The Cable

Lugar: No more money for development banks until reform

In the wake of the global financial crisis, a slew of multinational development banks are asking for large amounts of new capital to both replenish and in some cases expand their resource pools, and much of the burden will fall on the United States.

This creates a unique opportunity for the Obama administration to press these organizations to implement long-awaited reforms, according to the Senate's top Republican on foreign relations, who has a big say in whether and how the Congress doles out the funds.

"As the world struggles to emerge from the worst economic crisis since World War II, it is an appropriate time to ask whether the [International Financial Institutions] are performing optimally and doing the jobs they should be doing," reads a newly released report by the staff of Sen. Richard Lugar, R-IN, "The crisis should not be used as an excuse to win increases that could not otherwise be justified. As the requests for capital are negotiated with the international donor community, there is a window of opportunity for significant reform."

The report, which is the culmination of six years of research, including half a dozen hearings when Lugar was committee chairman, outlines several dozen recommendations for what the Obama administration, Congress, and the banks can do to update their relevance.

"Does the world really need the IMF, World Bank, African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, and Inter-American Development  Bank today? Can they be changed to better address our needs? How should we re-design them?" the report asks.

"Such questions are particularly timely because nearly all the IFIs have sought, or will soon seek, major new infusions of money from their donors, including the taxpayers of the United States."

The Asian Development Bank has already asked the Obama administration for new funds, and the administration has requested in its new budget $533 million in direct money and $12.8 billion in borrowing authority for the ADB.

A committee staffer told The Cable that Lugar wants to see progress on reform before he would support authorizing the money.

"We want to make sure that before the American taxpayer puts more money in there that things are fixed," the staffer said. "It's not possible for them to do everything, but they could certainly make progress."

The reforms the administration could press for in the short term include pressing the banks to focus more on development goals rather than the structure and size of loans and "work with the other donor countries to step back and slow down the process," the staffer said.

Congress is also concerned that the Obama administration might not be interested in pressing for these reforms, considering that Obama issued a signing statement in June indicating he did not feel bound to follow congressional direction on such international negotiations.

Negotiations between several banks and the Treasury Department are ongoing. The U.S. side is led by Scott Morris, deputy assistant secretary of the Treasury's Office of International Development Finance and Debt.

The issue will next surface at the end of March when the Inter-American Development Bank convenes its annual meeting in Cancun.

The Cable

Report highlights growing risks of terrorism in the U.S.

Since last fall, five major incidents have brought the issue of "homegrown terrorism" to the fore, as Washington policy experts try to find new ways to combat what seems to be a growing trend.

The U.S. government needs to refocus its efforts on extremists born and raised in American communities, through tougher confrontation of "Internet radicalization," doing more to combat the notion that America is at war with Islam, and improving cooperation with local law enforcement, according to a report being released today by the Center for Strategic and International Studies.

"Facing comparatively few restrictions, U.S. legal residents and citizens can travel abroad, connect with terrorist groups to gain explosives or weapons training, and return here to plan and execute attacks," the report warns.

Rick "Ozzie" Nelson, one of the principal authors of the report, told The Cable that his group tried to find a common thread in the recent spate of high-profile domestic terrorism cases, but none was apparent. The perpetrators had different backgrounds, family identities, levels of wealth, and various motivations. The suicide attack on an IRS building showed that not even religion can be seen as a common theme in domestic extremism.

Therefore, the U.S. government needs to build resilience and greatly expand its ability to detect domestic terrorist threats, which are increasingly organized online.

"The U.S. government needs to be much more aggressive and have a much more comprehensive plan to address these threats on the Internet," said Nelson. "We have to start to treat this virtual environment as a battlespace."

To the extent some domestic extremists are motivated by the perception that the United States is at war with Islam, that's the government's fault too and needs to be corrected, he said. "The U.S. needs to do a better job of counteracting this narrative."

Here are the five domestic terrorism cases examined by CSIS, all from 2009:

Sept. 19: Najibullah Zazi, an Afghan citizen and U.S. legal resident, was arrested on charges of conspiracy to use weapons of mass destruction. Zazi later admitted to traveling to Pakistan to receive explosives and weapons training and to planning an attack in the United States.

Oct. 27: Federal authorities charged U.S. citizen David Coleman Headley with planning to attack a Danish newspaper. In December, revelations surfaced that Headley may have conspired with operatives of Lashkar-e-Taiba, a Pakistani terrorist group, in the 2008 Mumbai attacks.

Nov. 5: U.S. Army Maj. Nidal Malik Hasan allegedly killed 13 and wounded 30 at Fort Hood Army Base outside Killeen, Texas. Early reports revealed that Hasan had previously communicated with a radical Yemeni cleric connected to al Qaeda.

Nov. 23: Federal officials unsealed indictments against eight people charged in connection with the alleged recruitment of approximately two dozen Somali Americans to fight with an insurgent group in Somalia.

Dec. 9: Five young Northern Virginia men were arrested in Sargodha, Pakistan. U.S. and Pakistani authorities claim that the group traveled there to fight alongside Taliban militants in Afghanistan.

"This rash of arrests has important implications for policymakers and officials in charge of counterterrorism and homeland security because U.S. legal residents and citizens are lucrative assets for global terrorist organizations," said the report.