World Bank

World Bank, Shiny Things, CC 2.0

World Bank, Shiny Things, CC 2.0

World Bank

The World Bank is an international organization dedicated to improving economic development for countries around the world. Set up after the Second World War, the organization allowed economically rich countries to borrow money at very low rates, and in turn lend this money to economically developing states, who may have not had the same lending abilities due to high interest (As Hurd (2014) explains, the World Bank has very good credit). The belief was that by improving economies, and addressing issues such as poverty, this would help prevent conflict from arising (Behar, 2012). Currently the World Bank has 10000 employees, and a budget of 57 billion dollars. It is also comprised of 189 members within the international organization. The objectives of the World Bank are to deal with development projects, cooperating with state and non-state actors, and is a major entity in the field of international relations.

The World Bank is very similar to the International Monetary Fund in how the organizations are structured, collect resources, and operate. However, while the IMF focuses on financial stability in the world, loaning money to states in order to ensure their economies are secure, the World Bank was created to help support development (Hurd, 2014).

Within the World Bank are two specific development entities: The International Bank for Reconstruction and Development (IBRD), as well as the International Development Association (IDA). As Pease (2012) explains, the The International Bank for Reconstruction and Development “is an independent agency within the UN system and is responsible for UN multilateral lending” (190). Today, the IBRD’s role is to lend money to countries for development projects, based on support by those in the World Bank (which is expressed through vote shares). It is the Board of Governors that decide who the International Bank for Reconstruction and Development lends money to (Pease, 2012). And while the initial objectives of the IBRD were lending to states, they have moved to focus on development projects so that a country can improve upon their earning possibilities, as well as their ability to improve economic production (Sanford, 1988, in Pease, 2012: 190). The International Bank for Reconstruction and Development gets the majority of its resources by issuing bonds (Driscoll, 1996). As the World Bank (2015) itself explains, the

“IBRD raises most of its funds in the world’s financial markets. In fact, in these markets, IBRD is known simply as the World Bank. This practice has allowed IBRD to provide more than $500 billion in loans to alleviate poverty around the world since 1946, with its shareholder governments paying in about $14 billion in capital. IBRD has maintained a triple-A rating since 1959. Its high credit rating allows it to borrow at low cost and offer middle-income developing countries access to capital on favorable terms —  in larger volumes, with longer maturities, and in a more sustainable manner than world financial markets typically provide. IBRD earns income every year from the return on its equity and from the small margin it makes on lending. This pays for IBRD’s operating expenses, goes into reserves to strengthen the balance sheet, and provides an annual transfer of funds to IDA, the fund for the poorest countries.

The World Bank IBRD committed to 23.5 billion dollars of lending for the 2015 fiscal year (World Bank, 2015).

The other section of the World Bank is the International Development Association (IDA). The IDA differs from the International Bank for Reconstruction and Development. Historically, the IBRD has been stricter on its loan qualifications. In contrast, the IDA focuses on economically poorer states, as these countries could rarely be qualified for the loans through the International Bank for Reconstruction and Development. Therefore, for example, “the IDA provides “soft” loans–loans whose repayment periods are extensive, ranging from thirty to fifty years, and whose interest rates are very low, ranging from 1 to 3 percent. [In addition], [s]ome loans may be interest-free, in which cases the countries are usually assessed a small administration fee” (190-191). In order to be eligible for International Development Association loans, a country’s national income must be less than a stated amount (Pease, 2012: 191), which is a gross national income of 1215 dollars (World Bank, 2014). The International Development Agency receives its funding through grants provided by member countries (Driscoll, 1996).

Within its lending and assistance programs, the World Bank offers support only to countries that have no other place to acquire the capital to finance their initiatives (Driscoll, 1996). The World Bank has agreed to 19 billion dollars of lending for the 2015 fiscal year (World Bank, 2015).

