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World Bank

international financial institution

The World Bank is an international financial institution that provides loans and grants to the governments of poorer countries for the purpose of pursuing capital projects. It is a component of the World Bank Group. The current President of the World Bank Group is Ajay Banga.

World Bank headquarters in Washington, D.C.
David Malpass, World Bank Group President since April 9, 2019
We’ve set two goals: ending extreme poverty by 2030 and boosting shared prosperity. ~Jim Yong Kim, 12th President of the World Bank from 2012 to 2019
This is what John Perkins’ book about being an economic hit man for the World Bank (2004) is all about. He realized that his job was to get countries to borrow dollars to build huge projects that could only be paid for by the country exporting more – which required breaking its labor unions and lowering wages so that it could be competitive in the race to the bottom that the World Bank and IMF encourage. ~Michael Hudson

Quotes

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  • I would encourage every single business in the world, if they haven't done it already, to become climate change literate. There is not a business in the world that can afford to ignore climate change. The investment strategies are going to change - the things we invest in are going to change. The World Bank has already pledged $6bn for building climate resilient infrastructure.. We think that we need $10bn more than that.
  • The Horn of Africa finds itself at the epicentre of the worst locust outbreak we have seen in a generation, most probably in more than a generation...Locust swarms have infested 23 countries across East Africa, the Middle East and South Asia, the biggest outbreak in 70 years... It threatens food supplies in East Africa where nearly 23 million people are facing food shortages... In Kenya, the locusts are eating in one day the amount of food consumed by all Kenyans in two days... The new World Bank programme will help farmers, herders and rural households by providing fertiliser and seeds for new crops, and cash transfers to pay for food for people and livestock. It will also fund investments to strengthen surveillance and early warning systems to make the region more resilient over the medium- to longer-term.

