reading response w4

II The Rise of the Bank

The New World had to be yoked, and kept yoked, to the Old

World, if the latter were to enjoy durable peace and prosperity.

—John Maynard Keynes, , personal correspondence

(Skidelsky )

s World Bank/IMF officials gathered in Washington, D.C., for the  annual meetings in the face of an

ailing global economy the mood was anything but grim. The meetings marked the fifty-first anniver-

sary of the Bretton Woods conference, which led to the estab- lishment of these institutions and the Bank’s stewardship of the global development project. But the party had its gate- crashers—an energetic global activist network that stormed downtown Washington with an impressive “ Years Is Enough” campaign. The protesters successfully undermined the anniver-

sary celebration and shocked the complacent Bank and IMF leadership. Over time they have played a major role in the re- forming of the World Bank and giving shape to its next devel- opment regime. Inside and outside this oppositional cam- paign, a broad range of observers identified Bank policies as the catalyst for the collapse of economies throughout Latin America, Africa, and Asia, and for the two “lost decades” dur- ing which whole regions of the world suffered from substan- tial backsliding in per capita income, GDP, and health and so- cial indicators. Representatives of the displaced, aggrieved, and angry stakeholders of Bank/IMF projects had crossed oceans to come speak out at street protests, teach-ins, and workshops scattered throughout the city. From their perspective, we should have all been wearing black. Few officials and delegates at the Bank/IMF annual meetings, however, seemed to agree.

The majority of those attending the annual meetings were not members of the development community one learns about in development studies courses or through the media. They were not associated with church-based charities or food aid NGOs. None spoke the language of charity or of desper- ately poor third worlders. There was no discourse of resuscita- tion or emergency aid to avert catastrophe. In fact, they spoke only of business. Packing Washington during the week of the Bank/IMF meetings were the world’s central bankers and fi- nance ministers, and they were obviously on a shopping spree. At one hotel, they met with Henry Kissinger, Bill Gates, and the CEOs of Westinghouse, Bechtel, Citicorp, and major banking, insurance, finance, defense and armaments, telecommunica- tions, energy and power, and computer companies. At the main hotel, they had breakfast courtesy of Bear Stearns, Baring Se- curities International, the Istanbul Stock Exchange, ING Cap- ital, Banco Portugal, and Standard Chartered Bank. Lunch was

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hosted by Chemical Bank, Creditanstalt-Bankverein, and ABN- AMRO in the Corcoran Gallery of Art and the National Mu- seum of Women in the Arts. In the late afternoon, the official program brought all delegates and guests back to the Sheraton Hotel to listen to the Bank president and IMF managing di- rector officially convene the annual meetings. But by  p.m., the early round of cocktail receptions commenced, courtesy of the Bank of Tokyo, Brown Brothers Harriman & Company, Unico Banking Group, Citicorp/Citibank, Arab Banking Cor- poration, and Bank of America, among others. First Chicago Bank hosted a dinner party at the Meridian House, Morgan Stanley at the Phillips Collection, Chase Manhattan Bank at the Decatur House, and ChinaTrust Commercial Bank at the Twin Oaks. An elite group of high rollers attended a black-tie dinner with J. P. Morgan executives. Later, guests were invited to after-dinner parties, which included the  p.m. live show, “Broadway Meets Berlin,” hosted by Bankgesellschaft Berlin. Delegates looked exhausted after the first day of the meetings, but there was little to suggest they were anything more than weary revelers.

Running concurrently for the scientific community was a conference sponsored by the National Academy of Sciences (NAS) and World Bank that included Vice President Al Gore; UN Secretary General Boutros Boutros-Ghali (by video); World Bank President James Wolfensohn; Jacques-Yves Cou- steau; Harvard Professor E. O. Wilson; Worldwatch Institute President Lester Brown; the director general of World Wildlife Fund, Claude Martin; Mali Prime Minister Ibrahim Boubacar Keita; the administrator of China’s National Environmental Protection Agency, Xie Zhenhua; and CEO and chair of Enron Corporation, Rebecca Mark. For three days, in panels and ple- naries, scientists and officials from the World Bank, govern-

 The Rise of the Bank

ments, NGOs, universities, research institutes, and private cor- porations discussed “Effective Financing of Environmentally Sustainable Development” at the prestigious National Acad- emy of Sciences. In his welcome address, the academy’s presi- dent, Bruce Alberts, announced his gratitude to the World Bank for helping the academy incorporate the concept of en- vironmentally sustainable development into its scientific work. The conference was glamorous and upbeat in ways uncom- mon to the tweedy world of science and academics.

The business of development is a profitable and inclusive one, and the topics discussed at these and other World Bank meetings are not typically hunger or poverty. Whereas most writings on the World Bank claim that some combination of the “poor” borrowing states, Northern aid agencies, and devel- opment NGOs are the main constituents and partners of the World Bank, my observations of the Bank’s annual meetings lead me to suggest that the actors in the world of development are much more diverse, with powerful ties to familiar for-profit interests. Moreover, there is nothing intrinsic or inevitable about the specific discourses of development the Bank has pur- sued or its role in the global political economy during its sixty- year history. Most authors assume as inevitable the Bank’s rise to prominence as the world’s premier global institution, and they take for granted the authority of global institutions in general. By contrast, in this chapter I will explain the political- economic contexts and discursive strategies that helped the Bank to become a globally hegemonic institution by empha- sizing the historical conjunctures that others have glossed over —in particular, the phenomenal way that Robert McNamara inserted the World Bank into the global economy as a power- ful institutional force. Although historians of the World Bank note the Bank’s growth under McNamara, they do not exam-

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ine the key historic shifts in the global political economy and how the technologies of power/knowledge (Foucault ) es- tablished under McNamara enabled the Bank to grow and prosper even during difficult times. These technologies have become crucial for the Bank as it tries to maintain its reputa- tion in a world where anti-Bank social movements have gained considerable legitimacy.

Four distinct periods mark the history of the World Bank: the “reluctant Banker” period of  – ; the Bank’s “rise to power” in the period of  –  during which the calls for “poverty alleviation” and meeting “basic needs” for the “abso- lute poor” reflected a new rhetorical turn in development; the “debt and adjustment” period of  – ; and the “green ne- oliberal” period from  to the present. This first period was shaped by the absolute control over the Bank by the U.S. Trea- sury, the State Department, and Wall Street bankers, who were the Bank’s main constituents during its early years.1 These ac- tors were primarily interested in having the Bank lend for bricks-and-mortar types of projects. They kept tight control over Bank expenditures based on conservative banker ethics, except when the State Department insisted that providing sup- port for its cold war allies was more important. Under these constraints and conflicting rationalities, the Bank remained small and ineffectual. During its first two decades, the Bank was unable to articulate a universal project of liberal capitalist development, and as a consequence, it played a very minor role in the realms of development and political economy during its first twenty years.

It was only during the McNamara era (-) that the World Bank emerged as a powerful organization, spurring the creation of a new transnational space that the Bank helped fill with professional networks and discursive regimes of rule,

 The Rise of the Bank

truth, and government. During his thirteen-year reign as World Bank president, Robert McNamara, a former U.S. secretary of defense, converted the Bank into a major transnational insti- tution as well as the world’s foremost authority on develop- ment. Ironically, the engines of growth for the twin Bretton Woods institutions fired up only after the longstanding Bret- ton Woods agreement on currency and capital controls failed. As no single institution had before, the World Bank under Mc- Namara facilitated an explosion of financial capital invest- ment in the global South as well as a surfeit of development knowledge, which repositioned development as a global proj- ect. By bringing together the ideas of economic growth, social upliftment, and global security, and making it into a “science” backed by World Bank finances, McNamara created a power/ knowledge leviathan of a completely new sort. Not a state, not an international agency, not a finance bank, the World Bank became something quite unique in the world—a one-of-a- kind supranational development institution.

After a decade of growth in the s, the Bank’s capital, ideas, and institutions set root and flowered in many different forms around the world: national development banks, na- tional development institutes, national centers for agricultural (or green revolution) research, large dams, highways, power plants, mines, and national forestry projects. A major learning initiative sparked by the World Bank, United Nations agencies, and universities in the North fueled studies in development economics, poverty, and the green revolution. This research became meaningful when it was supported by Northern foun- dations, used by major agro-industrial corporations, and situ- ated in Bank-financed research institutes in borrowing coun- tries. In short time, the Bank’s large capital flows into the South were explained in terms of the financing of poverty al-

The Rise of the Bank 

leviation, basic needs, and the green revolution. As a conse- quence of the Bank’s well-financed knowledge production ma- chinery, one could find middle-class people almost anywhere with an opinion about how to help poor peasants in India, Brazil, or Kenya.

In no small part because of the World Bank’s metamor- phosis during the s and early s, development power/ knowledge writ large became common sense. The Bank’s role as global economic and political manager became more en- trenched during the s, when the Third World debt crisis it helped to create further reduced the political autonomy of borrowing countries while increasing its own. The Bank’s phe- nomenal rise to power, however, also induced the conditions for its own legitimation challenges. The Bank could no longer pretend to be the dispassionate technical expert offering ad- vice from an apolitical distance when it was also making the daily decisions for finance ministers and central bankers in its client countries (i.e., Mexico, sub-Saharan African countries). As a consequence, at the height of the World Bank’s hegemony, the Bank became a target of a growing worldwide movement with street riots, parliamentary demands, and mass mobiliza- tions to try to close it down. Forced to “reform or die,” the World Bank experienced yet another transformation in the s, an equally profound shift, to green neoliberalism.

