International Development Should…..

…Before I built a wall I’d ask to know
What I was walling in or walling out,
And to whom I was like to give offence.
Something there is that doesn’t love a wall,
That wants it down….

Robert Frost, Mending Wall (1874 – 1963)

Introduction¹

Depending on the specific agencies involved, relations between the World Bank Group and the United Nations (UN) system have been both cooperative and hostile, often at the same time. A detailed description of those relationships over the last sixty-five years is beyond the scope of a single blog post. Therefore, the focus here is limited to a summary of initial UN overtures and the World Bank’s response as well as examples of both collaboration and tensions during the period from January 1946 through the end of December 1959.

Initial UN Overtures

Only two months after its first meeting in London, a letter from the first President of the Economic and Social Council (EcoSoc), Sir Ramaswami Mudaliar of India, was delivered to the Board of Governors of the International Monetary Fund (IMF) and International Bank for Reconstruction and Development (IBRD) at their first meeting (Savannah, Georgia, March 1946). That letter proposed establishing the IMF and IBRD as UN specialized agencies. However, because neither the Bank nor IMF had a chief executive officer or any staff at that point, Ecosoc was informed that its request had been referred to the first meeting of their respective executive directors to be held two months later. Therefore, just before that meeting on May 6, 1946, a follow-up letter was sent to IBRD and the IMF in Washington, DC. But, this time, the letter was signed by the UN’s Deputy Secretary-General David Owen, a British citizen subordinate only to the UN Secretary-General. Owen was clearly disappointed in the IBRD’s and IMF’s earlier response to what UN staff no doubt assumed was a routine matter. Indeed, agreements between EcoSoc and the International Labour Organization (ILO), United Nations Economic, Social, and Cultural Organization (UNESCO), Food and Agriculture Organization (FAO), and International Civil Aviation Organization (ICAO) had already been completed by the time this second letter was sent.² But once again, the response of the Bank’s executive directors was that “such action would be premature.” That second rebuff prompted yet a third letter only one month later – this time signed by the Secretary-General, Trygve Lie of Norway, himself – requesting discussions between an EcoSoc negotiating committee and representatives of the IBRD and IMF begin no later than the first joint Annual Meeting of their Board of Governors the following September. But once again, both the IBRD and IMF demurred, arguing that other problems required their priority attention.

There was substantial validity to that claim. The Bank’s first President, Eugene Meyer, had only just arrived on June 18, 1946, he was met by a full staff of only twenty-six professional and administrative staff recruited since the meeting in Savannah, and IBRD was about to officially begin operations on June 25, 1946. In addition, there was the unresolved question of whether the Bank’s Executive Directors or its President was primarily responsible for managing the Bank. Nonetheless, the most important reason for IBRD’s reluctance was the view that, as a “non-political” investment bank, it had a fiduciary responsibility to its financiers. The fear was that private sector investors would not trust IBRD if it was responsible to a UN politically beholden to its membership because its “one country one vote” decision-making structure was divorced from financial responsibilities.

That view is clearly recalled by Richard Demuth, who was at that time a lawyer and Assistant to the Bank’s President, as remembered during an interview on August 10, 1961:

…[during the latter part of 1946,] the UN people…gave us copies of relationship agreements that they’d entered into with some of the other specialized agencies, which made the other agencies very definitely subordinate to them. We said we didn’t know enough about our business to enter into any kind of formal contract with them [yet]…. [But] in any case, we said that we couldn’t enter into the kind of contract that the other agencies had entered into because it would appear to the public that we were in effect an agency of the United Nations, and if it seemed that we were an agency of a political instrumentality, our…position [in the financial markets] would be impaired.

Those views did not change during the brief five month tenure of the Bank’s first President Eugene Meyer, the three month hiatus before the arrival of its second President John McCloy, or during subsequent years. Indeed, the World Bank’s own Archives characterizes McCloy’s position as follows:

McCloy…wanted to demonstrate that the Bank was autonomous, free from political interference, and run according to sound financial and organizational principles. The establishment of the executive autonomy of the president, the emphasis that investment decisions would be made on economic rather than political grounds, and the close link between the president and the U.S. executive director were important factors in bolstering the confidence of the U.S. securities market.³

But this too was not the whole story. There was also the less tangible, but no less important, feeling of superiority that emerges time and again from the oral histories of selected IBRD staff serving at that time. Indeed, another high level IBRD staff, Davidson Sommers, recalled the Bank during that period as having a “standoffish” and “supercilious” attitude to other international organizations.⁴ So when representatives of both the Bank and Fund met together to discuss Trygve Lie’s letter, they agreed that neither organization could sign any kind of agreement like those already signed by the UN with other specialized agencies.

“We Wouldn’t Recommend That They Accept it”

With the arrival of President McCloy on March 17, 1947, the United Nations tried again. As again described by Richard Demuth –

the [UN] Charter required that the United Nations enter into a contractual relationship, that this required a written contract agreed to by both sides, and they raised again with a good deal of insistence the need for a written document. Well, we said, all right, if they really wanted a written document we’d submit a draft that we could accept but they wouldn’t like it and we wouldn’t recommend that they accept it…. So we wrote a draft agreement that was in effect a declaration of independence…. Well, this [led to]…. a very strong, vigorous negotiating session between a committee of the Economic and Social Council and Mr. McCloy [and IMF’s Managing Director Camille Gutt], which went on for a day at the United Nations, in which our draft was reviewed, and we took out a few of our declarations of independence but not very many.

