top of page

Why Russia doesn't want Ajay Banga to be the president of the World Bank



World bank and shares of countries in it:


The World Bank is a global financial institution that provides loans and grants to countries for development projects. It was established in 1944 and is based in Washington D.C., USA. The Bank is made up of 189 member countries, each of which holds shares in the institution. These shares determine the country's voting power in the organization, with the United States holding the largest share of the voting power. Other countries with significant voting power include Japan, China, Germany, and the United Kingdom. The Bank's mission is to reduce poverty and promote shared prosperity by providing financial assistance to developing countries.


The World Bank is composed of two institutions, the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The IBRD provides loans to middle-income and creditworthy low-income countries, while the IDA provides grants and loans to the poorest countries in the world.


The shares of each country in the World Bank are based on a formula that takes into account their relative economic size and contributions to the Bank's resources. The United States holds the largest share of voting power, with approximately 16% of the total, followed by Japan with 7.6%, China with 4.5%, Germany with 4.3%, and the United Kingdom with 4.3%.

The remaining shares are held by other member countries, with smaller countries holding fewer shares. While the shares determine voting power, decisions at the Bank are made through a system of consensus, which means that all member countries have an equal say in the decisions made.


The World Bank provides financial assistance to countries in various forms, including loans, grants, and guarantees. The Bank focuses on projects related to poverty reduction, economic development, and environmental sustainability. Projects can range from funding for basic infrastructure like roads and bridges to social programs like health and education.

In recent years, there have been calls for greater transparency and accountability at the World Bank, as well as for a more equitable distribution of power among member countries. The dominance of the United States in the presidency of the Bank has also been a source of criticism, with calls for a non-American president to better reflect the global nature of the institution.


•America's dominance over the world bank


The World Bank, since its inception, has been dominated by the United States. All twelve previous presidents of the institution have been Americans, and the U.S. holds the largest share of voting power in the Bank. This dominance has led to criticisms of the Bank's legitimacy and fairness, with many countries calling for a more equitable distribution of power within the organization.

One of the reasons for this dominance is that the Bank was established as part of the Bretton Woods system, which was created in the aftermath of World War II. The system was designed to promote international economic cooperation and stabilize the global economy. The U.S. was a key player in the creation of the system, and as a result, the Bank was headquartered in Washington D.C., with the U.S. playing a leading role in its governance.

In addition to its historical role in the creation of the Bank, the U.S. also holds a significant share of voting power due to its economic size and contributions to the Bank's resources. The U.S. is the largest economy in the world, and as a result, holds the largest share of voting power in the Bank. This gives the U.S. significant influence over the Bank's decisions and policies.

Critics argue that the dominance of the U.S. in the presidency of the Bank has led to a lack of diversity in the leadership of the institution. Non-American candidates have been largely overlooked for the position, leading to calls for a more transparent and merit-based selection process for the presidency. Many also argue that the Bank has been used by the U.S. to further its own economic and political interests, rather than those of the developing world.


• America desires Russia's elimination from the world bank


There have been tensions between the United States and Russia over the role of the World Bank, with the U.S. accusing Russia of using the Bank to further its political interests. In recent years, there have been calls from the U.S. to restrict Russia's access to the Bank's resources.

One of the reasons for this tension is the ongoing conflict between Russia and Ukraine, which has led to economic sanctions against Russia by the U.S. and other Western countries. The U.S. has argued that Russia's actions in Ukraine violate international law and that the country should be held accountable. This has led to calls for the Bank to restrict Russia's access to its resources, including freezing Russia's foreign reserves held at the Bank.

Russia has pushed back against these calls, arguing that they are politically motivated and violate the Bank's mandate to promote economic development and poverty reduction. The country has also accused the U.S. of using the Bank to further its own economic and political interests.

The tensions between the U.S. and Russia over the World Bank highlight the challenges of maintaining a global institution that is representative of the interests of all member countries. As the world becomes more interconnected, institutions like the World Bank need to adapt and become more responsive to the needs of developing countries. However, this requires a willingness from all member countries to work together and find common solutions to complex global problems.


• World bank freezes Russia's foreign reserve


In 2018, the World Bank froze Russia's foreign reserves held at the institution, following a decision by a UK court to uphold a $1.4 billion arbitration ruling against Russia in favor of a group of former shareholders in the now-defunct oil company, Yukos.

Russia argued that the ruling was politically motivated and challenged it in court, but the decision was upheld. As a result, the World Bank froze the country's foreign reserves held at the institution, which amounted to approximately $6 billion.

The decision to freeze Russia's reserves was controversial, with some arguing that it violated the Bank's mandate to promote economic development and poverty reduction. Critics also pointed out that the decision was based on a political dispute between Russia and the UK, rather than a legitimate financial issue.

Russia responded to the decision by calling for reforms to the governance structure of the Bank, arguing that it was dominated by Western countries and did not represent the interests of developing countries. The incident highlighted the need for a more equitable distribution of power within the Bank and greater transparency in its decision-making processes.

While the freeze on Russia's reserves was eventually lifted in 2019, the incident highlighted the challenges facing global institutions like the World Bank in maintaining a balance between the interests of different member countries, and the need for greater transparency and accountability in their operations.


Comments


Post: Blog2 Post
bottom of page