An Auspicious Start

In the beginning, the World Bank was just an afterthought. In May , the U.S. government invited forty-four countries to participate in a conference at Bretton Woods, New Hampshire, to consider creating an international monetary fund to rebuild international currencies sunk by the war (George and Sabelli

 The Rise of the Bank

; Mason and Asher ). The invitation included the idea of “possibly a Bank for reconstruction and development,” but John Maynard Keynes and the British were against it. Of the fourteen days spent in Bretton Woods, one participant esti- mated that no more than a day and a half was dedicated to dis- cussing this possibility (Kapur, Webb, and Lewis , p. ). Keynes did see the sense in some international coordination over the rebuilding effort, but “international” clearly meant Europe, which in turn translated only to the imperial West. He argued that with “proper” economic management, govern- ments could “have a boom that would raise the standard of living of all Europe to the levels of America today.” When Keynes was asked, “Does this apply to India and the rest of the (British) Empire?” he replied, reflecting the colonial view of the day, “That must wait until the reconstruction of Europe is much further advanced” (Kapur, Webb, and Lewis , p. ). In the mid-s, much of the South, with Latin American ex- ceptions, was still colonized, and Western leaders still had em- pire on their minds, even as the war was destroying European economies and attenuating their colonial power. Consequently, although some delegations from the South were invited to at- tend, they knew enough to articulate their needs in ways that emphasized imperial self-interest.

Indeed, as one observer noted, “at Bretton Woods, the de- veloping countries tended to view (or at least present) them- selves more as new, raw-material-producing nations and less as countries with general development problems” (Bauer, Meier, and Seers , p. ). Brazil, Colombia, Cuba, and Bolivia had their own proposals on how to steer the global postwar econ- omy: recalibrate prices for raw-material goods from the South and manufactured goods from the North, which were “notori- ously far out of proportion” before the war. To Southern dele-

The Rise of the Bank 

gates, the price gap was the fundamental reason their econo- mies were imperiled. At Bretton Woods, Southern delegates tried to put this issue on the table. A Mexican delegate tactfully argued that Europe could not be reconstructed without the raw materials and the markets of the South: wouldn’t capital be best spent in the colonies to help reconstruct Europe (Kapur, Webb, and Lewis , p. )? In the end, it did not matter much what these delegates argued; proposals from the South were not taken seriously by the organizers from the United States and the United Kingdom.

Keynes, in fact, anticipated such arguments. He preferred a completely different meeting format: a one-on-one meeting between the British and the United States. In private, Keynes remarked that with “twenty-two countries which clearly have nothing to contribute . . . [the meeting will be] the most mon- strous monkey-house assembled for years” (Kapur, Webb, and Lewis , p. ). But Harry White, assistant to U.S. Treasury Secretary Henry Morgenthau, was much more sanguine and strategic: “There’s nothing that will serve to drive these coun- tries into some kind of—ism—communism or something else—faster than having inadequate capital” (Kapur, Webb, and Lewis , p. ).

Just as the British perspective on the Bretton Woods con- ference was starkly summarized by Keynes in this chapter’s opening epigraph, the U.S. position is outlined in the follow- ing State Department press release from the first day of the (July)  conference:

The purpose of the Conference is . . . wholly within the American tradition, and completely outside po- litical consideration. The United States wants, after this war, full utilization of its industries, its facto- ries and its farms; full and steady employment for

 The Rise of the Bank

its citizens, particularly its ex-servicemen; and full prosperity and peace. It can have them only if cur- rencies are stable, if money they receive on the due date will have the value contracted for—hence the first proposal, the Stabilization Fund [i.e., the IMF]. With values secured and held stable, it is next desir- able to promote world-wide reconstruction, revive normal trade, and make funds available for sound enterprises, all of which will in turn call for Ameri- can products hence the second proposal for the Bank for Reconstruction and Development [i.e., the World Bank]. (U.S. Department of State , p. , as cited in Peet , p. )

From these “monkey house” histrionics emerged the Interna- tional Bank for Reconstruction and Development (IBRD), or the World Bank, and the International Monetary Fund.2 Be- ginning without much direction or trust in it by the leading Western powers, the World Bank began to find its personality under its second president, one of the most powerful men in the “American Establishment,” Wall Street veteran John Mc- Cloy (Bird ).3 McCloy’s initial measures clearly reflected the type of institutional character he sought to create. For ex- ample, when the first three loan applications came in to the Bank from France, Poland, and Chile, McCloy worked quickly to select only France as a recipient, sending a strong tough love message to the watching world. As his biographer notes:

By April , . . . McCloy decided that the first loan would go to the French. . . . The terms would be tough: The Bank would lend only half of the re- quested $ million, Bank officers would monitor end use of the funds, and the French government

The Rise of the Bank 

would have to pledge that the repayment of the Bank’s loans would have absolute priority over any other foreign debt. Furthermore, the Bank would closely supervise the French economy to ensure that the government took steps to balance its budget, in- crease taxes, and cut consumption of certain luxury imports. The French protested that such conditions infringed on their sovereignty. But when McCloy refused to budge, they reluctantly agreed to his terms. Simultaneously, the [U.S.] State Department bluntly informed the French that they would have to “correct the present situation” by removing any communist representatives in the Cabinet. The Communist Party was pushed out of the coalition government in early May , and within hours, as if to underscore the linkage, McCloy announced that the loan would go through. Even then, he warned that the French would not receive the loan until the Bank successfully floated $ million worth of bonds on the New York market. . . . This was exactly the message McCloy intended to convey to Wall Street. For the next two years, he planned to run the Bank as if its clients were private Wall Street investors and not the forty countries that had joined in the hope of receiving development aid. (Bird , pp. ,  – )

Selectivity, caution, and Wall Street respectability were the mantras of the early World Bank and the signal sent to po- tential borrowers as to what lay in store for them. These ideals, however, rapidly gave way to the reality that the Bank’s poten- tial client base in Europe and Japan had been erased by the U.S. government’s Marshall Plan. In direct competition with the

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Bretton Woods institutions, the Marshall Plan, a multibillion- dollar giveaway by comparison, was the antithesis of the World Bank’s mandate: it was indiscriminate, massive, and seemingly free (Kolko and Kolko ; Wood ). The Marshall Plan was a social welfarist project deployed to jumpstart Europe’s capitalist economy through a large infusion of capital. Indeed, because of the Marshall Plan, the Bank had to reinvent itself as a bank for the non-European world, albeit one guided by strict (colonial) rules and regulations that stood in stark contrast to the ones catering to postwar Europe. As highly inequitable colonial-imperial relations had been the norm, the different approaches to Europe and the colonies easily passed as legiti- mate, dispassionate, and rational for leaders and constituents from the United States and Western Europe.4 In this fashion, a major postcolonial discourse of development was launched.

Wall Street had a clear revulsion for anything but the most “sound” financial investment, as defined by Wall Street and its officials employed by the Bank.5 For example, as the Bank’s treasurer from  to , Robert Cavanaugh under- stood that his main priority was to allay Wall Street’s fears of financing risky investments in the colonies. For Cavanaugh, the Bank was constrained in the early years by Wall Street’s re- fusal to allow the Bank to invest in what later became its staple development areas, namely, public education, health, and housing: “If we got into the social field . . . then the bond mar- ket would definitely feel that we were not acting prudently from a financial standpoint . . . if you start financing schools and hospitals and water works, and so forth, these things don’t normally, and directly increase the ability of a country to repay a borrowing” (Cavanaugh ).6 During the Bank’s first twenty years, only the most direct investments in “productive capital” (i.e., roads, ports, power plants) were promoted.7 Interviews with the managerial elite who served the World Bank in its first

The Rise of the Bank 

few decades demonstrate that every decision regarding the fundamental architecture of the World Bank, and its potential stability and growth, hinged on pleasing the five nations with the largest vote in the Bank—the “Big Five” countries (the United States, Japan, Germany, the UK, and France) and their firms.8 Every project was negotiated in terms of which of these countries’ currencies would be used and whose financial inter- mediaries and capital goods would be purchased.9 Only in hindsight might this seem abnormal: foreign currency and in- vestment were extremely scarce and precious, and for the re- building economies of France and Japan, every yen and franc counted. In discussions of the third world, there was no rea- son to bring up such concerns as poverty alleviation or local needs. That this should surprise us today precisely reflects the hegemonic effect of just a few decades of contemporary World Bank developmentalism. At the start, the role of the Bank was unambiguous and its beneficiaries so few that they were all on a first name basis.

Meanwhile, U.S. political leaders demanded something quite different from the World Bank. While senior Bank man- agement strove to persuade economists, including some of its own, that the non-European world was more predictable, vis- ible, and attractive than they might believe (Kapur, Webb, and Lewis , p. ), the U.S. government pushed the Bank to act for U.S. strategic purposes. Whereas McCloy’s Bank preferred strict and unforgiving loan policies based on “economic” cri- teria, the U.S. government insisted that the Bank work only with countries identified as friends of the United States. The Bank could not lend to Guatemala and Ceylon, for example, because of the political position of the parties in power (Kapur, Webb, and Lewis , p. ). When conservatives within the Bank and on Wall Street objected to the idea of generous or

 The Rise of the Bank

“soft” loans with low interest and long repayment schedules— now the Bank’s modus operandi—Secretary of State Dulles argued: “It might be good banking to put South America through the wringer, but it will come out red,” that is, commu- nist (Kapur, Webb, and Lewis , p. ). Because of U.S. po- litical power, Turkey, Egypt, and brutal authoritarian regimes in Latin America received generous and unscrutinized loans that were matched by substantial U.S. military and foreign aid (Payer , p. ), while more “economically worthy” coun- tries received none.10

Clearly, in this first period of its history, the Bank was heavily constrained both by the conviction it shared with Wall Street that “loose lending” had precipitated the pre–World War II financial collapse and by political pressure from the United States . Each loan was a painstaking process marked for its ability to ruffle the fewest feathers in Washington, New York, and London. It quickly became clear to Bank presidents and staff that the Bank was doomed to stagnate. Indeed, the first president, Eugene Meyer, stayed on only from June to De- cember , saying after his abrupt resignation, “I could stay and fight these bastards, and probably win in the end, but I’m too old for that” (Kraske , p. ). John McCloy lasted for two arduous years before he had enough.