World Bank Voting Structures

From the beginning the World Bank’s voting and power structures were related to the amount of investment that states provided into the organization (Griffith-Jones, 2002). In fact, as shall be discussed later on in this article, a number of economically developing states would like to see this change (Griffith-Jones, 2002), and some have criticized the amount of power that economically rich states have.

For example, looking at the history of the World Bank, “When the World Bank was created, the United States was allocated 35 per cent of Bank stock, in line with its comparative economic strength. This capital share was accompanied by specific governing rights, such as effectively having a veto power over major decisions taken by Bank members. The Articles laid down certain major changes-essentially anything required a change to the Bank’s Articles of Agreement-required a majority of at least 80 per cent (qualified majority). The US was the only country with more than 20 per cent of the votes, and therefore the only country that could block major change at the Bank” (Griffith-Jones, 2002: 4).

There has been somewhat of an evolution in the World Bank decision-making process. For example, when looking at World Bank voting, through a 1979 General Capital Increase updated the voting so that it allowed each state to have a minimum of 250 shares, along with an additional vote within the World Bank per each additional share held. The idea behind this is to give more weight and voice to developing states (Griffith-Jones, 2002). However, this has not shifted power very much, because while “With later capital increases at the Bank, the amount of other shares held has increased, while the number of basic membership shares has remained constant. This has resulted in a situation where basic votes are less important. This hs relatively weakened the voice of small countries, (mostly developing country borrowers), and ensured that their participation in decision-making is small ” (Griffith-Jones, 2002: 5).

Along with this shift in capital and the effects on voting, key components-which include US influence over the World Bank-that were in place during the World Bank’s early days still exist (Griffith-Jones, 2002). For example, in order for major decisions to be made within the World Bank, there needs to be a 85 per cent majority of the vote (this was moved from 80 percent in 1989). Thus, the US still has veto power within the World Bank organization, the only state to have such power (Griffith-Jones, 2002).

World Bank Board of Governors

Similar to the International Monetary Fund, the World Bank consists of a Board of Governors. Also similar to the IMF, the World Bank “Boards of Governors consist of one Governor and one Alternate Governor appointed by each member country. The office is usually held by the country’s minister of finance, governor of its central bank, or a senior official of similar rank. The Governors and Alternates serve for terms of five years and can be reappointed” (World Bank, 2016).

The vast majority of power within the World Bank is to the Board of Governors. This group meets yearly to discuss key issues related to the Bank. For example, The Board of Governors can:

  • Admit and suspend members;
  • Increase or decrease the authorized capital stock;
  • Determine the distribution of the net income of the Bank;
  • Decide appeals from interpretations of the Articles of Agreement by the Executive Directors;
  • Make formal comprehensive arrangements to cooperate with other international organizations;
  • Suspend permanently the operations of the Bank;
  • Increase the number of elected Executive Directors; and
  • Approve amendments to the Articles of Agreement (World Bank, 2016).

There are five states that have set seats on the Board of Governors (The United States, Japan, Germany, The United Kingdom, and France) (Hurd, 2014: 82), whereas other seats are filled by region (Hurd, 2014). Here, votes are theoretically taken, although there is an aim for consensus. The United States is one of the largest vote shareholders, with roughly 16 percent of the total vote share (Hurd, 2014).

World Bank Executive Board

When the World Bank was initially established in 1947, it had 12 Executive Directors (from 44 countries). Today, there are 25 Executive Directors on the World Bank Executive Board (this change took place from 2010 (World Bank, 2016). Of those twenty-four, some states have their own Executive Director. These states include the United States, along with “Japan, Germany, France, the United Kingdom, China, Saudi Arabia, and Russia[,]” whereas other representatives vary by regional blocks (Griffith-Jones, 2002: 5). However, as some such as Griffith-Jones (2002) have suggested, related to voting fairness, “The inequality of voting power and representation on the Bank Board…seriously compromises the strength of the developing country voice at the Bank” (6). She goes on to say that “Developing country Executive Directors that have very large constituencies, such as the two representing the Sub-Saharan Africa region, have an unreasonable workload just trying to follow the huge number and variety of projects run by the Bank” (6).

