Posted on 08/13/2007 10:37:38 AM PDT by Kaput
Poverty Reduction or Pork? by: Bethany Stotts, August 13, 2007
Although less well known as a multilateral government agency than the United Nations, the World Bank still has many of the same problems. The World Bank has remained considerably corrupt, perpetuating inside procurement deals, exorbitant salaries, and fund embezzlement, according to witnesses testifying before the Senate Subcommittee on Security and International Trade and Finance recently.
In truth, have we gotten enough poverty reduction bang for the development buck? Karen Lissakers of the Revenue Watch Institute asks. I think its pretty obvious the answer is no. Lissakers served as executive director of the International Monetary Fund (IMF), the Banks sister institution, during the Clinton years.
As her testimony shows, criticism of the World Bank has spread well beyond conservative think tanks. I know in the past, at leastI don't know if its still truecareer paths were really determined by your ability to push loans out the door, Lissakers remembers. That was the most concrete measure.
In recent years, the World Bank has lost its ability to compete with private investors, suffering a net loss of $300 million in fiscal year 2006. The Banks current loans are backed not by profits, but by interest accruing on approximately $40 billion in assets retained from more profitable years. Much of this capital comes from member-nations original contributions to the Bank.
One likely reason for the World Banks dearth of profits is its penchant for granting zero interest loans grants by any other nameto middle-income countries such as China and India. The World Bank sends 80% of its loans to 12 middle-income countries, including Turkey, Mexico, Brazil, and China. It sends only 10% of its loans to Africa.
Adam Lerrick, visiting scholar at the American Enterprise Institute (AEI), estimates that between $100 billion and $500 billion in World Bank funds intended for African development have been smuggled into offshore accounts. A repeat witness before the subcommittee, Lerrick argues that the World Bank faces insurmountable problems in Africa, because if you actually enforce these anti-corruption standards, there will be no destination in Africa to ship the money to.
At the same time, The bank is desperate to maintain the illusion of relevance to emerging countries that no longer need its money and no longer want its advice, claims Lerrick.
Criticism of the IMF and World Banks opaque decision-making process and unaccountable procurement practices abound. The September 2006 Global Transparency Initiative (GTI) Transparency Scorecard acknowledges that the World Bank has made significant strides toward transparency over the last 15 years by regularly releasing financial documents, but expresses concern over the Banks willingness to exercise wide discretion over what information becomes publicly available.
It is simply no longer acceptable thatto put it crudelya few rich white guys should decide in a closed room who heads an institution with. . .more than 180 shareholder governments, and then simply present the person, take it or leave it, which is what has been the case, Lissakers argues. At the World Bank, the United States retains its historical right to unilaterally appoint the organizations President.
The hearings witnesses also questioned the IMF and World Banks ability to reduce poverty, a key goal for both of these institutions. Dr. Daniel Tarullo, Professor of Law at Georgetown University, presented the Subcommittee with a list of possible IMF reforms, including outcome-oriented lending and systematic program evaluation[s] which would expose whether current programs were reaching their intended goals.
Despite these criticisms, Ms. Diane Willkens, President and CEO of Development Finance International, argues that the World Bank still provides an essential multilateral function by supplying middle-income countries with loans for projects that the private sector will not fund. These pro-poor loans are often used for public-service projects such as education and AIDS treatment. The World Bank promotes pro-poor programs which private markets wouldnt touch due to their lack of profitable return[s] argues Willkens.
Lerrick rebuffs Ms. Willkens misunderstanding of the type of project the World Bank Funds, because, he asserts, Any pro-poor program the Bank will fund, the private markets will fund. Private financiers calculate profits using interest rates regardless of project outcomes.
Despite endemic problems within the World Bank and IMF, Willkens retains high hopes for the continued importance of a multilateral institution. . .advancing sound and sustainable economic development, and alleviating poverty in the developing world. Other experts are not so positive. If the bank stopped lending tomorrow to its major borrowers, no one would notice, quips Lerrick.
Bethany Stotts is an intern with the American Journalism Center, a training program run by Accuracy in Media and Accuracy in Academia.
If you would like to comment on this article, please e-mail mal.kline@academia.org
Pork!
What do you think?
a whole LOT of pork....
Poverty is part of human nature...........always has been, always will be. Spend all the money you want and it won’t go away. Some cultures just live that way.
There is no doubt why that outfit wanted Jon Bolton out of there immediately. They got it, too.
The left is masterful in getting us, the U.S., to finance their destruction of us. What is bewildering to me is their failure to see that we are the source of all they have and all they want, yet, like lemmings off a cliff, they rush headlong into their pursuit of our destruction.
Perhaps that is a fatal flaw in the human condition.
Music to my ears.
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