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The Ethics of the World Bank

Posted By Nick Alexandrov On January 27, 2014 @ 7:21 am In article,articles 2014
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The World Bank’s Office of the Compliance Adviser/Ombudsman (CAO) determined on January 10
that the Bank’s private-sector lending arm, the International Finance Corporation (IFC), violated
“its own ethical standards” when it “lent millions of dollars to a Honduran palm oil company
[Dinant Corporation] accused of links to assassinations and forced evictions,” Nina Lakhani
reported in the Guardian. Were this true—had the Bank really acted against its principles,
displayed over decades of consistent action—then the appropriate response would be global
celebration. But the IFC-Dinant incident is just the latest chapter in a miserable story.

Consider, for example, Honduras in the ’90s, when a “paradigm promoted by the World Bank”
spurred “a massive re-concentration of land in the Aguán”—the valley where Dinant operates
—“into the hands of a few influential elites,” Tanya Kerssen writes in Grabbing Power, her superb
study. These land barons, particularly Dinant’s owner Miguel Facussé, thrived as “the Aguán
cooperative sector was decimated,” some three-quarters of its land seized. Campesinos,
suddenly dispossessed, first sought legal recourse, which failed. They subsequently “protested
and occupied disputed land,” Rights Action’s Annie Bird writes in a crucial report, prompting
government authorities to review the legitimacy of Bank-assisted territorial transfer. But the
June 2009 coup ended this appraisal. Four School of the Americas (SOA) graduates directed
Manuel Zelaya’s removal from power—“a crime,” a top Honduran military lawyer, himself an SOA
alumnus, admitted, and proof “that the Obama administration had as weak a commitment to
democracy, human rights, and the rule of law as the preceding U.S. presidency,” British scholar
Julia Buxton explained. Since then, Bird observes, Honduras’ 15th Battalion, Washington-aided
“since at least 2008,” has “consistently been identified as initiating acts of violence against
campesino movements,” with police forces and Dinant’s security guards getting in on the kills.
The CAO paper puts the number of peasant murders since January 2010 at over 100.

Four times as many Guatemalans died in one massacre over three decades ago—another chapter
in the Bank’s tale. The slaughtered, presumably, failed to understand that they had no special
claim to the land, which was repurposed to serve the Chixoy Hydroelectric Dam’s needs, and
cleared of whatever humans cluttered the landscape. The World Bank and the Inter-American
Development Bank supported the project first in the late ’70s, and then—to silence any doubters

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—again, seven years later, as “state terror reached genocidal proportions,” the Guardian’s Nick
Dearden writes. The savagery peaked when Ríos Montt, another SOA graduate, ruled from 1982-
83. His official policy “aimed at massacring thousands of indigenous peasants,” according to the
National Security Archive, and succeeded in this regard, wiping out some 600 Mayan villages.
Bank officials, for their part, had concluded in the early ’70s that Guatemala’s dominant
institutions were inherently rotten. The officials’ views were “uniformly critical and often
scathing,” the Brookings Institution’s history of the Bank reveals, failing to mention the Bank’s
crucial role in perpetuating Guatemalan inequities. And this “assessment,” furthermore, “did not
change over the decade.” It was an appropriate judgment of the regimes Washington backed
after ruining the country’s democratic experiment in 1954, the year Jacobo Árbenz was deposed
—but also wholly compatible with uninterrupted loans.

Money flowed into Pinochet’s Chile as well. “The World Bank and the Inter-American
Development Bank extolled Chile as a paragon of responsibility,” Greg Grandin writes, “advancing
it forty-six loans between 1976 and 1986 for $3.1 billion,” a decade witnessing “a spectacular
transfer of wealth to the private sector,” the handover eased by the state terror campaign the
U.S. championed. In 1976, Secretary of State—and Nobel Peace Laureate—Henry Kissinger, in
Santiago, personally assured Pinochet that Washington was “sympathetic with what you are
trying to do here.” What the dictator was “trying to do,” historian Steve J. Stern determined, was
promote “policide,” by “building a regime of systematic violence and fear so that the old ways of
understanding, organizing, and practicing politics could be annihilated and replaced by
technocratic and authoritarian governance.” “Roosevelt lost the war,” Guatemalan President Juan
José Arévalo, Árbenz’s predecessor, remarked in 1951, foreseeing his own country’s slide towards
policide. “The real winner was Hitler.”

A quick survey of Honduras today reveals the winners there. Kerssen quotes a peasant,
interviewed by journalist Giorgio Trucchi: “Since our lands were taken away, the money supply
throughout the Aguán has decreased dramatically,” the man began. “Unemployment and
underemployment increased, as did hunger and despair. Now, workers don’t even have enough
money to buy food for the entire month.” A related problem, Peter J. Meyer points out in a
Congressional Research Service report, is that “misused government funds” and “weak tax
collection” have helped bankrupt the post-coup Honduran state, which no longer pays many of its
workers. It’s wage slavery without the wages, as nurses, doctors, and educators toil with no
hope of adequate compensation. The Center for Economic and Policy Research noted recently
that over 43% of Honduran workers labored full-time in 2012 for less than the minimum wage,
as the extreme poverty rate climbed to 46%. And the killings continue. Annie Bird reports that
Juan Ramón “Mejía’s body was found on the side of the road” in January 2010. José Leonel

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Álvarez Guerra, in April 2010, was “[s]hot five times by two assassins on a motorcycle who
awaited him outside the home of his in-laws where his wife was staying in the final days of her
pregnancy. He was killed in front of his wife and children.” Jacobo López “Erazo left his home in
the town of Quebrada Seca at approximately 4am to go to work” in July 2012, “but upon entering
his vehicle multiple assassins shot him,” and he died immediately.

If the Bank were honest about its “ethical standards,” photographs of these victims, only three of
dozens, would have featured on the “End Poverty” banner draped over its headquarters’ façade in
Washington last year. Instead, passers-by saw images of a smiling nurse, a focused construction
worker, inquisitive children—futures being terminated, right now, for Hondurans who lack even
the most basic rights, thanks to the Bank’s policies.

Nick Alexandrov lives in Washington, DC.

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