However, again, similar to the Board of Governors, in the Executive Board, what must be kept in mind is that the World Bank tries to agree on issues through consensus. Thus, this has limited the actual impact of voting, and some have suggested even more power for the economically stronger states that have significant representation at the World Bank (Griffith-Jones, 2002).

The Board of Directors also selects the President of the World Bank (World Bank, 2016).

World Bank Membership

As mentioned above, there are 188 states in the World Bank. And together, the World Bank is seen “as a kind of corporate partnership, owned by a system of shares held by the members in proportion to their investments in the joint enterprise” (Hurd, 2014: 84). In order to be a part of the World Bank, states must offer a financial commitment, which is usually in the form of an initial payment, along with increases over time. What they are essential buying are shares in the organization, which the World Bank then uses to fund their development initiatives (Hurd, 2014). However, as Ian Hurd (2014) points out, World Bank “shares are not tradable on any market, and the Articles of Agreement forbid countries from selling their shares to anyone other than the Bank itself or from using them as collateral for any sovereign borrowing. Shares in the Bank are therefore not useful as an asset in any of the ways that shares of a private firm are valuable. They are only relevant for the country’s position within the Bank itself” (84).

Functions of World Bank

There are many functions of the World Bank.

As mentioned above, the World Bank was created to help support development projects (see here for a list of World Bank approved development projects). While it was initially focused on Europe, the scope of their activities increased to all parts of the world. Today, it continues to focus on proving aid for development projects. During its earlier years, many of the functions of the World Bank included loans for electric power, as well as transportation. In fact, these specific concentrations accounted for two-thirds of all World Bank aid (Driscoll, 1996). However, throughout the years of the World Bank, the functions of the World Bank have increased and expanded to other issues (Driscoll, 1996).

For example, as Driscoll, writing in 1996, explains, “[t]he Bank gives particular attention to projects that can directly benefit the poorest people in developing countries. The direct involvement of the poorest in economic activity is being promoted through lending for agriculture and rural development, small-scale enterprises, and urban development. The Bank is helping the poor to be more productive and to gain access to such necessities as safe water and waste-disposal facilities, health care, family-planning assistance, nutrition, education and housing.”

In fact, in recent years, the World Bank has expanded upon some of these issues, giving more attention to Millennium Development Goals that include primary education, the eradication of disease, the assurance of gender equality, reduction in child mortality rates, improvement in maternal health, emphasis on the environment, as well as global development initiatives (United Nations, 2014). Moreover, along with assistance on issues of poverty reduction, education, and health, the World Bank has also focused more on offering technical assistance for countries looking to expand on programs within agriculture, economic planning, as well as energy projects. The World Bank also is functioning to hep with “technical assistance for institutional development and macroeconomic policy formation” (Driscoll, 1996). The World Bank explains their role in the following way:

We offer support to developing countries through policy advice, research and analysis, and technical assistance. Our analytical work often underpins World Bank financing and helps inform developing countries’ own investments. In addition, we support capacity development in the countries we serve. We also sponsor, host, or participate in many conferences and forums on issues of development, often in collaboration with partners.

To ensure that countries can access the best global expertise and help generate cutting-edge knowledge, the Bank is constantly seeking to improve the way it shares its knowledge and engages with clients and the public at large. Key Priorities Include:

Results: We continue to sharpen our focus on helping developing countries deliver measurable results.

Reform: We are working to improve every aspect of our work: how projects are designed, how information is made available (Access to Information), and how to bring our operations closer to client governments and communities.

Open Development: We offer a growing range of free, easy-to-access tools, research and knowledge to help people address the world’s development challenges. For example, the Open Data website offers free access to comprehensive, downloadable indicators about development in countries around the globe. We have also made World Bank Live—live discussions open to participants worldwide—a key part of our Spring and Annual Meetings with the International Monetary Fund” (World Bank, 2016).