Quotes about

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  • As we sat around the table discussing world events, we were especially fascinated by McNamara's role as president of the World Bank, a job he accepted soon after leaving his post as secretary of defense. Most of my friends focused on the fact that he symbolized what was popularly known as the military-industrial complex. He had held the top position in a major corporation, in a government cabinet, and now at the most powerful bank in the world. Such an apparent breach in the separation of powers horrified many of them; I may have been the only one among us who was not in the least surprised...
    I see now that Robert McNamara's greatest and most sinister contribution to history was to jockey the World Bank into becoming an agent of global empire on a scale never before witnessed. He also set a precedent. His ability to bridge the gaps between the primary components of the corporatocracy would be fine-tuned by his successors.
  • In 2004, oil began to flow through the World Bank-financed Chad-Cameroon pipeline. The $3.7 billion project is the second largest private investment project in sub-Saharan Africa; oil discovered in Chad’s Doba region in the 1960s would not have finally reached the marketplace but for World Bank finance. The reason: Chad is a war-torn country, the fifth poorest in the world and among the world’s most corrupt. World Bank support meant guarantees of risk insurance for the oil companies involved–Exxon, Chevron and Petronas–in the event of a civil war or other disruptions to the oil supply.
    World Bank money intended for poverty alleviation is instead being used to buy bullets and guns to fight in one of the most brutal battles being fought in the world today. It is also painfully clear, as the blood spills on both sides of the Chad border, that the consortium of international oil companies and their allies at the World Bank are being careful to make sure nothing stops a drop of oil from flowing to global markets. A fragile peace agreement brokered between Chad and Sudan on December 24 seems to be holding–for the moment. Regardless, those of us who pay taxes support the World Bank, and are thereby helping finance Idriss Deby’s brutal regime. Thanks to the World Bank, we may have plenty of oil in our tanks, but we also have blood on our hands.
  • The World Bank’s long-running identity crisis is proving hard to shake. When efforts to rebrand itself as a “knowledge bank” didn’t work, it devised a new identity as a “Green Bank.” Really? Yes, it’s true. Sure, the Bank continues to finance fossil fuel projects globally, but never mind. The World Bank has seized upon the immense challenges climate change poses to humanity and is now front and center in the complicated, international world of carbon finance. It can turn the dirtiest carbon credits into gold.
    How exactly, does this work, you ask? Quite simply: The Bank finances a fossil fuel project, involving oil, natural gas, or coal, in Poor Country A. Rich Country B asks the Bank to help arrange carbon credits so Country B can tell its carbon counters it’s taking serious action on climate change. The World Bank kindly obliges, offering carbon credits for a price far lower than Country B would have to pay if Country B made those cuts at home. Country A gets a share of the cash to invest in equipment to make fossil fuel project slightly more efficient, the World Bank takes its 13% cut, and everyone is happy. Everyone, that is, who is cashing in on this deal. If you’re after a real solution to the climate crisis, these shenanigans can and should make you unhappy.
  • On the morning of May 27th this year, the staff of the Legal Affairs Office of the World Bank encountered an ugly racial slur scrawled on the wall outside their department. Very shortly, however, the words “N–––, go home!” were erased by order of World Bank management. This was the second such episode in as many weeks. The General Counsel’s office filed an incident report with security services, much as you might do about a broken lock or a stolen purse, but word spread rapidly through the Bank. For days, black staff members waited in vain for senior management to condemn the graffiti and inform them about steps that would be taken to ensure that public displays of race hatred would be stopped. This expectation was met with silence. Senior management neither acknowledged nor condemned either incident. One week later, the Bank’s diversity policy was posted on the intranet. Period.
  • US President Donald Trump is expected to nominate David Malpass to head the World Bank, a known vocal critic of the institute's lending to China... Malpass would succeed Jim Yong Kim, who announced in January that he is stepping down three years before his term was set to expire amid differences with the Trump administration over climate change and development resources. Kim's departure is likely to become a contentious fight between the Trump administration and other countries who believe the United States exerts too much influence over the bank, which is based in Washington, DC. Kim was first nominated by former US President Barack Obama in 2012... Malpass, the undersecretary for international affairs at the Treasury Department... has been a sharp critic of the World Bank, especially over its lending to China... Last year, Malpass helped negotiate a package of World Bank lending reforms tied to a $13bn capital increase that aimed to limit the bank's lending and focus resources more on poorer countries. The reforms seek to "graduate" countries to private-sector lending and limit World Bank staff salary growth. Malpass... would still need to win approval from the World Bank's 12-member executive board. The US holds a controlling 16-percent share of board voting power and has traditionally chosen the World Bank's leader... China is the World Bank's third-largest shareholder after Japan, with about a 4.5 percent share of voting power.
