History of the world economy|
World Bank Misleads US Congress
From Probe International (Canada)
18 September 1995
The world's largest development institution, the World
Bank, is misleading the US Congress and American
taxpayers, says a soon-to-be-released report by
Canadian watchdog group Probe International. The new
study takes the World Bank to task for recent claims
that its loans to Third World nations are good for the
American economy because they provide billions of
dollars in jobs and contracts for US firms.
The new Probe study refutes the Bank claims, calling
them "misleading" and "smoke and mirrors accounting."
According to the report, the US contributes more than
three times as much money to the Bank's International
Development Association as it receives back in
contracts for consultants, construction companies, and
equipment suppliers. With American firms getting
approximately 23 cents in procurement contracts for
every dollar US taxpayers contribute, IDA provides few
net benefits for the American economy, says the report.
The World Bank began making the inflated claims after
Congress proposed slashing US funding for IDA earlier
this year. To counter the Congressional threat, the
Bank launched an expensive public relations campaign to
portray investments in IDA as the "deal of the century"
for the United States. As part of the campaign, the
Bank ran a series of newspaper ads in major US dailies.
The ads, which ran under the theme "The World Bank. A
Good Investment,." argue that World Bank loans return
"extraordinary" benefits to US firms, and give examples
of companies that have won lucrative contracts to
supply goods to countries receiving Bank loans.
In recent years, IDA has come under fire from
environmental groups and lawmakers who argue that its
loans, like those for India's Sardar Sarovar dam
project in India, often do more harm than good to Third
World environments and economies. These criticisms have
been confirmed by internal World Bank reports that have
found more than a third of Bank projects are failures,
that sink borrowing countries deeper in debt and
provide few development benefits. "IDA is a failure for
borrowers and for donors," said Probe International's
John Thibodeau. "IDA is not the deal of the century,
but a black hole into which money goes and from which
few benefits emerge."
Congress also expressed its displeasure with the Bank's
PR campaign when a number of Congressmen complained
that the expensive advertising was inappropriate for an
institution whose mandate is poverty alleviation. The
ads were subsequently pulled. Meanwhile, Budget and
Foreign Operations Committees of the House or
Representatives recently voted to slash US
contributions to IDA by nearly $800 million next year.
The Senate will debate IDA contributions this week.
For more information, please contact John Thibodeau,
Probe International, Canada, at +416 964 9223, ext.
If you would like a copy of Probe's forthcoming
study on Procurement at the World Bank, contact Andrea
Davis by phone at +416 964 9223, ext. 233, or by fax at
+416 964 8239.