World Bank officials seek to balance the ledger on current criticism
Washington — There were touches of old-fashioned rhetoric in the speech of World Bank president A. W. Clausen at his institution's annual meeting this week. The touches were put there on purpose.
''Here in this hall today,'' he said, ''is an assembly of men and women with the greatest experience and understanding of the problems, and the clearest recognition of the solutions, as has ever been convened. And I venture to suggest that all of us here are of one mind on this: that the economic situation , though serious in much of the developing world, is categorically not hopeless.''
To think otherwise, he continued, would ''dash the hopes of a better life for millions and millions of our fellow human beings.''
Mr. Clausen was showing sincere care for the world's poor. The World Bank's largest shareholders, however - the United States, Japan, and other industrial nations - must worry about budget deficits and restraint in spending taxpayer dollars. And they hold the World Bank's purse strings.
Although aware of these limits, World Bank presidents have tended to become advocates for the world's poverty-depressed people.
When former president Robert S. McNamara made his parting speech at the 1980 annual meeting, he received an extended standing ovation. It was an emotional event because so many officials from developing countries felt Mr. McNamara's deep sincerity in his desire to have the bank help the world's poor.
When Clausen took over the following year, the first speeches seemed dull by comparison. The former president of the Bank of America talked much more about the banking aspects of his institution.
They were unlike McNamara's speeches, which were essays on development economics or emotional pleas to the people and politicians of the industrial nations for greater aid for those stricken by poverty. Clausen's earlier speeches were briefer and more businesslike.
But now Mr. Clausen is under attack, facing criticism that often seems inconsistent.
Much of the press has joined in. The New York Times and the Washington Post have recently published long articles critical of the bank which bank officials consider unfair.
Mr. Clausen's latest speech dealt with some of the criticism, including charges that he has been too much of a glassy-eyed banker.
All this is important to those in poorer countries. The bank is the world's largest external source of capital for development projects.
''The bank has awesome power in the world both in financial terms and in terms of the size, experience, quality, and diversity of its technocratic staff, '' notes Oxford scholar Stanley Please in a new book, ''The Hobbled Giant.''
In interviews, Ernest Stern, senior vice-president in charge of the loan side of the bank, and other longtime observers of the institution dealt with some of the criticisms.
* Criticism: The bank is too big. Last year it approved almost $12 billion in loans. Answer: Because of its ability to borrow on the world's capital markets, the bank itself has not felt constrained by a shortage of funds.
Some of those nations suffering from overly large foreign debts, however, have braked their borrowing, even from the World Bank.
In the case of a bank affiliate, the International Development Association, there is a shortage of funds. IDA's money comes from the industrial nations and must be appropriated each year by legislatures.
The US has decided to rein in the IDA - and, if it can, the World Bank. It wants to shift more resources to bilateral aid and believes the bank can make more effective use of the funds it has.
There is not much the bank can do to stop the US from putting on the brakes. It does, however, campaign to change the public mood to favoring more foreign aid.
* Criticism: The bank should have done more to ease the developing-country debt crisis. Answer: A few years ago, critics argued that the bank was becoming too much like its sister institution, the International Monetary Fund.
The IMF's prime purpose is to help nations with balance-of-payments deficits through loans while those nations try to correct underlying causes of their deficits.
The bank has tried to help by dispensing loans that can be used quickly. For instance, it doubled its loan commitments in Brazil to $1.4 billion in one year.
Mr. Clausen noted that in an effort to be flexible, the bank in the past 12 months ''revised fully 40 percent of our bank lending program as countries acted individually on needed changes in their policy priorities.''
The IMF, noted Mr. Stern, has plenty of money to lend to debtor nations. But the bank's aim is to accelerate development; it is not the IMF.
* Criticism: The bank has lent too much for prestige projects. Answer: Nonsense, says Stern. The only steel plant the bank has supported in the last decade was a rolling mill in the private sector in Egypt. It has not built an international airport within his memory.
Contrariwise, the bank has had ''terrible battles'' with nations that have been offered such projects through bilateral aid programs. They are usually ''seduced'' by provision of easy credit terms by national export-promotion banks.
The World Bank tells the developing country it cannot provide loans if the nation insists on going ahead with prestige projects it cannot afford, such as convention centers or fancy ports or uneconomic dams.
All bank-supported projects, he added, must pass an analytical screening that shows they will provide a high rate of economic return.
There are more criticisms, some of them better reasoned. Mr. Please, for instance, wants the bank to take a greater role in steering developing countries into more fruitful economic and development policies. The bank has already moved to some degree in that direction.
One can see that the bank's defense of its own policies is spirited - and it does appear to document a highly constructive record.