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By Tom Gara

Who really loves the World Bank? The institution often seems cornered from all sides, detested with equal vigor across the political spectrum.

“The ironclad connection between military aggression and economic domination has never been clearer than with the appointment of Paul Wolfowitz to head the World Bank,” said Leslie Cagan, national coordinator of United for Peace and Justice, the largest antiwar coalition in the United States, about the former World Bank president. (Wolfowitz was forced from the World Bank after an ethics scandal.) “He is changing offices but continuing to do the work of coercing the rest of the world to accept the dictates of the US government.”

Conservative political voices aren’t much friendlier, with the CATO institute, one of the most influential conservative think-tanks in the world, stating in a recent analysis that the Bank is “helping Third World governments cripple their economies, maul their environments, and oppress their people,” and that although founded with good intentions, the Bank “now consistently does more harm than good for the world’s poorest.”

In Egypt, as in other developing nations where the World Bank has been active for many years, sentiments toward the institution and the international economic order that it represents are rarely positive. It is a challenge that Country Director Emmanuel Mbi, a native of Cameroon with more than 30 years of experience in the organization, is long accustomed to dealing with.

“You have to expect this kind of suspicion or criticism,” says Mbi, “because to the common man, what we do is not well understood. While we are working with governments, looking at areas like financial reform and infrastructure development, they are wondering when their salaries will rise, where the food will come from.”

Media images of rioting anti-globalization protesters from Buenos Aires to Manila, all expressing a common sentiment of rage toward the World Bank and similar institutions, further the impression to the layman that the work of the Bank is a world apart from the needs of the poor. What exactly it is that the bank does, and why and how it does it, remains a shady area for most.

In July 1944, with the Second World War still raging in both Europe and Asia, representatives of the 45 Allied nations gathered together in a ski resort in New Hampshire, aiming to reach an agreement on an international financial and monetary order to be established once the war ended.

The eventual agreements, reached after more than three weeks of negotiation, were named after Bretton Woods, the alpine location of the meeting. The Bretton Woods system, which outlined common monetary and financial policies and standards to be implemented by the ratifying countries, was the first truly international system for governing financial relations between countries. Sixty years later, the legacy of the Bretton Woods system lives on, with its founding ideals and policies remaining central to the world economic order.

Emerging from these agreements was a family of institutions, now known as the World Bank Group (see box), established to ensure the sustained success of the new international system. Although many aspects of the system (such as the ‘gold standard’ for currency convertibility) have since collapsed, the Bretton Woods institutions survive to this day, with a mission considerably more diverse than their original mandates.

The World Bank Group comprises five institutions with the declared mission of reducing poverty. Its highest-profile organizations are the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), which are together known simply as ‘the World Bank’.

Both the IBRD and the IDA work exclusively with national governments, employing a combination of loans, guarantees and technical advice that support the efforts of these governments to grow their economies and eliminate poverty. The IDA works with the world’s poorest countries, typically those with a Gross National Income (GNI) per capita of less than $1000, although exceptions are made. The IBRD works with what it describes as “middle income” countries, ranging from relatively well-developed former communist states such as Estonia and Latvia to the belt of North African countries from Morocco to Egypt.

As incomes rise over time, countries progressively ‘graduate’ from the IDA to the IBRD, and with this graduation comes a transition in priorities. The IDA focuses its support on the essential areas needed as a foundation for development: primary education, basic health services, water and sanitation. As countries move up and become involved with the IBRD — as Egypt did in the mid-1990s — support shifts toward economic development, institutional reform, productivity, human capital growth and similar second-tier priorities.

The World Bank in Egypt now finds itself active in a number of areas of reform and development. “There is no one ‘big bang’ thing that needs to happen in Egypt,” says Mbi. “The focus now needs to be on sustaining the reforms, sustaining the economic direction and the very positive trends we are seeing in both local and foreign investment.”