The World Bank has contributed a number of countries that in turn has improved living conditions, along with the economic conditions of the state. For example, as David Driscoll (1996) explains, “Graduation from the IBRD and IDA has occurred for many years. Of the 34 very poor countries that borrowed money from IDA during the earliest years, more than two dozen have made enough progress for them no longer to need IDA money, leaving that money available to other countries that joined the Bank more recently. Similarly, about 20 countries that formally borrowed money from the IBRD no longer have to do so. An outstanding example is Japan. For a period of 14 years, it borrowed from the IBRD. Now, the IBRD borrows large sums from Japan.”

October Rebellion_IMF/World Bank Protest, Elvert Barnes, CC 2.0

October Rebellion_IMF/World Bank Protest, Elvert Barnes, CC 2.0

Currently, while the World Bank works on a series of development projects, there are two goals in particular that the international organization is focusing on reaching by the year 2030: “

“End extreme poverty by decreasing the percentage of people living on less than $1.90 a day to no more than 3%

Promote shared prosperity by fostering the income growth of the bottom 40% for every country” (World Bank, 2016). 

In a 2014 report, Jim Yong Kim–the President of the World Bank–explains in a report that 

“The world has made great progress in the last quarter-century in reducing extreme poverty – it was cut by a stunning two-thirds – and now we have the opportunity to end poverty in less than a generation,” said World Bank Group President Jim Yong Kim.“But we will not finish the job unless we find ways to reduce inequality, which stubbornly persists all over the world. This vision of a more equal world means we must find ways to spread wealth to the billions who have almost nothing.”

While the World Bank has been working to reduce the number, and “that much success has been achieved in reducing extreme poverty – those living on less than a $1.25 a day. However, the number of poor remains unacceptably high, at just over 1 billion people (14 percent of the world population) in 2011, compared with 1.2 billion (19 percent of the world population) in 2008” (World Bank, 2014).

In addition, the World Bank has also worked with the United Nations to reach Millennium Development Goals set out in 2000.

Criticisms of the World Bank

While the World Bank has provided support for a number of development projects, there are many that have been quite critical of the international organization. For example, in 2006, Peter S. Goodman wrote an article in the Washington Post entitled “The Persistently Poor” in which he examine the effect of World Bank anti-poverty approached in economically poor countries. Goodman argues that “World Bank programs have failed to lift incomes in many poor countries over the past decade, leaving tens of millions of people suffering stagnating or declining living standards, according to a report released Thursday by the bank’s autonomous assessment arm. Among 25 poor countries probed in detail by the bank’s Independent Evaluation Group, only 11 experienced reductions in poverty from the mid-1990s to the early 2000s, while 14 had the same or worsening rates over that term. The group said the sample was representative of the global picture.” Furthermore, most did not see gains in income, and where there was economic growth, distributions inequalities between the rich and poor existed.

He points out from the report a number of criticisms toward the World Bank’s approach:

…The report chides the bank for failing to help cushion poor people against price and currency liberalizations, for focusing on the fiscal sustainability of pension systems to the detriment of the poor and for promoting the privatization of power industries without thinking enough about wiring up the indigent.

It criticizes the bank for failing to tailor projects to local conditions and for sometimes attempting to accomplish more than national governments can handle. In Uganda, the bank assisted the government with an ambitious effort to increase school enrollments but failed to plan for sufficient teacher hiring or classroom construction. By last year, Uganda’s schools had an average of 94 students per classroom, and each book was being shared by three pupils.

Critics of the bank used the report to claim vindication and call for change in the institution’s policies — in particular, loan conditions that sometimes force poor countries to slash spending on social services and reduce price controls on food. “At a certain point, you have to say, ‘This is policy failure,’ ” said Mark Weisbrot, an economist and co-director of the Center for Economic and Policy Research, who has long argued that the bank’s emphasis on austerity and privatization has increased poverty.