To navigate out of these political straits, the Bank had to prove it could provide steady profits to its bondholders while sustaining the confidence of political elites—two different but related constituencies. Postcolonial “public” banking was new to the world; it had to be invented in a form agreeable to the Bank’s Western founders and constituents before it could take root. As one of the Bank’s first senior officials noted, people at the Bank “didn’t know much about the developing world ex- cept as colonies. They didn’t know much about development

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lending, didn’t know much about development economics.”11

In fact, these ideas of economy had to be invented, and Keynes and his colleagues were the early inventors (Mitchell ). This suggested that the World Bank had to invent more than just “safe” loans. Rather, it needed to construct a whole new way of thinking about its role in the world and the institutional in- frastructure to cultivate and reproduce that new vision.

In sum, after its inception, the Bank’s mission shifted from reconstruction of Europe to development of Europe’s re- maining and former colonies, and from intervention not as bi- lateral representatives of eroding empires but as a multilateral apolitical doyen of the new global economy. The odds of suc- cess were not good. Northern political and financial institu- tions insisted that these worldly endeavors were irrational, wasteful, and counterproductive, as this type of development lending looked to them like preferential “subsidies” to the for- mer colonies. Under such overwhelming skepticism and criti- cism, it was slow going for the Bank in its first two decades. In fact, the World Bank remained a rather minor player until Robert McNamara, the man who ran the ignominious war in Indochina, took over.

The McNamara Era

In addition to devastating Vietnam, Laos, and Cambodia, the U.S. war in Indochina undermined the United States’ domi- nant position in the global economy. It also had a profound and generative effect on the World Bank. As the United States’ share of the world’s gross domestic product (GDP) fell precip- itously, from a high of  percent in the early s to a low of  percent by the early s (Gwin ), so too did its ability to dominate the Bank and its capital flow. With the decline of

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U.S. hegemony in the international political economy arose new opportunities for the Bank to assert its own limited power.

President Johnson, mired in a war he was losing badly, had no choice but to fire Secretary of Defense McNamara, but he wanted to do it in a face-saving way. So he gave McNamara the less-than-glamorous job of running the World Bank. Upon receiving the position, and amidst worldwide acrimony to- wards him and “his war,” McNamara, in his characteristically obsessive manner, sequestered himself in his office, immersed himself in numbers, charts, and tables, and two weeks later resurfaced with two main goals for reorganization. As he wrote in his personal notes, his strategies were, first, to “develop new sources of financing: try to increase the holdings of the Bank’s securities by the central Banks. Break into the European pen- sion trust market. . . . Obtain approximately $ million per year from Kuwait, the head of the Kuwaiti Fund is young, ed- ucated at California and HBS [Harvard Business School]” (May , , cited in Kapur, Webb, and Lewis , p. ).12 His second strategy was to develop new mechanisms to protect the Bank against funding risks: “In the event the U.S. Government refuses permission for large borrowing for FY , develop a plan for standby credit with commercial banks.”

Realizing from the start that the Bank he inherited was weak and ineffectual, McNamara wanted to increase its power base by finding—or creating—new sources of finance. In- deed, he riled everyone when he announced with a frankness uncharacteristic of the staid Bank, that the project of develop- ment he had inherited had failed abysmally. Poverty increased and lending was sluggish; populations were growing and the Bank’s resources were shrinking. Something had to be done, and quickly. Institutionally, the Bank had little autonomous power to expand and innovate upon the project of develop-

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ment; it had become a supplicant to the old-boys’ network that McNamara himself, as a former Harvard Business School pro- fessor, Ford Motor Company CEO, Ford Foundation board member, and secretary of defense, knew so intimately. None- theless, as the newly anointed World Bank president, he sought to wrench control of the Bank from these Northern elite net- works while tapping into their capital and power: have them work for the Bank rather than the other way around. In , the Bank was stagnating under the weight of the U.S. and European bond markets, which were demanding fiscal prudence and high returns; the U.S. government was continuing to support loans in its political interest; and the U.S. Treasury and key corporate lobbies wanted American firms to benefit from (or certainly not be hurt by) World Bank loans. The World Bank was financially solid but, despite its grandiose name, it was weak and severely underutilized. McNamara made two bold moves.

First, he turned to his staff and board. Apparently at his inaugural senior staff meeting, he listened to senior staff boast about the successes of their organizational turfs—a long- standing tradition of optimistic spinning for one’s superiors (George and Sabelli ; Wade )—until he had no more patience. He abruptly ended the meeting with a pointed re- quest: “I am going to ask you all to give me very shortly a list of all the projects or programs that you would wish to see the Bank carry out if there were no financial constraints” (George and Sabelli , p. ). He made his conservative staff ex- tremely uncomfortable by suggesting that the Bank needed to unleash its potential. He demanded from them a development plan for every borrowing country with a list of top priority projects and persuasive explanations as to their worthiness. His next move was at his first board meeting, where he told his cautious directors that he planned to double the Bank’s lend- ing (Kapur, Webb, and Lewis , p. ). He then expanded

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his personnel by  percent and started a new staff promotion policy, in which productivity would be measured by the size and turnover rate of a loan officer’s loan portfolio. Conse- quently, in his first five-year term, the Bank financed more projects ( versus ) and loaned more money ($. billion versus $. billion) than it had during the previous twenty- two years combined (George and Sabelli , p. ).

McNamara then turned to Wall Street to promote his idea of what the Bank could be if it changed its modus oper- andi. Surprising all, five months into McNamara’s tenure, the Bank had borrowed more funds on capital markets than in any calendar year of its history. The Bank was rolling under the new chief; miraculously, he was able to finance virtually all of the Bank’s increased lending without soliciting any new paid- in capital from the Big Five countries. In short time, he had effectively nullified past controls on the Bank’s access to capi- tal. “The Bank’s capacity to lend is now based almost entirely on its capacity to borrow,” claimed the Bank’s new treasurer, Eugene Rotberg (Rotberg , p. ). It was Rotberg who re- alized how to unleash the Bank’s borrowing potential by uti- lizing the nascent market for global bonds—and to do it profitably. With this remarkable growth in the Bank’s capacity to borrow and lend, the “McNamara era” began.

T H E F A L L O F T H E B R E T T O N W O O D S

D O L L A R - G O L D A G R E E M E N T , T H E

R I S E O F T H E W O R L D B A N K

The backdrop to political change inside Bank headquarters was some substantial structural shifts in the global political econ- omy and a series of momentous decisions made by the U.S. president, just a few strides from McNamara’s new office. Still within the loop of decision making in Washington, McNamara

The Rise of the Bank 

was able to quickly insert his Bank into the middle of new U.S.-centered plans and help the Bank to grow in tandem with U.S. power. As a result of the tumultuous period of  to , when a wave of events hit the global economy, the con- servative banking agenda of the pre-McNamara Bank disap- peared in a flash (Block ; Helleiner ; Kapstein ).

In spite of money managers looking for good invest- ments to absorb the worldwide glut of Eurodollars, OPEC petrodollars, and Japanese yen, a floundering U.S. economy did not attract foreign investors to its currency, government bonds, real estate, and firms. In a brilliant move aimed at stem- ming the free-falling U.S. economy, on the recommendation of his economic advisor Paul Volcker, President Nixon pulled out of the postwar Bretton Woods system of fixed currency that tied all world currencies to a gold value through the U.S. dol- lar. By forcing the gold-dollar standard to collapse and then by liberalizing international financial relations against the will of Western Europe and Japan, the United States skillfully placed the burden of its huge deficit upon other states and investors. When foreign investors purchased U.S. assets and dollars in order to participate more actively in global markets, they were also assuming the U.S. deficit risks as well as buoying the U.S. economy. This move to deregulate international finance capi- tal also shifted the balance of power away from state-managed financial institutions (and national development projects) to private financial institutions and capital investors. Nixon’s bold decision sparked an incredible rise in speculative capital activity that would, by the s, shift hundreds of billions of dollars across national borders and national currencies with the bat of an eye and beyond the control of national govern- ments. But more immediately, holders of the abundant finan- cial capital were enticed by McNamara to invest in World Bank

 The Rise of the Bank

“global bonds,” which would help finance large productive capital investments in undercapitalized markets in the third world. By promising a range of risk guarantees to these in- vestors, McNamara tapped into their surplus capital assets, dramatically expanded the Bank’s lending base, and began to finance his vision of large projects in the highly volatile post- colonial world. But Rome was not built in a day, and Mc- Namara had much work to do before he could take full advan- tage of this momentous historical conjuncture.

F I R S T R E V O L U T I O N : G L O B A L B O N D I N G

Within weeks of assuming the Bank’s presidency, McNamara asked his newly hired treasurer, Eugene Rotberg, whether and how the Bank could increase its access to capital. “Do you think we can raise one billion dollars a year?” McNamara queried Rotberg. “Sure, why not?” was Rotberg’s reply. In a  inter- view, Rotberg explained that fifteen years later, the Bank was easily borrowing $ billion a year (Institutional Investor , p. ). “I think I helped create an environment,” Rotberg claimed, “where my [Bank] colleagues could raise $ billion for poor people and where we could attract those funds from institutions that do not ordinarily lend, directly or indirectly, to that constituency.”

