Normally when I picture a bank a certain mental image comes to mind. It usually involves such things as the ATM, direct deposit and a free toaster or some other kind of giveaway when you open a checking account. I’ve also got a strange fantasy about me and one of the female tellers that takes place after hours inside the closed vault and involves hundred dollar bills but that’s another story for another time.
The World Bank doesn’t offer any of those things. It doesn’t have any local branches or offer up mortgages, credit cards, debit cards or try and persuade you into taking a loan so you can buy that sweet ride you’ve got your eyes on. (I don’t think they have good looking tellers either.)
The World Bank’s stated goal is reduce poverty across the globe. It’s membership consists of bigwigs from 188 countries that make up the IBRD and 172 countries from the IDA and is based out of (where else?) Washington, D.C.
The World Bank was created as a result of the Bretton Woods Agreement that was signed back in 1944 to determine how the world was going to be rebuilt at the end of that pesky thing known as World War II.
The Early Years
In its infancy the World Bank was actually pretty stingy when it came making loans. France was the first beneficiary of the World Bank when they got a loan of USD 250 million dollars (they applied for 500 million) in order to rebuild after the war. The loan came with some strings attached. In order for it to be granted France had to boot the Communist elements within their Cabinet out before they would get the money. What’s the old saying? Money talks and bullshit walks and before you could say “Mother Russia” the Commies were gone and the French had their money.
Starting in the mid 1960’s the bank shifted gears and started lending to developing countries on a much larger scale. It also expanded the purpose of the loans. Rather than focus purely on building a countries infrastructure they would now make loans that included social programs and other government interests. This included such things as building schools, hospitals and literacy programs in remote locations throughout the world.
The Middle Years
Beginning in the 1980’s the bank again shifted gears and began lending to in order to service the debt of many third world countries. This led to criticism from of all places, the United Nations who never met a dollar they didn’t like. They actually blamed the bank and its lending policies for starving millions and millions of children in Asia, Latin American and Africa.
The Current Years
Presently the World Bank has expanded the purpose of its loans. Many of them now address environmental issues dealing with such things as climate change, soil erosion and deforestation. In addition loans to combat the spread of diseases such as malaria and AIDS were now being granted.
Who decides what?
Just like any other large institution there’s a balance of power within the World Bank to decide who gets a loan and who doesn’t. The following is the current power structure of the main players within the bank.
United States – 15.85%
Japan – 6.84%
China - 4.42%
Germany – 4.00%
United Kingdom – 3.75%
France – 3.75%
India – 2.91%
Russia – 2.77%
Saudi Arabia – 2.77%
Italy – 2.64%
The World Bank has its fair share of detractors. One of the main criticisms is that the head of the bank has been traditionally an American and that even though it has a huge amount of members the movers and the shakers within the bank are from a relatively small amount of countries. This unspoken policy remained in effect this year when President Barack Obama nominated Jim Yong Kim, originally from South Korea but now a citizen of the United States to run the bank.
In addition such traditional charges such as cronyism, nepotism and black market transactions continue to plague the bank and damage its reputation. This is most likely due to making loans based on a stated purpose only to have the funds diverted to someplace else once the loan is granted. In fact, many people want to dismantle the World Bank due to what they view as wasted money and acting as a cash cow for corrupt government officials. Those people would like to return the loan making process to the private sector where loans would be monitored more closely and held to a much larger degree of scrutiny.