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Short gives evidence on World Bank to UK parliamentarians

26 November 2002


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On 5 November Clare Short gave evidence in parliament on UK influence in the World Bank. MPs on the International Development Select Committee questioned Short on issues including HIPC debt, PRSPs, Poverty and Social Impact Analysis, governance of the Bank, social and environmental policies, privatisation of services, education funding and trade capacity building. Many Committee members’ points were prompted by submissions from 16 NGOs, from the UK, Ghana, USA and Canada.

Selected highlights from the uncorrected transcript:

World Bank Governance

Ann Clwyd MP: We have criticised the international financial institutions, as you have yourself, for not practising what they preach in terms of transparency, accountability and good governance. What ways have you identified to see the voices of the developing countries heard?

Short: There is room for looking at who has been consulted about what and how much say everyone has. [Also at] how many executive directors there are, Africa has two, so you have two people, one Francophone, one Anglophone, paid to represent every country in Africa. How well serviced are these people who are doing this heroic job of trying to represent very frail countries with a weak capacity? We have been working to try and strengthen the African EDs and there is more that can be done.

Clwyd: I wonder how you are supporting the introduction of an open process for selecting the next President of the World Bank?

Short: The US gets the World Bank and Europe gets the IMF and it cannot go on, surely. What about the rest of the world? The geographical carve up is intolerable and the system for selecting is a kind of political fix system. It is an outrage the present system and it needs continuing pressure to make it transparent.

Social and environmental policies

Clwyd: It has been suggested that the UK Government does not regard the maintenance of World Bank safeguards as a priority, and this was illustrated in UK support for the Chad-Cameroon Pipeline Project. Can you tell us what the UK position is?

Short: We need to go much more to the sort of wisdom that was in the World Commission on Dams, responsible projects, properly managed, properly considering all the interests of all the people involved. We intervene often to try and make sure the projects are more responsible but we always look at what is the interest of poor people in the country, can it help reduce poverty and be responsible environmentally and in considering the interests of the poor. My own bias is to have the Bank in if you can rather than leave it to pure commercial development.

Poverty Reduction Strategy Papers

Hugh Bayley MP: Can I ask what the UK Government is doing to make sure that the Poverty Reduction Strategies are owned by the countries to which they apply, and that they are developed in consultation with civil society and the parliament of the people of those countries?

Short: The Poverty Reduction Strategy process is a revolutionary shift from reform agendas written in Washington, imposed on countries, often in collusion with some of their governments. I think everywhere it has opened governments to criticism by civil society that they were not used to. I think in the early stage we missed parliaments [but] I think that has been corrected.

Poverty and Social Impact Analysis

Bayley: Are we in a position to ensure that when a country is debating its Poverty Reduction Strategy that it faces real choices, both as regards economic and social policy?

Short: This is enormously important. The view of my Department is we should not take an ideological position. There are always thousands of different ways of doing things. I think we are moving there. We are very keen on this Poverty and Social Impact Analysis. We are doing some work to experiment with rolling them forward and giving them an example.

Private Sector Development Strategy

Tony Colman MP: Can I ask you about the World Bank’s Private Sector Development Strategy which I understand aims to encourage the transfer of public services into private hands. Do you think ownership and choice for countries is compatible with the World Bank’s strategy in this area?

Short: I do not agree at all that is what the World Bank’s Private Sector Development Strategy says. We have got to bring responsible private investment into the poorest countries if they are to get the investments they need to get the infrastructure for their economies to move forward. There should be this assessment of where the interests of the investment in the economy of a poor country lies. You need to go towards the private sector learning the lessons of good regulation, regulation is very important. … There should be choice. We do not prefer a private model; we prefer a model that will serve the poor and get better services.

Trade capacity-building

Bob Walter MP: What is the appropriate role for the World Bank in international trade policy and in trade-related capacity building? Uri Dadush, the World Bank’s new Head of Trade has said that “unilateral trade liberalisation is good for all countries”. How confident do you think we can be that the World Bank’s trade-related capacity building will not simply become a sort of aggressive form of trade liberalisation, possibly at the expense of nationally owned strategies for poverty reduction, and simply pursuit of reciprocity, which is in the WTO regime?

Short: I have not seen that quote that you have just read out. It is not our policy and it is not the policy of many developing countries, or any that I can think of, to just open unilaterally.

Walter: The Integrated Framework is an important initiative, but will the United Kingdom as a major contributor to the Framework seek to ensure that a range of organisations are all engaged in trade-related capacity building to provide the necessary intellectual competition and variety to that?

Short: My own view is that we need effective trade-capacity building, not necessarily ‘Uncle Tom Cobbley and all’ [everyone] doing it. We have worked very hard on the Integrated Framework, and it took ages to get it going, and we think it is going much better now. Certainly in the work we do and fund we use expertise and academics and so on but I do not think we need to spend all our time getting everybody in to offer training to developing countries. It is a fantastically complex area of policy.

Longer extracts from the committee transcript, plus links to the full transcript and to the written evidence submitted to the Committee by NGOs and DFID are available on our new UK site section.

New parliamentary questions web tool

Parliamentarians have a new facility to put questions to the World Bank. An electronic forum enables them to “post queries, track the status of questions and receive responses”. These “can be related to World Bank Group programs or projects as well as statistics, publications and research, within the scope of the Bank’s Policy on Disclosure of Information”. At the time of writing this had only been once used, for a question on the Albanian Country Assistance Strategy, so its usefulness is untested.

Q and A for Parliamentarians, Parliamentary Network on the World Bank.

IMF boss grilled by British MPs, Bretton Woods Update 29