Abstract
In 1997, the World Bank announced a commitment to combating corruption within its own projects and within its client countries. The first has always been a concern of the Bank since its inception. The second marked a complete departure from past Bank activity, where the Bank had dealt with some of the world’s most notoriously corrupt dictators and political regimes, often in the face of heavy criticism from many of its shareholders. This current focus on corruption at the World Bank must thus be seen both within the context of an overall international movement and as the result of certain historical events. It is important to examine the changing philosophy of development at the Bank, with the Bank both informing and being informed by changes in development theory, and also the significance of changes in Bank leadership.
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Notes
Biersteker refers to the ‘mimetic’ nature of the multilateral development bank (MDBs) and donor agencies. See, Biersteker, T. (1990), ‘Reducing the Role of the State in the Economy: a Conceptual Exploration of IMF and World Bank Prescriptions’, International Studies Quarterly, 34, pp. 477–92.
For an analysis of the way policy is developed at the Bank, see MillerAdams, M. (1999), The World Bank: New Agendas in a Changing World (London: Routledge).
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Four years after Bretton Woods, White was named as a communist spy, and was forced to testify before the Committee on UnAmerican Activities on 13 August 1948. Although acquitted, he died of a heart attack three days later. See Boughton, J. (1998). ‘Harry Dexter White and the International Monetary Fund’, Finance & Development, 35 (3), pp. 39–41.
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In 1949, Colombia became the first country to ask for the Bank’s assistance in drawing up a plan for a loan application. Black sent a fourteenperson team (which included twelve Americans) to Colombia, resulting in a 642-page five-year plan. The Bank then helped the Colombian government set up a Commission on Economic Development (counselled by Bank staff) to analyse the report in order to determine whether or not to endorse it. When this was completed and the report had official government backing, the Bank helped to establish a National Planning Council to oversee execution of the plan (with Bank staff hired as permanent advisors). ‘The Bank was now the driving force behind the decisions Colombia was making about its long-term development.’ Caufield, C. (1996), Masters of Illusion, pp. 58–9.
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The Henry J. Kaiser Co. was involved in a clear example of politically motivated lending and US political involvement in Bank affairs before Woods arrived at the Bank. In 1957, President Nkrumah of Ghana wanted to dam the Volta River to generate electricity for the processing of bauxite deposits into aluminium. The US government wanted the Bank to fund the project, rather than allowing Nkrumah to elicit funding from the Soviets, despite two separate Bank evaluation missions which determined the project was unattractive. The loan was initially declined but then the US State Department discovered that Nkrumah was flying to Moscow. Despite then Bank president Eugene Black’s claim that, ‘It isn’t our business to make loans to prevent the spread of communism’, the Bank quickly reversed their decision and approved the loan in 1961. Cited in Caufield, C. (1996), Masters of Illusion: the World Bank and the Poverty of Nations, p. 83. The consequences of this ill-advised project included the displacement of over 80 000 villagers, a dramatic increase in disease, extensive famine, and loss of income from fishing due to increased salination in the water supply. George Woods became Bank president shortly after this transaction (1963–8), replacing Black. Woods was a board member of the Henry J. Kaiser Co. and returned to the board upon his departure from the Bank. Caufield, C. (1996), Masters of Illusion, pp. 79–83.
The IDA is an agency of the World Bank that provides loans to the poorer countries at more favourable rates of interest and repayment and is funded solely through contributions from member countries. See Williams, M. (1994), International Economic Organisations and the Third World (London: Harvester Wheatsheaf), pp. 101–9.
Quoted in Caufield, C. (1996), Masters of Illusion, p. 91.
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Cited in Shapley, D. (1993), Promise and Power: the Life and Times 01 Robert McNamara (Boston: Little, Brown and Co.), p. 381.
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For example, a poor sugar harvest in Cuba, the USSR and Europe, combined with the OPEC oil embargo, forced sugar prices through the roof. In 1973, the world market price was GB£99.46, but increased to GB£305.13 in 1974; see, Mahler, V. (1981), ‘Britain, the European Community, and the Developing Commonwealth: Dependence, Interdependence, and the Political Economy of Sugar’, International Organization, 35 (3), Summer, p. 477.
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Figures for OECD members were converted into 1978 prices.
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See, for example, Sachs, J. (ed.) (1989), Developing Country Debt and the World Economy (Chicago: University of Chicago Press); Commins, S. (ed.) (1988), Africa’s Development Challenges and the World Bank: HardQuestions, Costly Choices (Boulder: Lynne Rienner Publishers, Inc.); Mosley, P. et al. (1991), Aid and Power; World Bank (1981), Accelerated Development in Sub-Saharan Africa: an Agenda for Action (Washington DC: World Bank).
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lU3 C;ited in Gauneld, G. (1996), Masters of Illusion, p. 200. Original: US Dept. of Treasury (1982), United States Participation in the Multilateral DevelopmentBanks in the 1980s (Washington DC: GPO).
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Caufield, C. (1996), Masters of illusion, p. 204. As Cauheld points out, this does not mean that it did not influence the Bank to make improper loans for political reasons. One example is a $1.25 billion loan to Argentina, made in 1988, despite Bank staff objections to the country’s fiscal policies. Secretary of State Baker, a close friend of Bank president Barber Conable, ‘wanted to forestall social unrest in Latin America during the run-up to the US presidential election’. The Bank was forced to cancel the loan four months later when it proved unviable (p. 204).
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Marquette, H. (2003). The Emergence of a Development Agency, 1944–1981. In: Corruption, Politics and Development. International Political Economy Series. Palgrave Macmillan, London. https://doi.org/10.1057/9781403943736_2
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