to delay or prevent the election failed, and Claver-Carone, who formerly served as senior director for Western Hemisphere affairs in the White House National Security Council, earned a majority of votes as the only candidate officially nominated.

Since he took up the IDB presidency on Oct. 1, Claver-Carone said he has spoken directly with leaders of some of the nations that opposed his run, including Argentina, Costa Rica, and Chile.

“We all agreed to have a cohesive agenda … We talked about the opportunities and the need for a capital increase, we discussed how to focus on job creation,” Claver-Carone said. “It behooves us now to work as one to move forward on that agenda. So I think there’s a great deal of cohesion.

“I think, frankly, there’s been more cohesion than there’s probably been in the past in this regard,” Claver-Carone continued. “We bring an opportunity to have greater representation here in the bank and I think that’s one of the things I’m very proud of to be able to do, being from the United States — something different.”

That includes elevating representatives from smaller countries like Paraguay and Ecuador — which typically have not held powerful roles at the bank — to positions of vice president of countries and the vice president of sectors, respectively.

“There’s no disagreement on the vision that we have proposed and the efforts we’ve proposed. So I think we have a better opportunity than we’ve ever had.”

— Mauricio Claver-Carone, president, Inter-American Development Bank

Claver-Carone said he wants his to be “the presidency of small countries” so they aren’t mathematically prevented from forming effective coalitions, which in the past have been dominated by larger countries.

“At the end of the day, there’s only so much we can invest in Mexico, Brazil, and Argentina that’s going to have a real development impact in those countries because they’re big countries, with …  big economies. But we can have one hell of an impact in Honduras, in Haiti, in small countries throughout Central America, the Caribbean, the small countries of South America. We can have a real big, big development impact in those with more consistent amounts of money,” Claver-Carone said.

“I won’t say that all countries are really happy about that, but it is what it is.”

Claver-Carone indicated his nomination for executive vice president — a position that had traditionally gone to an American in the past — will be “historic,” and will come from a smaller bank member country. He declined to name his pick but said “she’s an extraordinary finance leader” and said after approval from the board, the announcement should be public by the end of the month.

Digitalization, nearshoring, and support for small and medium-sized businesses will be key to COVID-19 recovery in Latin America and the Caribbean, Claver-Carone said. The region has the highest number of deaths of any in the world, and an estimated 24 million jobs have been lost. Informality, already a large share of the market in many countries, has already increased to 62 percent, Claver-Carone said.

“Our job is not to compete or replace the private sector. Our goal is to really focus in on helping those that don’t have access or where that is not available in order to help the most vulnerable populations and countries in need,” Claver-Carone said.

“What I don't want is particularly the small countries … to then have to make choices on spending on people’s lives today or sacrificing their children and grandchildren’s futures tomorrow. We can be a good partner in helping them balance those really difficult questions.”

Lockdowns have sent tourism in the region plummeting, with small Caribbean states that are highly dependent on the industry suffering the most. Small and medium-sized businesses have been hit extremely hard, with few countries able to offer government loans, or support like the U.S.’s Paycheck Protection Program.

“One of the lessons learned moving forward as we seek to focus on job growth and focus on small business growth, would be to plan in the future for some type of safety net as well for small and medium-sized businesses, particularly in times of great pressure. But then again, most countries in the region don’t really have a safety net for individuals, let alone for small business,” Claver Carone said. “We can be creative not just from a knowledge capacity, but a financing capacity.”

Key to the success of Claver-Carone’s agenda will be delivering on his campaign pledge to secure a capital increase for IDB. The bank has not seen its $12 billion borrowing limit increased since 2010, but Claver-Carone said the region likely needs about $25 billion in lending. Not all of that should come from IDB, he said, so he’s aiming for an increase to $20 billion to aid in COVID-19 recovery.

More money is also needed, he said, to help countries respond to the Venezuelan refugee and migrant crisis. That country’s political and economic collapse has driven more than an estimated 5 million people abroad since 2015, with the majority of them settling in Latin America and the Caribbean. Neighboring Colombia hosts the largest portion, an estimated 1.8 million.

Securing the capital increase will require approval from the U.S. Congress, where Senate Appropriations Committee member Sen. Patrick Leahy, Democrat of Vermont, pledged during Claver-Carone’s candidacy to deny him a capital increase. If Democrats take back the Senate after the November elections, Leahy would chair the committee.

Claver-Carone said he has “high confidence” he can secure support from the relevant committees in both the Senate and the House.

“I think we’re actually in a much improved position than in the past. There has never been a champion of making the IDB more financially relevant or having a capital increase in the United States Congress,” Claver-Carone said.

“I hope to be able to convince everyone. I think we have a very compelling case to make and I think we’re going to be doing some good work … There’s no disagreement on the vision that we have proposed and the efforts we’ve proposed. So I think we have a better opportunity than we’ve ever had.”

Approving the capital increase will also allow IDB to retain its position as Latin America and the Caribbean’s lender of choice over China, Claver-Carone said. He worked to counter Chinese influence in the region while in the U.S. government through the America Crece initiative.

China is a member of IDB, and Claver-Carone said nothing the bank does is “prejudiced” toward China,” but “there’s no comparison” in lending partners.

“If you present the region with the choice of borrowing from the IDB, of which they own over 50 percent, or borrowing from China, they would hands down say IDB,” Claver-Carone said.

“We’re the lender of choice for the region, but … in order to be able to really fulfill those needs in the region, we need to be more financially relevant. I think it behooves not only the region but it behooves the United States, in order to work towards a capital increase so we can remain the lender of choice.”

Updated Oct. 16, 2020: This article has been updated to reflect the percentage increase in economic informality.

About the author

  • Teresa Welsh

    Teresa Welsh is a Senior Reporter at Devex. She has reported from more than 10 countries and is currently based in Washington, D.C. Her coverage focuses on Latin America; U.S. foreign assistance policy; fragile states; food systems and nutrition; and refugees and migration. Prior to joining Devex, Teresa worked at McClatchy's Washington Bureau and covered foreign affairs for U.S. News and World Report. She was a reporter in Colombia, where she previously lived teaching English. Teresa earned bachelor of arts degrees in journalism and Latin American studies from the University of Wisconsin.