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The World Bank: a multiheaded Hydra

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Title: The World Bank: a multiheaded Hydra


1
The World Bank a multi-headed Hydra
  • Alex Wilks, Coordinator
  • Bretton Woods Project
  • www.brettonwoodsproject.org

2
What does WB do
  • Projects
  • Economic and Sector analysis
  • National economic plans
  • Sector strategies, ie, agriculture, environment,
    water
  • Global thinktank/knowledge Bank
  • Global diplomacy, ie on AIDS, for Rio 10 meeting

3
World Bank Group
  • International Bank for Reconstruction and
    Development (IBRD)
  • International Development Association (IDA)
  • International Finance Corporation (IFC)
  • Multilateral Investment Guarantee Agency (MIGA)
  • International Center for the Settlement of
    Investment Disputes (ICSID)

4
A multi-headed Hydra?

5

6
Founders intentions
  • Established after Second World War to
  • Raise funds from the bond markets with backing
    from rich country governments
  • Provide finance for the reconstruction and
    development of (mainly) European economies
  • Promote the long-range balanced growth of
    international trade and the maintenance of
    equilibrium in balances of payments

7
World Bank lending theory
  • Loans to governments. To be used only for
    proper purposes and in proper ways, after due
    enquiries by experts and technicians, so that
    there will be safeguards against squandering and
    waste and extravagance which were not present
    with many of the ill-fated loans made between the
    wars.

8
World Bank lending practice
  • Many inappropriate and unsustainable schemes,
    country indebtedness.
  • Reasons include
  • Technocratic approach
  • Hard currency loans
  • Megaprojects
  • Bank now moving away from infrastructure towards
    social sectors and adjustment lending. Lends
    around 25 billion per year.

9
  • OVERSTRETCHED
  • The Bank is now committed, at least on paper,
    to helping the private sector, women and the
    poor to working with NGOs and the people
    directly affected by its projects to increasing
    its lending for education, health, nutrition, and
    micro-enterprises to protecting or improving the
    environment to reducing military expenditures
    and corruption to promoting open government, the
    rule of law and equitable income distribution -
    and to doing it all 'sustainably'
  • Catherine Caufield

10
Whos fault?
  • The Bank has been used as a dumping ground for
    intractable world problemsJames Orr, Executive
    Director Bretton Woods Committee, 1993
  • Rich countries have happily loaded new
    responsibilities onto the World Bank, knowing
    they will not have to foot the bill Stephen
    Fidler, Foreign Policy, September 2001

11
Decision-making at the Bank
  • Governors (government ministers)
  • Board (appointed officials)
  • Management
  • Staff
  • Evaluation and complaints mechanisms
  • Consultation with borrower govts. and NGOs

12
World Bank executive board
  • Representation (big 5)
  • United States - 15 of votesJapan - 11 Germany
    - 7 Great Britain - 5 France 4
  • Each country represented by single official
  • Representation (rest)
  • 178 other member countries with 19 officials to
    represent them
  • The 47 sub-Saharan Africa countries have 7 of
    votes and two Executive Directors between them
  • Source WB Annual Rpt. 2000

13
Wolfensohns reforms
  • Aimed to secure a fundamentally transformed
    institution - quicker, less bureaucratic, more
    able to respond continuously to changing client
    demands and global development opportunities, and
    more effective and efficient in achieving its
    main mission-reducing poverty".

14
Reform main aspects
  • Change staff mix and retrain existing staff
  • Decentralise move more staff and
    decision-making power to field offices
  • matrix management create internal market for
    skills and services
  • Increase the Banks knowledge management and
    research outputs.

15
Positive moves
  • Comprehensive Development Framework
  • Debt relief/Poverty Reduction Strategy Papers
  • Transparency/information disclosure
  • Governance/corruption work
  • Civil society participation and consultation

16
WB participation review
  • Desk review, plus missions to Bangladesh, El
    Salvador, Guatemala, India, Kenya, and Malawi
  • Reported late 2000
  • Carried out by the Banks semi-autonomous
    Operations Evaluation Department

17
Limits to participation
  • Stakeholder participation in Bank projects and
    processes increased during 1990s. But
  • Much was limited to only small parts of
    projects, too rushed or superficial, or too
    ineffective to make much difference.
  • often too late, involved few women and bypassed
    existing institutions.
  • Meetings "sometimes little more than
    opportunities for the Bank to present and gain
    acceptance for its programs rather than to learn
    about local priorities".

18
Participation key constraints
  • government resistance,
  • a lack of capacity or experience of all
    stakeholders.
  • World Bank staff face "scarce time and money,
    rigid project cycles, inadequate incentives, and
    inconsistent management support".