Rotberg opened a trading floor in Bank offices and traded assets at highly competitive yields. By the end of the s, the “pit,” as it came to be called, was earning . percent, or $ million, a year on liquid assets of $. billion (Shapley , p. ). These profits not only funded the Bank’s new palatial headquarters and staff expansion; they enhanced its independ- ence from its Big Five executive directors. This was a major break from the past, when each currency transaction had to be

The Rise of the Bank 

approved by the central bank in the country whose currency was being sold—a disciplinary device imposed by Western bankers and ministers to prevent the World Bank from spiral- ing out of their control.

Rotberg searched the world for underutilized capital. He approached the Japanese for a few billion dollars even though, at the time, their international bond market was relatively small. But he knew they had a high savings rate, and so he tapped into their growing interest in the global financial market (Institutional Investor , p. ). German markets, then the coffers of the capital-flush, oil-producing OPEC members, were equally alluring. Rotberg summarized his strategy in this way: “What one must focus on is who has the wealth, how fast it is accumulating and what kind of instrument do the controllers of wealth want in order for you to take it. Do they want equity? Do they want to be liquid? Long? Short? Leveraged or not lever- aged? Fixed or floating? That is essentially what every govern- ment, private corporation and quasi-public institution has to figure out worldwide. And once you know that, creation of the instrument is child’s play” (Institutional Investor , p. ).

By the s, the Bank was successfully borrowing from countries as diverse as Kuwait, Japan, Libya, and India and was working with large pension funds and multiple broker- age firms, not just the U.S. undersecretaries of treasury. The Bank also diverged from its traditional source of currency, the U.S. dollar, borrowing in franc, Turkish lira, yen, Kroner, bo- livares, and rupees.

The McNamara-Rotberg revolution was as transforma- tive for the World Bank as it was for the world of international finance.13 Because of the Bank’s new ability to borrow globally, it gradually ceased to rely on Northern governments and their paid-in capital. Whereas in  the Bank received $ billion worth of paid-in capital from twenty Western countries and

 The Rise of the Bank

borrowed $. billion from financial markets, by , it col- lected $. billion in paid-in capital and a whopping $ billion from the global bond market (Rotberg ). Its power alle- giances became much more dispersed because it never bor- rowed too much in one place or currency and it worked to cre- ate new markets and investment tools in new locations around the world.

As remarkable as these feats were for the new World Bank, it paradoxically suffered from an inability to stimulate—of all things—demand for its capital. After twenty years, the Bank was still short of borrowers and loan packages that could sat- isfy its rigorous approval requirements. Borrowing countries, soured by political and institutional constraints on the loan- approval process, had difficulty agreeing with Bank staff on projects. To utilize effectively this huge influx of “development capital” required a few more revolutions from above.

A N E W A G E N D A

The World Bank’s first twenty-five years were marked by a cau- tious approach to investment. Most Bank loans went into areas of infrastructure deemed necessary to stimulate economic growth, but not to actually grow the Bank, which would have been frowned on by the U.S. Treasury and Wall Street. To as- sure secure results, the Bank also loaned only to the more affluent countries. From  to , the Bank loaned ap- proximately $ billion, most of which went to high- and middle-income borrowers, including Japan, Italy, France, and the Netherlands.14 When McNamara assumed control, he made public his astonishment about how little the Bank actu- ally loaned in the name of “equity” and “poverty alleviation” and about the failure of its development model in general. In his early speeches and in private, he argued emphatically that

The Rise of the Bank 

most Bank loans completely bypassed the “poorest  percent” (McNamara ; McNamara ).

McNamara, by contrast, wanted to lend to the poorest countries and for concerns that had been consciously avoided by the Bank’s economically prudent managers. In his first pub- lic speech as Bank president, McNamara noted that since , in the developing world “the average annual growth thus far has been .%. . . . And yet . . . you know and I know that these cheerful statistics are cosmetics, which conceal a far less cheer- ful picture. . . . [M]uch of the growth is concentrated in the in- dustrial areas, while the peasant remains stuck in his imme- morial poverty, living on the bare margin of subsistence” (McNamara , pp.  – , as cited in Kapur, Webb, and Lewis , p. ).

In a dramatic shift, he began to use the language and po- litical strategy of “development” rather than “investment bank- ing,” borrowing liberally from old and new political discourses. Whereas today this new development discourse may seem for- mulaic and predictable, for the time, and the institution, it was disconcertingly novel and risky. From the beginning of his presidency, McNamara wanted to put Bank money into the hands of the “absolute poor,” a radical concept to his banking clients. Loan composition also greatly changed as McNamara insisted on shifting the focus to agriculture and rural develop- ment, a sector universally shunned for being much too dicey and unproductive for capital. Yet, McNamara argued boldly that no amount of investment in coal production or port de- velopment would directly help the poor, since their lack of ac- cess to new technologies, capital, and know-how—and their absolute numbers—were the primary reason the investment banking model of development had failed.

According to McNamara, the Bank needed to turn its full attention to third world rural peasants if it wanted to solve

 The Rise of the Bank

the problems of poverty and underdevelopment. From his vantage point, the key question became: what was the most efficient vehicle for reaching the peasantry so that their lives could be transformed? This, of course, was precisely the con- cern of elite policy circles in the nascent U.S. Agency for Inter- national Development, the Council on Foreign Relations, the CIA, and the Defense and State departments, and it reflected the fears of many who believed that the war in Indochina was making it harder to win the hearts and minds of third world peasants, whose participation in rebellions and revolutions around the world seemed to be growing. Perhaps he under- stood better than most from his experience in Vietnam that in- stabilities around the world would not be ameliorated by pri- vate capital investment but required public funding and a more comprehensive approach.15 Hence, over time, the McNamara Bank, with its virtually unlimited access to capital, blanketed whole regions with new kinds of projects, shifting from indi- vidual loans in specific types of infrastructure to society-wide interventions.

In one of his earliest speeches, to the annual meeting of the board of governors of the World Bank in September , he spoke at length on how deep he expected Bank interven- tions to go in “poor” countries: “to help them rise out of the pit of poverty in which they had been engulfed for centuries past. . . . Our aim here will be to provide assistance where it will contribute most to economic development. This will mean emphasis on educational planning, the starting point for the whole process of educational improvement. It will mean ex- pansion of our support for a variety of other educational ac- tivities, including the training of managers, entrepreneurs, and of course, agriculturalists. . . . To carry out this program we hope over the next five years to increase our lending for edu- cational development at least threefold.”16

The Rise of the Bank 

But the most significant expansion was in agriculture, which McNamara defined as the “stepchild of development.” “Here again there has never been any doubt about [agricul- ture’s] importance. Two-thirds of the people of the developing world live on the soil, yet these countries have to import an- nually $ billion of food from the industrialized nations. Even their diet is so inadequate, in many cases, that they cannot do an effective day’s work and, more ominous still, there is grow- ing scientific evidence that the dietary deficiencies of the par- ent are passed on as mental deficiencies to the children” (Mc- Namara , p. ).

To resolve the problem, McNamara proposed to bring to Asia, Africa, and Latin America the green revolution, an inte- grated project of high-yield-variety seeds, fertilizer, irrigation, capital, and technical support. “In the past,” he noted:

Investment in agricultural improvement produced but a modest yield; the traditional seeds and plants did better with irrigation and fertilizer. But the in- crease in yield was not dramatic. In the past twenty years, however, research had resulted in a break- through in the production of new strains of wheat and rice and other plants that can improve yields by three to five times. What is more, these new strains are particularly sensitive to the input of water and fertilizer. Badly managed, they will produce little more than traditional yields, but with correct management they will give the peasant an unprece- dented crop.

Here is an opportunity for irrigation, fertilizer, and peasant education to produce near miracles. The farmer himself in one short season can see the beneficial results of that scientific agriculture that

 The Rise of the Bank

has seemed so often in the past to be a will-o’-the- wisp, tempting him to innovation without benefit.

Our task now is to enable the peasant to make the most of this opportunity. (McNamara , pp. -)

Although McNamara’s idea for poverty alleviation fo- cused heavily on the rural sector and the undercapitalized “small farmer,” his ambitious plans for the developing world did not end there. Whereas in the pre-McNamara era, the Bank loaned no money for primary school education and very little for nonformal education, by the end of his tenure, lending for education increased substantially, almost half of which went to primary and nonformal education to attack the problem of low literacy rates. McNamara also pushed for nutrition, popu- lation control, and health components to rural projects, which represented a marked shift for the Bank; he also increased lending for urban poverty concerns, starting projects for low- cost housing and slum rehabilitation. At first, these invest- ments dismayed the dominant powers in development financ- ing. His staff lacked the resources to fend off critics from the banking sector and to demonstrate how Bank projects would contribute to productive capital expansion and overall eco- nomic growth. By the s, however, these types of poverty al- leviation investments became standard for the Bank, the trans- national development agency network (bilateral aid agencies, NGOs, and charities), and borrowing-state bureaucracies.

