Skip to main content

World Bank needs a new perspective on development, not just a new president

By Maju Varghese*
The resignation of the World Bank President Jim Yong Kim was an unexpected development given the fact that he had three more years to complete his tenure. Resignations at such a high level after bidding for a second term is unusual which prompts people to think what would have led to the act itself.
The World Bank as a multilateral institution has been in the spotlight of criticism particularly from the global south and justice movements for their support to neo-liberal economic reforms acting on behalf of its financial sponsors particularly the United States.
The recent differences of opinion between US president Donald Trump and Jim Kim on various issues including issues around funding of coal, funding in China etc are said to be one of the reasons for his resignation. The World Bank leadership did not enjoy the earlier support from the United States after Trump took over; however, Kim managed to get a USD 13 billion capital increase for the World Bank with a condition that lending to China will be decreased. The differences seem to have escalated and resulted in the resignation.
The earlier high profile resignation was when Paul Romer resigned from the post of Chief Economist of World Bank after disclosing that the changes in the Ease Of Doing Business ranking on Chile may be due to the political motivations of the World Bank staff and apologised for the mistake. The two resignations show the orientation and power structure on how the Bank operates.
Two inferences from these episodes could be made. First, the Bank acts according to interest of its financiers, particularly the US and its neo-liberal philosophy. Second, anyone who dares to challenge either the leadership of the United Sates or its political preferences will be pushed out from the Bank. Both of these factors undermine the ‘democratic’ functioning and multilateral nature of the institution. The legitimacy of the institution is at question.
Kim’s tenure as the Bank’s president has seen the rise of development banks from the south, namely the Asian Infrastructure and Investment Bank (AIIB), and the New Development Bank (NDB), pushed by China and other BRICS nations. The space for global development finance is no longer monopolised by the World Bank, which has limited capital, as both the AIIB and NDB provides an alternate space for countries to finance their development needs.
Kim brought in the strategic reorientation to attract the private capital to supplement the earlier model of developed countries ‘aiding’ development through the Bank. Under Kim, the World Bank reoriented itself from a lender to development project to a broker for private sector investment.
The new strategy therefore is not to lend money but to derisk (covering private sector investment risk with public money) development projects and promote policies that make countries and projects attractive to private investment. This strategic shift also means a shift from the traditional IBRD and IDA investments to the private arm of the World Bank i.e the IFC (International Finance Corporation).
The exit of Kim to join the private equity funds only underlines that the private capital has now occupied the development thinking of both Kim and the Bank and how deeply the private players are taking over the multilateral agencies.
Tata Mundra
Kim’s term also saw the World Bank fighting to protect the immunity of its private lending arm International Finance Corporation (IFC) and its investment in the Tata’s Mundra Ultra Mega Thermal Power project, which was challenged by the local fishworkers as it robbed their livelihood and destroyed the environment. The case was recently heard by the US Supreme Court. A verdict of the same is expected soon.
World Bank’s Environment and Social Framework was changed during Kim’s tenure from mandatory compliance to World Bank Safeguards to that of host country policies and system. This has led to widespread criticism by civil society organisations of dilution of standards potentially impacting people and environment.
The non-recognition of human rights had earlier prompted the United Nations Special Rapporteur on Extreme Poverty and Human Rights, Philip Alston, to call World Bank as a ‘human rights-free zone’ as it treats human rights more like an infectious disease than universal values and obligations.
The resignation of Kim has lead to revival of the demands to undo the post-World War II dominance of the US in terms of deciding who should lead the World Bank. Historically, all the World Bank Presidents were US citizens. However this was challenged in the last election by former Nigerian finance minister Okonjo-Iweala and former Colombian finance minister Jose Antonio Ocampo.
A new president from the global south with a history of work in environment and human rights will be a good beginning to regain some elements of multilateral democratic existence. However, if it is not coupled with democratising the institution and rescuing it from the ‘political bias’ the change itself will not contribute much.
To quote Herman Daly, taking “a few antacids and laxatives to cure the combination of managerial flatulence and organisational constipation” will not work. World Bank needs new perspective along with a new president from global south.
---
*Associate Director, Centre for Financial Accountability, New Delhi

Comments

TRENDING

Mystery around Gujarat PSU 'transfer' of Rs 250 crore to Canadian firm Karnalyte

By AK Luke, IAS (Retd)*
While returning from a Board meeting of the Oil India Limited (OIL) in Ahmedabad some time in 2012, two officers of the Gujarat State Fertilizers and Chemicals Ltd (GSFC), Nanavaty and Patel,  saw me off at the airport. They said they were proceeding to Canada in connection with a project GSFC had entered into with a company there. As we were running late, I hastily wished them the best.

