IDB: A bank of ideas, not ideology

When the Inter-American Development Bank (IDB) was created in 1959, 40% of the Latin American population did not have access to water infrastructure. The IDB's first loan was to the city of Arequipa and its water sanitation project, which proved the institution's ability to detect the region's real problems.

The idea of a Latin American development bank headed by Latin Americans did not please many people - not even Che Guevara, who branded it the latrine bank, and not those who defended the status quo and who forecast that the IDB's first president, Felipe Herrera, would last six months because the only Latin Americans that Wall Street was familiar with was those who showed up looking for a handout.

Of all the development banks, the IDB is by far the leading source of financing in Latin America and the Caribbean Yet his presidency lasted 10 years, and he was followed by Ortiz Mena, Enrique Iglesias and Luis Alberto Moreno. Each one of them made changes and left a personal mark on the bank, but they all had one thing in common: their absolute willingness to speak with the entire region, regardless of the political regimes, and to extend loans on just one condition: that the project should be viable and contribute to the economic and social development of Latin America.

Today, the IDB funds around a hundred projects annually in infrastructure, education and trade integration; it facilitates the design and execution of reforms in education, health and the modernization of the state; it also has a private branch that participates in business projects and offers technical assistance. Of all the development banks, including the World

Bank, the IDB is by far the leading source of financing in Latin America and the Caribbean.

The IDB is more than a bank because all its presidents have always known that development is about more than just building dams. They knew that in order to make Latin America a prosperous, inclusive place, it would be necessary to invest in social policies and knowledge. It was that comprehensive vision that allowed the IDB to become the bank of ideas for the region's public policies. Today, the IDB is one of the few existing institutions that is able to combine loans and economic and social development policies with a deep knowledge of its 26 borrowers based on history, mutual respect, trust and dialogue. That is why it is known as Latin America's friendly bank.

But there is another reason. Ever since its creation, this bank has been headed by a Latin American president and supported by an executive vice-president from the United States, the bank's biggest individual shareholder. And borrowers have had most of the voting power on the board of governors. This governance system has not only worked impeccably well - with a portfolio of $100 billion (€89.44 billion) in loans in the region with the most economic crises of the last few decades, the bank holds a triple-A credit rating - it also explains why the region identifies so closely with the institution.

This balance is now under threat due to the Trump administration's decision to nominate a US citizen to lead the IDB. As several former Latin American presidents have noted, this decision goes beyond the mere fact of breaking with a diplomatic protocol: it is the latest link in the chain of the Republican administration's attacks against the global multilateral system, from the Paris Climate Agreement to the World Health Organization (WHO).

Part of the blame for this situation must be assigned to Latin American countries themselves, for having been unable to come up with a candidate who could be unanimously accepted by everyone. If political differences made that impossible, then countries should have focused on professionalism, personal merit and experience. There are candidates out there. But countries did not do this, and now they are dealing with a superlative failure of diplomacy that reveals how deeply the region is divided, damaged and fearful of the upcoming economic depression.

For reasons of history, of democratic culture and economic interests, particularly in Spain's case, Europe should be a relevant player at debates about Latin America. But taking advantage of the vulnerabilities and lack of Latin American leadership in order to strike a blow that will create institutional instability is an unjustifiable decision by the US, especially considering that its own election is just four months away.