A thousand and one World Bank shenanigans

The World Bank’s decision to suspend publication of the Doing Business (DB) magazine, following an internal scandal, is yet another example of the discredit that has plagued the institution for decades. In fact, the magazine is an intellectual fraud in itself.

Launched in 2002, it had become an instrument for promoting neoliberal policies associated with the “Washington Consensus”, in vogue in the 1990s, but completely discredited in the early 2000s. The magazine served to promote the interests of multinational corporations and encourage the plunder of southern resources, pushing for further deregulation, privatisation and large-scale liberalisation to attract foreign direct investment (FDI). These policies have led to massive capital flight, depriving Africa and other countries in the South of large amounts of their own resources that exceed the combined flows of FDI and official development assistance (ODA).

How many destructive reforms have been made in Senegal and elsewhere to get a better ranking or earn the title of “best reformer”! But the more we reform, the deeper we sink into poverty. The recent study by the National Agency for Statistics and Demography (ANSD) shows that Senegal’s efforts to improve its ranking have only worsened the country’s economic and social situation. It remains in the category of “least developed countries”, where it landed in 2001 after two decades of indiscriminate application of the prescriptions of… the World Bank and the International Monetary Fund!

For several years now, there have been more and more insistent calls for the demise of the DB magazine, due to its ideological orientation and the questionable methodology behind its rankings. For example, in 2018, Paul Romer, then the Bank’s chief economist, acknowledged that it had a real ideological bias, which influenced the ranking of countries. His statements followed Chile, then under the presidency of Michelle Bachelet, considered “socialist”, falling 23 places!

Criticism of DB has intensified since the collapse of market fundamentalism after the 2008 global financial crisis. But the DB scandal is not an isolated case. Far from it, it adds to the long list of scandals that have peppered the work of the World Bank, which is used to manipulating figures to support the goals it wants to achieve in the service of its main sponsors, the United States and European countries.

In 2006 a commission led by Princeton professor Angus Deaton and former IMF chief economist Kenneth Rogoff exposed the Bank’s ideological bias and manipulation of figures in thousands of its studies. After reviewing 4,000 documents published between 1998 and 2005, the Commission found that teams writing the papers often ensured that their conclusions were consistent with what Bank management wanted to convey as key messages.

According to Professor Angus Deation, who will receive the Nobel Prize in Economics in 2015, “it is not just that they commission research that supports predetermined claims […] but that they select from papers that support management’s positions […] This is what we criticise, rather than the bias of the research itself.

The Bank tried to hide this report, which was a major blow to the credibility of its work and its own reputation. It took a long time to publish it and gave it very little publicity, leading Professor Deaton to say wryly: “It took me so long to get it out that I have forgotten the details of its contents”.

But the World Bank’s scandals are not limited to the manipulation of its work. In 2005, a major sex scandal involving the Bank’s then president, Paul Wolfowitz, broke out. This scandal rocked the Bank between 2005 and 2006. Paul Wolfowitz was guilty of promoting his mistress, Shaha Riza, who held a senior position in the Bank’s Middle East communications system.

Wolfowitz’s scandal was made all the more notorious by the fact that he had played a key role in the US invasion of Iraq in 2003. He was known as one of George W. Bush’s top hawks. From 2001 to 2005 he was the number two at the Pentagon, the US Department of Defence. After the attacks of 11 September 2001, Wolfowitz was one of the architects of the policy of propaganda and manipulation of public opinion that ultimately led to the invasion of Iraq in 2003 and the unleashing of the US policy of terror and mass destruction against that country.

After this dirty work, he was rewarded to become President of the World Bank. His mission was undoubtedly to make this institution an even more docile instrument for spreading neoliberal poison, or “the neoliberal virus”, as the late Professor Samir Amin would say, and to further promote US interests. But the scandal in which he became embroiled put a premature end to this mission. After resisting pressure for a long time, Wolfowitz was finally forced to resign in June 2006. He was replaced by another member of the Bush administration: Robert B. Zoellick.

Despite the DB scandal, the World Bank is not defeated. In fact, in its press release, it says it wants to find another way to continue spreading its ideology and its deadly policies towards the countries of the South. It says it remains “firmly committed to promoting the role of the private sector in development” and is already working “on a new approach to assessing the business and investment climate”.

Most importantly, the World Bank says it is ending DB because the publication is “no longer credible”: “Trust in the World Bank Group’s research is vitally important. This work guides the actions of policymakers, helps countries make better-informed decisions, and enables stakeholders to measure economic and social progress more accurately,” the statement said.

In fact, it is not just the Bank’s work that lacks credibility, but the Bank itself that has lost credibility in the eyes of much of the world’s public. The Bank and the IMF have already been heavily criticised for failing to foresee the 2008 international financial crisis and the economic crisis that followed. Indeed, since the collapse of market fundamentalism in the wake of this financial crisis, the discrediting of the World Bank and the IMF has grown.

Since then, both have been on the defensive and internal critics have questioned some of the dogmas on which their philosophy and analysis were based. For example, in a remarkable speech in September 2010 at Georgetown University in Washington, Robert B. Zoellick, who had replaced Wolfowitz as head of the Bank, called for major revisions. In particular, he questioned the excessive modelling, even by Nobel laureates, that led to the explosion of the derivatives market and the sub-prime mortgage crisis, which brought the global economy to the brink of collapse.

The new scandal surrounding the Bank will increase criticism of its very existence. Indeed, many now believe that the Bank is an obsolete institution that has outlived its usefulness. It was originally charged with managing funds for the reconstruction of Western Europe (the famous Marshall Plan) after the Second World War. It was added to the “development” component in the 1960s, when many former colonies became independent.

But it has never helped any country to “develop” because it has remained primarily an instrument serving the US geostrategic agenda. That is why there are growing calls for its total dissolution – like that of the IMF – to be replaced by a new democratic institution, reflecting the realities of the 21st century and capable of financing a genuine development agenda.

Demba Moussa Dembélé

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