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

Hindutva founders 'borrowed' Nazi, fascist idea of one flag, one leader, one ideology

By Shamsul Islam*
With the unleashing of the reign of terror by the RSS/BJP rulers against working-class, peasant organizations, women organizations, student movements, intellectuals, writers, poets and progressive social/political activists, India also witnessed a series of resistance programmes organized by the pro-people cultural organizations in different parts of the country. My address in some of these programmes is reproduced here... 
***  Before sharing my views on the tasks of artists-writers-intellectuals in the times of fascism, let me briefly define fascism and how it is different from totalitarianism. Totalitarianism is political concept, a dictatorship of an individual, family or group which prohibits opposition in any form, and exercises an extremely high degree of control over public and private life. It is also described as authoritarianism.
Whereas fascism, while retaining all these repressive characteristics, also believes in god-ordained superiority of race, cultur…

Gujarat refusal to observe Maulana Azad's birthday as Education Day 'discriminatory'

By Our Representative
The Gujarat government decision not to celebrate the National Education Day on !monday has gone controversial. Civil society organizations have particularly wondered whether the state government is shying away from the occasion, especially against the backdrop of "deteriorating" level of education in Gujarat.

Congress 'promises' cancellation of Adani power project: Jharkhand elections

Counterview Desk
Pointing out that people's issues take a backseat in Jharkhand's 2019 assembly elections, the state's civil rights organization, the Jharkhand Janadhikar Mahasabha, a coalition of activists and people’s organisations, has said that political parties have largely ignored in their electoral manifestos the need to implement the fifth schedule of the Constitution in a predominantly tribal district.

Ex-World Bank chief economist doubts spurt in India's ease of doing business rank

By Rajiv Shah
This is in continuation of my previous blog where I had quoted from a commentary which top economist Prof Kaushik Basu had written in the New York Times (NYT) a little less than a month ago, on November 6, to be exact. He recalled this article through a tweet on November 29, soon after it was made known that India's growth rate had slumped (officially!) to 4.5%.

With RSS around, does India need foreign enemy to undo its democratic-secular fabric?

By Shamsul Islam*
Many well-meaning liberal and secular political analysts are highly perturbed by sectarian policy decisions of RSS/BJP rulers led by Prime Minister Narendra Modi, especially after starting his second inning. They are vocal in red-flagging lynching incidents, policies of the Modi government on Kashmir, the National Register of Citizens (NRC), the demand for 'Bharat Ratna' to Savarkar who submitted 6-7 mercy petitions to the British masters (getting remission of 40 years out of 50 years' sentence), and the murder of constitutional norms in Goa, Karnataka and now in Maharashtra.

Rushdie, Pamuk, 260 writers tell Modi: Aatish episode casts chill on public discourse

Counterview Desk
As many as 260 writers, journalists, artists, academics and activists across the world, including Salman Rushdie, British Indian novelist, Orhan Pamuk, Turkish novelist and recipient of the 2006 Nobel Prize in literature, and Margaret Atwood, Canadian poet and novelist, have called upon Prime Minister Narendra Modi to review the decision to strip British Indian writer Aatish Taseer of his overseas Indian citizenship.

Worrying signs in BJP: Modi, Shah begin 'cold-shouldering' Gujarat CM, party chief

By RK Misra*
The political developments in neighbouring Maharashtra where a Shiv Sena-NCP-Congress government assumed office has had a trickle down effect in Gujarat with both the ruling BJP and the Congress opposition going into revamp mode.

Church in India 'seems to have lost' moral compass of unequivocal support to the poor

By Fr Cedric Prakash SJ*
In 2017, Pope Francis dedicated a special day, to be observed by the Universal Church, every year, as the ‘World Day of the Poor’. This year it will be observed on November 17 on the theme ‘The hope of the poor shall not perish for ever’; in a message for the day Pope Francis says:

'Discussed' with Modi, Gujarat Rann Sarovar proposal for Kutch runs into rough weather

By Rajiv Shah
Top Saurashtra industrialist Jaysukhbhai Patel’s by now controversial proposal to convert the 4,900 sq km Little Rann of Kutch area, an eco-sensitive zone – a UNESCO biosphere, world’s only wild ass reserve, and a nesting ground of lesser flamingoes – into a huge sweet water lake, called Rann Sarovar, has suffered a major roadblock. At least three Central agencies have expressed serious doubts about its feasibility.

'Favouring' tribals and ignoring Adivasis? Behind coercion of India's aborigines

By Mohan Guruswamy*
Tribal people account for 8.2% of India’s population. They are spread over all of India’s States and Union Territories. Even so they can be broadly classified into three groupings. The first grouping consists of populations who predate the Indo-Aryan migrations. These are termed by many anthropologists as the Austro-Asiatic-speaking Australoid people.