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The British government and the World Bank

Mr H. Benn (the ‘Overseas Development’ minister) has announced that the British government will withhold £50 million (US$ 94 million) of taxpayers money that it was to pay to the World Bank to be lent out to ‘Third World’ governments.

Mr Benn said this was protest against the World Bank’s policy of demanding free trade and privatization in return for loans. Actually the World Bank does not do that very much any more. These days it normally just demands that a loan (for example) for education actually be spent on education – rather than go in corruption.

However, I still think the government was right to withhold the money (and not because I am against free trade or privatization – or think that the same economic principles can produce good results in one country and bad results in another, as a weird editorial in the Daily Telegraph claimed), but because I do not believe that taxpayers money should be taken by the government and given to the World Bank.

The World Bank should not exist (and nor should the IMF). If ‘Third World’ governments want state education (or some other folly) they should pay for it themselves – as they will have to after the loan money runs out anyway. All the loan achieves is to give them a debt to pay back on top of the future state education (or whatever) bill.

9 comments to The British government and the World Bank

  • That Hillary is a chip off the old bloc.

  • I’ve never heard of the World Bank. I keep my modest savings with the Calder Valley Infirm Paupers Friendly. They do make ethical structural loans to people in less fortunate climes. Only last week a small advance was given to the people of Croydon for a children’s climbing frame.

    We all benefit from spreading the wealth around sir !

  • Totally agree Paul.

    I wondered if Mr Benn did not want to set a precedent for when the WB or IMF have to bail out the UK government, but then he said he wanted it to focus on tackling corruption, human rights and poverty…so I must have been wrong.

    The Tsunami Appeal showed how people, individuals, can respond to humanitarian tragedies faster than governments (and it shows how sticky fingers, butter fingers and all thumbs are too often the governmental response).

    If the World Bank wants a country to grow using loans, surely the way is to create the environment in that country so that LOCAL banks can create the loans. Thus, that any interest payments remain within the economy, at least for a while.

  • John K

    When I read the headline, I thought that Benn had grown a pair, and wanted the World Bank to be more accountable for the money it loans. Of course, I had reckoned without the Wedgie-Benn genes, which true to their eye-swivelling heritage, were ticked off that the World Bank should have the temerity to ask any questions of the third world kleptocrats getting the money.

    Young Benn is indeed as barking as his guvnor. I wouldn’t mind so much, but I have a horrible feeling that eventually he will back down, and let the money taken from us by force go to the World Bank, and thence to sundry dictators, after which it will fructify in the pockets of the Gnomes of Zurich and sundry orifices of the Whores of Belgravia. Funny old world.

  • Johnathan Pearce

    it is perhaps understanderable that some anti-globalistas regard the World Bank, the IMF and so on, as parts of the international capitalist order, and yet in many ways they are classic products of the mid-20th Century, big government mindset.

    At a recent talk in London I attended, I watched an obviously leftist guy look puzzled when a US libertarian thinktank guy denounced the IMF as part of the international big government order. It really scrambles the minds of the left when you point out that these organisations are not in the bests interests of global free trade.

  • Jacob

    How naive can you be Paul ?

    “If ‘Third World’ governments want state education…”

    “Third World governments” are no more than a bunch of kleptocrats. They don’t want any “state education”. They want money in their pockets. If they have to write “education” in the loan application – then so be it, they can live with it. When the money arrives, they take good care of it.

    “All the loan achieves is to give them a debt to pay back…”

    Don’t be a fool. WB loans are never paid back, unless it is with IMF funds, but mostly they are just not repaid. They are just kicked forward until some debt forgiveness scheme is activated.

  • Paul Marks

    Things are sometimes not so simple Jacob. Sometimes the West (or rather Paul W. and his neocon friends) actually succeed in making a “third world” nation a democracy – or getting one that already is a democracy to set up more state education, health or welfare projects.

    So the loan funds the new government scheme for year one – what happens in year two?

    “Ah but the better educated population will mean better economic growth in the country – this leading to more tax revenue”.


    “The government spending itself will promote economic growth via the multiplyer effect”.

    I do not need to explain to you Jacob why both of these “arguments” are false.

  • Paul Marks

    As it is the 40th anniversary of “Star Trek” perhaps I can get away with saying that many important people have a “Star Trek” view of freedom.

    Captain Kirk (it was normally this character) would talk about how some primitive world would get “schools, hospitals, provision for the old….” and this was all to do with “freedom” (this would be in one of the many episodes where the characters, or rather script writers, forgot about the “Prime Directive” which was supposed to forbid interference).

    Although (I seem to recall) there was an episode (a alien world that was the “Roman Empire in the 20th century”) where the education, health care, old age pensions (etc) were not called “freedom” (as they were given to slaves) they were called (by “Mr Spock”) “rights”.

    Anyway the crew of the Starship World Bank (like the other government Starships) have this view of their activities.

    Now whether one believes that a developed country can have all these government health, education and welfare schemes (and I have my doubts, to put it mildly, concerning the long term on this), poor countries certainly can not.

    For example, more government education in a “third world” country will just mean lots more people seeking jobs as government administrators – and being very angry if they do not get such jobs.

  • jerry s

    i have a friend that is british trying to get a loan to make some inprovements to rv and mobile home park worth 5million and turned away because he is british he is buying a home here in the us pays taxexs here and socialsecurity for the help he employs which are disabled or retired I am one what is up with this other nationalities get loans every day, could you explaine this to me,