Savarkar in Ahmedabad 'declared' two-nation theory in 1937, Jinnah followed 3 years later

By Our Representative
One of the top freedom fighters whom BJP and Prime Minister Narendra Modi revere the most, Vinayak Damodar Savarkar, was also a great supporter of the two nation theory for India, one for Hindus another for Muslims, claims a new expose on the man who is also known to be the original proponent of the concept of Hindutva.

Indians have made 119 nations their ‘karma bhumi’: US-based Hindu NGO tells Rupani

Counterview Desk
In a stinging letter to Gujarat chief minister Vijay Rupani, the US-based Hindus for Human Rights (HfHR), referring to the report citing his justification for the Citizenship Amendment Act (CAA) – that “while Muslims can choose any one of the 150 Islamic countries in the world (for residence), India is the only country for Hindus" – has said, he should remember, Hindus have made several countries, including USA, their home.

J&K continues to be haunted, as parts of India 'degenerate' into quasi-Kashmir situation

By Rajendran Narayanan*, Sandeep Pandey**
“Jab har saans mein bandook dikhe toh baccha kaise bekhauf rahe?” (How can a child be fearless when she sees a gun in every breath?) remarked Anwar, a gardener from Srinagar, when asked about the situation in Kashmir. On November 30, 2019, a walk through an iron gate in a quiet neighbourhood of Srinagar took us inside a public school. It was 11 am when typically every school is abuzz with activity. Not here though.

Tata Mundra's possible closure? Power ministry's 'pressure tactic' on consumer states

By Bharat Patel*
Tata power has announced to the Union Ministry of Power that Tata Power may be forced to stop operating  its imported coal-based Mundra Ultra-Mega Power Project (UMPP) after February, 2020. It is not only unfortunate but also criminal that irreversible damage has been caused to the fragile ecosystem of Mundra coast for a project that will have a running life of only seven years.

Population control? 10% Indian couples want to delay next pregnancy, but fail

Counterview Desk
Shireen Jejeebhoy, director at Aksha Centre for Equity and Wellbeing, previously senior associate at the Population Council, India, argues that the debate on the country's population was fuelled by Prime Minister Narendra Modi’s Independence Day address to the nation, where he drew attention to “concern” about the challenges posed by this ‘exploding’ population growth, needs to centre around the promotion of rights and education, instead of the language of explosion and the threat of coercion that this term implies.

Upendra Baxi on foolish excellence, Indian judges and Consitutional cockroaches

By Rajiv Shah
In a controversial assertion, top legal expert Upendra Baxi has sought to question India's Constitution makers for neglecting human rights and social justice. Addressing an elite audience in Ahmedabad, Prof Baxi said, the constitutional idea of India enunciated by the Constituent Assembly tried to resolve four key conflicting concepts: governance, development, rights and justice.

Savarkar 'opposed' Bhagat Singh's, Netaji's dream of India, supported British war efforts

By Shamsul Islam*
In a shocking development, the student wing of the RSS put the busts of martyrs Bhagat Singh and Subhash Chandra Bose with Savarkar's on one pedestal at the University of Delhi late in the night on August 20, 2019. Bhagat Singh sacrificed his life for a socialist-democratic-secular republic and Netaji raised Azad Hind Fauj (INA) consisting of people of all religions and regions for armed liberation of India.

Savarkar 'criminally betrayed' Netaji and his INA by siding with the British rulers

By Shamsul Islam*
RSS-BJP rulers of India have been trying to show off as great fans of Netaji. But Indians must know what role ideological parents of today's RSS/BJP played against Netaji and Indian National Army (INA). The Hindu Mahasabha and RSS which always had prominent lawyers on their rolls made no attempt to defend the INA accused at Red Fort trials.