O V E R C O M I N G R E S I S T A N C E

Despite the availability of megaplans and money, McNamara learned that it was not going to be easy to embrace his new agenda without losing the confidence of the Bank’s main con-

The Rise of the Bank 

stituents, namely, Wall Street, the U.S. Treasury, and the Big Five political elites. In fact, it required an intensive lobbying effort as well as a whole new discursive approach: the capacity to produce a social imagery to rationalize the lending and bor- rowing of large sums of capital for things other than roads, mines, and power plants, the bread and butter of the old in- vestment regime. To convince institutional investors that the Bank would remain financially strong as it expanded its port- folio to include many more capital-poor countries and invest- ments in such intangibles as poverty alleviation, the McNamara Bank needed to generate a major shift in perceptions and the institutional means to put theory into practice. Even within the Bank, McNamara’s new vision was met with considerable resistance. To win support for his interventionist and expan- sive development agenda, McNamara needed to sell it as ra- tional, politically and economically necessary, and profitable. The effort required a new organizational culture and a much grander development science.

For inspiration and support, McNamara looked outside the Bank’s traditional intellectual and financial networks to new ideas and approaches that were emerging in U.S. and Western European academic and policy circles. If the postwar era from  to  was the “development as growth” era, as economic historian H. W. Arndt has suggested (Arndt ), then the  to  period was the “social objectives” era. Amidst worldwide social protest, such influential develop- ment scholars as Dudley Seers of the Institute for Develop- ment Studies in Sussex and H. W. Singer of the United Nations were officially dethroning the hegemony of GNP (gross na- tional product) as a determining marker of development. Since substantial poverty and inequality could clearly be generated in the midst of high GNP growth rates, Seers and others ar-

 The Rise of the Bank

gued, it was time to discard an approach that was exclusively concerned with economic growth (Arndt ).

The larger political-economic context helped McNamara convince skeptics that his Bank expansion plans were not only sound, but also necessary. Growth rates in high- and middle- income countries were falling, unemployment and poverty rates were rising, and the war in Indochina had substantially weakened the U.S.-dominated world economy. The late s and early s were also a period of street protests and revo- lutionary challenges to colonial and imperial orders around the world, the effects of which were to unsettle Northern po- litical elites, economists, and McNamara himself. Even as sec- retary of defense, he began to borrow liberally from such en- lightened policy makers as Barbara Ward, Mahbub ul Haq, and David Morse (head of the International Labor Organization), and ideas from the decade-old war against poverty in the United States. Moreover, as Bank president, McNamara proselytized alongside powerful third world leaders, such as Indira Gandhi (who called for a “new international economic order” or a rad- ical re-balancing of power between North and South), to ad- dress the poverty question in terms of North-South inequities. If development experts continued to “concentrate on the mod- ern sector in the hope that its high rate of growth would filter down to the rural poor,” McNamara declared in numerous high-profile venues, “disparities in income will simply widen” (McNamara , as cited in Caufield , p. ). Further, he asked, how will the world’s nearly  million people, whom he called “the absolute poor,” continue to survive on  cents a day? Rich countries had the responsibility to redistribute their wealth to the poorer countries, for moral and ethical reasons, as well as the more pragmatic reason of stemming the tide of revolution. Vietnam, of course, was the elephant on the table.

The Rise of the Bank 

R E O R G A N I Z I N G T H E B A N K

Once McNamara reinvented the Bank’s mission, he had to re- fashion the Bank. Robert Strange McNamara had entered the Bank riding on his reputation of having modernized the auto industry at Ford Motor Company and streamlined the Penta- gon as secretary of defense (Shapley ). Described as “an IBM machine with legs” by Senator Barry Goldwater, McNa- mara was one of the business world’s whiz kids who trans- formed corporate managerialism through a completely ration- alized and numbers-based systems analysis. He then went on to be part of the Kennedy and Johnson administrations’ “best and brightest,” the elite Ivy League boys who navigated the country through the tumultuous s and s, albeit not without some very serious miscalculations. To many observers, taking over the World Bank was to be a salve on his tormented conscience (Clark ; Shapley ). As defense secretary, his public speeches claiming “there can’t be security without wealth redistribution to the poor” fell on deaf ears (McNa- mara ); from the pulpit of the Bank presidency, they sounded like prophetic activism. He believed in a frontal as- sault on poverty, but he found the potency of the World Bank lacking. At the Defense Department, McNamara worked with an annual budget of more than $ billion, and he was taken aback that the Bank lent less than $ billion a year. According to one of his senior managers, “He kept talking in billions and then he would correct himself and say ‘I mean millions’” (Shapley ).

McNamara had a well-known history of instilling, for the times, a unique managerial culture onto the organizations he ran. David Halberstam, author of The Best and the Bright- est, explained it as a pathology that allowed him and his col-

 The Rise of the Bank

leagues in the White House to rationalize the devastating war they were supporting. McNamara’s quantifications may have helped numb the public with numbers that the U.S. press by and large accepted as a legitimate language for describing the carnage, but they belied pictures on the evening news as well as the stories from journalists and soldiers. As McNamara’s bi- ographer noted: “He searched out the enemy, poverty, and quantified it. He and his staff at the Bank were trying to iden- tify the  million absolute poor in the fall of . ‘We do not now have all the information we need to identify the different groups in individual countries,’ he said. But they were building a database with ‘present and potential levels of productivity of individuals in each category.’ Some in the Bank objected that counting and classifying people as absolutely or relatively poor was a poor exercise, so to speak. ‘We did a lot of body counting in those days,’ remarks a staffer, not without irony” (Shapley , p. ).17

Moreover, the Bank of the early s seemed an “un- likely vehicle to fix the slums of Calcutta. . . . The  staff members were overwhelmingly Anglo-American . . . men from the former colonies [who] were overwhelmingly angli- cized. . . . Meetings of the Oxford-Cambridge Society were an- nounced in the Bank’s newsletter. The place had the air of a boarding school such as Eton” (Shapley , p. ). The cul- ture of the old Bank was simply not conducive to the McNa- mara regime. As one Bank staffer recalled: “[In those days,] we made a loan to Ghana and then waited for years to see how it came out before making another.” At this rate, progress in the third world would be snail-like at best, a pace McNamara found intolerable. He told his closest aide that this was “an inefficient way to run a planet” (Clark , p. , as cited in Shapley , p. ).

The Rise of the Bank 

Upon taking over, McNamara infused the Bank with the same highly hierarchical and numbers-based managerial style that made him famous at Ford and the Defense Department. He started by changing the organizational structure from one that was fastidious, plodding, and risk-averse, to one that was fast growing, risk-taking, and reached in many different direc- tions. He insisted that staff members not only increase their loan portfolios to include new types of investments to reach the absolute poor, but also that they provide empirical data to justify the risk. In other words, within an ever-shrinking time frame as staff promotions became linked to the turnover time of loans, Bank staff had to simultaneously invent and design new projects, drum up demand for them, and justify through data that these projects were necessary for economic growth and poverty alleviation in borrowing countries and financially rewarding for the Bank’s investors.

McNamara was convinced from early on that academia was incapable of supplying the theories and tools that could help explain and solve the problems he perceived as essential (Stern and Ferreira , p. ). Both the Bank he had inher- ited and the academic professions at large had no good under- standing of, for example, how to get economies to transition from protectionist ones to ones that used price mechanisms and competitive markets as vehicles for luring foreign direct investment. They had no model or formula for measuring and explaining poverty and its rise or fall in connection to specific interventions, such as low-interest credit to small farmers or primary school education to illiterate youth. McNamara had no confidence in the trickle-down theory of growth; he in- sisted economists and development specialists had no idea— certainly not one based on hard, quantifiable facts—how to solve the problems of poverty, malnutrition, ill health, and

 The Rise of the Bank

rapid population growth. His strategy was therefore to create a new paradigm in development thinking: to measure, analyze, and overcome.

In the prevailing culture at the Bank and in the world where Bank staff worked, it had been the self-evidentiary as- pect of their carefully packaged productivity-oriented loans that had kept Wall Street and the Treasury Department con- tent. An institutional support system existed that affirmed and reproduced the Bank’s claims that large-scale infrastructural investments were the way to generate growth and develop- ment in places incapable of achieving them on their own. But no internal institutional support system existed to make Mc- Namara’s audacious claims ring true that “investing in the poor” was the most efficient route to growth with equity in the third world. Nor was anyone in the larger community of con- stituents, development officials, or economists prepared to ac- cept the financial soundness of such investments. That was a perception that McNamara’s team had to create. The World Bank thus became central headquarters for research, eco- nomic modeling, data collection, report writing, and dissemi- nation of information on the so-called less developed world.

The impetus to develop an institutional capacity to jus- tify the Bank’s dramatic expansion and its involvement in new types of work and new experiments in the field of develop- ment rapidly took on a life of its own. The job required data, greater involvement in borrower countries, and the establish- ment of a transnational division of labor that included, over time, the adoption, adaptation, and the indigenization of data collection and project design responsibilities. Following Mc- Namara’s mandate, teams of professional staff and consultants traveled on extended “missions” to conduct economic research. They collected data on standards of living, consumption, pro-

The Rise of the Bank 

duction, and poverty; they also generated analyses of barriers to change, the workings of societal institutions, and the status of natural resources. Staff began to focus their energies on these economic missions as in-country economic analysis and formal policy discussions with borrowers and other key devel- opment agencies became part of their regular mission activity.

G A U G I N G C H A N G E

To see how much the Bank changed under McNamara, it is useful to compare the pre-McNamara Bank with the Bank that emerged after he took control. In the –  World Bank an- nual report, the greatest problem cited for the Bank in its early years was a lack of demand: “The principal limitation on the Bank’s rate of lending has been the limited number of projects or programs presented to it, which were ready for financing and execution. The studies and analyses needed to prepare a project or program are often beyond the capacity of many less developed countries because of the local shortage of experi- ence and of trained personnel” (World Bank , p. ).

