CONABLE WARNS PROTECTIONISM MIGHT SPREAD World Bank President Barber Conable expressed concern that trade protectionism, at the heart of a new showdown between the United States and Japan, might spread throughout the industrial world. But in an interview with Reuters, Conable said the action by the United States to slap tariffs on certain electronic goods from Japan did not mean the countries were heading for a full-scale trade war. Conable said the World Bank has been pressing developing countries to open their markets, arguing that a free trading environment increased the possibility of global economic growth. "We have, in fact, been making adjustment loans to many countries in the developing world which have encouraged the opening of their markets and we want to be sure that the developed world doesn't close at the same time," he said. He said the U.S. action against Japan was "a significant retaliatory step but it did not constitute a basic change in trade policy." The interview came just before next week's semi-annual meetings of the Bank and the International Monetary Fund. Referring to Brazil's recent interest payments moratorium, Conable also said the global debt situation was very serious and must be closely watched. He said the Bank, which in the past has concentrated on making loans that assist the basic underpinnings in the developing world such as dams, roads and sewers, will increasingly make assistance available for economic reform. The Bank has increased these loans, in part because of the debt crisis that has found countries desperately in need of new funds for balance of payments adjustment and economic reforms aimed at opening their markets, encouraging foreign investment and reducing government's role in the economy. "We're comfortable with adjustment lending, we expect, however, that it will never reach a majority of our portfolio," Conable said. He made clear, however, that adjustment lending would continue to increase as a proportion of overall Bank lending for some time. He noted, "the problem of debt was a severe one and many countries are asking for adjustment assistance because of the problem of debt." Conable, is a a former Republican Congressman from New York chosen by President Reagan for the Bank position last year. He is an associate of Treasury Secertary James Baker who launched the U.S. strategy for shoring up indebted nations in October, 1985 which included a call for increased adjustment lending by the World Bank. Conable also said that he expected the result of a major study of the Bank's organization to be completed in the next several weeks. He said the decision to seek a reorganization was based, in part, on the fact that the Bank had come under fire from the poorest countries for not doing enough to help and from the richest countries because of inefficiency. the reorganization is considered a major initiative by Conable, and is being closely-watched by the agency's 151 member-countries as an indication of his management style and priorities. "I want to be sure this institution is viewed by those who must support it as soundly constituted so that it will be permitted to grow," Conable said. However, he said "I don't believe there is anything basically wrong with this institution and I don't believe it has to have any redefinition of its purpose." He said, however, that it was apparent that the debt initiative proposed by Baker has given the Bank a central role in dealing with the debt crisis. Conable added that cooperation between the Bank and its sister agency, the International Monetary Fund, was good and that he talked often with IMF Managing Director Michel Camdessus on a variety of issues. On a personal level, Conable said that he not feel a need to put his personal stamp on the Bank noting that "I don't have a particular mission here except to be useful to the institution and to the process of development." He added, "so I don't feel a great calling to personalize the institution." On the development needs of sub-Sahara Africa, Conable said that the Bank was constantly reviewing new ways for assisting the region, noting that half of the recently agreed financing of 12.4 billion dlrs for Bank's International Development Association was earmarked for Africa. Leading industrial nations are expected to consider new forms of debt relief for the very poorest nations, like those in the Sub-Sahara, during next week's meetings.