Surprisingly, that proposed text was accepted with only slight changes by the EcoSoc negotiating committee led by Jan Papenek of Czechoslovakia. Selected quotations from the official Text of the Agreement between the United Nations and the Bank signed on August 15, 1947 support Demuth’s characterization as “a declaration of independence:”⁵

…by reason of the nature of its international responsibilities and the terms of its Articles of Agreement, the Bank is, and is required to function as, an independent international organization….

…[action taken by the Bank] is a matter to be determined by the independent exercise of the Bank’s own judgment…

…[it would be] sound policy [for the UN] to refrain from making recommendations to the Bank with respect to particular loans or conditions of financing by the Bank….

…[nonetheless, the UN] may appropriately make recommendations with respect to the technical aspects of reconstruction or development plans, programs or projects….

…[the UN] will take into consideration that the Bank does not rely for its annual budget upon contributions from its members, and that the appropriate authorities of the Bank enjoy full autonomy in deciding the form and content of such budget.

But when presented to EcoSoc’s eighteen elected member-states for approval, it was strongly criticized by the Norwegian, Soviet, and Byelorussian delegates on the grounds that the “special privileges” extended to IBRD and the IMF violated at least four articles of the UN Charter and would seriously endanger the international cooperation for which the UN had been established in the first place. But the American delegation disagreed, defended the Agreement, and it was approved sequentially by EcoSoc, IBRD’s and IMF’s Board of Governors the following September 1947, and the General Assembly on November 15, 1947.

The opposing positions held by the United States and Soviet Union is not fully explained by the emerging Cold War. They also make sense from the perspective of their relative power and influence within the Bank, Fund, and United Nations; especially given the Soviet Union’s decision not to join the IMF and, by extension, IBRD. But with the approval of the General Assembly, both the World Bank⁶ and IMF became completely independent “specialized agencies” of the UN, allowing their staff to travel on United Nations Laissez-Pass even as their “independence” was institutionalized within the overarching international architecture still in place today.

Collaboration

Although the 1947 Agreement was a “Declaration of Independence,” Richard Demuth has also argued that the limits placed on the UN were misconstrued:

….There’s nothing in this agreement that prevents the Economic and Social Council from making general policy recommendations to us, but the EcoSoc has been so cowed that they feel that it prevents them from making any recommendations on policy to us, which it doesn’t at all…. We [simply] wanted to make it clear that the Economic and Social Council would not attempt to dictate particular loans to us,… but if they wanted to make a policy recommendation,…there was nothing in the agreement that would stop general recommendations of that sort. We wouldn’t necessarily adopt them but we didn’t say that it was inappropriate to make them…. [nonetheless], It’s a very difficult relationship at best, because in the hierarchy of things the UN is the top agency. They’re the central global body, and they feel they ought to be able to exercise authority over all the other international agencies. On the other hand, the Bank has the money….

Nonetheless, the fact is that collaboration at the operational level between IBRD and the UN system has far outweighed areas of largely rhetorical conflict since 1947. Even without an official agreement with the UN, it was clear that IBRD officials were welcome to attend any of the almost continuous series of meetings already being held by EcoSoc during this period.⁷

The theoretical foundation for collaboration between IBRD and the UN was articulated at about the same time by the ubiquitous David Owen. As reported by Craig Murphy, Owen argued that the UN Secretariat should focus on three key pillars of “development.” The first pillar was the development of skills within underdeveloped countries through provision of technical assistance (TA), a label eventually changed by the UN, but not the World Bank, to technical “cooperation.” The second pillar was the design of appropriate domestic and global institutional environments, including central planning mechanisms internally and appropriate trading mechanisms internationally. The third pillar was the financing of infrastructure required for economic growth and industrialization. Although no doubt thinking that the Secretariat and EcoSoc should be responsible for coordinating activities in all three of those areas, there was no real argument during those early years that IBRD was primarily responsible for the third pillar. But even so, that still left the first two pillars to the UN; especially when an international trade organization was not established for another four decades.

UN Extended Programme of Technical Assistance (EPTA, 1949-1966)⁸

The UN’s earliest TA efforts consisted of “experts,” student fellowships, and seminars financed from the regular General Assembly budget and managed by the Secretariat. Although the IMF joined Secretariat staff and representatives of FAO, UNESCO, and World Health Organization (WHO) in the UN’s first large inter-agency TA mission to Haiti that same year, IBRD did not accept the invitation to join them on the grounds that participation might imply commitment to finance investment proposals such missions might recommend. Nonetheless, the volume of requests for TA accelerated quickly, at least partially in response to the distribution of a pamphlet by the Secretariat that identified ten sources of available TA. That list was clearly a case of aspiration or wish fulfillment rather than actual capacity because it included not only seven conventional specialized agencies, but also IBRD, the IMF, and an “International Trade Organization” that would not actually exist until the World Trade Organization (WTO) was established forty-six years later. But fortunately for the UN, the desire for a new fund for international TA dovetailed with a desire by United States’ President Harry Truman to expand such assistance. That objective was embedded in Truman’s inaugural address delivered on January 20,
1949 in which he called for –

