The World Bank, at 80, and the True Goals of Multilateral Cooperation and Global Development — Global Issues
MANILA / LONDON, Apr 30 (IPS) – The Rogun Dam in the mountains of Southern Tajikistan, if ever completed, would be the tallest dam in the world. Late last year, the World Bank committed almost $3 billion to finance its development, claiming the project would benefit locals.
What the World Bank has failed to highlight, however, is that the dam is also causing tremendous social and environmental damage, while driving up the country’s foreign debt obligations. When the dam goes online, 70% of the power it generates will be exported to neighbouring countries, as the project’s capacity far exceeds domestic needs.
Multilateral development banks (MDBs) are relevant to the extent that they respond to the development priorities of countries in the Global South.
The World Bank, the largest MDB, says its mission is to create a world free of poverty on a liveable planet. Yet its policy prescriptions—and those of the International Monetary Fund (IMF)—continue to restructure Global South economies in ways that de-prioritise production for domestic markets and disincentivise industrial policy.
The grandiose scale of the Rogun Dam—which far exceeds projected national energy needs at an unaffordable price tag—is a perfect example of this misguided approach.
Today, 80 years since the Bank and the IMF’s establishment, and amid widely recognised threats to the multilateral order, demand is growing for a UN intergovernmental process to review the governance, role and mandate of international finance institutions.
The pre-conference negotiations at the end of April for the Fourth Financing for Development Conference (FfD4) later this year in Sevilla, Spain, are an ideal opportunity to move this agenda forward.
The World Bank was a product of the post-World War II order. The United States and its European allies grew in economic and political influence, and this power was and remains reflected in the Bank’s leadership, governance, and priorities.
Directed by the Global North, the Bank’s role evolved throughout the decades. Initially focused on infrastructure, it first embraced development policy; then narrowed its focus to eradicating extreme poverty and now incorporates climate and job creation.
While its initial support for infrastructure investment was better linked to national industrialisation efforts, the Bank has departed from that approach. Reflecting the ascendancy of neoliberal economics and policies in the Global North, the Bank increasingly relied on market-based solutions and prioritised private capital.
This bias deepened in 2015 with the Bank’s “billions to trillions” push— which claimed public finance must primarily serve to attract large-scale private investment.
But economic history casts serious doubt that private finance leads to economic transformation, rather than ‘bigger and better’ extraction. And enticing private capital into low-income countries and ‘emerging markets’ requires offloading risk—onto Global South countries.
The Global South has losttrillions in resources, as global norms supported by the Bank drive the private appropriation of wealth.
Worse, decades of Bank-supported deregulation, privatisation and focus on primary commodity exports has left Global South countries increasingly exposed to shocks, crises and market volatility. Even after the Bank’s Chief Economist admitted the “billions to trillions” agenda was a “fantasy,” the focus on ‘creating an enabling environment’ for foreign finance remains unchanged.
The Bank’s recent attempts to reform itself—its ‘Evolution Roadmap’—have so far failed to move the Bank beyond its private capital focus. This is unsurprising, given the Northern-led “one-dollar-one-vote” governance and Bank President Ajay Banga’s own statements that the Bank’s original purpose “was to forge a global economic landscape ripe for private sector investment.”
More than a year since Banga echoed the G20 in calling for a “bigger and better Bank,” the institution now finds itself having to defend its very existence.
The Bank needs to convince the US administration of its essential role in furthering the interests of the United States. And, as the establishment of the BRICS’ bank, the Asian Infrastructure Investment Bank and the expansion of the BRICS bloc demonstrate, Southern countries’ patience with the lack of governance reform is not without limits.
The negotiations in preparation for Sevilla could shift the norms of the current extractive financial architecture and set the stage for transformational development in the Global South.
We need economic transformation and industrial policy that allows states to escape debt and dependency, reduce exposure to external shocks, and increase capacity to safeguard human rights while supporting the aspirations of their people. We need development banks that support those goals.
The World Bank, in its current form, is not fit for this purpose. It is up to Global South countries, social movements, and civil society to raise their voices to change the terms of the conversation.
No dam, no matter how tall, can hold back the flood of change that’s coming. The world is not what it was 80 years ago. Development banks shouldn’t be either.
Rodolfo Lahoy Jr. is Deputy Director of IBON International, based in Manila, and Luiz Vieira is Coordinator of the Bretton Woods Project, based in the UK
© Inter Press Service (2025) — All Rights Reserved. Original source: Inter Press Service
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