Abstract
The Bank’s attempts to respond to international pressures for environmental reform exposed a whole series of paradoxes that up through the early 1980s had been unarticulated. The crystal palace of global economic development, whose mission seemed so certain in earlier years, had become a castle of contradictions by the early 1990s.
Where do the pressures come from, pressing down on the World Bank to degrade its own procedures and to bring its own integrity into question?1
—Representative James Scheuer
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Notes
- 1.
Already by the mid 1960s (1965–67), 87 percent of all new lending, private and public, to Latin America was flowing back to the North for debt service and amortization, and 73 percent for Africa. (Report of the Commission on International Development, Lester B. Pearson, chainnan, Partners in Development [New York and London: Praeger, 1969], 74, cited in Cheryl Payer, Lent and Lost: Foreign Credit and Third World Development [London and New Jersey: Zed Books, 1991], 57.)
- 2.
“The pressure to lend,” according to one recent study of the Bank in the 1980s, “is both general, to return the Bank toward being a positive net lender to developing countries, and particular, to give special assistance to highly indebted Latin American borrowers where U.S. commercial banks had dangerously high exposures. The Bank’s top management does not admit that its decisions are influenced by net negative transfers, but that is only to be expected in the circumstances” (Mosley, Harrigan, and Toye, Analysis and Policy Proposals [see endnote 5], 47).
- 3.
According to Mosley et al., “Formally, its [the Bank’s] policy is not to allow fresh loans to countries in arrears on past loans. To permit this to happen, an elaborate ritual can be performed involving borrowing from a third party to pay off the Bank’s arrears, in the knowledge that forthcoming Bank lending will allow the third party to be promptly repaid” (Mosley, Harrigan, and Toye, Analysis and Policy Proposals, 48).
- 4.
An ibrd loan or an ida credit is classified by the World Bank as non-performing if payments on interest or principal are more than six months overdue. If a single loan or credit for a given nation is non-performing, the Bank is obliged to declare the entire country loan portfolio in non-accrual status.
- 5.
In the late 1980s and early 1990s about a quarter of World Bank loans were for adjustment.
- 6.
The Bank’s net negative transfer problem was only a window on an upside-down world where the poor increasingly bankrolled the rich: net capital flows from the South to the North were running at a rate of $50 billion a year in the late 1980s.
- 7.
See, for example, A. Peter Ruderman, “Economic Adjustment and the Future of Health Services in the Third World,” Journal of Public Health Policy, Winter 1990,481–89; Judith Marshall, “Structural Adjustment and Social Policy in Mozambique,” Review of African Political Economy 47 (Spring 1990),28–41; Howard Stein and E. Wayne Nafziger, “Structural Adjustment, Human Needs, and the World Bank Agenda, Journal of Modern African Studies 29, no. 1 (1990), 173–89.
- 8.
Adjustment is in theory mixed in its environmental implications: one important environmental benefit could be the reduction of government subsidies that encourage profligate energy and water consumption, and the overuse of agricultural chemicals. Overall, however, Bank and Fund adjustment conditions seemed to be more vigorous and successful in reducing government funding for “soft” social and environmental services, in lowering real wages, and in promoting cash crops for export, than in cutting energy and water subsidies for powerful vested industrial and agricultural interests—a hardly unexpected outcome, given the political bargaining power of those affected.
- 9.
The Philippines in the late 19705 and early 1980s provides an enlightening case study. See Robin Broad, Unequal Alliance: The World Bank, the International Monetary Fund, and the Philippines (Berkeley, Los Angeles, London: University of California Press, 1988).
- 10.
But population grew 3.1 percent annually, negating most of these gains.
- 11.
This is one of the reasons why Global Environment Facility projects are unpopular among Bank country departments: they take an inordinate amount of staff time for the amount of money they move. The main mitigating factor is the more attractive financial package for borrowers the gef grants create when blended with larger Bank loans.
- 12.
There are at least two partial exceptions. In the late 1970s, the appropriations committees of the U.S. Congress enacted legislation requiring that they be given the same information available to the U.S. World Bank executive director, or all appropriations would be halted. The commercial and trade ministries of several major donors (including the United States, the U.K., and Germany) maintain libraries of some documents available to the executive directors—appraisal reports and some country economic studies—for consultation by businesses interested in obtaining Bank procurement contracts. In the United States, after protest, ngos now have access to the Department of Commerce library set up for this purpose.
- 13.
To cite one of numerous examples: “The Bank’s role in the environmental area is [to] work with member governments toward better understanding of the problems, to assess the chain of causality, and to assist in formulating appropriate policies and financing investments. This should be done with the full participation of those people most affected by the activities” (Joint Ministerial Committee of the Boards of Governors of the World Bank and the International Monetary Fund on the Transfer of Real Resources to Developing Countries [Development Committee], World Bank Support for the Environment: A Progress Report [Washington, D.C.: World Bank, 1989], 36).
- 14.
“Foreign aid,” wrote Lord Bauer, “ … often server[s] to underwrite and prolong extremely damaging policies commonly pursued in the name of comprehensive planning” (P. T. Bauer, “Remembrance of Studies Past: Retracing First Steps,” in Meier and Seers, Pioneers in Development [see endnote 30],42). “I am of the opinion that we should discontinue aid for industrial projects, particularly large-scale ones,” wrote Gunnar Myrdal at the same time (Gunnar Myrdal, “International Equality and Foreign Aid,” Meier and Seers, op. cit., 161). Myrdal and Bauer made these statements in a series of lectures delivered at the World Bank in the early 1980s.
- 15.
Lord Bauer is worth citing on this topic: “Economic development is but one facet of the history of a society, and attempts to formulate general theories of histoty have so far heen conspicuously unsuccessful.… In the more narrowly economic context, I have found the approach embodied in the conventional growth models to be unhelpful and even misleading … The models take as given such decisive factors as the political situation, peoples’ attitudes, and the state of knowledge” (Bauer, “Remembrance of Studies Past,” 34).
- 16.
In World Conservation Strategy, released by iucn in 1980.
- 17.
Who introduced generations of college freshmen to international development in The Stages of Economic Growth: A Non-Communist Manifesto (Cambridge, England: Cambridge University Press, 1960).
- 18.
A criterion that in practice serves to exclude more diverse social and public input, rather than to make loans more “economical.”
- 19.
This is not to say that in practice individual Bank staffers cannot succeed in promoting participation that involves more genuine empowerment; but to do so is to fight against a heavy instimtional bias and the modus operandi of the Bank.
- 20.
See Zygmunt Bauman, Modernity and the Holocaust (Ithaca, New York: Cornell University Press, 1989).
- 21.
See, for example, David Harvey, The Condition of Post modernity: An Enquiry into the Origins of Cultural Change (Cambridge, Massachusetts and Oxford, U.K.: Blackwell, 1989); and Zygmunt Bauman, Intimations of Postmodernity (London and New York: Routledge, 1992 ).
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© 2013 Bruce Rich
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Rich, B. (2013). The Castle of Contradictions. In: Mortgaging the Earth. Island Press, Washington, DC. https://doi.org/10.5822/978-1-61091-515-1_7
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