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The World Bank
In 1944 Articles of Agreement of the International Bank for Reconstruction and Development and the International Monetary Fund were drawn up and adopted at Bretton Woods, New Hampshire, in a conference of forty-five governments. The IBRD (later renamed the World Bank) was created near the end of the war as nations realized that they needed a coordinated plan to facilitate post-war reconstruction and development.
The World Bank says it is not a bank in the traditional sense, that they are, in fact, two unique development institutions – the International Bank for Reconstruction and Development, and the International Development Association. “Each institution plays a different but collaborative role to advance the vision of an inclusive and sustainable globalization. The IBRD focuses on middle income and creditworthy poor countries, while IDA focuses on the poorest countries in the world. Together we provide low-interest loans, interest-free credits and grants to developing countries for a wide array of purposes that include investments in education, health, public administration, infrastructure, financial and private sector development, agriculture, and environmental and natural resource management.”
They articulate that their mission has evolved from post-war reconstruction and development to their “present day mandate of worldwide poverty alleviation,” and that “… poverty reduction through an inclusive and sustainable globalization remains the overarching goal of all our work.”
Currently, the World Bank has Six Strategic Themes: The poorest countries; Post-conflict and Fragile States; Middle-income countries; Global Public Goods; The Arab World; and Knowledge and Learning. The website sets out 10 things “you never knew about the World Bank” including:
- it’s the world’s largest external funder of education - it’s one of world’s largest external funders in the fight against HIV/AIDS - it responds to the voices of the poor - it works in partnership more than ever before
This presentation by the World Bank of its hard work to help people and make the world a better place is countered by opponents of the Bank who argue that while it may say all the right things, its policies are unjust and harsh, and demonstrate anything but a true concern for the needs of developing countries and their populations. Indeed, the World Bank, together with the WTO and the IMF, have been referred to as an unholy trinity that is undemocratic, corporate-lead, and unaccountable. (Peet)
One prominent critique of the World Bank has been its structural adjustment policies, which have required many developing nations to submit their economies to drastic measures in exchange for loans and assistance. Typical requirements for a nation seeking assistance have included:
“1. Cutbacks and a “liberalization” of the economy and resource extraction/export-oriented open markets as part of their structural adjustment. 2. The role of the state is minimized. 3. Privatization is encouraged as well as reduced protection of domestic industries. 4. Other adjustment policies also include currency devaluation, increased interest rates, “flexibility” of the labor market, and the elimination of subsidies such as food subsidies. 5. To be attractive to foreign investors various regulations and standards are reduced or removed.”
These policies have had terrible effects:
“….Structural Adjustment Policies have been imposed to ensure debt repayment and economic restructuring. But the way it has happened has required poor countries to reduce spending on things like health, education and development, while debt repayment and other economic policies have been made the priority. In effect, the IMF and World Bank have demanded that poor nations lower the standard of living of their people. <http://www.globalissues.org/article/3/structural-adjustment-a-major-cause-of-poverty>
Critics also note that the World Bank’s policies have deviated from their original vision:
They were conceived …. with the goal of creating a stable framework for post-war global economy. The IMF was originally envisioned to promote steady growth and full employment by offering unconditional loans to economies in crisis and establishing mechanisms to stabilize exchange rates and facilitate currency exchange. Much of that vision, however, was never borne out. Instead, pressured by US representatives, the IMF took to offering loans based on strict conditions, later to be known as structural adjustment or austerity measures, dictated largely by the most powerful member nations. Critics charge that these policies have decimated social safety nets and worsened lax labor and environmental standards in developing countries. The World Bank ……was created to fund the rebuilding of infrastructure in nations ravaged by World War Two. Its vision too, however, soon changed. In the mid 1950’s, the Bank turned its attention away from Europe to the Third World, and began funding massive industrial development projects in Latin American, Asia, and Africa. Many scholars and activists contend that the Bank’s aggressive dealings with developing nations, which were often ruled by dictatorial regimes, exacerbated the developing world’s growing debt crisis and devastated local ecologies and indigenous communities. Both IMF and World Bank policies remain a source of heated debate. (Henning)
Reviewing the website with an eye to these criticisms reveals that the organization still has very much a business orientation, with trade is either at the top or close to the top in any category. One small example is, under Global Public Goods, one of the Six Strategic Themes, that trade is included with health and environment issues: “Our work on global public goods focuses on the environment, especially climate change; controlling communicable diseases, such as HIV/AIDS and malaria; preventing and mitigating crises in international financial systems; and promoting an open, multilateral trade system.”
John F. Henning Center for International Labor Relations, Institute for Industrial Relations, University of California, Berkeley, <http://henningcenter.berkeley.edu/gateway/imf.html>
Global Issues <globalissues.org>
Peet, Richard. Unholy Trinity: The IMF, World Bank and WTO. Zed Books, New York, 2003.
World Bank. <worldbank.org>
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