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World Bank

May 24, 2008
When poor countries become desperate for economic help, they turn to the World Bank for loans. However, these loans come with strings attached - the World Bank imposes certain harsh conditions on debtor countries to ensure that their loans will be repaid. The Fund's standard package is designed to "get the economy going again", but the consequences for the poor are catastrophic because the World Bank, to put it loosely, "encourages" more land to be put into exports (increasing dependence on costly food imports), wages to be cut, reduction in state assistance to the poor, and increased ease of access for foreign corporations. These policies are beneficial to the rich countries, but they have had such savage effects on poor Third World people that riots against the World Bank break out from time to time.

Far from progressing towards self-sustaining, economic growth, and prosperity, the Third World has fallen into such levels of debt that few would now hold any hope of repayment ($514 billion in 2007). Some countries now have to pay out most of their annual income just to meet interest payments on the debt. On top of that, the World Bank pays no attention to the environment by clear cutting unusable lands and destroying precious ecosystems, and have now be deemed responsible for a dollar amount of close to a trillion dollars in continuing destruction and wasted money during their "so called" economic projects that are always end up doing a lot more harm than good.

Established at Bretton Woods in 1944, the World Bank is the most controversial international organizations in the world today. This is due to the Bank's policies on the least advantaged countries of the world, which fall mainly in Africa and parts of Asia. More specifically, The World Bank, with their plan to "get the economy going again", demands "structural adjustment" and "conditionalities" to be met before any money is authorized to be sent out. Poorer countries have no choice because they desperately need the money to keep their country going. This is a mistake, because country ends up having little to no choice on how the money is spent. They end up with the money being put towards something they did not really need, or want, and it is usually useless to them. The country ends up being worse off then when they began; they have a bigger debt, a higher interest, and a project ex. (No short terms) (road / electrical system) that does them little to no good, and they still do not have a long-term solution to their economic problems.

As mentioned above, the term "Structural adjustment" refers to preconditions that the World Bank imposes before loans are made. These "conditionality's" are based on market-oriented ideas that include devaluing the currency, increasing exports while decreasing imports, and decreasing social spending, among other requirements designed to ultimately balance the borrower's budget. This mode of operation was not envisioned to come from the World Bank. It was created as a specialized agency of the United Nations. The World Bank was designed to serve as a short-term lending agency to be able to provide a temporary balance of payment and debt because of World War II (or Two). But in the 21st century they have become more of a loan shark, then a friend.

Taken from the World Bank website, I was able to read about the diluted facts they have the nerve to put up (change wording). I summarized it as follows:

Last year in 2002, the World Bank provided 19.5 Billion US dollars to client countries around the world. The World Bank currently works in more than 100 developing economies, in which they bring different financial ideas on improving the living standard and target to eliminate the worst forms of poverty. For each "client" country, the World Bank works with government agencies, nongovernmental organizations, and private sectors in their quest to formulate effective assistance strategies. The World Bank itself, which is owned by more then 184 member countries, has a main focus on helping the poorest people and the poorest countries with emphasis on:

* Investing in people, particularly through basic health and education

* Focusing on social development, inclusion, governance, and institution-building as key elements of poverty reduction

* Strengthening the ability of the governments to deliver quality services, efficiently and transparently

* Supporting and encouraging private business development

* Supporting and encouraging private business development

* Promoting reforms to create a stable macroeconomic environment, conducive to investment and long-term planning.

In many countries in the world, hunger, poverty and things like illiteracy run rampant, since the opening in 1944, the World Bank boasts to be one of the key elements in the improvement of living standards in many of these countries. They boast to have made the lives of millions of adults and their children. In the last few decades, they have said again, to be a key element in the following:

* Life expectancy has increased from 55 to 65 years

* The number of literate adults has doubled

* The total number of children in school has risen from 411 million to 681 million

* Infant mortality has been reduced by 50 percent

When reading this, how could one not become sick to their stomach? To say that they have been a tool in the reshaping and helping (use different word) of these countries is an outright lie. But this lie, kept by World Bank, is held in high regard. The World Bank is overly concerned, unlike most other modern corporations, about its image. The World Bank gets its product; loans and credits, "out the door" at the rate of two and a half million dollars an hour. Most poor borrowing country clients don't much care how the World Bank is "perceived" so long as the money keeps flowing in to them. Whatever the appearances, these developing countries are not the World Bank's real clients. The target audience it must impress is in the rich North Western Countries, and will stop at nothing to do it. If the World Bank's image deteriorates too sharply, in the rich countries, because of lack of interest in different projects, it will sooner or later feel the pain in its purse and its power will consequently be diminished.