  • Newly installed World Bank Group president David Malpass said on Thursday that the development lender is preparing to become "deeply involved" in Venezuela, "but the situation is still troublesome on the ground". Speaking at a press conference on the opening day of the joint World Bank and International Monetary Fund (IMF) spring meetings, Malpass said that Venezuela is a "deep concern" for the World Bank, but that any decision to intervene in the country or recognise opposition leader Juan Guaido as Venezuela's president would be left to the World Bank's stakeholders... Venezuela is in the throes of a prolonged and worsening economic crisis that has led to severe shortages of food, life-saving medicines and electricity. More than 50 nations including the United States have thrown their support behind the country's self-proclaimed interim president, Juan Guaido. Russia, China, Turkey and Cuba support President Nicolas Maduro, who has vowed to remain in power.
  • A contradiction lies at the very centre of the neoliberal project. On a theoretical level, neoliberalism promises to bring about a purer form of democracy, unsullied by the tyranny of the state. Indeed, this claim serves as the model lodestar for neoliberal ideology - a banner under which it justifies radical market deregulation. But, in practice, it becomes clear that the opposite is true: that neoliberalism tends to undermine democracy and political freedom. More than 40 years of experimentation with neoliberalism shows that it erodes the power of voters to decide the rules that govern the economic systems they inhabit. It allows for the colonization of political forums by elite interests - a process known as political capture - and sets up new political forums, such as the World Bank, the IMF, and the WTO, that preclude democratic representation from the outset. Neoliberalism also tends to undermine national sovereignty, to the point where parliaments of putatively independent nations no longer have power over their own policy decisions, but are governed instead by foreign banks, the US Treasury, trade agreements, and undemocratic international institutions, all of which exercise a kind of invisible, remote-control power.
  • People commonly think of neoliberalism as an ideology that promotes totally free markets, where the state retreats from the scene and abandons all interventionist policies. But if we step back a bit, it becomes clear that the extention of neoliberalism has entailed powerful new forms of state intervention. The creation of a global 'free market' required not only violent coups and dictatorships backed by Western governments, but also the invention of a totalizing global bureaucracy – the World Bank, the IMF, the WTO and bilateral free-trade agreements – with reams of new laws, backed up by the military power of the United States. In other words, an unprecedented expansion of state power was necessary to force countries around the world to liberalize their markets against their will. As the global south has known ever since the Opium Wars in 1842, when British gunboats invaded China in order to knock down China's trade barriers, free trade has never actually been about freedom. On the contrary, as we have seen, free trade has a tendency to gradually undermine national sovereignty and electoral democracy.
    • Jason Hickel, The Divide: Global Inequality from Conquest to Free Markets (2018) p. 218
  • Its job is to do in the financial sphere what, in the past, was done by military force. The purpose of a military conquest is to take control of foreign economies, to take control of their land and impose tribute. The genius of the World Bank was to recognize that it’s not necessary to occupy a country in order to impose tribute, or to take over its industry, agriculture and land. Instead of bullets, it uses financial maneuvering. As long as other countries play an artificial economic game that U.S. diplomacy can control, finance is able to achieve today what used to require bombing and loss of life by soldiers.
    In this case the loss of life occurs in the debtor countries. Population growth shrinks, suicides go up. The World Bank engages in economic warfare that is just as destructive as military warfare. At the end of the Yeltsin period Russia’s President Putin said that American neoliberalism destroyed more of Russia’s population than did World War II. Such neoliberalism, which basically is the doctrine of American supremacy and foreign dependency, is the policy of the World Bank and IMF.
  • [The World Bank]... was set up basically by the United States in 1944, along with its sister institution, the International Monetary Fund (IMF). Their purpose was to create an international order like a funnel to make other countries economically dependent on the United States. To make sure that no other country or group of countries – even all the rest of the world – could not dictate U.S. policy. American diplomats insisted on the ability to veto any action by the World Bank or IMF. The aim of this veto power was to make sure that any policy was, in Donald Trump’s words, to put America first. “We’ve got to win and they’ve got to lose.”
    The World Bank was supposed to make loans for what they call international development. “Development” was their euphemism for dependency on U.S. exports and finance. This dependency entailed agricultural backwardness – opposing land reform, family farming to produce domestic food crops, and also monetary backwardness in basing their monetary system on the dollar.
  • Most World Bank loans are for transportation, roads, harbor development and other infrastructure needed to export minerals and plantation crops. The World Bank doesn’t make loans for projects that help the country develop in its own currency. By making only foreign currency loans, in dollars or maybe euros now, the World Bank says that its clients have to repay by generating foreign currency. The only way they can repay the dollars spent on American engineering firms that have built their infrastructure is to export – to earn enough dollars to pay back for the money that the World Bank or IMF have lent.
    This is what John Perkins’ book (2004) about being an economic hit man for the World Bank is all about. He realized that his job was to get countries to borrow dollars to build huge projects that could only be paid for by the country exporting more – which required breaking its labor unions and lowering wages so that it could be competitive in the race to the bottom that the World Bank and IMF encourage.