Some of these criticisms, along with additional ones, have continued to be levied against the World Bank.

In 2012, Dr. Professor Jeffrey Sachs, who runs the Earth Institute at Columbia University, wrote an opinion piece entitled: “How I would lead the World Bank as President,” where he was advocating for the possibility of the position. In the piece, while he praised some of the work of the World Bank–namely its attention to poverty eradication, disease reduction, etc…He also saw the value of the World Bank “as a powerhouse of ideas and a meeting ground for key actors…”. However, he also criticized the organization, saying that the “World Bank is adrift. It is spread too thin. It has taken on too many fads. It is too disconnected from critical areas of science and knowledge. Without incisive leadership, that bank has often seemed like just a bank. And unfortunately, Washington has backed at the helm bankers and politicians who lack the expertise to fulfill the institution’s unique mandate.”

It seems that he criticisms are what others have thought: that the World Bank is focused on finances, without really understanding the challenges that every-day people who need the World Bank’s help may face. In fact, in the piece, Sachs goes on to say that the top post in the World Bank should have a thorough understanding of peoples’ struggles, saying “Its leader should come to office understanding the realities of flooded villages, drought-ridden farms, desperate mothers hovering over comatose, malaria-infected children, and teenage girls unable to pay high school tuition…”

However, even former President Robert Zoellick (2006) stated the importance of re-imagining old understandings about the World Bank as it relates to other countries when he says that “Developing countries are the World Bank’s clients — not the objects of old “structural adjustment” policies. This notion may seem obvious, but it represents an important shift in mindset. The bank should be a seeker of solutions, not a purveyor of prescriptions. If the best textbook solution does not fit the client’s political economic context, the bank has not helped solve the problem. At the same time, the bank’s experts need to be able to share knowledge about how other countries are solving similar problems.”

Others have pointed out similar concerns, even following the selection of the newest World Bank President Dr. Jing Yong Kim. For example, Richard Behar (2012) wrote a detailed piece in Forbes Magazine detailing some of the issues that were brought up before Kim would begin his tenure within the World Bank. In this article, Behar discusses the challenges of the World Bank. One of the concerns regarding the World Bank is that to some, the Bank has not expressed how it sees its position as an international organization moving forward. Others have suggested that the World Bank has failed to maintain high standards of accountability with regards to all of the funding within the organization. As Behar (2012) reports,

“Part of the problem is structural: Internal reports, reviewed by FORBES, show, for example, that even after Zoellick implemented a budget freeze some officials operated an off-budget system that defies cost control, while others used revolving doors to game the system to make fortunes for themselves or enhance their positions within the bank. Why not track all the cash? Good luck: Bank sources cite up to $2 billion that may have gone unaccounted for recently amid computer glitches.”

There is also concern about the culture within the World Bank, and the difficulty in making necessary changes within the organization. For example, reports have surfaced that some within the Bank have went after whisle-blowers who have exposed corruption inside the World Bank. Furthermore, since there are no outside entities that can actually audit the World Bank, it becomes difficult to know just how much corruption is within the organization, although there is a belief that such activities have increased as finances and World Bank activities have risen (and continue to plague the organization), despite attempts by formers President Paul Wolfowitz, and Zoellick, to eliminate corruption (Behar, 2012).

The World Bank has tapped individuals from within the organization to investigate corruption accusations. However, as Behar (2012) argues, “The bank’s corruption fighters are too focused on specific development projects and not enough on the budgets of poor countries, where bank funds-more than $50 billion since 2008-are commingled with a country’s income and may not be used for its intended purposes.” He goes on to say that “These funds go down a rabbit hole and are almost impossible to track.”

