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

Missed call drive for VVPAT verification follows online plea to "pressure" poll panel

By Our Representative
Several political activists have begun a new campaign, asking concerned citizens to give a missed call on 9667655855 to “support the demand that 2019 Loksabha elections must be declared only after verification of 50% electronic voting machines (EVMs) with Voter Verifiable Paper Audit Trail (VVPAT) receipts.” The effort, supported by civil society networks across India, is meant to "further pressure" India's election machinery to ensure that the poll outcome becomes more transparent.

Now, top Gujarat "litterateur" close to Modi says: Godse was patriot, so was Gandhi

By Rajiv Shah
A little over a week after Prime Minister Narendra Modi criticized BJP candidate from Bhopal Pragya Thakur for calling Nathuram Godse a patriot saying he would never forgive her for the remark, a top Sangh Parivar ideologue, known to close to Modi in Gujarat, has supported her, saying her statement should be seen “within a context.” Thakur won from Bhopal by more than 3.5 lakh votes defeating her nearest rival, veteran Congressman and ex-Madhya Pradesh chief minister Digvijay Singh.

Opposition refuses to legally challenge EVMs amidst plans of "back to ballot" protest

Counterview Desk
Even as opposition to the use of electronic voting machines (EVMs) allegedly to rig polls is growing, a group of prominent citizens who have come together to form the EVM Virodhi Rashtriya Jan Andolan has controversially called for a national protest against EVMs on May 30, demanding future elections should be held only on ballot paper.

When a Pak scribe said Modi has 'proved' Jinnah’s two nation theory right...

By Zafar Agha*
It was around nine in the morning on May 24, 2019, a day after Prime Minister Narendra Modi stormed the Lok Sabha with 300-plus MPs. It was a call from a journalist friend, Muzamal Suhrawardy, from Lahore, Pakistan. I ignored the call. We liberals had a depressing day the previous evening as the opposition to Modi and BJP collapsed. The results belied reports from the ground and even assessments made by colleagues.

It's now official: Akshay Kumar has not been conferred honorary Canadian citizenship

By Our Representative
It is now official. Super-star Akshay Kumar has not been conferred any honorary citizenship by Canadian authorities, as claimed by him ahead of the 2019 elections. In reply to a query by Roshan Shah, who is a Canadian citizen living in Waterloo, Ontario, and belongs to Ahmedabad, the country’s authorities dealing with issues related with immigration, refugees and citizenship in Canada have said that only six persons have so far been granted honorary citizenship.

Savarkar in Ahmedabad "declared support" to two-nation theory in 1937, followed by Jinnah three 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.

If EC's credibility is under question, shouldn't one "assume" EVMs might be tampered?

Counterview Desk
Gauhar Raza, scientist, documentary film maker and poet; senior human rights activist Shabnam Hashmi of the Act Now for Harmony and Democracy (ANHAD); military veteran Major Priyadarshi Chowdhury (retd); and Sucheta De and Sandeep Saurav of the All India Students' Association (AISA), have asked “individuals, organisations and people's movements” to send their endorsement to an appeal they have prepared on Electronic Voting Machine (EVM).

Govt of India overestimated GDP by 2.5%, must restore reputational damage: Ex-CEA

By Rajiv Shah
Top economist Arvind Subramanian has said that changes brought about by the Government of India in data sources and methodology for estimating the country’s gross domestic product (GDP) since 2011-12 “has led to a significant overestimation of growth”. While official estimates place annual average GDP growth between 2011-12 and 2016-17 at about 7 percent, the actual growth may have been 4½ percent, ranging from 3 ½ to 5 ½ percent during the period, he adds.

Common thread of Modi, political Hinduism, nationalism? 'Contest' of ideas isn't over

By Salman Khurshid*
Losing the 2019 election and that too in a somewhat extreme manner has confronted us with unexpected challenges: Our leadership has naturally taken it very hard and to heart but with suggested options that we cannot imagine or contemplate. Hopefully the emotions will settle soon and give us the direction to pick up the pieces and march again.

Will minorities in India be 2nd class citizens? Wake up call: Be a 'communicating' Church

By Fr Cedric Prakash sj*
India today is at a defining moment of her history. There is so much that has taken place in the past five years (and particularly in the last ten days)- that several citizens of the country are genuinely concerned about the future of the country! Will democracy survive? Will key elements of the Constitution be changed?