With an expressed mission to reduce poverty and increase standard of living, the World Bank is acutely aware of the fact that disposable incomes in Egypt are either stagnant or falling, and that for the large part, the fruits of five years of reform and economic growth have yet to be tasted by those outside of the country’s economic elite.

According to Mbi, one of the greatest challenges to economic reform in a developing country is keeping reform politically sustainable during the painful adjustment period, the lag time between reforms and corresponding increases in real wages and standard of living. “The poorest people, who are hungry and who need jobs, they won’t wait for 10 years,” he says. With the dual blows of inflation and stagnant incomes having a very real impact on the lives of tens of millions of Egyptians, the temptation to appease public sentiment and back away from controversial reforms is high.

For Mbi, one way to keep reforms moving ahead while addressing the real challenges experienced by the country’s poorest is to actively direct economic development to the places most in need. “Go out and find where these people are, what it is that they need — jobs, social services, infrastructure — and target these people with your programs,” he says, singling out Brazil as an example of this principle in practice. Brazil, with a GDP that tops $1 trillion, the ninth largest in the world, has brought tens of millions of Brazilians into the middle class in the last decade, although income disparity there remains among the highest in the world.

In Egypt, World Bank loans and advice are contributing to projects ranging from water and air quality initiatives to the construction of Cairo International Airport’s third passenger terminal and the recently opened new terminal at Sharm El-Sheikh airport. A loan of $335 million dollars was made for these two airport projects, accounting for more than half of the total cost to construct the two new terminals.

Another member of the World Bank Group, but independent of the IBRD and IDA, is the International Finance Corporation (IFC), which promotes economic development by working exclusively with the private sector. Egypt is one of the most active countries in the world for IFC activity, and in recent months the IFC has given loans to private businesses here within the oil and gas extraction, fertilizer production, and retailing industries.

High-profile companies such as poultry and processed foods producer Wadi Holdings and retailer Omar Effendi have utilized IFC loans to grow their businesses. The Indian-Egyptian Fertilizers Company (IFFCO) recently announced the establishment of a $325 million fertilizer factory, supported by IFC loans, in the Upper Egyptian city of Aswan. The factory is set to provide much-needed jobs and economic stimulation in a region hungry for development of industries outside of tourism.

Opinions of an institution as large and influential as the World Bank are guaranteed to be strong, particularly when the institution is intimately involved in politically and socially contentious areas such as privatization and economic liberalization.

Mbi believes that one weakness of his organization has been in its communications, most specifically in its ability to explain what it does and how it benefits everyday people in a language and style understood and accessible by non-experts. The Bank is well known in academic and policy circles for its information-dense, highly technical reports, which often run to the hundreds, if not thousands, of pages. “But we often do not do enough to speak to the working man,” Mbi admits, “to the father or mother who needs to know how our work will benefit their families.”

It is this kind of understanding, not just in Egypt but across the developing world, that is the Bank’s best hope for shifting perceptions of its purpose and actions. With the government here firmly dedicated to the kind of neo-liberal economic agenda typically promoted by the World Bank, and numerous Bank-funded projects taking off across the country, it seems that the environment is right for a true test of the Bank’s wisdom. The results of the work of Mbi and his staff in Egypt will speak louder, and more conclusively, than anyone.

According to its Country Assistance Strategy for Egypt in 2006-09, the World Bank will support the government in achieving three key strategic objectives:Private-sector development

Improving the efficiency and responsiveness of the financial sector

Lowering the transaction costs for international trade

Lowering the transaction costs for opening, running and shutting down a business

Ensuring that fiscal and monetary policy promotes macroeconomic stability

Supplying and improving infrastructure services (power, transportation, telecommunications, etc.)

Improving quality and relevance of education

Improving air and water quality

Increasing coverage, quality and sustainability of the social insurance system

Creating greater accountability for public-sector agencies

Improving the coverage and effectiveness of social safety nets

Reducing disparities between Upper and Lower Egypt

Reducing gender disparities bt

(Source: World Bank)