The World Bank, Poverty and Education

The World Bank is also heavily involved in poverty and education projects. However, many have criticized the World Bank’s historical approach towards these issues. For example, Paul Cammack, in his writings on the World Bank’s approach to poverty, argues that the World Bank has continued to work on poverty issues, but with the intention of ensuring the promotion of capitalist principles. As he states that “over more than a decade it has constantly sought to feed its understanding of poverty reduction as the transformation of society to embed the disciplines of capitalist competition not only into its official discourse, but also into mechanisms to bring about the institutional and social transformation of developing countries” (206).

In the World Bank’s writings, they have stressed the importance of education, but namely for individuals to be competitive regarding laborers in the economic market. In addition, the World Bank wanted people to be educated, but so that they would be able to better understand what the World Bank was trying to advocate economically (Cammack, 2004: 193). Cammack (2004) quotes  the World Bank’s Poverty Reduction Strategy Sourcebook, regarding who they view education. Part of the statement reads:

“…Education investments are also crucial for the sustained economic growth that low-income countries are seeking to stimulate, and without which long-term poverty reduction is impossible. Education directly contributes to worker productivity, and can promote better natural resource management and more rapid technological adaptation and innovation…

As noted earlier, others have also been outspoken against other elements of the World Bank’s policies with regards to primary education. Namely, some, such as the late Katerina Tomasevski, took issue with the World Bank’s approach towards primary education. Tomasevski (2006) argued for the importance of not only primary education, but that schooling would be free for children and their families. She understood the difficult burden placed upon families when they were levied school fees. However, when reflecting on the role of the World Bank with regards to primary education, Tomasevski (2006) wrote that the World Bank aimed to reduce the role of the state with regards to free schooling. She argued that they viewed state involvement in providing free education as “handouts” to families, and instead, advocates that some of the fees be paid by them. Unfortunately, this goes against findings in the literature that any fees have horrible consequences with regards to children and their ability (or, in this case inability) to stay in school. Moreover, the international human rights law stipulates that children should have access to education, and that private education should be free.

World Bank Lending

Others have been criticized the World Bank for providing loans to countries that are not in the most need for the resources. For example, Adam Lerrick (2006, in Behar, 2012) explains that the World Bank has lend extensively to economically rising states that may not be the ones who most need the money; countries such as Turkey, China, India, Mexico, Brazil, and Russia have received World Bank loans (Lerrick, 2006; Behar, 2012). Lerrick (2006), in a 2006 paper, stated that “Ninety percent of Bank loans now go to just 27 borrowers, 10 of these accounting for 75 percent, a list that closely parallels private sector choices…” (117). Moreover, a large percentage of the World Bank loans have historically went to areas with disproportionately lower populations when compared to the percentage of loans that went to the rest of the Global South (Lerrick, 2006). Furthermore, when scholars have looked more into where the loans were going, the vast majority of loans were granted to states with high bond ratings, and very little to states that do not have credit ratings (Lerrick, 2006). He goes on to explain that even when states “graduate” from the lower economic positions, the World Bank wants to continue to be able to loan money, particularly to “middle-income borrowers,” since these states offer a low risk on their lending (Lerrick, 2006: 118).

The World Bank has responded to the notion that they are lending to state that don’t need it as much as others by saying that this allows them to have more resources to devote to less economically developing states. However, scholars such as Lerrick (in Behar, 2012) have found that the World Bank has suffered yearly losses upwards of 100 million dollars. As Behar (2012) explains, “Nowhere is the problem clearer than with China, the world’s second-largest economy–and the World Bank’s second-largest customer behind Mexico, having borrowed more than $30 billion over the past few decades. When China in 2007 threatened to stop borrowing from the bank unless the agency toned down its new corruption-fighting plan–according to a secret internal bank memo, obtained by FORBES–the bank’s top managers went into a panic and quietly caved.” Thus, the World Bank said they would measure each country based on alone, instead of against a unified global comparison (Behar, 2012). Moreover, there have often been examples of the World Bank lending China money for a project, only to see them in turn lend to economically developing states (Behar, 2012).

