Monetary Cooperation Between East and West by Adam Zwass

Author:Adam Zwass [Zwass, Adam]
Language: eng
Format: epub
Tags: Political Science, General
ISBN: 9781351695909
Google: gFgPEAAAQBAJ
Goodreads: 35866751
Publisher: Routledge
Published: 2017-07-28T00:00:00+00:00

3.2. The Tasks of the International Investment Bank

The Twenty-Third Special Session of the CMEA (April 1969) hosted a discussion of memoranda from member nations seeking new ways to pursue the goal of economic integration in the Eastern bloc. It was decided to "prepare a comprehensive prospective program on the broadening of cooperation and the development of socialist economic integration." The Twenty-Fourth Session approved the draft outline, the structure, and the provisional content of this program. These two sessions also formulated the resolution establishing the IIB (Twenty Third Session) and approved the general outline of its activities (Twenty-Fourth Session).

Article III of the agreement reads: "The principal function of the bank is the granting of long-and medium-term credits, primarily for the execution of projects in connection with the international socialist division of labor, specialization and cooperation in production, and expenditures for the expansion of raw material and fuel reserves in the common interest; for the construction of projects in other sectors of the economy that are of common interest for the economic growth of the bank's member nations; for the construction of projects to further economic growth of the national economies of the respective countries; and for other purposes...." (72)

"The activities of the bank should be organically connected with practical programs promoting socialist economic cooperation, and working toward the achievement of a uniform level of development in all the member nations...." (73)

The IIB is primarily involved in the financing of projects of common interest for the promotion of international specialization. The bank is to encourage the multilateralization of economic relations and make available the multilateral funds required for that purpose. In the integration plan of the CMEA, the "founding of the International Investment Bank was a comprehensive measure that paved the way for the systematic and deliberate international utilization and concentration of investments in the pursuit of solutions to current international and national economic problems." (74)

The IIB was charged with a qualitatively new task: to put an end to the current practice of extending credits in commodity form for investment purposes and to create a new, progressive form of multilateral bank credit.

The investment bank assumed a task much more complicated than that of the IBEC. It was to create a joint fund of capital and dispense it in the form of credits. The founding of the bank marked the beginning of a new stage in which special emphasis was given to cooperation in currency matters. (75) An investment bank, however, has more need of a viable currency than does a clearing bank.

It should be pointed out that the European Investment Bank was founded before, not after, the postwar currency crisis had passed. It was not established at the same time as that clearing institution par excellence, the EPU, but only after convertible currencies were restored in Western Europe, i.e., when the EPU had already been in operation for seven years.

The CMEA investment bank, however, was founded when it was realized that the IBEC would be obliged to continue functioning as a clearing office because the necessary preconditions for abolishing bilateralism in the CMEA did not exist.

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