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As promised.  Sorry its rather long winded.

The first thing I have to say is I had little or no knowledge as to what the World Bank did other than when ever it calls its Annual Meetings of the Boards of Governors presided over by some bloke named  Jim Yong Kim the 12th president of the Bank it is in the lime light for all the wrong reasons.

So what is it and what is it function?

The International Bank for Reconstruction and Development, commonly known as the World Bank was Established in 1944, its headquartered are in Washington, with 10,000 employees in more than 120 offices worldwide.

It and its sisters organisations of global capitalism, the IMF and WTO have their origins in the United Nations Monetary and Financial Conference at Bretton Woods, New Hampshire, in July 1944.

Originally established to rebuild Europe after the war. Once the rubble was cleared up it branched out into the world expanding from a single institution to a closely associated group of five development institutions with close ties to the International Monetary Fund. (IMF)

The Bank to-day is like a cooperative in which 188 member countries are shareholders.

The term “World Bank” incorporates five closely associated entities that are to suppose to work collaboratively toward poverty reduction World Wide.

These are:  The World Bank (IBRD and IDA), and three other agencies, the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID).

Its member countries, or shareholders, are represented by a Board of Governors, who are the ultimate policymakers at the World Bank. Generally, the governors are member countries’ ministers of finance or ministers of development.

All members must first join the International Monetary Fund.

Members are shareholders in the bank but they do not all pull equal weight within the organisation.

The leading contributors, and therefore those with the biggest say in World Bank policy, are: the United States, Japan, Germany, France and the United Kingdom.

Each of these five countries has a nominee on the bank’s board of executive directors. The remaining 178 countries are between them allowed to nominate a total of 19 other board members.

It is this select board that decides on the bank’s work.

So the rich and powerful decide where the money goes?

That should come as no surprise, even to the most die-hard anti-capitalist protester.

Some more moderate critics argue that while it is normal for the richest countries to choose who they are willing to help, the methods used are too narrowly focused.

The critics say that to invest in projects that seek to smash corruption, for example, will do little to alleviate long-term poverty unless and until the entire international economic system is reformed and made fairer. True but impossible to achieve.

And the critics go on to say that the bank attaches far too many strings to its loans. For example, in return for debt relief Benin, the poverty-stricken African country, was forced to liberalize its cotton sector and introduce a performance-based pay structure for civil servants. Zambia was forced to privatize its copper mines in return for relief. The move led to 60,000 job losses in the sector.

The poorest countries of the world owe more money to the World Bank and the IMF than they do any other private or government institutions because most of these loans were so poorly designed that the borrowing countries have not reaped enough income to pay them back.

Up to quite recently the World Bank and IMF refuse to cancel debts because these two institutions say that their bylaws prohibit them from doing this. Additionally, governments have special incentive to stay current with their multilateral debts, since the IMF determines the creditworthiness of countries: i.e., until the IMF gives its stamp of approval (which usually requires adherence to the economic policies it recommends), poor countries generally cannot get credit or capital from other sources.

IN 1996 the Heavily Indebted Poor Countries (HIPC) Initiative was introduced by the world bank to address the above problem.

Since the HIPC Initiative was adopted in 1996, only five countries-Uganda, Bolivia, Guyana, Mozambique, and Mali-have received or are in a position to receive any relief this year (2000). And these countries have found HIPC relief to be worth relatively little. Uganda began to receive debt relief worth US$350 million in April 1998, but as a consequence lost access to other debt relief mechanisms. With a drop in the international price of coffee, its chief export, Uganda found itself by April 1999 once again saddled with an officially “unsustainable” debt burden. An internal World Bank/IMF report indicates that Mali and Burkina Faso (slated for HIPC relief in early 2000) will actually pay more on their debt after graduating from HIPC.

(This multilateral debt (money owed to international institutions like the World Bank and IMF as well as their sister institutions like the Asian Development Bank, the African Development Bank and the Inter-American Development Bank) has skyrocketed in the last few years for the poorest countries. For low-income countries (defined by the World Bank as those with per capita Gross National Product below US$785), multilateral debt increased by some 544% between 1980 and 1997, from US$24 billion to US$155 billion, and currently constitutes 33% of their total long-term debt burden (versus about 25% in 1980). For the most severely indebted of those low-income countries, multilateral debt increased by 459%, from US$10.6 billion to US$59 billion, with a corresponding percentage increase in their long-term debt from 22% to 30%.)