….a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas…. [in] a cooperative enterprise in which all nations work together through the United Nations and its specialized agencies whenever practicable. It must be a worldwide effort for the achievement of peace, plenty, and freedom….⁹

In response, the UN Secretary-General summoned representatives from the specialized agencies to a meeting at Lake Success, New York where they were told to formulate a proposal that could be presented to the United States as the UN’s contribution to the American’s proposed “Point Four” program. And that led to establishment of the Expanded Programme of Technical Assistance (EPTA) on November 16, 1949 as a separate, centralized fund financed by voluntary contributions from member-states that, in turn, financed activities conducted by other UN subsidiary and specialized agencies. EPTA’s name distinguished it from the much smaller TA efforts managed by the Secretariat that continued to be financed from the regular core budget.¹⁰

This was not, of course, an entirely “bold new program.” In addition to the UN General Assembly’s initiative the previous year, other UN specialized agencies, whether implementing EPTA financed TA or not, also continued to raise additional funds directly from bi-lateral donors.¹¹ And, in the words of a State Department officer at the time –

…the [American] Government had for some years been conducting programs of technical assistance in Latin America, and only there…[and] it seemed reasonable that this novel way of conducting international relations might have its uses elsewhere in the world.¹²

In response to those new initiatives, the Bank announced on June 2, 1949 that it would also begin collaborating with the UN’s expanded TA activities.¹³ And between the founding of EPTA in 1949 and the UN Special Fund (UNSF) in 1958, IBRD did participate in several joint missions with UN specialized agencies, especially with FAO.¹⁴ According to the authors of the World Bank’s own Historical Chronology –

This marked the Bank’s realization that deficiencies in technical skills and experience were often a more serious handicap to economic development than lack of capital.

IBRD, for its part, also expanded its own TA services and, on November 1, 1951, Richard Demuth was appointed Director of the Bank’s first Technical Assistance Department responsible for –

…planning, coordinating and giving general direction to the Bank’s technical assistance activities, and for coordinating the Bank’s relationships with other international agencies….”

The Bank substantially expanded those TA efforts even further about eighteen months later when it established a Department of Development Services in 1961.

But in parallel, EPTA had extended TA services to 140 countries and dependent territories by the early 1960s and was by then receiving voluntary financial contributions from 85 member-states; although as discussed in an earlier blog post, the United States was the primary contributor throughout the period under review here.

Nonetheless, although EPTA was an important first step, it financed only a limited range of “expert” services, equipment, and a limited number of student fellowships for studies primarily in industrialized countries. Those limitations led, in turn, to increasing demands for grant financing of an expanded range of activities, including capital investment and, ultimately, for proposals to establish a Special United Nations Fund for Economic Development (SUNFED) and, latterly, the United Nations Special Fund (UNSF). Because the proposal to establish SUNFED was strongly opposed by IBRD, it is discussed under the header “Tensions” below. But the UNSF involved close collaboration between the Bank and UN and is, therefore, discussed first.

UN Special Fund (1958-1966)

UNSF was established by the General Assembly in 1958 to finance the pre-investment phase of capital investment projects.¹⁵ It too served as a mechanism through which voluntary contributions by member-states could be coordinated by the UN. Although EPTA served as a precedent for the UNSF, they both occupied the same building in New York City, and shared a “Joint Administration Division,” there were four fundamental differences between the two groups.

First, in order to ensure collaboration with other important entities, a “Consultative Board” was established for UNSF consisting of the UN’s second Secretary-General Dag Hammarskjold of Sweden, the World Bank’s third president Eugene Black, and EPTA’s chief David Owen. Second, UNSF did not adopt EPTA’s practice of establishing specific funding entitlements for each of its eligible countries. Instead, proposals were evaluated at UNSF headquarters on a case-by-case basis. Third, UNSF’s pre-investment studies were substantially more expensive than the expert advice and student scholarships financed by EPTA. UNSF mobilized a full $2 billion in constant 2010 dollars (as all dollar amounts are presented in this blog post) for conducting feasibility studies and designing proposed infrastructure investment projects. Fourth, UNSF was connected much more closely to follow-up financing by the World Bank. Once construction began or materials were procured, the World Bank group’s IBRD, International Finance Corporation (IFC), or International Development Association (IDA) often assumed responsibility. In that way, a clear division of responsibilities was established between UNSF and the “World Bank.” Once again in the words of Richard Demuth –

We felt that the Special Fund might have a very real role to play, and Mr. Black has been very anxious that the Bank cooperate with the Special Fund, and in fact we’ve cooperated with them quite effectively. We are one of the executing agencies — some of the other agencies have many more projects, but I think we’ve probably got more completed and under way than most of the others, and on the whole I think this has worked out very well. We’ve been able to put things to them which they’ve financed, and others we’ve carried out with the help of their financing…. [Indeed,] we get all the Special Fund projects. They send them to us for examination and advice, and to get our views on what should be done, and we’re in close touch with what they’re doing.

About eight years after it was established, the merger of UNSF and the older EPTA created the United Nations Development Programme (UNDP), an organization that today is still tasked with the responsibilty for coordinating all UN development activities.¹⁶

Tensions

Although collaboration between the World Bank Group and the UN system has been more common than conflict, this segment identifies some of the persistent tensions that emerged between 1946 to the end of 1959. But a word of caution; the presentation of tensions as polar opposites is for analytical purposes only. The reality was a matter of relative emphasis rather than absolute opposites. With that in mind, tensions are discussed in terms of country presence, turf, and substance.