To resolve this problem, the Bank’s third president, Eu- gene Black (whose term ran from July  to January ), established a Development Services Department and Develop- ment Advisory Service that offered advice and technical ser- vices in the preparation of loan applications (World Bank ). In , the Bank loaned $. million. Electric power accounted for more than half of the total, with Argentina, Australia, and Mexico receiving the largest loans. Transport, mainly highway construction (an obsession of U.S. industry), comprised the second largest category, with loans going to Japan, Costa Rica, Mexico, Peru, and Venezuela; a smaller por-

 The Rise of the Bank

tion was invested in railways in South Africa and India; and the smallest portion was lent for port projects in India and the Philippines. The only loan for agriculture, for $. million, went to Kenya, for land settlement costs.

Most of the technical assistance in  was directed to- ward very specific pre-loan project assessments, such as a study for a bridge over the Hooghly River in Calcutta, a study of feeder roads in northeast Nigeria, and a mineral survey in Surinam. A Bank mission helped Spain set up a development program, and two-man advisory teams were posted in Chile, one in Nigeria, and a few were assisting Thailand and Pakistan on development investment strategies. One hundred and forty- three government officials attended the Bank’s Economic De- velopment Institute (EDI) ten-week courses in project develop- ment and management. The courses were held in English, with an experimental course introduced in French, and one under consideration in Spanish. Four hundred book libraries were dis- patched to ninety-three different sites in developing countries.

In , a typical Bank loan was described in this way:

South Africa/Railway Loan ($ million, -year  ¾% loan) This loan will help to meet the current investment requirements of a large program of railway expan- sion and modernization of the South African rail- way and harbours. Administration has been carry- ing out since . Earlier Bank loans totaling $. million assisted the program, and the new loan will cover part of the foreign exchange re- quirements for – . About % of the mining and industrial freight of South Africa goes by rail

The Rise of the Bank 

and further investment in the railways is essential to economic growth. The current expansion program involves an increase in capacity, the elimination of traffic bottlenecks and progressive dieselization.

Participations: The New York Agency of Barclays Bank D.C.O; Girard Trust Corn Exchange Bank, Philadelphia; Morgan Guaranty Trust Company of New York; Bank of America, San Francisco; the New York Agency of The Bank of Montreal; Fidelity- Philadelphia Trust Company; the First Pennsylvania Banking and Trust Company, Philadelphia; and The Riggs National Bank of Washington, D.C., were among the banks participating in the loan for a total of $,,. (World Bank , p. )

For technical assistance, the following description was quite common:

British Guiana: The Bank is acting as executing agency for the UN Special Fund project to survey the bar siltation and erosion problems at the port of Georgetown. The field study has been completed and the consultants’ report is in preparation. (World Bank , p. )18

Whereas in , the Bank committed just under $ million in new loans for  projects in  countries (World Bank ), twenty years later, it was committing $. billion in support of  projects in  countries (World Bank b). By , when McNamara retired, projects, and the language to de- scribe them, had changed completely. The Bank was no longer simply providing its clients with money for large-scale infra-

 The Rise of the Bank

structure; it was now training staff, supporting local research facilities, and doing “integrated rural development” as part of its mission, as the following project descriptions indicate:

Brazil: Bank—$ million. To assist the country’s national agricultural research agency in expanding its current research programs and to support sev- eral new programs, funds will be provided to train scientific manpower and upgrade existing research facilities. Technical assistance is included. Total cost: $. million. (World Bank b, p. )

Brazil: Bank—$ million. About , farm fam- ilies and more than , small-scale entrepreneurs will benefit from a second rural development proj- ect in the northeastern state of Ceara that includes agricultural extension services, development of co- operatives, assistance to small enterprises, con- struction of feeder roads, marketing facilities, and irrigation systems, and education, health, and san- itation services. Co-financing ($ million) is being provided by IFADS. Total cost: $. million. (World Bank b, pp.  –)

Cameroon: Bank—$ million; IDA—$. million. The incomes of , farm families living in a Northern province will be increased through im- proved rural infrastructure, effective extension and credit services, training, and research. In addition, financial and technical assistance will be extended to local agencies to plan, monitor, and evaluate a wide range of rural development activities. Total cost: $ million. (World Bank b, p. ).

The Rise of the Bank 

The definition of development’s beneficiaries also changed substantially as the Bank’s annual reports became a discursive tool intended for a broader—and more public—audience. Rather than emphasizing the economic benefits that would flow to Northern firms and investment banks as these entities supplied hardware, technical support, and financial services for projects through the procurement process, the focus shifted to the various civil-society “beneficiaries” of the devel- opment process: for example, the “, farm families” who would be affected by a loan to Cameroon; the local officials, agronomists, and researchers who would receive “scientific

 The Rise of the Bank

Senior government officials participating in an early World Bank training seminar, Washington, D.C., . Courtesy

World Bank Archives.

[To view this image, refer to

the print version of this title.]

manpower” training through various Bank projects; and the research facilities that would be established or upgraded with World Bank capital (World Bank b). In the McNamara years, it became inappropriate to highlight the Northern bene- ficiaries (that is, Northern finance capital) in the loan descrip- tion itself; in their place were development’s new clients—the third world poor. Overall, these were not mere rhetorical changes, designed to satisfy a discerning left-Keynesian politi- cal elite in the North. Rather, they were changes with deep meaningful and material consequences.

The Rise of the Bank 

Men working the railways, Nigeria, . Both this and the facing photograph come from the World Bank annual report of , a time when such juxtapositions were not perceived

as politically awkward. Courtesy World Bank Archives.

[To view this image, refer to

the print version of this title.]

Sowing the Seeds of Bank Power

World Bank power grew remarkably during the McNamara years in ways that have now become commonplace to the world of development and, more generally, North-South rela- tions. Few today would think twice of calling upon U.S. ex- perts to offer their know-how to African or Indian farmers after a bad harvest. The ease with which such information can be transferred reflects the Bank’s success during the s in creating both the worldwide institutional structure and the discursive formations to make such ideas realistic and work- able. Part of that institutional structure included the facilities erected to assist the transfer of green revolution seeds and technologies to major borrowing countries. The World Bank helped bring the green revolution to the South by offering sub- stantial institutional support to state ministries, credit banks, and research centers, and loans for heavy infrastructure, such as dams, power plants, irrigation systems, and agro-industrial factories.19

To boosters like Lester Brown (currently director of the Worldwatch Institute), the green revolution bore “witness to the fact that careful evaluation, sound scientific and economic planning, and sustained effort can overcome the pathology of chronic under-production. . . . A formula for success can be de- signed for any area that has available the new adapted plant va- rieties and the other inputs and accelerators that must be ap- plied in logical fashion” (Escobar , p. ). In practice, the poor’s pathologies were defined in relation to the technologi- cal innovations occurring at international agricultural re- search institutes and agro-industrial corporations.20 Develop- ment planners, meanwhile, began to intuitively “‘know’ that villagers have certain habits, goals, motivations and beliefs,”

 The Rise of the Bank

according to Stacey Pigg, an anthropologist working in Nepal. To the development expert, “the ‘ignorance’ of villagers is not an absence of knowledge . . . [but] the presence of too much locally-instilled belief ” (Pigg , pp. , ). By the s, “miracle seeds” were followed into the third world village by an entire power/knowledge complex based on a specific type of elite knowledge production. This became the terra firma on which the World Bank’s hegemony was constructed. The idea of a green revolution became world-significant primarily be- cause of the size of the World Bank’s financial support, and the new breadth of its development assistance network.

As McNamara sent his staff into the field demanding that they come back with both solid data and projects in hand, the Bank generated its own transnational demand for information about the conditions of the rural poor, transforming the pre- viously imperceptible millions into visible objects of develop- ment. McNamara was dissatisfied with the pace of collecting information. He wanted data collection to match the fast- paced cycle of the Bank’s loan approval process (Kapur, Webb, and Lewis ). To expedite and legitimate new loans, McNa- mara created his own knowledge-generating machinery by adopting two Rockefeller Foundation-funded research centers in Mexico and the Philippines, from which he created the mul- tisited research network called the Consultative Group on In- ternational Agricultural Research (CGIAR). With a growing number of Bank-supported research campuses around the world, the CGIAR quickly became “one of the greatest suc- cesses in the annals of development promotion” (Kapur, Webb, and Lewis , p. ).21 Eventually, there were sixteen insti- tutes comprising the CGIAR system. Through them, green revolution technologies swept the South. In , innovative semi-dwarf varieties of wheat covered less than one-tenth of

The Rise of the Bank 

 percent of the total area planted in wheat in developing coun- tries. By ,  percent was planted with CGIAR-promoted green revolution wheat, with  percent of the total area for wheat in Latin America and India under CGIAR varieties. For rice, by , almost  percent of total area in developing countries was planted with semi-dwarf varieties, with China planting  percent, India,  percent, and the rest of Asia,  percent (Baum , pp.  – ).

Over the first twenty-five years of its existence, the Bank’s CGIARs trained approximately , scientists, many of whom subsequently took up prominent positions as ministers of state, agriculture, and finance (Baum ), as well as CEOs and research directors for major multinational firms (World Bank ). This global research enterprise represented a marked change from the early World Bank, which in  had only twelve professionals working on agriculture, most of whom were experts in drainage and irrigation (Kapur, Webb, and Lewis ). During the McNamara years, the Bank’s agri- culture divisions could not hire staff fast enough (Kapur, Webb, and Lewis ).

