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The oldest of the World Bank agencies - the International Bank for Reconstruction and Development (IBRD) - was set up in 1944 at a conference convened in the town of Bretton Woods, New Hampshire, at the end of the Second World War with the original intention of providing low interest loans to Europe and Japan to help rebuild their infrastructure after the devastation of the war. This plan was scuppered when these countries opted instead to take money from the United States Marshall Plan, which provided grants (money that does not have to be repaid), for the same purpose. Over the next few decades the IBRD rewrote its original mandate to provide cheap loans to the Third World instead.

The two men who shaped the institution were probably John Maynard Keynes, the brains behind the Bretton Woods conference (also the architect of the Gross National Product economic indicator) and Robert McNamara, who headed up the World Bank in the 1970s, after he left his job at the Pentagon spearheading the Vietnam War for the United States. Today the IBRD's policies are dictated by the member countries who run the institution. Although almost every country in the world is a member, the agency is ruled on the principal "one dollar, one vote" and so it is controlled by the US, the UK, Japan, Germany, France, Canada, and Italy -- the "Group of 7," which holds over 40% of the votes on their boards

In fiscal 1999, the IBRD loaned out US$22.2 billion, up from US$21 billion dollars the previous year, making it the biggest source of development capital for Third World countries and the former Soviet bloc. Many of these loans are for major industrial development projects like dam building, power plants and mining for non-renewable resources like gold and copper. In addition the IBRD dispenses loans for social matters such as education and health but these loans are often linked to strict economic policies such as Structural Adjustment Programs that have often exacerbated local problems. Finally because these loans are often designed in Washington by the Bank's own staff, they often reflect theoretical models that have little relevance in the borrowing countries.

A leaked May 1999 draft Bank review of structural and sectoral adjustment loans severely criticized their treatment of environmental and social issues. The review assessed 54 such loans approved between July 1997 and December 1998 and found that only 20% contained a environmental goals or conditionalities - down from 60% in 1994. Furthermore, according to the document, ''the majority of loans do not address poverty directly, the likely economic impact of proposed operations on the poor, or ways to mitigate negative effects of reform.''

Although most projects did achieve their short-term physical objectives, according to the report, only 44% were likely to be sustained after completion - largely because staff appraisals underestimated the projects' recurrent costs, which would have to be borne by the agency's borrowers.

The IBRD makes loans to countries at the best possible market rates because its bonds have the highest possible credit rating on Wall Street. The agency has this high rating because almost all its borrowers pay their loans back on time, although the way many borrowers do this is by taking out fresh loans. In fact the Bank often receives more money in debt repayments than it makes in loans. Contrary to public opinion, the agency is not even a non-profit organization: the Bank routinely makes a billion dollars in profits every year on the loans it makes.

IBRD has three major sister agencies - the International Development Agency (IDA), the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency. These four and the much smaller International Center for the Settlement of Investment Disputes (ICSID) make up the World Bank group. Unlike the IBRD the IDA makes loans at almost no interest over much longer periods of time (a 0.5% handling fee is charged) to the poorest countries. This agency loaned out US$6.8 billion dollars in fiscal 1999, down from the US$7.5 billion dollars that it loaned out in 1998.

The IFC and MIGA do not make loans to countries. Instead the IFC makes loans to private corporations that have projects in the Third World and former Soviet bloc. This includes major multinational corporations like Shell and Coca-Cola. MIGA provides political risk insurance to companies that are worried that their assets may be seized by local governments or destroyed in war or other civil disturbances.

The region that received the most loans from IBRD and IDA was East Asia and the Pacific, struggling to recover from the financial crisis of 1997-98, with US$9.8 billion, followed by Latin America and the Caribbean with US$7.7 billion. The region suffered ripple effects from the East Asian meltdown as well as the ravages of Hurricane Mitch, which struck Central America in October, 1998. Europe and Central Asia came third, with US$5.3 billion in new commitments, followed by South Asia US$2.6 billion, sub- Saharan Africa with US$2.1 billion and the Middle East and North Africa with US$1.6 billion.

Argentina is the Bank's largest borrower with US$3.2 billion in commitments from the Bank in fiscal 1999, followed by Indonesia, with US$2.7 billion in commitments, China with US$2.1 billion, South Korea with US$2 billion, Russia with US$1.9 billion, Brazil with US$1.7 billion, Thailand with US$1.3 billion, India with US$1.1 billion, Bangladesh US$1 billion, and Mexico with US$950 million.

Financing designed to support over-arching policy themes such as privatization of state enterprises and commercialization of services dominated the new commitments, with loans for 'multi- sector' projects and policy reforms amounting to US$10.3. Some US$4.5 billion went to transportation, industrial, oil and gas, energy and mining projects, with another US$2.8 billion for agriculture, US$753 million for water and sanitation and US$647 million dollars for urban development. Population, health and nutrition projects accounted for another US$1.1 billion dollars. Education garnered US$1.3 billion and US$2.7 billion were earmarked for social programs. Environmental lending amounted to US$540 million.

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