Country Presence

Since its earliest years, the UN has had greater “country presence” than the World Bank Group has had. During the period under review here, the UN was already relying on resident representatives in many client countries to ensure effective implementation of UN activities while also inform headquarters of local conditions. By contrast, the World Bank Group has relied primarily on staff and consultants dispatched from its Washington headquarters (Figure 1 — UN WB Resident Offices 1949-1966) even as the number of its own resident representatives has grown substantially since the 1980s. That was in part a function of the much smaller number of World Bank staff until the latter part of the 1970s; the World Bank’s entire professional and administrative staff totaled only 511 persons on June 30, 1956.

Turf

Two areas of tension over turf are addressed here: the relative attention given to “development” or “reconstruction” from 1946 through about 1951 and the unfulfilled desire for the creation of a separate UN capital investment fund during the 1950s.

Development vs. Reconstruction. IBRD’s original mission was to provide finance without preference for either reconstruction in Europe or development elsewhere. Nonetheless, from its first “reconstruction” loan to France on May 9, 1947 until the approval of its first “post-reconstruction” loan to The Netherlands on August 9, 1948, the Bank extended four loans to Europe in the total amount of $4.5 billion while approving only one “development” loan to Chile for $148 million.¹⁷ IBRD’s first loan to an Asian country (India) was not made until August 1948 while the first loan to an African country (Ethiopia) was not extended until September 1950. Indeed, France, Luxembourg, Netherlands, and Belgium remained eligible for World Bank lending throughout most of the 1950s while the last loan to any other western European country (with the exception of Portugal)¹⁸ was made to Spain on May 17, 1977 ($67 million). In part because of IBRD’s dual mandate, the United Nations rather than the Bank was the intellectual leader with respect to “development” well into the 1950s.

SUNFED vs. IDA. The perception that IBRD was off to a slow start, that it was too much focused on reconstruction needs in Europe, and that its interest rates were too high increased the dissatisfaction among Latin American governments expressed prior to the 1945 San Francisco Conference. Not long after, India joined that chorus of complaint; a complaint reinforced further by lower cost grants and concessional rates provided to European economies under the terms of the American’s Marshall Plan announced on June 5, 1947. Those dissatisfactions led to a proposal and counter-proposal to establish a low-cost lending arm to either the UN (SUNFED) or IBRD (IDA).

The Marshall Plan created two precedents that remain with us today. First, its success encouraged the application of a “reconstruction” – rather than “development” — model in Africa, Asia, and Latin America. And that played to the comparative advantage of IBRD. It also legitimized demands by developing countries for the same kind of low cost financing that had been provided to Europe.¹⁹ IBRD was not prepared to provide that kind of financing. Therefore, the desire for low-cost financing seemed to play to the comparative advantage of the UN – if only the UN had an institutional mechanism for providing it.

In response to that inequity, the Director of the Delhi School of Economics (India) — Vijayendra Kasturi Ranga Varadaraja Rao – suggested that a new “UN Administration for Economic Development” should be established with a dramatically broader mandate than EPTA (which had just been established that same year).²⁰ Rao’s proposal was, however, a direct challenge to IBRD’s mandate as the primary multi-lateral provider of investment finance and raised the specter that a separate UN capital investment fund would be established. The opposition of IBRD managers to a separate UN capital investment fund was summarized by Richard Demuth as follows:

The one threat that has been hanging over us [would be the creation of] a UN capital fund…. The confusion between that sort of fund and the Bank would have been tremendous, and whether the creation of IDA, which was designed in very large part to hold that development off, will succeed in doing so, has yet to be seen. But with IDA getting into many more fields, and the Special Fund active in fields in which we’re interested, our relationships necessarily become closer….

And in the words of Davidson Sommers:

Within the United Nations staff as well as the membership, there’s been a real movement that the United Nations ought to get into the capital financing business. Technical assistance was a first step, and the Hoffman Special Fund is a second step, a compromise, something short of capital financing. But the other — the pure SUNFED idea, if you remember that proposal, is not dead. That will revive again from time to time.

The first attempt to find a compromise between Rao’s proposal and industrialized countries that opposed it was introduced during the 1953 session of the General Assembly by Greece, Haiti, and Pakistan supported by the Soviet Union and Yugoslavia. That proposal authorized a study of the proposed new organization by an intergovernmental committee and gave the proposed organization a preliminary name only slightly different from the one proposed by Rao – i.e., the Special United Nations Fund for Economic Development (SUNFED).²¹ Following completion of that report, several of SUNFED’s advocates proposed establishment of SUNFED with the specific purpose of providing grant financing for capital investments  and, further, that decisions by SUNFED should be made on the basis of “one country, one vote.” In addition, a few of SUNFED’s supporters also argued for establishment of a new “Economic Security Council” to replace EcoSoc with a voting system somewhere between one country, one vote and the Bank’s system of weighted voting.

