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The World Bank. An overview of history, structure and priorities

Creative Commons: Deborah W. Foreign indebtedness has been and continues to be used as an instrument for subordinating the borrowers. Since their creation, the IMF and the WB have violated international pacts on human rights and have no qualms about supporting dictatorships. A new form of decolonization is urgently required to get out of the predicament in which the IFI and their main shareholders have entrapped the world in general.

New international institutions must be established. The concept of the World as a huge bureaucracy, gradually freed from the influence of the US, is actually a far cry from reality. It financed public and private projects in Third World and East European countries. It consists of several closely associated institutions, among which : 1. The International Bank for Reconstruction and Development IBRD, members in , which provides loans in productive sectors such as farming or energy ; 2.

The International Finance Corporation IFC , which provides both loan and equity finance for business ventures in developing countries. It has frequently failed to make the effort to reach a consensus with its principal partners since the end of the s, these are Japan, Germany, Great Britain and France and it imposes its views directly on the Bank.

One must also consider the intervention more or less active depending on the period of Congress. On several occasions, the US executive has had to make a deal with Congress concerning the attitude to be taken with reference to the Bank and its activities. Although the World Bank is systematically subject to US influence, it nevertheless enjoys a certain measure of autonomy. It possesses a certain logic of its own which sometimes comes into conflict with the immediate interests of the US government.

Also, one must take into consideration the close links between the US business world big capital and the Bank. Although this intense interaction has changed little over the years, the way the United States mobilizes other member countries in support of its views has changed considerably. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set.

Referring again to the origin of the World Bank and the influence of the US. Its first mission was to support the new system of standard exchange rates. When the Bretton Wood fixed rates system came to an end in , the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. The other member countries are divided into groups led by one country. Among the issues that divided the participants at the Bretton Woods conference was the location of the Bank and IMF headquarters.

The US Treasury wanted it to be established in Washington, within the reach of its influence, while several foreign delegations preferred New York, on the one hand to put it at a distance from the US government, and on the other hand to move it closer to the future headquarters of the United Nations. John Maynard Keynes explicitly asked that the Bank and the IMF be kept at a distance from the US Congress and, he added, from the influence of the embassies; New York must therefore be the choice of headquarters.

In fact, Keynes initially tried to persuade the participants to choose London. Realizing it was a losing battle, he then tried to avoid Washington by proposing New York. The second part of his argument was also clever in that Wall Street was synonymous with the domination of the business world that had produced the crash.

Basically, Morgenthau wanted, as he declared, to place the centre of the new financial institutions effectively in the control of the Treasury and maintain a distance in relation to Wall Street.

In fact, the Bretton Woods institutions very quickly came under the double supervision of the Treasury and Wall Street from in fact. Out of the ten presidents of the World Bank from till , seven, including the first, came directly from the business world.

To avoid undue influence of the US government on the Board of Directors of the Bank, Keynes wanted its members executive directors to divide their activity between their country of origin and World Bank headquarters: he therefore proposed that they work on a part-time basis. During the vote in Congress on US participation in the World Bank and the IMF, an overwhelming majority emerged against 18 in the House of Representatives; 61 against 16 in the Senate - a very unusual state of affairs.

This clearly proved that Congress was indeed satisfied with the choices made in the construction of these two institutions. With a budget of Although it in fact played a marginal role in reconstruction, nevertheless the Bank allocated certain loans to European countries, starting with the first in its history: million dollars to France in May The State Department therefore took an explicit and formal step in this matter, the PCF was pushed out of the governmental coalition and, in the days that followed, the representative of the World Bank announced that the loan of million dollars was granted.

This clearly shows the direct influence exercised by the US Executive on the Bank and the political choices leading to this intervention.

In the same study, the author indicated that in , the US intervened successfully in order to prevent the granting of a loan to Poland and Czechoslovakia on the grounds that the governments of these countries included Communists. Since the start of operations, the policies of the World Bank were determined by the context of the Cold war and US interests in this regard. Since its origin and up to the present time, the president of the World Bank has been a US citizen proposed by its government.

The members of the Board of Governors simply ratify the candidate presented by the US. This privilege does not figure in the statutes of the Bank. From its beginnings till today, the US is the only country to have a de facto right of veto at the World Bank.

With the creation of the Bank, the US had The wave of newly independent countries in the South increased the number of member nations of the World Bank Group, gradually diluting the weight of the US vote. However, the US took care to preserve its right of veto: in , it had only When in the situation was no longer tenable for the US, the definition of the qualified majority was modified in its favour. In this manner it gave full satisfaction to Japan while maintaining its right of veto.

Formally, most Bank decisions, including those affecting lending levels and loan allocations, require a simple majority vote of the board. And most board decisions are taken by consensus. It is the weight of its voice, therefore, more than the exercise of its vote that gives the United States effective power on the board. The influence of the US on the Bank in specific cases of countries. We will present the cases of five countries in order to illustrate the influence of the US in the choices made by the Bank.