As the Bank reinvented the professional landscape in which the international agricultural scientist worked into one flush with financial and political rewards, this science-industry- government network enabled the Bank to overcome the his- toric skepticism of capital markets to invest in rural produc- tion. With its huge spillover effects on industry (e.g., energy, fertilizer, chemical pesticides, synthetic seed, farm machinery), the Bank’s green revolution became extremely lucrative for its Northern clients. The Bank and its bilateral aid partners cre- ated agricultural universities and research and policy centers throughout the South to direct the trajectory of this develop- ment (Anderson, Levy, and Morrison ; Anderson et al.

 The Rise of the Bank

; Stakman ; Wright ). These prominent national institutes attracted development dollars and university ex- changes with American land-grant institutions (e.g., the Uni- versities of Illinois and Iowa) and economic and law depart- ments (e.g., University of Chicago), helping to “Americanize” agro-food systems, property-right traditions and statutes, and trade and investment laws in the Bank’s borrowing countries (Dezalay and Garth ).

Overall, the Bank under McNamara took Norman Bor- laug’s miracle seeds and used them to expand its lending port- folio in many different directions: large dams to electrify and irrigate industry and agriculture, mining and factories for farm-based capital goods, transportation, the development of market towns, and basic education and primary health in the countryside to facilitate the green revolution. But the rapid growth of the Bank’s loan portfolio, associated with this and its other endeavors, eventually led to crippling effects in the South: high external debt, loss of diverse food production, land enclosures that displaced millions of peasants, the dollar- ization and Americanization of food production, and plum- meting food prices due to a worldwide glut in agricultural commodities, for example, U.S. wheat dumped on the world market (Bonanno ; Friedmann ; Wright ). Be- cause of highly imbalanced terms of trade, McNamara’s “end poverty” decade ended with a highly indebted South and a highly stratified farming system.22 With the devastation of local systems of food production and the triumph of export- oriented production, the South became a net importer of foods from the United States and Europe. None of these changes solved the problems of development or significantly reduced absolute poverty. Instead, poverty grew as a result of the Bank’s development industry.23

The Rise of the Bank 

Although highly profitable for foreign investors, the new development regime was too costly for borrowers who did not have the resources to repay the large Bank loans. Combined with the collapse of world food prices and the spike in oil prices, trouble loomed. While the Bank’s newfound large cap- ital assets allowed it to expand beyond its wildest dreams, it also fueled a mounting debt crisis amongst its borrowers.

Debt and Structural Adjustment

The Bank’s long string of loans helped fuel a dramatic increase in the South’s foreign debt, which grew at an average annual rate of  percent between  and  (McMichael ; Mosley, Harrigan, and Toye ; Toussaint ). By the s, much of what the World Bank was lending did not go for bricks and mortar, seeds and tractors, or even research and training; most went to pay the interest on national budget deficits (Mosley, Harrigan, and Toye ; World Bank ). The twin effects of massive borrowing for rural industrializa- tion and the linking of Southern food and agricultural sectors to the consumption of Northern-based capital goods and farm inputs, contributed heavily to the net flow of capital out of the South and into the North.

Although the impending debt crisis could have toppled the World Bank’s stance in the world, the opposite occurred. Because of the vulnerable position of its borrowers and its unique role as development master, the Bank positioned itself as one of the major transnational institutions that could man- age the process of debt restructuring. Despite its deep-seated entanglement in the roots of the debt crisis, the Bank emerged from the era, quite unexpectedly, as the newly anointed global arbiter of debt relations between the North and the South (Gowan ; Helleiner ; Kapstein ).24

 The Rise of the Bank

Ideally, countries could have repaid their development loans from revenues generated from the commodities pro- duced from dams, power plants, and seeds, but the world- market prices of many of the goods produced with Bank fi- nancing had plummeted (George and Sabelli ). Many key commodities that the Bank assiduously promoted for produc- tion across the South were being replaced by commodities produced in the North, such as corn syrup for sugar, glass fiber for copper, soy oils for tropical oils, and synthetic alternatives to rubber, cotton, jute, and timber (McMichael ). By , third world debt had risen to $ trillion and countries were borrowing large amounts from the Bank and IMF just to ser- vice the interest on their old loans. Many African countries were forced to use all their export earnings to service their bal- looning debts.

One of the most significant effects of the debt crisis was the dramatic shift in power that took place between borrow- ing states and the World Bank and IMF. As soon as these sib- ling institutions assumed control of countries’ foreign debts, they required governments to reorganize and reorient their economies. In particular, they pushed them to produce for export rather than to produce for domestic needs, to reduce trade barriers and tariffs, and to open up key public sectors for international competition (i.e., telecommunications, electric- ity and mining, manufacturing, insurance, banking, and trans- port). As private lending dried up, governments succumbed to these pressures and dramatically cut their spending on health, education, and welfare in order to comply with the new con- ditions placed on World Bank and IMF loans.

The ensuing era of structural adjustment was supposed to have been a short-lived “shock” that would help countries adjust to the oil price hike and ride out a two-to-three-year pe- riod of economic restructuring, after which liberalized trade

The Rise of the Bank 

relations between North and South would kick in to draw capital to structurally adjusted countries (Dasgupta ). In- stead, shock therapy became a never-ending cycle of large debt- servicing loans and additional policy requirements that fur- ther destabilized borrowers. By , rather than having a net outflow of capital, the Bank had a net inflow and received far more from its borrowers in the form of loan repayments than it was lending (Dasgupta ; Mosley, Harrigan, and Toye ). By the late s, UNICEF reported that World Bank ad- justment programs were responsible for the “reduced health, nutritional, and educational levels for tens of millions of chil- dren in Asia, Latin America, and Africa,” resulting in a “lost decade” for many of the Bank’s borrowers (Cornia ).

This lost decade for many countries affected Northern interests as well, which only served to deepen the Bank’s in- volvement and commitment to resolving the crisis. For in- stance, in , U.S. banks had almost half their capital in Mex- ican loans at a time when Mexico built up $ billion worth of debt and became unable to pay off its loans (McMichael ). To avert a catastrophe, the World Bank and IMF bailed out overextended Northern banks and investors while forcing a much more interventionist structural adjustment regime on Mexico. In only ten years, Mexico took out thirteen adjust- ment loans from the Bank and six adjustment agreements with the IMF that completely revamped the Mexican state and econ- omy, eliminating food subsidies, rural public agencies, na- tional food security systems, and state-owned food monopo- lies (McMichael ). Yet commercial banks made windfall profits in Mexico ($ million) and, under similar circum- stances, in Brazil ($ billion) (Peet , p. ). By , most new loans across the global South were adjustment loans and a debt-ridden post-Soviet empire had joined the ranks of the

 The Rise of the Bank

borrowers. The Bank’s adjustment regime had definitively be- come global.

With the debt and structural adjustment crises, the Bank reformulated the post- question of democratization and governance, and the green-revolution era concerns with re- distribution and equity, into the neoliberal question of the freedom and sovereignty of capital. The World Bank, IMF, and WTO provoked a global managerial state of mind that eclipsed alternative regional and national politics. If the green revolu- tion transformed North-South relations at the point of pro- duction, giving rise to a new global agro-food system, then the structural adjustment era affected relations at the point of so- cial reproduction, reconfiguring the way in which states and citizens interact, in what can be called the “government of the social” (Polanyi ). Spearheaded by the Bank, these over- lapping regimes of development—poverty alleviation and structural adjustment—only deepened and expanded World Bank power in borrowing countries, intensifying McNamara’s mission beyond his wildest dreams.

These overlapping regimes also reflected a major shift at the Bank and in Washington, as part of the Reagan-Thatcher neoliberal revolution, as well as multiple shifts in many other countries where neoliberal agendas have hatched. Soon after President Reagan selected A. W. Clausen (president of Bank of America) as the World Bank president, Clausen cleaned house of the Bank’s “redistribution with growth” advocates. First he fired McNamara’s chief economist, Hollis Chenery, a world- renowned innovator, and replaced him with Anne Krueger, the Milton Friedman neoliberal. Krueger’s intellectual contribu- tion to the field of development economics was the argument of the “rent-seeking” state as a significant drag on economic growth in the third world (Dezalay and Garth ; Kapur,

The Rise of the Bank 

Webb, and Lewis ; Krueger ); she seemed to be an odd choice because she was not an enthusiastic supporter of the idea of development lending. By the end of the Bank’s  reorganization, many of Chenery’s supporters were fired and nearly  orthodox macroeconomists were hired. This was the final stage of what one Bank official called “economic geno- cide” for the older generation of development economists (De- zalay and Garth ; George and Sabelli ).

Although structural adjustment became, for the World Bank and the IMF, the primary program for all countries with troubled economies, the blueprints for change were based on ascending neoliberal tenets. Known as the ideological founda- tion of the Washington Consensus, the neoliberal agenda did not necessarily originate or evolve in Washington alone. In- stead, the specifics of the agenda were generated through po- litical struggles and compromises unfolding through North- South, as well as World Bank-borrower, relations. This global debt crisis, derived from volatile flows of finance capital in and out of the South, catapulted the neoliberal agenda into the global arena. In many countries, the neoliberal mandate of lowering trade barriers, opening up markets to foreign im- ports, reducing the role of the state in production and social service provision, and eliminating restrictions on foreign cap- ital has led to the destruction of domestic productive sectors. In the s, for example, Michael Manley, then president of Jamaica, described as a “Faustian bargain” the series of struc- tural adjustment policies he was forced to accept, an arrange- ment that subsequently killed off Jamaica’s domestic agricul- ture, dairy, and poultry industries as a result of a flood of cheap imports from the United States (Black and Kincaid ). Moreover, dispossessed rural families had little choice but to work in the new, highly exploitative tax-free enterprise zones

 The Rise of the Bank

that obliged them to compete with the world’s lowest wages (McMichael ).