With active support for those proposals building within the General Assembly, IBRD pro-actively opposed SUNFED²² even as the proposal to divorce voting power from levels of finance provided was also too much for the
United States Treasury and several members of Congress. Therefore, the United States, with support from several other industrialized countries, joined the World Bank in a counter-proposal to establish IDA for the specific purpose of providing concessional finance for large-scale projects in developing countries. As IBRD’s third president Eugene Black admitted, the establishment of IDA was largely motivated by the desire to scuttle SUNFED – and in that it was completely successful. And that success was assured when India, an original supporter of SUNFED, changed its position in favor of IDA. In the words of Eric Toussaint, India –

was convinced that [it] would benefit from IDA since the major powers predominating in the [World Bank] would understand the necessity of giving India special treatment in view of its strategic position. And India was right: in the first year of IDA activity, it received 50% of IDA loans.

India’s expectations were correct. As of July 17, 2008, India remains the recipient of the largest number of loans and credits (560) and total amount of money received ($80.5 billiion in nominal dollars). It was in that context
that the substantially more limited and collaborative UNSF was also agreed in 1957.

Substance

Substantive tensions between UN system entities and the World Bank were largely about whether “development” was primarily about human “rights” or a narrower concern for economic growth.

Human “Rights” vs. Economic Investment. Much of the “social development”²³ and “human rights-based” approaches to development that emerged during the 1990s was foreshadowed by the General Assembly’s passage of the Universal Declaration of Human Rights on December 10, 1948. That Declaration, in turn, incorporated President Franklin Roosevelt’s “four freedoms” enunciated on January 6, 1941,²⁴ many of the civil rights incorporated over time in the United States Constitution,²⁴ and several other “rights” not previously articulated in international treaties.²⁶

The Universal Declaration launched a substantial number of UN covenants meant to establish universally-accepted norms about a wide range of specific “rights.”²⁷ Indeed, some legal scholars and other advocates of a rights-based approach have argued that state-signatories of UN human rights covenants are required to oppose any aid project, program, or policy loan within multilateral organizations of which they are a member that violates any of the rights spelled out in those covenants.²⁸

A human rights-based approach to development has clearly not been the primary driver of successive United States government development efforts (until perhaps very recently) or those of the increasing number of multilateral development banks or the IMF. Although the difference is often exaggerated, there is no doubt that UN entities have been strong advocates of a “Human Rights” approach to development while IBRD has historically viewed such approaches as “soft” at best and “political” at worst. Nonetheless, UN calls for eliminating all forms of discrimination against women or ensuring the rights of children while supporting the idea that there is a moral responsibility to promote social progress and better standards of living in all countries provides important benchmarks against which international development efforts can be judged.

“Social” Development. From the establishment of both UNESCO and the United Nations Childrens’ Fund (UNICEF) in 1946 and WHO two years later, the United Nations has been well out-front of other international development assistance agencies with respect to the inclusion of “social” aspects of “development.” Nonetheless, throughout the 1950s and 1960s almost all technical cooperation financed by members’ voluntary contributions to EPTA and other UN agencies were devoted to the education sector (Figure 2: Technical Co-operation – Evolution of Extrabudgetary Funds Utilized).²⁹ But those efforts were limited largely to the specification of long-term strategic priorities that would require finance from other bi-lateral and multi-lateral agencies. Such financing was often provided, although there was almost always a significant lag between the UN’s specification of investment priorities and provision of necessary funds.

Indeed, the World Bank’s first education project, an IDA credit in the amount of $36 million approved on September 17, 1962 to build technical education institutes in Tunisia, both proves and disproves that observation. On the one hand, the Tunisian credit was approved following a UNESCO-led identification mission only one year after the Conference of African States on the Development of Education in Africa was held in Addis Ababa. But on the other hand, that credit was approved more than a decade after the UN began to focus significant attention on the importance of education for development. Further, although the World Bank entered into a cooperative agreement with WHO to expand access to clean drinking water and improve waste disposal and storm drainage on September 1, 1971, lending in the health sector was not authorized for almost another eight years (July 24, 1979). Most of the World Bank’s initial lending for those sectors was for the construction of facilities and supply of equipment rather than for development of curriculum, training of teachers or medical staff. Indeed, I was surprised to find when I joined the Bank in 1983 that a large component of the World Bank’s education sector staff were architects concerned with the design of primary school buildings.

Summary Conclusion

Early tensions between the UN and IBRD raise important questions about the expectation that international organizations will serve as instruments of their sovereign-state members. If that was actually the case, tensions between UN entities and the World Bank should not have existed. The membership of both the UN and IBRD was essentially the same, with the exception of the Soviet Union, Byelorussia, the Ukraine, and Hungary (and later Poland, Czechoslovakia, and Cuba). Nonetheless, powerful leadership emerged very early within the both the UN Secretariat and IBRD — and that leadership carved out substantial areas of autonomous actions for those organizations. And although the World Bank’s definition of “development” was, and remains, substantially more limited than most UN entities, it has softened considerably during the last decade or so. One result of that softening has been increasing ambiguity about the division of responsibilities among the UN, World Bank, and IMF. Echoes of that concern can be heard in Larry Summer’s Speech four decades after the period reviewed
here.

Although Robert Frost might not agree, the aphorism “fences make good neighbors” is as true as his assertion quoted above that “something there is that doesn’t love a wall,” especially where it might be necessary to demarcate areas of responsibility within newly settled organizational territories. As will be illustrated in Parts #4 and #5 of this five-fold series, that lowering of boundaries has increased tensions between those two institutional systems.

