Inter-American Development Bank
At 30% voting share, US has de facto veto over IDB operations—but headquarters in Washington was contingent on the 'unwritten rule' that IDB president be Latin American, not American. This held for 60 years through five presidents (all Latin American: Herrera, Ortiz Mena, Iglesias, Moreno). In 2020, Trump nominated Mauricio Claver-Carone, first non-Latin American candidate, generating 'mixed reaction'—Argentina and Mexico refused to break tradition. He won anyway (30 of 48 governors, 67% of shareholding) and became first US president October 2020. Twenty-three months later, IDB Board unanimously ousted him (September 2022) after investigation found he violated ethics rules via affair with subordinate, gave her 45% salary raises in under a year, and allegedly threatened to 'burn down' the bank. Senator Patrick Leahy and Mexican officials said the 'experiment of appointing someone from outside Latin America had failed.' Presidency returned to Latin America with Ilan Goldfajn (Brazil, December 2022). Meanwhile, IDB now provides $10B to support Argentina's Milei—whose libertarian shock therapy is controversial—showing how US influence operates through financing.
Power Dynamics
Board of Governors (one per 48 member countries: 26 borrowing regional, 2 non-borrowing regional, 20 non-regional). US holds 30% voting share. Supermajority required for major decisions. Board of Executive Directors oversees operations.
US 30% vote = de facto veto on any decision requiring supermajority (charter amendments, capital increases, major policy shifts). Washington headquarters gives US geographic and institutional leverage. IDB presidents historically Latin American to balance US financial dominance—but Claver-Carone episode showed US can override tradition when it wants. Current president Goldfajn (Brazil) coordinates with IMF and World Bank on Argentina support, demonstrating IDB as part of Washington Consensus apparatus. CAF (Andean development bank) founded 1968 partly as alternative to IDB's US hegemony—CAF has founding-member majority control (Bolivia, Colombia, Ecuador, Peru, Venezuela) and looser conditionality, but can't match IDB's $13.1B lending (2024) due to lower creditworthiness without US backing.
- US 30% voting share vetoes supermajority decisions
- Washington D.C. location—US can pressure staff, control access, monitor activities
- Borrowing member majority can block some decisions but US controls capital
- Board of Executive Directors—US has permanent seat and coordination with allies
- IDB ↔ US: 30% shareholder, headquarters in D.C., coordinate on Western Hemisphere policy—but Claver-Carone ouster showed limits
- IDB ↔ Argentina: Major borrower; $10B support package for Milei's reforms despite controversy
- IDB ↔ Brazil: Largest regional economy, current president (Goldfajn) is Brazilian, traditional rivalry with Argentina
- IDB ↔ CAF: Competitive—CAF founded as alternative to US dominance, has founding-member control, but IDB has more capital
- IDB ↔ World Bank / IMF: Coordinate on Latin America—'troika' of Washington-based institutions
- IDB ↔ China: China not a member; IDB seen as US counterweight to Chinese bilateral lending in region
Revenue Structure
Inter-American Development Bank Revenue Sources
- Bond issuance (AAA/AA+ rated) 70% →
- Member capital subscriptions 20%
- Loan repayments and investment income 10%
US backing critical for rating
Credit rating depends heavily on US 30% callable capital—if US withdrew or was downgraded, IDB's borrowing costs spike. US political shifts impact priorities: Trump nominated Claver-Carone (ousted for ethics violations), Biden returned to Latin American president tradition. If US pivots to isolationism, IDB's Washington location becomes liability rather than asset. Argentina default risk (perennial concern) and Venezuela crisis create loan portfolio vulnerabilities.
IDB approved $13.1B (2024) vs World Bank ~$70-80B globally but IDB is Western Hemisphere-focused. CAF lends ~$7B with founding-member (not US) control and lower conditionality—some borrowers prefer CAF for sovereignty reasons despite higher interest rates. IDB is 'hegemonically structured' (US dominance) vs CAF's 'multipolar' structure (five founding members with roughly equal power).
Decision Dynamics at Inter-American Development Bank
Claver-Carone removal (September 2022): Unanimous Board vote to oust president after ethics investigation—swift once evidence compiled. Argentina support package (2024-2025): Rapid $10B commitment coordinated with IMF/World Bank for Milei's reforms.
Capital increases can take years of negotiation over voting share adjustments—regional vs non-regional members, borrowing vs non-borrowing. Claver-Carone presidency (2020-2022): Broke 60-year tradition, generated controversy from nomination through ousting—experiment lasted only 23 months.
US 30% veto means major decisions require US approval. Regional members have formal majority but lack capital to override US. Borrowing countries want looser conditionality; US wants policy reforms. This tension drives some countries to CAF or Chinese bilateral lending as alternatives.
Failure Modes of Inter-American Development Bank
- Claver-Carone scandal (2020-2022): First non-Latin American president ousted for ethics violations after 23 months—'experiment failed,' damaged IDB credibility
- Argentina defaults and restructurings (2001, 2020, etc.): IDB exposure to serial defaulter creates portfolio risk
- Venezuela crisis (2019-present): Maduro vs Guaidó recognition question paralyzed IDB governance temporarily
- Cold War legacy: IDB historically aligned with US anti-communist policy—funded regimes regardless of human rights records
- US hegemonic control: 30% veto means IDB can't act if US opposes—hub-and-spoke structure with US as hub
- Washington location: Geographic and institutional capture—US proximity to staff, Board, information
- Competition from CAF: Borrowers can bypass IDB for Latin American-controlled alternative with less conditionality
- Path dependence: 60-year tradition of Latin American presidents was broken once—could erode further if US prioritizes control over legitimacy
If US imposes ideologically-driven conditionalities (e.g., abortion policy, climate skepticism, trade alignment), borrowing countries defect to CAF or China. If Argentina defaults on major IDB loans during Milei's shock therapy, portfolio damage triggers rating review. If US withdraws from multilateralism entirely, IDB becomes 'orphaned hegemon structure'—designed for US leadership but abandoned. Combined scenario: CAF expands to fill gap, China provides bilateral financing without conditionality, IDB becomes irrelevant except for countries that need US political approval—which is exactly the hub-and-spoke interference competition it was designed to perpetuate.
Biological Parallel
IDB is like remora (Echeneidae) attached to US 'shark': The remora's suction disk (30% US voting share) keeps it attached to host, gains mobility (access to Western Hemisphere), feeding opportunities (US-backed bond issuances), and protection (US military/economic umbrella). But remora cannot choose direction—swims where shark swims. When US wanted Claver-Carone as president, IDB went that direction despite Latin American opposition. When that failed, US allowed return to tradition (Goldfajn). Now IDB supports Milei's controversial reforms because US does—$10B commitment coordinates with IMF/World Bank 'troika.' CAF represents free-swimming fish strategy—less powerful, more vulnerable, but autonomous. The 60-year tradition of Latin American presidents was like remora trying to steer shark—worked as long as shark tolerated it, but 2020 showed shark can override anytime. US 30% veto is the suction disk—detachment means death, but attachment means following shark's territorial disputes and feeding frenzies.