The World Bank: a multiheaded Hydra

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The World Bank a multi-headed Hydra

• Alex Wilks, Coordinator
• Bretton Woods Project
• www.brettonwoodsproject.org

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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
  

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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)

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A multi-headed Hydra?

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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

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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.

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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.

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• 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

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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

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Decision-making at the Bank

• Governors (government ministers)
• Board (appointed officials)
• Management
• Staff
• Evaluation and complaints mechanisms
• Consultation with borrower govts. and NGOs

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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

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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".

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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.

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Positive moves

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

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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

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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".

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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".

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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

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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)

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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

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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.

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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)

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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

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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

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Views from the street
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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

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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

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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.

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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?

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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