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NOTES:

^[1] Except where otherwise noted, this blog post relies on World Bank, World Bank Group Historical Chronology and John Jay McCloy: 2^nd World Bank President, 1947-1949; Craig Murphy, The United Nations Development Programme: A Better Way? (Cambridge, UK: Cambridge University Press, 2006); Louis Emmerij, Richard Jolly and Thomas Weiss, Economic and Social Thinking at the UN in Historical Perspective, Development and Change 36 (2005), p. 211–235; Devesh Kapur, John Lewis, and Richard Webb, The World Bank: Its First Half Century, Volume 1 (Washington, DC: Brookings Institution Press, 1997); Edward Mason and Robert Asher, The World Bank Since Bretton Woods (Washington, DC: The Brookings Institution, 1973); and The World Bank/IFC, Transcript of Interview with Richard H. Demuth conducted by Robert Oliver, Archives: Oral History Program (Oral History Research Office, Columbia University, August 10, 1961). Unfortunately, the UN system as a whole has not recorded a similarly large number of staff oral histories as has the World Bank (see Emmerij, Jolly and Weiss). Therefore, there is greater reliance here on the personal recollections of IBRD staff than on UN staff.

^[2] See Andrzej Abraszewski and Raúl Quijano, Relationship Agreements Between the United Nations and the Specialized Agencies: Review and Strengthening of Sections Pertaining to the Common System of Salaries, Allowances and Conditions of Service (Geneva: United Nations Joint Inspection Unit, 1993).

^[3] The same World Bank Archives clarified McCloy’s position with respect to political involvements as follows: “From the outset there was much concern about the role of political considerations in the Bank’s lending decisions. The discussions at Bretton Woods had dwelt on the importance of insulating the lending decisions of the Bank from politics and ideology. McCloy realized that the Bank did not operate in a political vacuum and that the line between politics and economics was not sharply delineated. His philosophy was that the Bank would not make loans to accomplish political objectives, but it could refuse to make loans where the political uncertainties were so great as to make the loan economically unsound.”

^[4] As quoted by Kapur, Lewis, and Webb, The World Bank: Its First Half Century, Volume 1. See also World Bank, Transcript of Interview with Davidson Sommers conducted by Robert Oliver, Oral History Program (New York: Columbia University, Oral History Research Office, August 2, 1961) and Transcript of Interview with Robert S. McNamara conducted by John Lewis, Richard Webb, and Devesh Kapur, World Bank History Project (Washington, D.C.: The Brookings Institution, 1991).

^[5] These quotations are from the Text of the Agreement Between the United Nations and the Bank, International Bank for Reconstruction and Development (IBRD), Second Annual Meeting of the Board of Governors, Proceedings (London, September 11-20, 1947), p. 25-27 as cited in Mason and Asher, The World Bank Since Bretton Woods.

^[6] Surprisingly, no common agreement exists about when the term “World Bank” first came into use. According to the World Bank’s Office of Chief Legal Counsel, one might legitimately date the introduction of that label to: (i) its first official use in the Bank’s Annual Report 1958-1959; (ii) President Truman’s use of the term in his message of September 23, 1946 to the Chairpersons of the Bank’s and IMF’s Boards of Governors; (iii) the official name of the first meeting of the IBRD and IMF Boards of Governors during March 1946 as the “World Fund and Bank Inaugural Meeting” and related news stories employing the term “World Bank;” or (iv) the earliest reference of all to the “World Bank” in an Economist article dated July 22, 1944. See World Bank, About the World Bank, Law and Development.

^[7] As only one example, both IBRD and the IMF were represented by the same person, Dr. Ching Chun Liang, at the first session of the newly formed Economic Commission for Asia and the Far East in Shanghai, China well before IBRD’s “Declaration of Independence” was negotiated. However, it is worth noting that by the second session in Baguio, The Philippines, they were represented separately; IBRD by Raoul de Sercey and the Onternational Monetary Fund by Dr. Wang Yuan-Chao; see Economic Commission for Asia and the Far East, Annual Report to the Sixth Session of the Economic and Social Council: First Session, Shanghai (16 June 1947 to 25 June 1947) [and] Second Session, Baguio (24 November 1947 to 6 December 1947) (Bagio, The Philippines: Economic Commission for Asia and the Far East, December 1947).

^[8] Also see UNESCO: 50 Years for Education (Paris: United Nations Education, Social, and Cultural Organization, 1997) and Technical Cooperation Programs – Evolution of UNDP, Encyclopedia of the Nations.

^[9] This was one of President Harry Truman’s “Four Points” set forth in his Inaugural Address on January 20, 1949. The first three points were: “First, we will continue to give unfaltering support to the United Nations and related agencies, and we will continue to search for ways to strengthen their authority and increase their effectiveness…. Second, we will continue our programs for world economic recovery. This means, first of all, that we must keep our full weight behind the European recovery program…. Third, we will strengthen freedom-loving nations against the dangers of aggression. We are now working out with a number of countries a joint agreement designed to strengthen the security of the North Atlantic area….

^[10] See also Kenneth Auerbach and Yoshinobu Yonekawa, The United Nations Development Program: Follow-Up Investment and Procurement Benefits, International Organization 33 (Autumn, 1979), p. 509-524.