The choice has not been easy since we have a profusion of examples at our disposal. In fact, according to these two books, the instances in which the opinion of the US government did not prevail can be counted on the fingers of both hands. Nicaragua and Guatemala. Central America is considered by the US government as part of its own exclusive sphere of influence.

The policies adopted by the World Bank in terms of granting loans to the countries of the region are directly influenced by the political choices of the US government. The case of Nicaragua and Guatemala during the s makes this clear. The United States supported the Somozas and the Somozas supported the United States - in votes at the United Nations, in regional councils, and by offering Nicaragua as a base for training and launching the Cuban exile forces that met disaster at the Bay of Pigs in An American military base was established in from which was launched the successful overthrow, by the U.

The reason for the suspension of lending was the accumulation of arrears. Gwin details the concrete proposals formulated by Nicaragua and she explains that although these proposals were acceptable, the Bank made no effort to help the Sandinista regime. She pointed out that this was in contrast to the flexibility adopted by the Bank in respect to other regimes which were allies of the US.

Black, went in person to negotiate directly with Marshal Tito. The Chilean case shows that there can be a contradiction between the judgment of the Bank and the position of the US government, the latter finally getting the Bank to modify its position.

Despite the pressure, the Bank sent a mission to Santiago having determined that Chile was in compliance with Bank rules requiring that for lending to resume after nationalization, procedure for compensation had to be under way. Robert McNamara subsequently met with Allende to indicate that the Bank was prepared to make new loans contingent upon government commitments to reform the economy.

But the Bank and the Allende regime could not come to terms on the conditions for a loan. Throughout the period of the Allende regime, Chile received no new loans. The suspension of lending in was cited in the U. Treasury report as a significant example of the successful exercise of U.

As a complement to this information there is a document conserved in the archives of the World Bank, in which the Chilean government, on the occasion of a meeting of the Bank in September , protested against the suspension of loans and pointed out that precisely-defined projects had already been submitted to the Bank.

Some twelve years later, when the atrocities committed by the Augusto Pinochet regime were incurring wide protests in the US, and even within Congress, the US government asked the Bank to delay a discussion on granting loans to Chile in order to avoid opposition in Congress. One can deduce that the request of the US government was simply lip service to public opinion, designed to depict the government as being sensitive to expressed democratic concerns, while remaining fully aware that, in a well-rehearsed distribution of roles, the president of the Bank would keep to the political course recommended by the government.

It was a question of pleasing everyone. After the end of the war and the defeat of the US, the World Bank sent two successive fact-finding missions which concluded that the Vietnamese authorities, although not pursuing a totally satisfactory economic policy, fulfilled the conditions required to receive concessional loans. In spite of this, the Bank management, under pressure from the US, suspended loans to Vietnam and its president, Robert McNamara, affirmed in Newsweek August 20 that the suspension was based on the negative report of the mission.

The World Bank management justifies allocation or non-allocation of loans on purely economic grounds. This is not to say that economic objectives have no importance but they are subordinated or supplementary to political and strategic choices.

Catherine Gwin, who defends the generally positive result of US influence on the World Bank, from the Washington standpoint, adopts a rigorous approach in which she does not conceal the contradictory aspects of the policies of both the US and Bank management. The influence of the United States concerning sectoral loans.

From the s, the US systematically used its influence in an attempt to convince the Bank not to grant loans which facilitated the production of goods that would compete with US products.

In the US got the Bank to drastically reduce loans granted to the steel-manufacturing industry in India and Pakistan. In , the US successfully opposed an investment project by the International Financial Corporation IFC - World Bank group in the Brazilian steel industry and later a loan from the Bank to support the restructuring of the steel-manufacturing sector of Mexico.

It also threatened to use its power of veto to block a loan for the Chinese steel industry in the 80s. It took similar action regarding an investment by the IFC in the Chilean copper industry. In addition, the US actively influenced the Bank in its policy on the oil sector. The US was in favour of loans for oil drilling but not refining. No comment is necessary.

Cases of convergences between the United States and another power Great Britain for example. On several occasions, US interests coincided with those of other powers; the attitude adopted by the Bank is then the result of close consultations between the United States, the other concerned power s and the Bank.

Two examples: the attitude of the Bank concerning the Aswan dam construction project under the regime of Gamal Abdel Nasser in Egypt, and in Iraq since the occupation of that territory by troops from the US, Great Britain and their allies in March The project for the construction of the Aswan dam on the Nile preceded the accession of Colonel Nasser to power in but took its final form during that year.

In January , the Egyptian Finance Minister wrote to Eugene Black, president of the World Bank, proposing the co-financing of this gigantic project. In effect, the Egyptian military in power challenged the occupation of the Suez Canal by British troops. President Eugene Black personally visited Egypt and discussed the project; the Bank sent engineers, etc.