19
Participation good practice
  • In the India water and Bangladesh roads projects,
    government agencies posted signs in villages
    specifying the work to be done, the projected
    costs and schedule, and related information.
    Village members or committees were then better
    able to hold contractors accountable, especially
    local contractors known to community members.
    Most contractors said such arrangements protected
    them from efforts to extort bribes and reduced
    community complaints.
  • OED review, 2000

20
World Bank participation tips (1)
  • Find out who is the person responsible- in
    Washington? in country?- Task Manager, Country
    Director, Country Economist, Regional Vice
    President, Network head? - dont get palmed off
    by External Relations people- use WB phone
    directory/website/independent guides (ie Bank
    Information Center www.bicusa.org)

21
World Bank participation tips (2)
  • Dont just accept WB or government invitations to
    meetings (may lead to ticking box
    participation).
  • Find out whole extent of the process
  • Press for documentation in relevant languages in
    good time
  • Neutral chair and facilitator for meetings Agree
    outcome and follow-up of meetings
  • See Oxfam guide to PRSPs, March 02

22
The reach of World Bank research - survey of
high-level policymakers
  • The Bank rated the most important information
    source out of 17 domestic and international
    organisations.
  • 84 percent of respondents said they use Bank
    analytical reports
  • the Banks work seen as technically sound,
    relevant and objective.

23
World Development Reports
  • Leading example of the Knowledge Bank in action
  • Over 100,000 copies circulated worldwide
  • Positioned as neutral/reflecting latest research,
    but do not reflect breadth of opinion highly
    leveraged interventions in policy markets
    (Brendan Martin)

24
Knowledge Bank critical views
  • Often the inquiry into the present state of
    knowledge is not broad, or profound, enough to
    raise fundamental issues
  • Prof. Yash Tandon, Director, Southern and Eastern
    African Trade, Information and Negotiations
    Initiative
  • "The idea of transforming the World Bank into a
    Knowledge Bank should be opposed."
  • Yves TavernierMember of Parliament, France,
    Report for Commission des Finances

25
Client (government) feedback of government
officials interviewed who find the Bank
effective WB surveys
  • Helping to reduce poverty - 33
  • Helping improve governance - 53
  • Helping strengthen civic participation - 14
  • Helping safeguard the environment - 52
  • Helping attract investment - 81
  • Helping strengthen and maintain sound
    macroeconomic and trade policies - 82

26
Views from the street
27
Protesters demands
  • 1. the IMF and World Bank should cancel 100 of
    all claimed debts without imposing any form of
    external conditionalities. 
  • 2. End policies that hinder people's access to
    food, clean water, shelter, health care,
    education, and right to organize. Such
    "structural adjustment" policies include user
    fees, privatization, and economic austerity
    programs.
  • 3. pay reparations to the peoples and communities
    who have borne the consequences of structural
    adjustment and failed projects. 
  • 4. Open all World Bank and IMF meetings to the
    media and the public.
  • From www.september30.org

28
Bank response
  • The Bank has opened up significantly to the media
    and the public
  • The Bank is the worlds largest external funder
    for education, for health and for HIV/AIDS
  • The Bank does not promote user fees for primary
    education or basic health care
  • The responsible use of natural resources provides
    developing countries with considerable
    opportunities for poverty reduction and economic
    development
  • The World Bank strongly supports debt relief
    through the Heavily Indebted Poor Countries
    (HIPC) Initiative.
  • www.worldbank.org/html/extdr/pb/pbfourdemands.htm

29
Summary
  • Bank drifted from original high-minded aims of
    founders
  • Overstretched doing projects, adjustment,
    research, global diplomacy, new issues
    (anti-corruption) etc.
  • Some useful reforms recently but key problems
    remain. Reforming the Bank is a Herculean task.

30
Summary further points
  • To what extent is the Bank prepared to cede
    control and enter into genuine partnerships (with
    governments, UN agencies, NGOs)?
  • Can an institution with governance dominated by
    the North gain the trust of all nations and
    citizens as a neutral arbiter?

31
Recommended resources
  • Bretton Woods Update (bi-monthly). By post,
    e-mail or at www.brettonwoodsproject.org/update
  • Other weblinks on brettonwoodsproject.org
  • Masters of Illusion the World Bank and the
    Poverty of Nations, Catherine Caufield,
    MacMillan, 1997.
  • Beyond Bretton Woods, John Cavanagh, Daphne
    Wysham, Marcos Arruda (Eds.), Pluto Press 1994
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