^[11] From this point forward, Chapter 8 of Maggie Black’s book, The Children and the Nations: The Story of Unicef (New York: United Nations Children Fund, 1986) is also a key source.

^[12] Louis Halle, On Teaching International Relatons,” Virginia Quarterly Review, 40 (Winter 1964) as cited by Murphy.

^[13] IBRD was no doubt reassured by the UN Secretariat’s apparent acceptance of limits on the scope of its activities, as demonstrated by its critical response to the Introduction written into the Economic Commission for Latin America’s first Economic Survey of Latin America on the grounds that it included references to subjects beyond its mandate, including “development, industrialization, terms of trade, and many other things that ECLA is not supposed to deal with;” as cited by Murphy. See also Louis Emmerij and Gert Rosenthal, UN Regional Contributions: Latin America and the Caribbean.

^[14] Examples include joint missions with FAO including the Bank’s first sector study (in this specific case an agricultural sector survey mission to Uruguay) that departed Washington, DC on October 13, 1950; an agriculture mission to Chile on May 26, 1951; and another agriculture sector survey mission to Peru on June 25, 1958.

^[15] With reference to the argument presented in a previous blog post, it is interesting to note the following information provided by Craig Murphy: “….when the Special Fund was in its infancy Singer sent Owen a paper linking ‘pre-investment,’…to distinguish the role of the nascent organization, with the new theory of development articulated in a series of Cambridge lectures by W.W. Rostow, an advisor to Senator Kennedy. At the first of Rostow’s five ‘Stages of Development,’ ‘Traditional Society,’ Singer argued that governments needed broad assessments of resources to help shape sensible requests for technical assistance. At the next stage (the ‘transitional state’), surveys of specific resources and the development of large industrial projects, the basis of requests for large investment, would be desirable. At the stage of ‘Take-off,’ investigations into potential macroeconomic bottlenecks and the design of critical investments to reduce them were essential. In short, the combination of Singer’s and Rostow’s ideas would provide a persuasive argument for building on EPTA’s capacity and for convincing major donors and the World Bank that extensive development financing could be used soundly.” See also, Eric Toussaint, Banque Mondiale: Le Coup d’Etat permanent (Liège: CADTM-Syllepse-Cetim, 2006), Chapter 3 translated into English by Judith Harris as Difficult Beginning Between the UN and the World Bank, and that from this point forward is also a key source.

^[16] See also UNESCO: 50 Years for Education.

^[17] IBRD’s first “reconstruction” loan was approved in the amount of about $2.5 billion in constant 2010 dollars (half of the requested amount) on May 9, 1947 to France for general budget support; i.e., in the words of the World Bank itself: “This loan, the very first, deviated from what was to be the standard pattern for loans: it was not for a specific project, but rather a general purpose loan, covering almost every sphere of activity in industrial life.” That was followed three months later (August 7, 1947) by the Bank’s first loan to The Netherlands for a reconstruction project ($2 billion) followed rapidly by another reconstruction project loan to Denmark on August 22, 1947 ($402 million) and a loan of $121 million to Luxembourg for a steel mill and railway project six days later. By the following year, IBRD was characterizing its loans to Europe as “post-reconstruction,” the first of which was to four Dutch shipping companies on August 9, 1948 in the amount of $121 million. IBRD’s first “development” loan, approved on March 25, 1948 followed the four earlier “reconstruction” loans to France, The Netherlands, Denmark, and Luxembourg. That loan approved on March 25, 1948 provided $148 million for hydroelectric and irrigation projects in Chile, followed within the next twelve months by IBRD’s first sector loan on January 7, 1949 for an Electric Power Development Project in Mexico ($216  million) and a power and telephone project approved on January 27, 1949 in Brazil ($672  million). The above quotation is from World Bank, John Jay McCloy: 2nd World Bank President, 1947-1949.

^[18] The last loan to a western European country was to Portugal for a “Regional Development Project” on April 11, 1989 in the amount of $90 million. In addition, three southern European countries continued to borrow throughout the 1970s: Greece, Romania, and Yugoslavia.

^[19] It is worth noting here that the general sentiment among Latin American governments was that they had supported European “reconstruction” during the immediate post-war period and that Europe’s successful recovery “meant that their own children’s needs were now as, or more pressing than, those of Europe;” Maggie Black, The Children of the Nations: The Story of UNICEF (New York: United Nations Children’s Fund, 1986) quoting Roberto Oliveria de Campos of Brazil.

^[20] See also D. John Shaw, Turning Point in the Evolution of Soft Financing: The United Nations and the World Bank, Canadian Journal of Development Studies / Revue Canadienne d’Etudes du Developpement 26 (2005), p. 43-61.

^[21] Richard Jolly in his obituary of Sir Hans Singer (The Guardian, Wednesday 1 March 1, 2006) recounts the following story: “In the 1950s, as secretary to the committee which recommended the creation of a UN fund for economic development, Singer did much of the technical work to create a soft-loan facility for poor countries. The fund was to be called by the acronym Unfed, until Singer pointed out how unfortunate a name this would be. So, as he delighted in telling, it became Sunfed, the Special UN fund.”

^[22] World Bank, Transcript of interview with Davidson Sommers (1961).

