The World Bank is today the largest lender to and creditor of low income countries. Its staff of nearly 10,000 is housed in a large headquarters complex in Washington DC as well as in resident missions in many developing countries. Though located in the US and traditionally led by a US citizen, the World Bank is a nominally independent entity within the UN family of organizations. It is governed by a board of Executive Directors whose voting is weighted according to a negotiated scheme. Though the US has the largest share of votes (a bit more than 15% of the total) neither it nor any other country has veto power over Bank operations, which are run by majority of votes. Nevertheless, the US exerts considerable influence due to its ability to influence other voting members.
The World Bank is technically owned by the governments that are members - Each owns a share of the capital equal to its voting weight. However, very little (less than 10%) of this capital is actually paid in, with the rest amounting to a contingent liability in the event of a default or liquidation. Funds for lending are mostly acquired through issuing bonds on world capital markets, with any loan profits being put into administrative expenses; loans typically bear an interest rate half a percent higher than the cost of borrowing, though low interest loans are available to the poorest countries through the soft loan window called IDA.
The World Bank was created at the end of World War II in order to help rebuild Europe, much of whose infrastructure and industrial plant had been destroyed in the conflict. Its original name, International Bank for Reconstruction and Development, refers to this task. At that time it was thought that the international capital markets would not be up to the job of channelling needed capital to Europe, a belief influenced by the near total collapse of international capital flows during the Great Depression. A new administrative structure was created since it was believed that the task would take decades to complete. As it turned out, (due largely to the success of the Marshall Plan) Europe was able to return to a self-sustaining growth path by the late 1950's. This meant that the World Bank was an organization whose mandated mission had already been achieved.
Rather than self-liquidate, the World Bank changed its focus from rebuilding Europe to lending to developing countries. Originally, this lending concentrated on infrastructure and other "bricks and mortar" projects, but gradually grew in scope to encompass virtually the entire economy and policy stance of client governments. By the 1980's with so-called Structural Adjustment Loans, the Bank was well entrenched in the process of policy and decisionmaking in host governments, often at a startlingly detailed level.
Recent criticisms of the Bank have focused on the failure of Bank supported policy reforms to generate the promised results (this is especially true in Sub Saharan Africa) as well as the distributional results of some of its policy proposals. Also important have been criticisms of the Bank's environmental record and its record on gender equality, both areas that the Bank has tried to address in recent years. A more overarching critique is the role of the Bank in the overall context of developing country debt, in that loans, once made, never get paid off, typically being rolled over into new lending.
Most of these issues remain hotly debated - What remains beyond dispute is that the World Bank remains a major player in lending to low income countries.
The World Bank Group consists of the International Bank for Reconstruction and Development, the International Development Association, the International Finance Corporation, the Multilateral Investment Guarantee Agency, and the International Centre for the Settlement of Investment Disputes.
- IBRD lends only to middle-income countries.
- IDA offers loans at concessional rates and grants to the world's poorest countries.
- IFC finances private sector projects in the developing world.
- MIGA offers political risk insurance to encourage financiers to invest in projects in the developing world.
- ICSID conciliates and arbitrates investment disputes between private sector entities and sovereigns, usually under bilateral investment treaties.
(Source: DailyKos user DC Pol Sci)
- Wolfowitz suspended, but then later resumed oil royalty payments to Chad. In return for a World Bank loan to build an export pipeline, Chad had agreed to be a test case for transparency in resource projects; however the country's leaders changed the law, so they could grab the cash for themselves, instead of spending it on social services as they had agreed.
- Wolfowitz appointed Suzannne Rich Folsom, a lawyer with ties to the Republican party, as the Director of the Department of Institutional Integrity, a department that investigates alleged fraud, in a move that was resented by many Bank employees.
- Wolfowitz gave a promotion and lavish raises to his girlfriend, who is an employee of the Bank.
Presidents of the World Bank
- Eugene Meyer (June 1946-December 1946)
- John J. McCloy (March 1947-June 1949)
- Eugene R. Black (1949-1963)
- George D. Woods (January 1963-March 1968)
- Robert S. McNamara (April 1968-June 1981)
- Alden W. Clausen (July 1981-June 1986)
- Barber B. Conable (July 1986-August 1991)
- Lewis T. Preston (September 1991-May 1995)
- James Wolfensohn (May 1995-June 2005)
- Paul Dundes Wolfowitz (June 1, 2005 - June 30, 2007)
- Robert Zoellick (July 1, 2007 - present)
- The World Bank's Problem (NOT Wolfowitz) - DailyKos article