Global Policy Forum

Does The Much Maligned World Bank Deserve a Thumbs Up from the DfID?


The Department for International Development’s (DfID) latest review of its policy towards the World Bank (WB) expresses its accord with the bank’s ideology and practices. It ignores persistent fundamental flaws such as loan conditionality and the bank’s hierarchical decision-making structure. According to this article, if the bank’s idealistic mandate is ever to be fulfilled, it is time for the DfID to leave behind minor issues and concentrate on the bank’s major structural deficiencies.  

By Jonathan Glennie

2 September, 2011

The World Bank has had a bad couple of decades. It was central to one of the biggest development disasters in history, forcing structural adjustment on aid-dependent countries. Other sins include insisting that countries impose user fees on the world's poorest people to access basic health and education. This policy, like much of the structural adjustment doctrine, caused increased poverty and is now discredited.

But we should not overlook the contribution made by the bank in many parts of the world, through small projects as well as large-scale financing, and the opportunity it has to do better in the future. The Department for International Development's (DfID) review of policy towards the World Bank, released last Friday, is therefore an important document.

In brief, DfID's priorities in terms of its relationship with the bank are: results and efficiency; fragile states; climate change; the International Finance Corporation (the private sector arm of the bank); and off-track millennium development goals, with a special focus on girls and women.

All are good objectives, and the World Bank has an important role to play in each. The messages sent by the bank are as important as its vast amounts of money, much of which is in any case lent at little better than private market rates. If it raises issues such as climate change and women's rights, that is likely to stir action from governments around the world. And although frequently criticised, the bank's involvement in infrastructure or business projects can signal more respect for human rights and environmental protection.

The focus on fragile states is to be welcomed. It is an exceptionally difficult area to get right, and it does DfID and the World Bank credit that they are not shirking it in favour of easier wins. The recognition in the paper of the role the bank needs to play to support development in middle-income as well as the poorest countries is also welcome.

But despite the positives in this document, one can't help thinking DfID is slowly shelving the important political changes required at the bank in favour of some slightly fluffy technocratic wins. The really big issues receive no mention at all.

Conditionality, whereby countries have to jump through policy hoops to access finance, is discredited in almost all available research papers. Openness about policy options, humility about what we do and don't know, and how much outsiders should influence national decision-making are now considered conventional wisdom by most aid practitioners.

But senior World Bank officials remain unabashed in their pursuance of conditionality. The bank and the IMF are the last bastions of the faith. One of Andrew Mitchell's predecessors as Britain's minister for international development, Hilary Benn, under pressure from UK civil society, brought out a strong critique of World Bank conditions. What happened to it?

Also gathering dust are some bold statements insisting on wholesale governance reform, which appeared to be a DfID priority as recently as last year, before the change of government. Many at the bank are public servants of high calibre, but they are constrained by the politics at the top. That is why the architecture of decision-making is so crucial. The World Bank needs to become a bank for the world, ditching its history of favouring the interests of a few powerful shareholders.

One example of the importance of World Bank governance is how it took so long to enact serious debt cancellation – which, once done, saved or bettered millions of lives – for the world's poorest countries. The campaign started in the 1980s, but the bank did not cancel its debts until 2005, and then only with neoliberal strings attached – a last-ditch attempt to remain in control. Why the delay? Because the bank is set up to look after the interests of the creditor countries, rather than the debtors, however hard decent officials seek to change that.

Voting rights are crucial, as is the selection of senior officials. First, Paul Wolfowitz, architect of the neocon wars and sponsor of Dambisa Moyo and her market fundamentalist vision, was named the bank's president. Now it is Robert Zoellick, hard-nosed partisan for US interests.

However, instead of getting stuck into the issues that really matter, DfID is in danger (again) of retreating into easy language about results and efficiency, which, while important, are only one side of the equation.

It's another key DfID publication without even a nod to concepts such as ownership and sovereignty. No mention of human rights or environmental protection. And no recognition that unbalanced governance has been core to the bank's past failures.

These are not just shopping list items; they are central to any serious assault on poverty, injustice (again, not mentioned) and inequality (also not mentioned). So while there is no doubting the energy at DfID, which is underpinned by a reform mentality determined to justify the increases in the aid budget, concerns are mounting that key issues are being edged off the agenda.

As a new generation of World Bank staffers seeks new opportunities to create a progressive global institution, this strategy paper delivers a vote of confidence from DfID, one of the world's leading national aid agencies. But without genuine changes in attitudes, ideology and decision-making power, no amount of pleasant technocratic language will enable the World Bank to fulfil its idealistic mandate.


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