THE
WORLD BANK
AS A
NON-POLITICAL
ACTOR
76. One of the clauses of the World Bank's founding
charter, the Articles of Agreement, states that:
"The Bank and its officers shall not interfere
in the political affairs of any member; nor shall they be influenced
in their decisions by the political character of the member or
members concerned. Only economic considerations shall be relevant
to their decisions, and these considerations shall be weighed
impartially in order to achieve the [Bank's stated] purposes."[106]
This clause informs the Bank's approach to policy
and its policy of engaging predominantly with governments rather
than a broader range of political actors. Some evidence received
in this inquiry asserts that the Bank is in fact a fundamentally
political institution, given its involvement in sensitive domestic
reforms, and that it should have a broader political engagement
strategy. Evidence from International Alert on the Bank's work
in fragile states says:
"All aid has local political impacts, and local
politics affect all forms of external engagement. […] A failure
to understand power relations and social dynamics […] risks
not only ineffective assistance but also that aid itself becomes
a resource worth competing, or even fighting, for."[107]
77. In his evidence, Michael Hammer of One World
Trust raised the issue of World Bank consultation with stakeholders
beyond governments, including parliaments. According to the Trust,
the Bank was:
"very, very weak when it comes to its ability
to be transparent and its ability to be really participative,
in the sense that stakeholders who are affected, living in the
countries in which most of the World Bank funding is going to
[…] There is very limited opportunity for people in those
countries, or through their representatives, for instance, in
parliament, to actually input and exercise some form of control
over what the World Bank does."[108]
The need for the Bank to increase its accountability
through parliaments was raised with us, both in terms of donor
country and borrower country parliaments. Christian Aid said:
"Both [the World Bank and IMF] should undertake
reforms to make their boards and management more accountable to
recipient country citizens and parliaments, and to the governments
and parliaments of all member countries."[109]
78. We wrote to President Zoellick at the start of
this inquiry inviting him to give formal oral evidence. Mr Zoellick
declined the invitation. In his response to us he cited the need
to avoid "involvement in domestic political affairs"
as a reason why neither he nor other Bank staff could give evidence
to any parliament.[110]
We publish, however, a summary record of our informal meeting
with him as an annex to this Report.[111]
79. One World Trust recommended that the Bank allow
its staff to appear at parliamentary evidence sessions and hearings
in both donor and borrower countries.[112]
We put this idea to the Minister, who said:
"The thing that would worry me the most about
parliaments would be the parliaments in developing countries where
the Bank is very powerful as an agent of change in many cases
and the ability of those parliamentarians to be able to ensure
that they understand and talk to the Bank."[113]
80. During our meeting, Mr Zoellick said he was keen
for the Bank to work more with parliaments and that the Parliamentary
Network of the World Bank (PNoWB) offered one avenue for this.[114]
He said that he was looking at ways of supporting PNoWB without
undermining its independence. We have sent representatives to
each of PNoWB's annual conferences. A former Chairman of the International
Development Committee, Bowen Wells, played an important part at
its inaugural conference and served on its Executive Committee,
as two other members of this Committee, Tony Worthington and Hugh
Bayley MP, have done since then. We believe that PNoWB plays an
important part in the Bank's relations with national parliaments.
We are pleased that the President of the World Bank attends PNoWB
conferences to answer questions from parliamentarians and we were
impressed that Robert Zoellick began his meeting with us by emphasising,
unprompted by questions, the importance of PNoWB. We are concerned,
however, that PNoWB relies heavily on the Bank's staff to deliver
its programmes of activities, and that it has only limited funds
of its own, provided largely by the Dutch and Finnish governments,
and only a single member of staff.
81. The World Bank argues that its founding articles
restrict its ability to engage with political actors beyond governments.
The Bank has, however, made some efforts to engage with and consult
parliaments and civil society on some policy and operational matters
with mixed success. We believe such engagement is particularly
important in borrower nations where it has the potential to bring
about national debate and ownership, which could significantly
enhance World Bank performance as well as strengthening accountability
in those countries. We recommend that DFID encourage the World
Bank to adopt outreach strategies with parliaments and civil society
consistently across its programmes, especially with borrower countries.
82. Parliaments have a central role in overseeing
government expenditure of national budgets. Those elements of
national budgets which are donations to the Bank or assistance
from it should fall within that oversight. In our view, it follows
that the Bank should make itself available to provide formal evidence
and information directly to parliaments to complement that provided
by governments, as other multilateral organisations such as the
United Nations do. We recommend that DFID ensure that the Bank's
policy of refusing to appear formally before parliamentary bodies
is discussed at the Board of Directors within six months; that
it push for a change in the policy; and that it report back to
us on those discussions.
