Why Is the World Bank Controversial
Why Is the World Bank Controversial

Like the IMF, the World Bank has been criticized for its part in promoting the Washington Consensus through its close participation with the IMF in lending only to programs that were heavily conditioned. Some believe the programs are focused on austerity measures that hurt the poor, while allow big corporations to flourish.

In addition, several unique factors contribute to dislike and distrust of the World Bank. The World Bank is often accused of ignoring the environmental and social impact of projects it supports. For example, the World Bank helped fund Brazil’s Polonoroeste development program, inaugurated in the Amazonian state of Rondonia in 1981. By improving the main highway into the forest, subdividing the land, and granting ownership of the land to settlers, the program caused an intense migration and land rush that resulted in the wide-spread destruction of the rainforest (Mahar and Ducrot, n.d.).

The World Bank also funded a dam-building project in India that resulted in the forced resettlement of people the Narmada River Valley between 1978 and 1993. As dams were built on the river, territories that have been populated since pre-historic times were lost to man-made reservoirs, causing resentment and social turmoil, for which the World Bank was blamed (Dams and the World Bank, 2003).

Similarly, the World Bank has been attacked for funding the Western Poverty Reduction Project in China that opponents of Chinese control of Tibet say will resettle 37,000 ethnic Chinese in the territory of Tibet.

Most recently, the Baku-Ceyhan pipeline mentioned above has garnered opposition because, its critics say, it will increase pollution in the region and world-wide through further use of fossil fuels, contribute to oil dependency in the economies of the countries involved, damage the forests and water supplies in the region, and contribute to human rights abuses

Another major complaint about the World Bank (as well as the IMF) is its role in causing high debt among developing countries. Although the World Bank’s loans are intended to help countries, they also cause those countries to take on debt that they must pay interest on and remain under the conditions of the institution. Over the last 20 years, these debts have piled up so much that, critics say, they amount to “perpetual debt” that the poor people of world are saddled with.  Many countries, say these critics, spend more on servicing their debt obligations than on basic social services.

To remedy this problem, a campaign has begun to get international banks-both the public development banks such as the World Bank and private banks—to eliminate the debt. According to the Jubilee movement (named after the Biblical practice of forgiving debts every 50 years), the campaigners “want to put an end to this system of deliberate exploitation which generates external debts for our countries, impoverishes billions of people and degrades our environment. It is a system which does not allow our communities, societies and nations to develop on their own terms, democratically, without domination and exploitation by foreign interests, and dictates from the OECD [Organization for Economic Cooperation and Development, countries who are the world's major economic powers] governments, the IMF, the World Bank and the WTO”(Statement of the Jubilee Movement, 2001).Naturally, this campaign is opposed by the IMF and the World Bank, and their private-sector allies.

Sebastian Mallaby, columnist for the Washington Post, discusses other reasons why the World Bank is controversial. To watch his interview, click here.

 

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