By John Green
This book reveals the intricate and up to now, untold story of the World Bank and its relationship with Latin America during the Cold War.
The World Bank (WB) was established in the aftermath of the Second World War in an attempt to address the needs of economic co-operation and global economic stability. It became the most influential financial organisations globally, directing the development agenda and providing financial and technical assistance for thousands of projects in developing countries worldwide.
It was established at the Bretton Woods Conference in 1944 along with the International Monetary Fund. The WB became a central pillar of the Liberal International Order (i.e. the imposition of market capitalism) that the United States promoted in the post-war period.
To begin with it granted reconstruction loans to a war-torn Europe, but later expanded its role to middle and low income countries, beginning with Chile in 1948. Over time the bank evolved into a powerful institution that supported development projects but at the same time advocated sweeping structural reforms, as it did in Latin America following the debt crisis of the early 1980. It also oversaw the transition of the former Soviet bloc from socialism to capitalism.
From an initial membership of forty-five Western states, the WB evolved into an almost universal institution with 189 member states today (the UN has 193 member states).
Although the WB has nominal autonomy, it has been and still is tied in closely with US political aims and financial interests. It has been, Kedar writes, “largely designed and funded by the US government, invariably headed by a US citizen and symbolically located within walking distance from the White House”.
Claudia Kedar’s book examines closely the role of the WB, largely through the lens of its relations with Latin America and particularly Argentina.
She writes that the WB can’t be looked at in isolation. Based on the premise that
The Bank’s leading operations are just the tip of the iceberg, she writes, decoding the Bank’s black box requires delving into the negotiations and decision-making processes driving both its lending and non-lending decisions. Looking at detailed case studies represents a first step in understanding how the Bank works. Her book provides a comprehensive exploration of the WB’s pivotal role during the Cold War in Latin America.
The WB was instrumental in persuading Argentina and other Latin American borrowers to adopt policies advocated by Washington. This was all part and parcel of US attempts to contain communism and ensure countries in Latin America, Asia and Africa remained anchored in the Western orbit.
Kedar emphasises that, “although the WB’s management and staff may have strived to comply with the Bank’s supposed commitment to political neutrality, they frequently found themselves serving US Cold War interests”.
She argues that the WB did struggle to shield itself from the constraints of the Cold War, but emphasises that this struggle “was Sisyphean due to the DNA of the WB, which bore the genes of the United States, its primary architect and most influential member-state. “Additionally,” she writes, “during the Cold War, the WB depended on US financial support. In a conflict where any departure from economic orthodoxy was perceived as a potential risk to the US-led Liberal International Order, the WB’s policy recommendations were an integral component of the Cold War dynamics’. Kedar bases her arguments on a whole cache of recently declassified files from the WB archives and other primary sources. These demonstrate clearly that Argentina’s retreat from the “statism”, interventionism and economic nationalism of the 19409s and 50s to a more orthodox capitalist model was a policy pursued relentlessly by the WB. This pattern could be seen throughout Latin America.
Through its close examination of the Bank’s interactions with Argentina, one of Latin America’s largest economies and an influential actor in the region, the author provides revealing insights. She closely examines the dynamic, and often fraught, relationships between Argentina and the USA, and exposes the ideological impact of the Cold War on those relationships and the promotion among “Third World” countries of developmental models rooted in Western notions of progress and modernisation. Argentina still today, despite increasingly large loans from the WB is still experiencing serious economic problems, widespread poverty and inequality.
What becomes very clear from the author’s investigations, is that the WB was primarily a means of imposing Western i.e. a US model of capitalism on all those countries which accepted its loans. These loans, despite their avowed intention of stimulating development, often created situations of dependency and certainly rarely helped true national development, nor did they help overcome crass social inequality. The WB appeared to be indifferent to the type of government to which it was lending, whether a nominal democracy or a military dictatorship, as long as the economic model conformed to its demands. It has always been more concerned with keeping out any communist or even socialist ideas, than in protecting human rights or countering endemic corruption.
While Kedar’s work is very much an academic treatise and hardly aimed at a wider readership, it does, in a very accessible way, provide invaluable information and new insights for anyone interested in the more detailed role of the World Bank in a global context.
The World Bank and the Cold War in Latin America – the Argentine Challenge, By Claudia Kedar. Published by Stanford University Press. Hdbck. £64
John Green is a former trade union official, a journalist and former documentary film-maker, which in the 1970s involved clandestine filming assignments in South Africa in the 1970s aimed at helping bring the abhorrent practices of the apartheid regime to world attention. He is the author of numerous books, including Ken Sprague, People’s Artist, A Revolutionary Life: Biography of Friedrich Engels and Britain’s Communists: The Untold Story.
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