The World Bank

What it does, who it answers to, and why it is important.

Controversy surrounds the World Bank lately due to the investigation and resignation of its President, former Deputy Secretary of Defense Paul Wolfowitz. Here’s a look at the role this oft-mentioned, little-understood institution plays in the global economy.

The purpose. Created in 1945, the World Bank is a financial institution with a social mission: aiding the economies of developing nations and reducing world poverty. It provides loans and grants to poor and middle-income countries, generally at low interest rates. It is also one of the leading contributors to the global fight against AIDS, having assigned more than $2 billion to the cause during this decade.

The

U.S.

Influence. While technically part of the United Nations, the World Bank is based in

Washington

,

DC

and all candidates for its presidency are nominated by the President of the

United States

. All major decisions made by the Bank require an 85% majority vote of its shareholders; currently, the

U.S.

holds 16% of shareholder votes.

Controversies. In 1976, the Bank funded a “transmigration” program in

Indonesia

, an unsuccessful attempt to relocate 65 million people from overcrowded islands to less crowded islands within that nation. Political scientists criticized the effort as the World Bank’s attempt to remodel a country. The Bank has also long funded oil and gas projects, but its critics contend that these projects benefit “first world” corporations while harming indigenous peoples and contributing nothing to “third world” communities.

Paul Wolfowitz’s nomination for the presidency of the World Bank in 2005 raised eyebrows. He had helped concieve the so-called “Bush Doctrine”, the preemptive national security strategy expressed in the War in

Iraq

. The Washington Post noted his appointment of two former Bush administration employees as advisors with $250,000 tax-free contracts. On April 12, the Financial Times of

London

reported that Wolfowitz had greenlighted the offer of a sizable raise and promotion to his girlfriend Shaha Riza, the Bank’s senior communications officer, in 2005. Wolfowitz resigned Thursday; he leaves office on June 30. The White House will nominate a successor

Comments

[eileen frances]

Bush the decider once again intitled to the privledge of deciding.... since this is the WORLD bank, shouldn't the WORLD have a say in who is picked to lead it? Bush has dicided too much already.