In fact, Lerrick (2006) has pointed out that the World Bank actually provided more in loans to states with high credit scores, compared to states that need the World Bank’s capital, as they are unable to a secure a loan elsewhere (119). In fact, even the World Bank President Robert Zoellick, in a 2007 speech entitled “Why We Still Need the World Bank” published in Foreign Affairs, stated that “private-sector financial flows dwarfed public development assistance.”

An interesting and related article is a piece written by Jeffrey Herbst and Greg Mills in the New York Times entitled “The World Bank’s Diminishing Role in Africa“. In the piece, they argue that the World Bank’s role as a leading lender of has diminished. They say that many states, are looking for alternative funding sources for their development projects. As Herbst & Mills say, in 2013, “African countries are slated to offer $7 billion in fresh government debt this year, as more governments, including Tanzania and Kenya, get access to private money. Once viewed as the preserve of autocrats and corruption, some countries in Africa are now seen as the new, high-yield investment frontier.” In addition, lenders are now moving away from the very strong economic markets due to low financial returns, and are looking to economically rising states in Africa. Thus, there is less and less need for lending organizations such as the World Bank. In fact, Herbst & Mills write that

“The decline in the World Bank’s importance as a tool for development can be seen in its own figures. In 1990, at the end of the Cold War, World Bank grants and loans ($17.7 billion) were in the ballpark of private investment flows to developing countries ($21.1 billion). By 2000, this had changed dramatically, with $18.5 billion from the World Bank, compared with $144.5 billion in private financing. By 2011, foreign investment far outstripped World Bank spending by a factor of 19 to 1 ($612 billion to $32 billion). In Africa, considered the investment laggard among developing countries and the most in need of aid, World Bank spending was just $5.6 billion in 2011, versus over $46 billion in foreign direct investment.”

World Bank and Human Rights

While the World Bank for decades has had policies that call for the protection of human rights, and the commitment not to lend to actors violating human rights (and also has various human rights and environmental “safeguards”) to ensure violations are not taking place, as well as just recently discussed the possibility of updating and expanding upon their safeguards (Human Rights Watch, 2013), many have challenged their record on lending to human rights violators. In 2013, Human Rights Watch put on a detailed report on the World Bank entitled Abuse-Free Development: How the World Bank Should Safeguard Against Human Rights Violations. In it, Human Rights Watch speaks about various human rights abuses committed by governments and non-government actors working on projects funded through the World Bank. For example, Human Rights Watch has criticized the World Bank regarding their loan to the Ethiopian government, saying that the “Bank failed to appropriately monitor human rights risks related to the program, or to meaningfully respond to the concerns about such violations when they are identified by third parties. In fact, it defended the government program, arguing there was no evidence that villagization was forced, despite hearing first-hand testimony from victims and witnesses who described it as anything but voluntary. Furthermore, it determined not to apply its own safeguard policies to the project in question” (3).

There have also been outrage at the World Bank’s lending to companies that have committed human rights abuses. In a well-publicized case, the International Finance Corporation, which has tied to the World Bank, gave a loan to Corporación Dinant in Honduras. Dinant owns a significant percentage of land in the Bajo Aguán Valley, where there has been fighting between Dinant security and farm workers (Malkin, 2014). There have been many worker deaths. And while Dinant did say that they would give over 10,000 acres of land to the state (which would in turn be given to the farm workers), the transition of this property has not been happening as fast as many would like. Thus, some have called for the World Bank to end loaning money with Dinant until they improved on these human rights (Malkin, 2014).

Thus, such organizations have called on the World Bank to speak out against human rights, and also to stop loaning money to government and corporations that are carrying out human rights violations. This is important, as the World Bank has been called to ensure that all of those who are borrowing money are in full compliance with human rights norms and standards (HRW, 2013).



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