THE NAKED TRUTH ABOUT THE WORLD BANK
Updated: Dec 23, 2020
Our connection with money is probably the most consequential one in our lives. While we might at times cut ties with our employer and end relationships, it is nearly impossible to break up with our money.
Our relationship with money is shaped by our relationship with Banks.
Yet very few people understand Banks.
The world of banking is like a labyrinth full of deceptive facades and mysteries.
Our relationship with money is shaped by our relationship with Banks. Yet very few people understand Banks.
Typically, before making a choice of life partner, most people would spend months or years of dating and superstitious endeavors such as checking their partner’s zodiac compatibility, family background, likes and dislikes, and so on. However, when it comes to choosing a Bank (our most consequential life partners), we do very little in performing the necessary due diligence prior to entrusting them with our hard-earned money. The average folk is quite happy to just have a Bank account. They put their trust in governments to screen Banks’s credibility on their behalf. In fact, the Banking & Financial industry is one of the most regulated in the world. However, what happens when a Bank is more powerful than our governments? Welcome to the World Bank & The International Monetary Fund. These two financial institutions are more powerful than many sovereign nation’s elected governments. The spotlight of the current article is focused entirely on the World Bank. In my next article, the International Monetary Fund (IMF) will be discussed.
Let’s demystify the Bank!
THE WORLD BANK IS NOT REALLY A BANK
The World Bank is technically a Non-profit organization registered under US Law. Unlike a typical Bank that uses ROI (Return-On-Investment), Dividend pay-out to shareholders to measure success, the World Bank’s target is more qualitative. It’s fair to ask: If the goal of the Bank is not to make profit then what’s their purpose? The former president of the World Bank for a decade, James Wolfensohn once explained: “The purpose of the World Bank is to fight poverty with passion” . The Bank fights poverty by fighting the cause of it: Endemic corruption.
In fact, The World Bank is not just a money-lender that expects financial return on its investment, it is a pseudo-global government by itself that operates on different sets of rules. Money-lending is only one of the most visible tools it uses to shape policy change amongst its client countries.
Can you handle The Naked Truth?
THE WORLD BANK DOES WHAT THE USA WANTS
Based in Washington, the World Bank is always led by an American citizen appointed by the US President. The United States holds the single largest voting Power within the Board of Directors. The World Bank effectively channels US foreign policy’s priorities unto the rest of the world. Although other countries (such as Japan, China, France & Germany) have significant leverage on the Bank, there is no denying that the Bank serves America’s global policy interest first.
The other significant players at the World Bank do tolerate the United States disproportionate dominance because they extract great benefit from the Bank’s policies too. When the World Bank imposes tough reforms on developing nations such as market deregulation that forces them to open their economies to International competition it’s usually Japanese, Chinese, French and British companies that get in first. National development projects (construction of Highways, Ports and Hydroelectric Dams) funded by the World Bank generally get executed by Chinese, Japanese and European companies.
WHY COUNTRIES BEG FOR THE HELP OF THE WORLD BANK
Despite being fully aware of the painful and disruptive measures they will be subjected to; sovereign countries still run to the World Bank to seek Development Policy Loans (DPLs)-with strict conditions attached-, the way an Alcoholic goes to a rehab Centre. Years of mal-governance, corruption and misuse of their citizen’s money leave them no choice but to approach the World Bank for help.
For a developing nation with limited financial resources, shortage of technical experts and poorly paid public officials, going to the World Bank gives them instant access to the World Bank’s Business Intelligence Database, Development Policy Actions Database, Global experts and Best practices across more than 170 countries. The value of such a massive intelligence resource is at times far more critical than the money the Bank might give.
THE NAKED TRUTH
The World Bank doesn’t quite cure Economic problems. It could be viewed as a temporary “pain-killer” and may or may not necessarily uproot the problem. When it makes loans, its priority is to mold the behavior of the recipient nation to be aligned with US foreign policy.
The Naked truth about the World Bank is that it’s more a policy think-tank lobbying force and a US foreign policy tool than a money-lending institution.
When the World Bank’s prescriptions to client countries are wrong, it is regular people like you and me who usually pay the heaviest personal price.
It is elected government officials who take the hit from their citizens while The Bank executives enjoy tax-free salaries, first class air travel and duty-free shopping. To read the full E-Booklet version of this article, please subscribe at the Contact page.