Christian Aid is deeply disappointed that the UK government is to increase its funding to the World Bank to £2.134 billion over three years, despite the fact that the Bank continues to attach harmful economic conditions to its loans to developing countries.
'Channelling funds through the World Bank undermines developing countries attempts to find their own way out of poverty,' says Alex Cobham, Christian Aid policy manager.
'It is deeply undemocratic if economic conditions are applied that effectively force governments in developing countries to ignore the mandate of those that elected them.'
'This represents a complete reversal of government policy.'
In 2006, the then development secretary, Hilary Benn, threatened to withhold £50 million's worth of UK funding if the Bank did not stop pressuring poor countries to privatise key industries and lift tariff barriers.
'Despite Gordon Brown’s rhetoric about the UK’s responsibility to help the world’s poorest, the new prime minister has presided over a complete reversal of government policy towards withholding funds from the World Bank. The government is now channelling more funds rather than less,' added Cobham.
At issue is the Bank’s practice of requiring countries to modify their economic policies in exchange for loans and debt relief. These changes generally benefit European and US investors much more than the people living in developing countries.
Conditions - the damage continues
After Mr Benn’s intervention last year, the Bank made a commitment to cease attaching harmful economic conditions to the money it lent.
However, the World Bank’s own conditionality report, released earlier this month, shows that the average number of conditions attached to each one of its ‘policy-based operations’ has remained in double figures for each of the past three years, in contrast to some improvements in previous years.
Norway has withheld more than 20% of its funding.
The Norwegian government has decided to withhold more than 20% of its planned increase and has mentioned its concerns at the continuing damage caused by conditionality. The UK has decided not to use its potentially much greater influence in this way.
Douglas Alexander, the current international development secretary, said: 'The World Bank is the most effective multilateral development institution and plays a critical role in helping accelerate progress toward the millennium development goals.'