Of the 32 countries classified as severely indebted low-income countries, 25 are in sub-Saharan Africa. For example, the country of Chad in West Africa saw its debt increase from US$330 million in 1987 to US$1 billion ten years later. Chad’s debt/GDP ratio rose from 28 percent in 1987 to 55 percent in 1997.

The World Bank Group has set two goals for the world to achieve by 2030:

  • End extreme poverty by decreasing the percentage of people living on less than $1.25 a day to no more than 3%
  • Promote shared prosperity by fostering the income growth of the bottom 40% for every country

So why is there still so much poverty after 60 years of the Bank’s existence?

Its ethos is simple: Countries that are open to international trade, are diversified, attract foreign direct investment and adhere to free market economic policies are the most likely countries to sustain growth.

It is a case of capitalism will feed itself.

The theory goes that, by encouraging countries to pursue US-style economic management and by attracting private investment, economies will grow and poverty will die as a knock-on effect. Worthless as Inequalities of trade, health, education, and the like ensure that any knock-on effect is controlled.

Much of the World banks money, goes on efforts to strengthen the banks and capital markets.

How and where does it get its Funds?

It is primarily financed by selling IBRD bonds AAA-rated in the world’s financial markets.

The Banks Capital consists of reserves built up over the years and money paid in from the bank’s 188 member country shareholders. IBRD income also pays for World Bank operating expenses and has contributed to IDA and debt relief. It has US$178 billion in what is known as “callable capital,” which could be drawn from our shareholders as backing, should it ever be needed to meet IBRD obligations for borrowings (bonds) or guarantees.

Although the World Bank attempts to present the goal of the organisation as “reducing poverty”, this has never been their objective.

Their main objective is to fund large-scale power and infrastructure projects in the third world to prepare the way for the exploitation of these countries natural resources and cheap labour by northern corporations.

The poor have no say in “development” projects which often displace them, rob their countries of valuable natural resources, and contribute to the climate change which is hitting their countries the hardest.

The World Bank, in conjunction with the IMF also provides loans to countries in debt in return for “structural adjustment” reforms to their economy which usually involve the slashing of healthcare, education and social services budgets, to the detriment of the local population, as well as dropping tariffs and opening their markets to a flood of cheap western imports. These often destroy local industry, farming and quality jobs, increasing the availability of easily exploitable labour for multinational corporations to take advantage of.

Regardless of whatever alleviating measures are taken, because of the very nature of global capitalism, the World Bank cannot be transformed into a benevolent global institution, since its very premise is to protect and promote the interests of multinational corporations.

The World Bank has no democratic accountability to those whom its decisions affect, decisions which take place behind closed doors and with little transparency.

The World Bank recently admitted that the world added 200 million poor people to the rolls of poverty by 1998 over the 1.3 billion classified as living below the international poverty line in 1993 (people with an income of less than a dollar a day).

Tanzania, half of whose population is illiterate, spends a third of its budget on debt payments and spends four times more on debt than it does primary education.

Niger, where life expectancy is only 47 years, spends more on debt payments than it does on health and education combined.

Altogether sub-Saharan Africa spends four times as much on debt repayment as she does on healthcare.

And you wonder why we have Ebola.

What we need is an Organisation that provide interest-free credits, and grants to developing countries. That offers support to developing countries through policy advice, research and analysis, and technical assistance. That ensure that countries can access the best global expertise and help generate cutting-edge knowledge to reduces Inequality not poverty.

In my view it should be scraped and replaced by a WORLD AID COMMISSION OF 0.05% on all High Frequency Trading, on all Foreign Exchange Transactions ( over £20,000) and on all Sovereignty Wealth Funds Acquisition.

This would produce a perpetual funded source of finance that could be run by a compact Organisation Independent of the United Nations. ( see previous Postings)

In the mean time it could and should at this every moment spend its so-called “callable capital,” to advert the Spread of Ebola. World Bank Mission

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<!– Robert de Mayo Dillon –>
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