^[23] See
also the Copenahgen Declaration on Social Development and Programme of Action of the World Summit for Social Development
adopted at the Copenhagen Summit on Social Development during March 1995.

^[24] The “Four Freedoms,” enunciated in President Roosevelt’s Annual Message to Congress on January 6, 1941, are: “The first is freedom of speech and expression–everywhere in the world. The second is freedom of every person to worship God in his own way–everywhere in the world. The third is freedom from want–which, translated into world terms, means economic understandings which will secure to every nation a healthy peacetime life for its inhabitants-everywhere in the world. The fourth is freedom from fear–which, translated into world terms, means a world-wide reduction of armaments to such a point and in such a thorough fashion that no nation will be in a position to commit an act of physical aggression against any neighbor–anywhere in the world.” Transcript of President’s annual message to Congress (January 6, 1941), Records of the United States Senate; SEN 77A-H1; Record Group 46 (Washington, DC: United States National Archives and Records Administration).

^[25] I have identified a few examples of consistency between “human rights” articulated in the UN Universal Declaration (UNUDHR) and “civil rights” included in the United States Constitution (USC), as follows: (i) UNUDHR Article 4/USC 13^th Amendment; UNUDHR Article 5/USC 4^th Amendment; UNUDHR Article 7/USC 14^th Amendment; UNUDHR Article 11(1)/USC 5^th Amendment; and UNUDHR Articles 18 & 19/USC 1^st Amendment. There are additional consistencies and I invite readers to try and find them.

^[26] Examples of new “rights” established by the UNUDHR include, but are not limited to, “the right to marry and to found a family…[based on] only…the free and full consent of the intending spouses [Article 16(1,2)]…; the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment [Article 23(1)]; the right to equal pay for equal work [Article 23(2)]…; the right to rest and leisure, including reasonable limitation of working hours and periodic holidays with pay [Article 24]; the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control [Article 25(1); and] the right to education…[that] shall be free [through] at least…the elementary and fundamental stages…[that] shall [also] be compulsory….”

^[27] Perhaps the two most important implementing covenants are the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights. Many UN delegations had originally expected that EcoSoc would prepare a single follow-up Covenant on Human Rights that would provide a mechanism for individual citizens to “write to” the UN Human Rights Commission to complain of any government’s violation of “rights” established by the Universal Declaration. But a schism arose between some member-states that were most interested in civil and political rights, including the United States, and some others more interested in economic and social rights. A diplomatic summary of that dispute was provided in speech by Eleanor Roosevelt, spouse of the deceased American President Franklin Delano Roosevelt and elected head of the UN Human Rights Commission from 1946 to 1952 (Statement on Draft Covenant on Human Rights, Department of State Bulletin, (December 31, 1951). In the event, EcoSoc’s draft follow-up agreement was split into two separate covenants, as referenced above. Those two convenants were negotiated and adopted by the General Assembly on December 16, 1966 with the hope that they would give practical effect to the Declaration. However, although the United States representative signed both covenants on October 5, 1977, the United States Senate did not ratify the one on civil and political rights for another fifteen years (June 8, 1992) while it still has not yet ratified the other one partly because some American Senators originally expressed the view that some its clauses are “communistic.” Other key UN Human Rights treaties, including whether or not they have been signed or ratified by the United States, are listed here:

• Convention on the Prevention and Punishment of the Crime of Genocide (adopted 1948/entered into force 1951; the United States signed the Convention in 1948 and ratified it in 1988);
• International Convention on the Elimination of All Forms of Racial Discrimination (adopted 1965/entered into force 1969; the United States signed the Convention in 1966 and ratified it in 1994);
• Convention on the Elimination of All Forms of Discrimination Against Women (adopted 1979/entered into force 1981; the United States signed the Convention in 1980 but has not yet ratified it).
• Convention Against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (adopted 1984/entered into force 1987; the United States signed the Convention in 1988 and ratified it in 1994);
• Convention on the Rights of the Child (adopted 1989/entered into force 1990; the United States signed the Convention in 1995 but has not yet ratified it); and
• International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families (adopted 1990/entered into force 2003; the United States has to date neither signed or ratified it).

According to the Human Rights Web, all countries have ratified at least one of the “core” UN human rights treaties, and 80% have ratified four or more. All international treaties registered with the UN Secretary-General as required of all UN member-states, whether or not the treaty is initiated or adopted by a UN organ, is available at the United Nations Treaties Database.

^[28] See, for example, Globalising Economic and Social Human Rights by Strengthening Extraterritorial State Obligations published jointly by Brot für die Welt (Bread for the World, Stuttgart), FIAN – Deutschland. e.v. (Cologne), FIAN – International (Heidelberg), and Evangelischer Entwicklungsdienst e.v. (Church Development Service, Bonn) during October 2006.

^[29] Examples of UN TA for education included sponsorship of the Inter-American Seminar on Overall Planning for Education (Washington, DC, June 1958); the Regional Meeting of Representatives of Asian Member States on Primary and Compulsory Education (Karachi, 28 December 28, 1959-January 9, 1960); and the aforementioned Conference of African States on the Development of Education in Africa (Addis Ababa, May 15-25, 1961); see UNESCO, Elements of Educational Planning (Paris: United Nations Economic, Social, and Cultural Organization, nd).