WORLD BANK


What it is: The name by which the International Bank for Reconstruction and Development (IBRD), together with the International Development Association (IDA), is known. It was set up at the same time as the International Monetary Fund (IMF) in 1944, and like the IMF is based in Washington, USA. Like the IMF it had good intentions: its aim was to encourage economic growth, particularly in the poorer member countries. Funds are supplied by members, and by borrowing on international financial markets. The World Bank is run by a board consisting of representatives from national governments, with votes proportional to how much their country has given to the Bank. This has meant that the USA has usually had around 20% of the votes and has always chosen the Bank's president. At first the World Bank helped countries recovering from the Second World War. It then concentrated on loans to developing countries, for projects like dams, roads, power plants, and airports. By the 21st century most World Bank loans were for agricultural development, water supply, sewage systems, and education.

What it means: A former World Bank economist has admitted that there are 'real risks associated with delegating excessive power to international agencies. The institution can actually become an interest group itself, concerned with maintaining its position and advancing to power'.  One noticeable feature of the World Bank is its desire for control. When it became clear (in the 1950s) that the poorest countries would have problems repaying World Bank loans, the Bank set up its own department called the International Development Association (IDA) to provide loans - for repaying the World Bank. (IDA loans had low interest rates, or were interest-free.) This meant that the client country remained tied to the Bank. Another sign of the wish to control is that the Bank has designed its own expensive projects, notably programmes to reduce malnutrition. Experts in malnutrition, like Save the Children, have said the Bank is tackling it the wrong way: it's not enough to teach mothers about nutrition if they are too poor to do anything about it. 'These projects threaten to plunge developing countries into further debt without making any difference.' The World Bank has also assumed that private companies were better than public ones to provide, for example, water supplies and sanitation. But the private companies discovered that these services in poor countries simply weren't profitable: the people couldn't afford to pay private companies' prices. By the 21st century the Bank had begun to show a few signs of accepting that privatising wasn't the only answer - yet was still pushing for privatisation in countries like Senegal which had been impoverished by World Bank and IMF demands. Many of the world's conflicts have economic causes. The world's economic system often makes matters worse, but it also has the power to provide solutions if its operators really want to - and more and more people are calling on them to do that.   

Think about it: In 2000, countries like Angola, Congo, Congo-Brazzaville, Guinea-Bissau, Guyana, Mauritania, Mozambique, Nicaragua, Sudan and Zambia all owed more than 2 years of their national income because of debt to the World Bank or the IMF (and also to individual developed countries). In 1998, for example, developing African countries had spent a total of $14 billion simply on interest payments. They received over $10 billion in further development aid. In effect they were sending aid to the rich countries - a situation not only crazy but deeply unfair and exploitative. The World Bank is particularly tough to borrow from: a condition of borrowing is that its loan must be paid first, before anyone else's. And like the IMF it will only let off its clients from paying all or part of what it owes if they agree to change their ways of running their countries. Even those with well-intentioned democratic governments find that they have to pay off debts run up by former dictators (often to buy large quantities of weapons) instead of dealing with the needs of the people. Debt is part of the structure of the modern world, as anyone knows who has a credit card to pay off, and it's a threat to that structure. Debt-driven decisions are likely to be desperate and dangerous. Being in debt - especially when you owe more than you can repay - is a modern way to experience slavery. Is this a safe and sensible way to live, in which the wealthy stay wealthy - or at least can pay off some of their own debts - by making the poor, whether individuals or states, even poorer and more desperate?