Asia has become too big for its bank
THE Asian Development Bank may have become the victim of one of Parkinson's Laws - that building a new headquarters is an early symptom of corporate middle age.
The ADB is still regarded as the best run of the regional development banks, but its first annual meeting held at its new Manila headquarters was an uneventful affair which was given scant attention by governments, despite the bank's urgent need of new capital.
Japan, which is the largest shareholder and has always provided the bank's president, sent Finance Minister Yoshiro Hayashi, who urged expansion of the bank's capital base.
But even the Japanese seemed unsure of the direction in which the institution should be headed.
As for the Americans, their attendance was low level and barely coherent. The Clinton administration has yet to develop a policy for multilateral institutions in general, let alone for the ADB.
Even the plush building added to the air of remoteness. It is located in the new Ortigas business district in Manila's eastern suburbs, which is itself symptomatic of the mis-direction of what little new investment the Philippines enjoys.
Being on the fringe of a city on the fringe of Asian development is itself a problem for the ADB.
But there are others. Most immediate is the capital increase which the ADB needs if its lending ability is not to fall sharply at the end of next year.
Under its current rules, loans outstanding and committed are not allowed to exceed subscribed capital and reserves.
At present, new loans from ordinary capital resources are being made at the rate of some US$4 billion a year, although gross disbursements are running at only half that and net - after loan repayments - at around $1.5 billion.
Without either a capital increase or a change in the rules, new lending would have to fall to around $1 billion, representing repayments plus retained earnings which are growing at roughly $500 million a year.
The bank can scarcely be accused of being profligate. Its last capital increase has lasted twice as long as originally envisaged - despite China's emergence as a major borrower - because other lending has grown more slowly, partly because of early repayments, notably by Thailand and South Korea, of loans at high, fixed rates.
But the US in particular is likely to remain difficult. The Clinton administration may be ideologically more favourable to multilateral banks than the Reagan and Bush administrations.
But money is tight and the ADB's focus too blurred.
It is widely believed that Japan will upgrade the bank in its own hierarchy by sending the versatile and articulate Vice-Minister for International Affairs at the Finance Ministry, Mr Tadao Chino, to replace current president Kimimasa Tarumizu.
In theory, most agree that with Vietnam and the former Soviet Central Asian republics - most of which are now negotiating to join - likely to be significant borrowers from 1995, the ADB needs more resources.
But in practice the shifting emphasis of its lending raises issues of politics and perception which can be summed up in the question: what is Asia? The ADB was a Cold War monument to Western and Japanese co-operation to fight communism through investment and trade. For its first 20 years, its ordinary lending was in East and Southeast Asia.
Its concessional lending went mostly to Bangladesh, Pakistan and Sri Lanka. China was not a member, India not a borrower.
The ordinary lending was thus to a group of middle-sized, trade-oriented, middle-income economies in which the ADB could have influence and where results showed.
Nowadays, these borrowers have less need of the ADB. Meanwhile, India and China now take almost 50 per cent of ordinary loans. The ADB's influence is less in these huge countries and at best it merely plays a supporting role to the World Bank in encouraging market reform.
It is also more political. Thus the capital increase cannot now easily be separated from other aspects of the US-China relationship and increasing nervousness about China in Southeast Asia.
The decline in lending to middle-income East Asian countries such as South Korea, Thailand and Malaysia has also hurt loan quality.
There are worries about poor project performance and acknowledgement that success or failure is more due to the administrative standards of the borrower than to the ADB.
The future is clouded by the decline of US-Japan mutual interests and by the consequences of the westward geographic lurch to come with admission of the Central Asian republics with their links to Russia, Turkey and Iran.
Turkey is a ''non-regional'' member of the ADB but Iran is eligible as a regional developing member.
It declined to join under the Shah out of irritation that Teheran was not chosen as the headquarters. Now it wants to join but is being kept out by the West on grounds of its being a ''terrorist'' state.
The Central Asian republics are also members of the European Bank for Reconstruction and Development so may look less to the ADB. But Iran is unlikely to be kept out forever and Pakistan is looking increasingly to Central Asia for trade.
The ADB's reputation in capital markets and the support of the developed members has rested squarely on its identification with the world's fastest-growing region: East Asia and the Pacific.
China's boom and the Indian reforms have helped sustain that reputation for being in the right place at the right time.
But the less it is a Pacific club the more difficult it may be for the bank to sustain its portfolio quality and take advantage of the combination of Japan-US commercial rivalry and political solidarity which have underpinned it.
The capital increase cannot be separated from the question: where will the money go? Opportunities in Vietnam excite the management and most members.
But otherwise, with the zeal of the US and others for helping China having apparently peaked, and neither the US nor Japan caring deeply about West and Central Asia, politically persuasive answers are hard to find.
It's a long long way from Ortigas to Azerbaijan. Asia is just too big for its bank.