83. The Parliamentary Network of the World Bank plays
an important role in the Bank's relations with parliamentarians.
It receives help in cash and kind from the World Bank but we believe
that it would be more effective and more independent if it had
a larger secretariat of its own. We ask DFID to consider how it
and other donors could provide funding for a larger PNoWB secretariat
and for its outreach activities with parliamentarians, especially
in developing countries.
ADVOCATING
A REFORM
AGENDA
84. We have discussed above the Prime Minister's
reform agenda for the World Bank: to create a Bank adapted to
today's needs. DFID publications also refer to its support for
institutional and governance reform, including the selection process
for the President and how to ensure developing countries are properly
represented in Washington.[115]
We were keen to establish during the course of this inquiry how
effective DFID was, not simply in setting out its reform agenda
but also in pursuing it.
85. Evidence from Lauren Phillips at the Overseas
Development Institute says:
"The UK has played an ambiguous role in the
process to reform the Bretton Woods institutions and therefore
increase their credibility with borrowing governments. While on
the one hand it made initial gestures supporting reform of formal
representation within the institutions, it has more recently become
part of a group of countries which is blocking a final deal."[116]
We discussed the UK's role in advocating reform during
our visit to Washington. We learnt from commentators and observers
of the World Bank that Australia, Canada and Brazil were perceived
to be highly active, visible and strong advocates for institutional
reform. We put to the Minister the comment made to us by one influential
Washington think-tank that, in contrast to those countries, the
UK had been a "strangely silent player" on institutional
reform issues. She responded:
"I am sorry if that impression has been created
and we will certainly have to change that if that is the case.
I think it would be unfair to say that that was an accurate reflection
of the reality. We have been, as I was explaining, perhaps a little
more silent on the issue around a reform of the voting and more
structural reforms because we believed that we wanted to get the
developing countries themselves to have a clearer view of what
they wanted and to respond to them rather than to impose our view."[117]
86. As well as co-ordinating views with developing
countries, DFID's evidence notes that the UK works with EU partners
to advance its reform agenda.[118]
In its evidence, Bretton Woods Project told us that the UK should
be pursuing alliances with "like-minded donors" more
actively, including those beyond the EU such as the Norwegians,
to push for reform.[119]
87. Given the priority the Prime Minister and the
Secretary of State attach to World Bank reform, it is perplexing
that British advocacy of that agenda in Washington is not more
high-profile. We assume that not all of DFID's work on this issue
is in the public eye—nor should it be. Advocacy does require
some public position-taking, however, and we recommend that the
Government do so more consistently in Washington.
88. We accept the Minister's view that developing
countries must also advance a view on reform issues. We reject,
however, the implication that the UK should wait until they do
so. As a major shareholder and contributor to the World Bank,
the UK has a distinct leadership role. The UK must not only articulate
a vision for reform of the World Bank but it must pursue this
with vigour, building alliances with borrower countries and with
other like-minded donors in and outside the European Union.
89 Ev 57 Back
90
Ev 95 Back
91
This percentage refers to IBRD voting shares. World Bank website
(www.worldbank.org). Back
92
Ev 109 Back
93
Ev 60 Back
94
Ev 64 Back
95
Ev 109 Back
96
DFID White Paper, Eliminating world poverty: Making governance
work for the poor, July 2006, para 8.22 Back
97
Q 159 Back
98
Q 159 Back
99
World Bank, IBRD Articles of Agreement: Article V, Section 5 Back
100
Ev 96 Back
101
Ev 58 Back
102
Q 171 Back
103
Ev 100 Back
104
Ev 109 Back
105
Ev 64 Back
106
World Bank, IBRD Articles of Agreement, Article IV, Section 10 Back
107
Ev 89 Back
108
Q 3 [Mr Hammer] Back
109
Ev 84 Back
110
Letter from the President of the World Bank to the Chairman of
the International Development Committee, 14 August 2007 [not printed] Back
111
Annex 1 Back
112
Ev 97 Back
113
Q 190 Back
114
Annex 1 Back
115
For example, see DFID, The UK and the World Bank 2006/2007,
November 2007, section 5 Back
116
Ev 100 Back
117
Q 171 [Baroness Vadera] Back
118
Ev 55 Back
119
Qq 31-32 [Mr Powell] Back