The ACG claim charges that the World Bank violated its policies and procedures during the preparation of the Arun III hydroelectric project. The ACG believes that there are alternatives to the project that are less expensive and less environmentally and socially damaging; and would have the advantage of developing hydropower more evenly throughout Nepal. While Arun III will be largely dependent on international contractors, a range of small to medium dams could be planned, built, and run by domestic companies. The coalition questions the relevance of undertaking a $1 billion U.S. project that is almost one-and-a-half times the annual national budget of Nepal. The claim against the World Bank submits that during the preparation of Arun III the World Bank violated its policy on economic evaluation of projects and other policies on energy, information disclosure, the environment resettlement, and indigenous people. "It's no exaggeration to say that Nepal's economic future is at stake, Nepal is a poor country and this mega project is completely inappropriate for it.

But the World Bank is ignoring viable alternatives that will meet our energy needs at a lower cost." Local hydro experts, including staff of the Alliance for Energy have been promoting alternatives to the Arun III project for many years now. The Alliance for Energy has put forward to the Bank and the Nepali government a concrete set of alternative proposals that include small- and medium-scale dam projects of up to 100 megawatts that could be developed in a number of river basins spread evenly throughout Nepal and could easily meet the growing demand for electricity. These projects could be developed and built in less time, than Arun III, and would have the advantage of providing electricity to rural communities. According to the Alliance for Energy, the alternatives would be less damaging environmentally because the proposed sites are already near existing roads. Sadly, even today, having Nepal's economic future riding on a thread, it is unknown what is going to happen with another one of the World Bank's blunders.

One final example is the problems that Africa has had with the World Bank in the last two centuries. Without going into greater detail, over the last 25 years, there have been failing projects after projects by the World Bank. Africa is at a point where people are using the term "continental bankruptcy" as an idea to deal with the detrimental economic problems. It now looks like there will remain a huge and escalating problem of multilateral and governmental debt for many low-income African countries. This is on top of the unilateral debts to private banks and governments. The World Bank, with this problem, has insisted that they not only have preferential status in debt repayment but also exemption from "default" or bankruptcy. Most people, around the world, think that the World Bank must be required to share responsibility with the borrowers or banks for failed and unviable projects and programs that they created. If the World Bank, who played the biggest part in Africa's current economic status, it would be the start of a very long road for Africa to ever get back on economic track.

Thinking back to my original question before making a decision, I asked myself, is the World Bank a friend or foe to the developing world? I think I would have to first expand on a statement made by the World Bank President Lewis Preston, after another blunder the World Bank made with the ravaging of India's Bihar Plateau. It sums up to me what the World Bank is really capable of, "Most of these projects have experienced implementation problems causing delays in disbursement and completion. Problems include delays in project mobilization and procurement, poor quality construction and maintenance of infrastructure (irrigation and rural roads), inadequate preparation and implementation of resettlement and rehabilitation plans for affected families."

After reading this, coming directly from the horse's mouth, and reading all the bad things that have come out of the World Bank, how anyone could not come to the conclusion that The World Bank really is a foe to the developing world is beyond me. They hinder and destroy the countries they try to "help" because they are unable to see the real picture. Developing countries need money to fund small projects to get going again, not huge projects, because the area in which they are building is still at a very low development level. Mostly, The World Bank is concerned about is getting funding, building and keeping power, and using the development of the less fortunate to their twisted benefit. With that, I feel, it is perhaps best to stay away from the 'help' afforded by the World Bank because their development strategies are often too aggressive and short-term and do not allow the fragile poor countries to gradually build up to their development expectations. It makes me sick that they use people in this way and then toss them aside and send away the bill. I hope that someday they stop getting all their funding and so other countries see that they are hurting people by supporting the World Bank, and making their own pockets bigger.

Works Cited

Abbasi K. The World Bank and world health. Changing sides. BMJ 2007; 318: 865-69.

Abbasi K. The World Bank and world health. Under fire. BMJ 2007; 318: 1003-1006.

Amos AF, McCarty DJ, Zimmet P. The rising global burden of diabetes and its complications: estimates and projections to the year 2010. Diabet Med 2007; 14 (Suppl 5): S1-S85.

Chale SS, Swai ABM, Mujinja PGM, McLarty DG. Must diabetes be a fatal disease in Africa? Study of costs of treatment. BMJ 2007; 304: 1215-18.

Decosas J. Developing health in Africa. Lancet 2007; 353: 143-44.

Gill GV. Outcome of diabetes in Africa. In Diabetes in Africa. Eds G Gill, J-C Mbanya and G Alberti. FSG Communications Ltd, Cambridge, 2008. pp65-71.

Jubilee 2008. The Debt Cutter's Handbook. ISBN 0 9528683 1 8. London, 2007.

The World Bank. World Development Report 2007. Investing in Health. Oxford University Press, Oxford, 2007.

Yudkin JS. Tanzania-still optimistic after all these years? Lancet 2007; 353: 1519-21.
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