The IMF: The World’s Controversial Financial Firefighter

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The World Bank is an international financial institution and is a member of the United Nations development group. During World War 2, the business classes of Europe were either supporting the Nazis or were forced to flee them. Socialists and communists had high credibility because they were seen as the leaders of the Nazi resistance. In order to prevent leftists from coming to power in Western Europe, it was crucial for the US and UK to get the business classes of Europe back into power. This required the establishment of strong institutions which would promote policies favouring development of private businesses. The fear of a post war economic depression also fostered the creation of the World Bank. These are referred to as the Bretton woods sisters or twins.

Section 6. The fall of the gold standard led countries to raise trade barriers, devalue their currencies to compete against one another for export markets and curtail usage of foreign exchange by their citizens. All these factors led to declining world trade, high unemployment, and plummeting living standards in many countries. In , the Bretton Woods Agreement established a new international monetary system. Both have taken on expanding roles, and there have been renewed calls for additional expansion of their responsibilities, particularly in the continuing absence of a single global monetary agreement. The two institutions may seem to have confusing or overlapping functions. However, while some similarities exist see the following figure , they are two distinct organizations with different roles.

Purposes. At Bretton Woods the international community assigned to the World Bank the The IMF has gone through two distinct phases in its year history.

World Bank

It now plays a central role in the management of balance of payments difficulties and international financial crises. Through the fund and other activities such as the gathering of statistics and analysis, surveillance of its members' economies, and the demand for particular policies, [11] the IMF works to improve the economies of its member countries. Quotas, which are pooled funds of member nations, generate most IMF funds.

Developing countries were hit hard by the financial and economic crisis, although the impact was somewhat delayed. Every country had different challenges to master. The closer the developing countries are interconnected with the world economy, the crasser the effects.

The World Bank Group and the International Monetary Fund (IMF)

Officially charged with managing the global regime of exchange rates and international payments that allows nations to do business with one another, the fund recast itself in a broader, more active role following the collapse of fixed exchange rates, intervening in developing countries from Asia to Latin America. The fund has received both criticism and credit for its efforts to promote financial stability. Some economists claim that it is in the midst of a major transformation, citing its vast expansion of lending capacity, governance reform, and the move away from free market fundamentalism. International Organizations. Financial Markets. Sovereign Debt. The new regime was intended to foster sustainable economic growth, promote higher standards of living, and reduce poverty.

Its first goal is to end extreme poverty. Its second goal is to promote shared prosperity. The World Bank is not a bank in the conventional sense of the word.

Glance Back, Drive Forward: Reflections on the World Bank's History. 1. Session 1—From Bank to The International Monetary Fund's Archives for Economic Research. Archives of Development in the _Transcript__44_pdf.

International Monetary Fund (IMF) vs. the World Bank: What's the Difference?

Domination of the United States on the World Bank

Creative Commons: Deborah W. Foreign indebtedness has been and continues to be used as an instrument for subordinating the borrowers. Since their creation, the IMF and the WB have violated international pacts on human rights and have no qualms about supporting dictatorships. A new form of decolonization is urgently required to get out of the predicament in which the IFI and their main shareholders have entrapped the world in general. New international institutions must be established.

Founded at the Bretton Woods conference in , the two institutions have complementary missions. The World Bank Group provides financing, policy advice, and technical assistance to governments, and also focuses on strengthening the private sector in developing countries. The IMF keeps track of the economy globally and in member countries, lends to countries with balance of payments difficulties, and gives practical help to members. Countries must first join the IMF to be eligible to join the World Bank Group; today, each institution has member countries. Its five institutions share a commitment to reducing poverty, increasing shared prosperity, and promoting sustainable development.

World Bank , in full World Bank Group , international organization affiliated with the United Nations UN and designed to finance projects that enhance the economic development of member states. Headquartered in Washington, D. It also provides technical assistance and policy advice and supervises—on behalf of international creditors—the implementation of free-market reforms. Together with the International Monetary Fund IMF and the World Trade Organization , it plays a central role in overseeing economic policy and reforming public institutions in developing countries and defining the global macroeconomic agenda. Its first loans were geared toward the postwar reconstruction of western Europe. Beginning in the mids, it played a major role in financing investments in infrastructural projects in developing countries, including roads , hydroelectric dams , water and sewage facilities, maritime ports, and airports. The IBRD provides loans at market rates of interest to middle-income developing countries and creditworthy lower-income countries.

 И что же из этого следует. - Из этого следует, - Джабба шумно вздохнул, - что Стратмор такой же псих, как и все его сотруднички. Однако я уверяю тебя, что ТРАНСТЕКСТ он любит куда больше своей дражайшей супруги. Если бы возникла проблема, он тут же позвонил бы. Мидж долго молчала.

International Monetary Fund

 Выкладывай. - Может быть, все это чепуха, - сказала Мидж, - но в статистических данных по шифровалке вдруг вылезло что-то несуразное. Я надеюсь, что ты мне все объяснишь. - В чем же проблема? - Джабба сделал глоток своей жгучей приправы. - Передо мной лежит отчет, из которого следует, что ТРАНСТЕКСТ бьется над каким-то файлом уже восемнадцать часов и до сих пор не вскрыл шифр.