It is near impossible to overstate the economic, political and social consequences of the COVID-19 pandemic for the countries of the Western Hemisphere.
To date Latin America has registered more COVID-19 cases than any other region in the world, with the United States and Canada a close second. The collective economies of Latin America and the Caribbean are expected to contract at least 9.4% in 2020, with the United States and Canada again close behind at -8.0% and -8.4%, respectively.
And those are simply the initial effects of this crisis. Far more is to come.
Once fully accounted, the challenges created by COVID-19 will dwarf those of the so-called lost decade of the 1980s and almost certainly surpass those of the Great Depression.
Together with the escalating hemispheric effects of climate change, endemic corruption, rampant insecurity, and increasing volumes of people on the move – both the internally displaced and those forced to flee their home countries – these realities require a coherent, coordinated response.
A response for which U.S. leadership is essential, but far from sufficient.
Given the shared destiny of the 35 countries of the Western Hemisphere, bound together by deep interconnections, the response will require bold action – by public and private actors alike – throughout the hemisphere.
This need for coordinated action is both a challenge and opportunity for the world’s oldest regional multilateral system, which has, in many ways, represented the heights of what can be achieved through international cooperation, particularly with respect to the collective defense of democracy and human rights.
Sadly, in many respects the inter-American system’s institutions have been reduced to relics of a bygone era, ill-suited to current challenges. They are all under-resourced and burdened by legacy missions that do not speak to the historic challenge before the nearly 1 billion residents of the hemisphere.
That must change. To meet today’s challenges, we need to start anew when it comes to the inter-American system while preserving the shared values and commitments that make the system unique.
In the construction of a new inter-American system built for the moment at hand and decades to come, there is an opportunity with the upcoming election of a new president of the Inter-American Development Bank (IDB).
Since its inception, the IDB has been characterized by two critical features – the United States has been its largest shareholder and its president has been chosen from Latin America and the Caribbean.
Both features are more important than ever and must be preserved.
An IDB with a deep balance sheet deployed in tandem with economic and social development expertise is an important bulwark in defense of U.S. interests and values. A strong, accountable, multilateral financing system is an essential counterweight to increasing Chinese investment and financing that undermines a rules-based approach to economic development at every turn.
A strong IDB can serve as a multilateral amplifier – internationally and domestically across the Americas – of values that include transparency, accountability and inclusion. Three things in short supply wherever China is involved.
In short, U.S. engagement and support for the bank is critical. It provides important leverage for U.S. taxpayer dollars devoted to economic and social development in countries that have a profound impact on the well-being and interests of the United States.
But to be effective, to be an instrument of partnership in which each country carries its respective burden – and not be an antiquated instrument of implicit U.S. hemispheric ownership – the IDB cannot be reduced to a mere tool of U.S. policy.
An IDB headed by an American – any American – would undermine its fundamental mission in a new inter-American system.
The Western Hemisphere is full of asymmetries. As the world’s largest economy, it is undeniable the United States is not on equal footing with the rest of its neighbors in the Americas. Too many in the region for too long have hidden behind that asymmetry, either passively waiting for the United States to swoop in and save the day or actively criticizing it for not doing enough.
Putting the IDB in U.S. hands would only exacerbate the effects of that asymmetry and reduce its effectiveness. It would eliminate agency for other countries in the Americas. And it would do so at precisely the wrong moment, when the countries of the Americas need to come together for a historic rebuilding effort.
Perhaps counter-intuitively, it would also undermine a quick recapitalization of the bank, as it would convert the IDB into a partisan and ideological flashpoint in Washington, D.C. – something the bank has avoided throughout its history of Latin American leadership. It could also lead some to question why the United States needs two development banks – the IDB and the recently minted Development Finance Corporation.
Leaders across the Americas face enormous challenges today. Wrestling COVID-19 under control is chief among them, but looming immediately thereafter will be the task of building more resilient, sustainable, just, and inclusive economies out of the COVID-19 wreckage.
A new Latin American leader for the IDB would be a critical first step in that direction.
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Jacobson was Assistant Secretary of State for Western Hemisphere Affairs from 2012 to 2016 and U.S. Ambassador to Mexico from 2016 to 2018.
Restrepo was Special Assistant to the President for Western Hemisphere Affairs 2009 to 2012.