The Bank’s neoliberal turn was supported by a whole network of policy elites based in Washington, as well as pro- fessional lawyers, economists, business leaders, and techno- crats in capital cities like Santiago and Mexico City, working in a variety of state and nonstate institutions (e.g., universities, the legal system, the private sector, even human rights agen- cies) and pursuing their own national agendas (Babb ). As a consequence, the neoliberalism that evolved in Venezuela looked markedly different than that which emerged in Chile, and both had little resemblance to the prototypes mapped out in Washington. As Yves Dezalay and Bryant Garth brilliantly document, the roots of the idea of the “neoliberal revolution” can be traced through these traveling elites and their institu- tions of training and work, constituting a North-South insti- tutional network of neoliberal “technopols” (Dezalay and Garth ). The production of actually existing neoliberalism was (and remains) a transnational dialectical process, a product of tension, struggle, and negotiated compromise among the World Bank, IMF, powerful bankers and political elites, and scores of actors working in corporations, governments, and professional societies around the world. Under the leadership of the World Bank, one significant strand that has emerged from these transnational institutional practices is green neo- liberalism.

Tensions between the Green and the Neoliberal

After decades of being ignored and dismissed, and after work- ing diligently to create a milieu in which there would be few al- ternatives to its rules, the World Bank of the s found itself

The Rise of the Bank 

firmly at the helm of the world of development. Yet the two transnational institutions in charge of the debt crisis, the World Bank and the IMF, did not have much time to celebrate. As economies crashed and people took to the streets, both insti- tutions became the focus of scorn, anger, and frustration. No longer was the World Bank seen as a dispassionate expert offer- ing technical advice at a distance. Instead, it was blamed for re- duced public spending; mass unemployment; currency col- lapse; rising prices for food, fuel, and other goods; and falling wages and export prices. At the precise moment that the Bank belted itself into the driver’s seat, many of its client govern- ments were on the verge of collapse.

Adding to these pressures was a series of high-profile ac- tivist campaigns directed at revealing and reversing the nega- tive social and environmental effects of Bank projects. The image in the North of the happy recipients of Bank aid—the “objects of development”—was sabotaged as rural peasants and urban laborers began a series of bread riots and project protests, including mass marches and fasts to dramatize their discontent with the World Bank and its policies. In the mid- s, activists “beyond borders” began to organize to increase the effectiveness of their protests (Fox and Brown ; Fox and Thorne ; Keck and Sikkink ; Smith, Chatfield, and Pagnucco ), such that the Bank’s policies and practices in the most remote areas of India, Brazil, and Indonesia became front page news in the North and were the topic of significant parliamentarian and congressional debates in Bonn, London, Tokyo, and Washington (Fox and Brown ). They were also the source of high-anxiety political conflict in the streets of Manila, Jakarta, and New Delhi. The global master of develop- ment was on trial in the world’s court of public opinion.

 The Rise of the Bank

In Thailand, activists protested dozens of destructive dam, mining, and forestry projects in support of the hundreds of thousands of people, especially ethnic minorities, who had been forcibly displaced by Bank projects with little compensa- tion (Parnwell and Bryant ; Rich ). The list of griev- ances included gross human rights violations and the impov- erishment of large rural populations through projects that mostly benefited a narrow set of state-class, urban, and indus- trial interests.25 In Indonesia, protests erupted against the World Bank’s extensive support of General Suharto’s Transmigration Project, a military-cum-development scheme that forcibly re- settled more than two million ethnic minorities from the inner islands of Java and Bali to the outer islands between the mid- s and mid-s.26

Campaigns were also launched against the World Bank’s support of the Narmada Dam project in India, and the Polono- roeste highway project in Brazil. Ironically, the Bank publicly promoted its Polonoroeste project in the Brazilian Amazon as a leading example of sustainable development, suggesting that its five successive loans to Brazil would be the key lever to force a reluctant Brazilian government to take seriously the needs of the indigenous peoples who lived in this region. Others, by contrast, saw this massive highway project as the death knell for the rain forest and its indigenous population, as it would invite millions of colonizers into a region without sufficient state authority to prevent clear-felling the forest and harassing its dwellers—which is precisely what happened. As scholars and activists documented the destruction, this campaign be- came a catalyst for a type of transnational advocacy network- ing that has become remarkably common today (Keck and Sikkink ).

The Rise of the Bank 

The anti-Polonoroeste campaign became a significant threat to more than just the Bank’s work in the Amazon. The exposure of Bank practices evoked strong criticisms on the part of key Northern policymakers. After sitting through more than twenty hearings before the U.S. Congress, in which pas- sionate and media-genic speakers from Amazonian indige- nous groups, clad in their traditional clothing, testified to the project’s destructive effects on their communities, some mem- bers of Congress threatened to cut support to the multilateral development banks, while others became determined to disci- pline the World Bank and impose upon it some form of ac- countability. As conservative Republican Senator Robert Kas- ten noted in , “When people find out what’s been going on, you’re going to see people out in the street saying, ‘My God, did you read this information? Why are our dollars being used to fund this kind of destruction?’” An official in the Treasury Department agreed: “I think it’s a disaster, it’s a mistake, and it’s been going on for years” (Wade , p. ). The fact that this campaign coincided with Bank efforts to request addi- tional commitments from European governments and the United States to replenish the International Development As- sistance (IDA) fund placed the Bank in an extremely vulner- able position.

To survive this onslaught of criticism that shook the con- fidence of Northern policy makers, the Bank responded with stubborn denial and then, when that backfired, with substantial organizational change. Through the efforts of a handful of reform-minded actors within the Bank, the environment be- came the Bank’s chief area of concern. New theories, idioms, images, slogans, departments, priorities, and data were gener- ated at breakneck speed. New World Bank reports determined that there could be no sustained economic growth without a

 The Rise of the Bank

sustainable environment and just treatment of the ethnic mi- norities and indigenous peoples living on fragile ecosystems. Money and other institutional resources were thrown at the problem. As late as , the Bank had only five staff people offi- cially working on the environment; by  it had more than three hundred. In , the Bank loaned less than $ million in the name of the environment; a decade later, it was lending al- most a billion dollars. Between  and , budgetary re- sources for environmental policy, research, and loans grew by more than  percent a year.27 The small Office of Environmen- tal Affairs ballooned into an Environment Department, with a significant body of staff. In , the Bank established a new vice presidency for environmentally sustainable development.

By the mid-s, environmental issues had become so central to the Bank’s identity and work that its clients could not borrow until they had signed off on a National Environ- mental Action Plan (NEAP), which committed them to “main- stream” their environmental concerns in national develop- ment policies. Large-scale projects were no longer approved by the Bank’s executive directors without rigorous environmental and social assessments based on a scientific protocol that the World Bank, meanwhile, was busy inventing. The Bank im- posed on its borrowers “environmental adjustment” policies throughout the s (often in concert with its fiscal structural adjustment policies), which pressed governments into creating cookie-cutter-like environmental protection agencies; redraft- ing forestry, land, and water laws; establishing national envi- ronmental policy and research institutes; and training a cadre of professionals to carry out environmental reforms. These in- terventions attempted to make national standards more com- patible with a set of “global” standards that the Bank and its partners were working hard to create at the same time.28

The Rise of the Bank 

Conclusion

Although its birth in the mid-s reflected a noteworthy event in postcolonial history, the World Bank became a powerful or- ganization only two decades later, under Robert McNamara’s leadership. McNamara seized the opportunity to expand the Bank’s role in the global economy at a pivotal moment when U.S. hegemony was being challenged by Europe, Japan, and the oil-producing OPEC nations, on the one hand, and by anti- colonial insurgents throughout the South, on the other. Under McNamara’s stewardship, the Bank instigated new transna- tional spheres of political and economic influence in which it and Southern professional supporters worked together to pro- duce a new regime of development. McNamara’s remarkable system of knowledge production and dissemination enabled the Bank to lend substantial amounts of capital and influence decision making within borrowing-country institutions as it never had been able to before. Even after McNamara’s retire- ment and major changes within the Bank, McNamara’s mark on the Bank helped it to overcome threats to its authority and legitimacy and to grow stronger and more powerful, as it had after the debt crisis and the anti-Bank street riots and mass protests of the s.

In the late s, the environment became a category of broad significance in the world of development in part be- cause of the widespread ecological and social devastation that resulted from Bank projects and policies. To survive the on- slaught of criticism that made the Bank into an institution non grata and attracted the critical eye of Northern policymakers, the Bank was forced to engage in major organizational reform. Remarkably, by the late s, the World Bank was setting new global standards for environmental management and regu-

 The Rise of the Bank

lation such that by the early twenty-first century, no inter- national organization could afford to stake a position without working through the parameters set by the Bank on issues that range widely from biodiversity and sustainable forestry, to poverty and public health, to fundamental rights for indige- nous peoples to access environmental resources, to society- wide rights to access safe water. The Bank responded to its crit- ics with renewed vigor, increases in finance capital, and global expansion.

The greening of the World Bank has successfully engaged numerous governments and development and environmental activists, as well as Bank investors and borrowers, proving to many skeptical observers, including those within the organiza- tion, that it could lead on the environmental front without compromising its “AAA” bond ratings. But transforming this massive technocratic hulk from culprit to vanguard would not be an easy job.

The Rise of the Bank 