ONE of the most revealing quotes in this lengthy and very readable study of the World from a US economist who used to work there. Speaking of the arrogance which characterised him and his colleagues in travelling to Third World countries which they barely knew and telling political leaders and experts in those countries how to develop their economies, he says: "Who wanted to give up that kind of power? Of course, I didn't know what I was talking about half of the time, but it was a wonderful feeling."
Catherine Caufield documents the results of this attitude throughout the world over the fifty years of the Bank's existence. Marshalling an impressive range of sources she shows again and again how World Bank projects have badly damaged the environment, further marginalised and impoverished the poor contributed to severe problems of foreign indebtedness in a large number of countries and largely failed to foster any pattern of sustainable development. In its entire history, only two countries have graduated from it Barbados in 1993 and South Korea in 1995.
Again and again, the Bank has been forced to acknowledge evidence that projects it funded have been environmental and social disasters; again and again it has offered reassurance that measures have been put in place to ensure that such disasters will never happen again. Yet this book contains numerous examples to show that mistakes keep being repeated, often at great social cost to large numbers of poor people.
One of the great benefits of this book is that it shows why this keeps happening. For example, Caufield describes the bank as being similar to "the elitist technocratic bureaucracies" that used to run the Soviet Union and its satellites, staffed with workers who were highly educated, intelligent, arrogant, privileged, and quite isolated from the people over whose lives they exercised so much power".
World Bank officials, she writes, live on huge salaries (586,000 tax free on average) and perks, rely on consultants who know little of the countries they are examining and who avoid critical questions, are motivated by the urge to increase lending rather than to examine what impact it may have, and lose interest in a project once a loan is approved, rarely bothering to read any evaluations of projects. Not only do they display an arrogant attitude towards the poor of the world, but their own board of directors representing member countries is often offered skimpy documentation on the projects it is asked to approve, thus ensuring that it functions as a rubber stamp and never withholds approval.
People with this world-view and experience find it hard to accept even well-documented evidence that their harsh medicine is worsening rather than bettering the condition of the countries to which they are lending. In response to an independent British study of the Bank's structural adjustment programmes (SAPs) which showed that they are not resulting in reduced inflation, significant long-term economic growth or even increased investment, the Bank's former chief economist, Lawrence Summers, contended: Well, the theory is right."
Caufield gives a number of examples of Bank officials imposing advice on local people only to turn around later and urge them to do the opposite. Having urged Third World farmers to apply fertilisers and pesticides continuously, the Bank's vice president in 1993 admitted that research showed this practice led not to an increased yield but rather that "some decline has been noted".
Having lent massive sums to encourage governments in the 1980s to cut public spending on social services, the Bank is now making new loans for the restoration of these services, she writes. The Bank lent Nepal 56 million to log 45,000 acres of pristine lowland tropical forest in 1974; by 1982 it had cancelled the final portion of the loan and was lending a farther 518 million to reforest the same area.
The book also documents many instances when the Bank effectively became the arm of US foreign policy from cutting off from lending countries such as Poland, Vietnam or Chile under Salvador Allende to giving loans to Argentina in 1988 and Mexico in 1993, to smooth the way for George Bush's election in the first case and for the passage of NAFTA through the US Congress in the second.
IN an advertising campaign in 1995 to placate critics in the US Congress, the Bank boasted that it "works to lower trade barriers and open developing countries' economies to US and other foreign investment" and that it has agreed to take steps to protect US and other producers from competitors in the developing world". Caufield quotes one former World Bank consultant, Doug Hellinger, as saying of the Bank's policy: "All isn't a development strategy, it's a corporate strategy."
In penetrating the secrecy of a huge and powerful institution which benefits from Irish taxpayers' money, Caufield has done a huge service. This is a book that should be required reading for Ireland's governor of the World Bank, Ruairi Quinn, for Irish officials who deal with the Bank, and for our parliamentarians. For this is an institution that urgently needs to be held to democratic accountability and to have its extremely dubious record held up to the light of public scrutiny.