  • When President Franklin Delano Roosevelt and other Western leaders were starting to plan for the postwar world, they had the recent past very much in their minds in other ways. They wanted to build a robust world order that would prevent the world from sliding, yet again, into another deadly conflict. The interwar years had been unstable ones, partly because the League of Nations had not been strong enough. Key powers, the United States in particular, had not joined or, like Germany and Japan, had dropped out. This time, Roosevelt was determined that the United States should be a member of the new United Nations. He was also prepared to do a good deal to keep the Soviet Union in. What had been a precariously balanced international order was put under further strain in the 1930s by the Great Depression, which encouraged countries to turn inward, throwing up tariff walls to protect their own workers and their own industries. What may have made sense for individual nations was disastrous for the world as a whole. Trade and investment dropped off sharply and national rivalries were exacerbated. To avoid that happening again, the Allies, with the Soviet Union's grudging acquiescence, created the economic institutions known collectively as the Bretton Woods system. The World Bank, the International Monetary Fund, and the International Trade Organization (this last did not materialize as the World Trade Organization until much later) were designed to provide stability to the world's economy and to encourage free trade among nations. How much difference these all made to the international order after 1943 will always be a matter of debate, but the world did not get a repeat of the 1930s.
  • The International Monetary Fund (IMF) provides funds to governments which have short-term liquidity problems. The World Bank invests in infrastructural projects. Both institutions are based in Washington and are controlled by the US. The head of the World Bank is always an American, and the IMF is always headed by a European, usually French. The IMF provided resources for France and Portugal to resist challenges in their colonies, and without these funds, decolonisation would have begun earlier. In the new Third World states, the World Bank and IMF favoured those states which adopted the American model. They became powerful instruments in the hands of the US and often influenced private bank lending as well. When the US left the gold standard in 1971, it became easier for Third World states to access loans. The rapid rise in oil prices after 1973 made more funds available as the oil-rich states sought to invest their new-found wealth, but the Third World fell into the trap of accepting cheap loans and gradually became heavily indebted. US banks were happy to lend to Third World states assuming that Washington would bail them out if these states defaulted on their debts. The newly independent states were often dependent on exporting raw materials, but prices fell as technology advanced. The US aim was to create an international environment which promoted convergence between communism and capitalism, but the opposite occurred. Hence US policy made it more diffi cult for developing states to raise living standards as so much wealth had to be used to service debt. This, inevitably, contributed to the growth of left-wing movements.
    • Martin McCauley, The Cold War 1949-2016 (2017)
  • The World Bank on Friday announced a $1-billion programme aiming to integrate India’s 400-plus fragmented social-security programmes for migrant workers hit by the coronavirus pandemic, part of an initiative that seeks to rebalance access to safety nets between rural and urban India., The “Accelerating India’s COVID-19 Social Protection **World Bank to fund $1bn for mobile safety nets for Covid-19 hit migrants in India, Zia Haq Hindustan Times (15 May 2020)
  • If the World Bank wants to streamline our social safety nets, first off, they are getting into very complicated things. The issue sometimes is not so much about how to reach the people as it is about how to get two wings of the government talking. The arguments are on two things, One, don’t over-centralise things. Where the World Bank can intervene and should is portability. Two, if I had to give out a billion dollars, then, I would give very little of that to the federal government and most of it to the states, in fact, more to the municipalities.
  • We call on all G-20 leaders through these [international financial institutions] to support the cancellation of debt obligations held by all IDA countries during this unprecedented pandemic... The vulnerable communities that lack the resources and privileges to adopt adequate public health measures will ultimately face the disproportionate burden of coronavirus... We also urge you to support a major issuance of Special Drawing Rights (SDRs) in order to provide developing countries with urgent financial support... An issuance of SDRs on the order of trillions of dollars will be required to avert major increases in poverty, hunger and disease.
  • Osama Bin Laden and George Bush were both terrorists. They were both building international networks that perpetrate terror and devastate people’s lives. Bush with the Pentagon, the WTO, the IMF and the World Bank. Bin Laden with Al-Qaeda. The difference is that nobody elected Bin Laden... The United States supported Saddam Hussein and made sure that he ruled with an iron fist for all those years. Then they used the sanctions to break the back of civil society. Then they made Iraq disarm. Then they attacked Iraq. And now they’ve taken over all its assets.
    • Arundhati Roy in The Shape of the Beast: Conversations with Arundhati Roy (2008)
  • Without sweeping relief, poor nations could be forced to “dedicate money that should be going towards protecting the health and safety of their people to pay off unsustainable debts. We cannot allow these countries to be deprived of the resources they need to purchase food, medicine, protective gear, and medical equipment. The steps that our international coalition of lawmakers is proposing are not radical. It is the very least that these financial institutions should do to prevent an unimaginable increase in poverty, hunger, and disease that threatens hundreds of millions of people.

See Also

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