The United States and the Politicization of the World Bank: Issues of International Law and Policy.

First of all, this book is not a juicy, behind-the-scenes expose of politicization within the Bank. It uses publicly available evidence to study efforts to politicize the World Bank at its highest level of decision-making.

Secondly, the book is not for all economists. If you need to understand the legal aspects of coercive multilateral lending, then you will find this book helpful. It provides case studies that illustrate legal and illegal attempts at politicization. It also includes a thorough study of U. S. national legislation directed towards the World Bank. The one thing an economist will learn from this book is that, although the U. S. has a lot of discretion in giving or withholding unilateral aid, it cannot control the funds it contributes for multilateral aid, in either a legal or in a practical sense.

The author's thesis is that the executive directors of the World Bank may not legally consider political issues when casting their votes on multilateral aid. He then considers whether or not the U. S. has illegally politicized the World Bank.

Some background material on the World Bank is necessary to understand the book's contribution. The day-to-day business of the Bank is handled by its Board of Executive Directors. The five largest contributors to the Bank each appoint their own executive director, with the remaining 17 elected at large from among the other members. The votes of the executive directors are weighted by the amount of funding given by their constituents. As a result, the top five contributors together control 40 percent of the vote, with the U. S. controlling 16 percent.

The author shows that it is illegal for the executive directors of the Bank to use political motives to determine their votes. His primary piece of evidence is from Article IV, Section 10 of the Bank's Charter, which uses the phrase, "'Only economic considerations shah be relevant to their decisions. . . .'" (emphasis added by Brown). Brown relies on interpretations by the General Counsel of the Bank and other evidence to conclude that there is, indeed, a legal basis for prohibiting the executive directors from using purely political considerations in casting their votes.

In two cases the author concludes that the U. S. was successful at illegally politicizing the World Bank. The first is the case of Salvador Allende's Marxist regime in Chile between 1971 and 1973. The Allende government had expropriated American investments in copper mines without adequate compensation, and as result the U. S. had issued a security directive which called for preventing new bilateral aid to Chile, reducing or eliminating current aid and working through the multilateral agencies to try to prevent aid being given to Chile. Chile received no aid during this period, but in the year following Allende's assassination World Bank loans to Chile immediately shot up. Based primarily on the evidence provided by the security directive itself, Brown concludes that the U. S. did illegally politicize the Bank in this episode.

The other case was an attempt in 1979 by the U. S. Congress to prevent the Bank from lending to Vietnam. Many Congressmen wanted to prevent the funds provided by the U. S. from being used in Vietnam. The Bank's Charter prevents it from accepting "earmarked" funds. Robert McNamara, who was then president of the World Bank, tried to placate Congress by assuring it that the Bank had no intentions of loaning to Vietnam anyway. In the end, a group of well-meaning U. S. government officials drafted a letter from McNamara which assured Congress that the Bank would not be approving new loans to Vietnam, and McNamara hastily signed it. This assuaged Congress's fears, but the letter seriously compromised the ability of the Bank to be perceived as immune to political pressures.

The book has a detailed study of U. S. legislation designed to influence the aid decisions made by multilateral lending institutions. A myriad of legislation includes efforts to punish countries for human rights violations, for not deterring the drug trade, for improper use of nuclear weapons, and for uncompensated expropriation of U. S. investments. The U. S. has tried to limit other countries' purchases of military equipment, to limit the salaries of World Bank employees, and to stimulate environmental reform.

The U. S. has also tried to use its voting power to block aid that would result in increased competition for U. S. suppliers of certain agricultural goods. The legal question is whether the Charter forbids consideration of national commercial interests in addition to forbidding consideration of political interests. The author concludes that unilateral economic interests may be considered as long as these are not inconsistent with the broader economic merits involved.

The legislative effort has taken many forms. The most benign of these, from the perspective of maintaining the integrity of the Bank, are issuing statements of policy, issuing vague directives to the U. S. executive director, obliging the executive director to consult with the U. S. executive or legislative branches, and obliging the executive director to promote a specific policy within the Bank. Congress has also issued directives to the executive director to vote against particular types of proposals. The wording of most of these directives allows the executive director some discretion in determining if a "no" vote is required.

The U. S. has occasionally legislated mandatory "no" votes. In one such case, the U. S. executive director cast 26 consecutive "no" votes on proposed lending to India, because India developed nuclear capacity without having signed the Treaty on Nuclear Non-proliferation. In each case, India nonetheless received its aid. Because the Bank's Charter is a treaty, under international law it takes precedence over any national legislation. If U. S. law requires a "no" vote for political reasons then it conflicts with international law. Therefore the U. S. was illegally casting its vote on these occasions.

In the book's conclusion, Brown emphasizes that U. S. attempts to politicize the Bank have failed to achieve concrete results, and are more likely harming the U. S. by making it appear that it does not respect international law and international institutions.

Shannon K. Mitchell Virginia Commonwealth University