WASHINGTON, D.C. – The World Bank’s motto of “Working for a World Free of Poverty” has garnered the institution consistent backlash throughout the years for its role in exacerbating critical conditions for locals in developing countries.
Established in 1944, the World Bank is an international financial institution that primarily serves to provide loans to developing states. The theme of the World Bank is to reduce poverty abroad by giving states a chance to get out of their rut and to become self-sustainable permanently.
Like many international institutions, organizations, or any all-encompassing networks, the World Bank’s development projects have sometimes resulted in devastating consequences. From environmental disasters due to resource extraction to forcefully relocating indigenous peoples, the World Bank has earned a reputation as causing more insecurity and harm for individuals who already experience significant suffering and hardship as is.
A recent revelation addressed by Amnesty International refers to a case in Nigeria, where the homes of 9,000 people were destroyed because of a World Bank-funded project in Lagos. This project, directed by the Lagos state government and the World Bank, had intended to benefit the very people whose homes it ended up destroying – and both entities failed to ensure that the locals would be taken care of. This mistake was insensitive, reckless and potentially life threatening.
The World Bank attempted to remedy this error by drafting a Resettlement Action Plan (RAP) – which would include reparations, active support and aid for the residents who have been forcibly evicted – yet the Badia East residents were not shown the contents of the draft itself. And now, those same residents are still waiting for their compensation package a year later and the World Bank has not made any active steps to reconcile the situation. It should be emphasized that forced evictions are illegal are under international law.
The World Bank was initially formed by 44 nations in 1944 at the Bretton Woods Conference following World War II. The goal was to rebuild the economy and infrastructure that has been torn apart by the war. It was only in the 1980s that the World Bank began to concern itself with development projects in Third World countries. This is where the downturn began: dealings with dictators, disturbing the environment, mistreatment of indigenous communities, deepening the debt crisis and employing neoliberal policies.
Who Controls the World Bank?
The World Bank is primarily controlled by developed countries such as the United States, Germany, UK, Japan and other powerful nations. It should be noted that the World Bank is 51% funded by the U.S. Treasury.
How does the lending process work? In short, the World Bank loans money to the country in need in return for the “structural adjustment” of that country’s economy — a stipulation physically and mentally disconnected from the devastation, chaos and peril that those living in developing countries face every single day.
Naomi Klein introduced the term “economic shock therapy.” It is a way for the powerful few to acquire money from shady and exploitative practices. The World Bank has historically and understandably targeted countries that have suddenly been affected by some massive shock (see: Latin America). This is where neoliberal policies come into play. Developing countries are vulnerable and damaged following a disaster, so they are more likely to jump on board and then eventually become exploited themselves by the very people they had hoped would save them.
Millennium Development Goals (MDGs)
While there have been many unintended consequences of the World Bank, it has also produced many comprehensive strategies to eradicate global poverty. One such initiative is the Millennium Declaration adopted by 189 member states of the United Nations in September 2000 which outline the eight Millennium Development Goals (MDGs) to eradicate poverty and protect the environment. Many of the agreements and resolutions were aggregated from world conferences and summits organized by the UN, so the goals are the result of a collaborative effort between these member states, allowing for multifaceted and varied solutions to eradicate poverty.
The World Bank has made significant leaps forward in eliminating global poverty, but unfortunately, it has received a lot of criticism in the process as it has produced the exact opposite consequences it was trying to eliminate from the get-go; it is through these unintended repercussions that a financial institution has arisen, which is constantly trying to create solutions to end global poverty.
One thing is certain: the World Bank has made significant leaps to include nations all around the world to work together in eradicating global poverty. Though it has suffered its fair share of setbacks, the World Bank’s significant works cannot be understated and its role in the global landscape is undeniable.
– Rozali Telbis