What makes the WB, IMF work for capitalist states?

The Second World War took place in previous century, in 1939. World economy was about to collapse at that time. Around 1943-44, it became clear that the world war was coming to an end. It was also distinct that United States of America, Britain and Soviet Union led allied force was going to win the war. The fact was that Germany and Japan were to be defeated turn out to be obvious. How the world would run, especially what to do in the post-world war economy was the prime motive of establishing World Bank and International Monetary Fund (IMF). Aside from that, negotiations to divide the assets of the defeated parties soon began. A convention on the structure of global economic institutions was held in the United States during that period. John Meiners Kein, a renowned economist, attended that convention.

Holding the seminar in the US has significance, before Second World War, Britain used to be the center of the capitalist system. As a result, post war world economic discussion was supposed to be held in Britain: however, the fact is, the momentums of world economy rapidly shifted from Britain to America. The USA accumulated a great amount of power through the war and became the leader of world economy.

States under European Union were most damaged in the war. America got effected but compared to the others it was lower. Rather the USA got the chance to prove itself as the most influential entity regarding economic and military power.

As a reflection of this fact, the seminar on world economy took place in the USA. Whenever any policy-making convention or seminar takes place in a country, the state automatically gets some influence on the concern. America did the tusk competently indeed. World Bank and IMF were established through that conference.

Primarily the name of World Bank was International Bank for Reconstruction and Development. Since post world economy was to be reconstructed in the first place. On the other hand, IMF was assigned to coordinate world monetary system. Soviet Union was a threat to the capitalist world.

Soviet Union was one of the greatest supremacies in Second World War. The USA or Britain did not want Soviet Union to influence the world. That is the reason why they tried to build an institutional structure which would preserve the interests of the USA and the other capitalist states. They built the structure of controlling capitalist economy. They established World Bank and IMF to secure the future of the USA and the European states.

If we look closely, we can observe that neither the World Bank nor the IMF ever make decisions or implement plans that conflict with the interests of the US or the global capitalist system. The IMF and World Bank were founded in 1944. It was established during the World Bank's founding that the president would be an American citizen. That is, a citizen of the United States of America is the only person eligible to lead the World Bank. It is expected that the person in charge of an organization will have authority over its operations. Additionally, the United States Ministry of Finance will serve as the primary patron of the World Bank. And the head of the IMF will be a citizen of a European Union country. Thus, they share the stake among themselves for governing the international economy.

Subsequently, we observe that the World Bank and the IMF continue to strive to defend the interests of the US and the EU, two capitalist nations. The course of action is still in place. The World Bank and the IMF stand out from other international organizations and financial institutions that lend money or offer other financial support to various nations for a variety of reasons. To put it more clearly, there is a connection between the terms that the World Bank and the IMF place on loans to certain countries. Other international lending organizations lend to a country without reluctance if the IMF decides to do so. It was mentioned by an advisor to the government of Bangladesh that the IMF loan functions similarly to a character certificate. When the IMF decides to lend to a country, other lending organizations lend to it without hesitation.

Through the World Bank and the IMF, the United States and other capitalist nations impose their interests on the borrower nations. The poor countries' ability to independently decide on economic policy is essentially eliminated, especially if they accept loans from the World Bank and the IMF. It is crucial to note that the lending conditions imposed by the World Bank, and particularly the IMF, are consistently the same. For countries that are relatively weak in terms of economic stability, IMF and World Bank lending conditions are relatively strict. And lending conditions to countries with strong financial fundamentals are relatively easy. It is mainly for this reason that developing countries never want to accept loans from the IMF unless they are absolutely insolvent.

Certain groups will undoubtedly dominate the development trend of the respective country if the loan is approved under the terms set forth by the IMF. The World Bank and IMF do not aim to promote the development of the borrower nation. Their job is to guarantee that the interests of multinational corporations, including the United States, are safeguarded in every nation on earth. Their goal is to maintain control over the borrower country. Aside from this, the World Bank and the IMF have direct or indirect influence over international politics. Both the World Bank and the IMF place restrictions on a nation when the US is at disagreement with it. There is the World Bank's own ideological framework.

This ideology serves as their guide. In Bangladesh, plenty of economists follow the World Bank's philosophy. The majority of Bangladeshi economists agree with the World Bank's positions on a range of economic matters. There is always some sort of synergy between the World Bank's and the IMF's work. The moniker "Two Sisters" is primarily attributed to these two establishments. The World Bank will not finance any new projects in a country unless the IMF gives a green signal to that country. Similarly, if the World Bank is not satisfied with a project, the IMF will not finance it.

Bangladesh is already a heavily indebted nation. As a result, taking out loans from organizations like the World Bank or the IMF in the future should be carried out with caution. Bangladesh's increasing dependency on borrowings from both foreign and domestic sources makes cause for alarm.

There are distinct goals for both the World Bank and the IMF. Among these, transferring all state-owned institutions and resources to private enterprises is a major agenda component. The second is to sell and privatize the state-owned service organizations that are currently in place. The cost of manufactured goods rises with the privatization and commercialization of public companies.
Removing subsidies from the agricultural industry and other similar sectors is another of their objectives. In our country, healthcare and education have become so commercialized that spending on both has exploded. World Bank requirements have ruined Bangladesh's jute industry.

The World Bank and IMF conditions are primarily responsible for the rise in domestic market prices for gas, electricity, fuel oil, and other commodities. The IMF discusses cutting back on subsidies in a number of industries, including agriculture, but they never explain why the subsidies are still into effect.

The agricultural sector receives substantial subsidies in developed nations, such as the European Union, but the IMF and World Bank remain silent about it. Contrary to this, in a nation like ours, attempts to subsidize the agricultural sector end in ablaze. In Bangladesh, the power industry now receives more subsidies. It has not increased to offer affordable electricity to the general public. It has evolved to unethically benefit particular corporate groups.

Author: Economist and former professor, Department of Economics, Jahangirnagar University

Transcribe: M A Khalek

Translation: Umme Rayhana