When my feeble brain tries to picture ‘The World Bank’ it comes up with some shadowy men in bowler hats, obscured by clouds of cigar smoke in the back room of a locked building. I realize this comic book image means that I don’t quite know who runs this mysterious sounding global organization and why, so dug into it after taking in their website and their various publications on climate changes, namely “Turn Down the Heat”. Here are three questions and answers:
- Who are ‘The World Bank’ and what purpose do they serve?
Founded in 1944 to rebuild the devastation wreaked by World War II, they have two stated aims for the global economy by 2030: to end extreme poverty and to foster growth in the incomes of the bottom 40% for every country. ‘The World Bank’ is now the largest development institute in the world and “works with country governments, the private sector, civil society organizations, regional development banks, think tanks, and other international institutions on issues ranging from climate change, conflict, and food security to education, agriculture, finance, and trade.” Their business model is to provide low-interest loans, zero to low-interest credits, and grants to developing countries. They have their own historic capital, their profits, and they can also borrow capital from their wealthy member states. The CFO Bertrand Badré has this to say: “Don’t forget that the World Bank is a bank, not a UN agency. In order to be sustainable, a bank has to make a profit and work with a credible budget.”
- Could you give us a more critical understanding of ‘The World Bank’?
Absolutely. Criticisms abound, particularly of the excessive neo-liberal policies adopted by the organization. As anyone with a loan knows all too well, it has to be paid back. And when you’re one of the worlds’ poorest countries, this means sacrificing money that could be spent on infrastructure or education or healthcare to repayments. A report from the Committee for the Abolition of Illegitimate Debt also points out that “…any debt relief remains conditional on the application of a wide range of neoliberal measures that negatively affect the living conditions of most of the people, violate human rights, and weaken the economies of the countries concerned by exposing them to international competition…” The organization is not a democratic one, with wealthy countries in the Global North making up its powerful majority. The U.S gets to dictate a lot, because it has a 16% share of the vote. David Malpass, the current president, is himself a failed banker and a Trump loyalist. And last but not least, an intervention from ‘The World Bank’ can often do more harm than good to the people it purports to help. That leads me to my final point.
- What does the World Bank have to do with the climate crisis?
Honestly? A lot. This is their take.
“Climate change is a major risk to good development outcomes, and the Bank Group is committed to playing an important role in helping countries integrate climate action into their core development agendas.” From www.worldbank.org
However, while they are loaning and granting many billions of dollars to climate – forward initiatives globally, this focus on economic development over everything seems like a huge missed opportunity along the lines of what Bina and La Camera concluded in their analysis ‘Promise and Shortcomings of a Green Turn in recent policy responses to the Double Crisis’, namely that growth has become synonymous with modernity and success, while justice and well-being are way down the list. This goes for climate justice too: an economic approach is not enough, what is required is a paradigm shift. And as for the past, a wide-ranging investigation by the International Consortium of Investigative Journalists found huge problems with the bank’s projects. From 2004 to 2013 alone, they physically or economically displaced an estimated 3.4 million people, forcing them from their homes, taking their land or damaging their livelihoods. By financing dams in Brazil and coal-fired power plants in India, the bank damages and destroys the natural environment and the people living there, as well as racking up more carbon emitting and rapacious infrastructure that contributes to long-term climate chaos.
Good work exposing the many issues that the World Bank creates both economically and environmentally with its focus on debt/profit and development. Very interesting in dialogue with Naomi Klein’s work.
I have a hard time understanding what role the World Bank and IMF plays globally. Thank you for shedding some light on the World Bank, Maeve. The Huff Post article is really helpful too!
Your analysis reminds me of Stengers’ criticism of reckless growth. Sounds like the World Bank contributes to the kind of growth that harms countries in the name of development.
As someone who studied the work of former World Bank Director of Policy Planning (1970-1982) Mahbub ul Haq (he created the imperfect Human Development Index/HDI, meant to measure the well-being of a country), I respect your post and though I have tremendous respect for the work of ul Haq on developing countries, I found his ideas too neoclassical for me (though his legacy is complicated as later in life, he shifts to a more holistic approach to economic development) and have questioned the efficacy of the World Bank in recent years.
Another great economist I respect (and agree more with) is Raul Prebisch, who served as the executive director of the Economic Commission for Latin America (1950), an arm of the UN intended to have economic cooperation for the Latin American region. Prebisch’s model with Hans Singer, the Prebisch-Singer hypothesis/Center-Periphery model, is so perceptive at capturing the economics of neoliberalism.
Though ul Haq and Prebisch are long gone, I think what is sorely lacking in these institutions is the leadership to combat neoliberalism and unfortunately, it seems that, given the current state of affairs, we’re a long way from the worlds of Prebisch and ul Haq.
I always feel like the World Bank and the IMF are the “evil spirits [of capitalism],” to use Stengers’s words. Your piece reminds me that I’m right lol
I would love to hear more about the World Bank’s direct or indirect contribution to environmental harm, especially through neoliberal relations or specific government agencies.