With Support from the US Treasury, World Bank Reinvents Tainted Aid Program for Ethiopia

11 May 2016 by Oakland Institute

CC - Flickr - David Stanley

Oakland, CA – Moral Bankruptcy : World Bank Reinvents Tainted Aid Program for Ethiopia, a new report released today by the Oakland Institute, exposes the shameful reinvention of one of the Bank’s most problematic programs in Ethiopia. The report also reveals that the US Treasury violated congressional law when voting in favor of this program.

Moral Bankruptcy scrutinizes the World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

’s new ’Enhancing Shared Prosperity through Equitable Services (ESPES) program in Ethiopia. ESPES, meant to bring basic services to Ethiopians nationwide, replaces the Bank’s Promoting Basic Services (PBS) program. For years, the PBS program has been associated with human rights abuses and the forced relocation of indigenous communities while paving the road for large-scale land grabs. These issues were highlighted in a report by the World Bank’s own independent Inspection Panel in 2015. Rather than addressing the grave concerns raised about the program, the Bank, instead, chose to launch an almost identical initiative under a new name.

“The World Bank has turned a blind eye to the findings of the Inspection Panel and well-being of indigenous communities in Ethiopia by conveniently re-launching PBS under a new name,” said Anuradha Mittal, Executive Director of the Oakland Institute.

  • “This incredibly irresponsible behaviour of the Bank shows that it would rather uphold the status quo than protect vulnerable communities.”

The report provides an in-depth analysis of the ESPES program, revealing its many shocking flaws and weaknesses. For instance, overlooking the climate of fear and government repression prevailing in Ethiopia, it relies on marginalized communities to self-report the abuses they are victims of and on the Government’s internal institutions to lead monitoring and evaluation efforts. Furthermore, the new program uses the same financial systems that the Inspection Panel lambasted in its report.

The report also examines the US Appropriations Bills from 2012 to 2016 to reveal that the US Treasury violated several of congressional laws by voting in favor of this program. “Congressional laws exist to ensure that US tax payers’ dollars don’t contribute to social harm,” said Mittal. “The fact that the US Treasury so blatantly ignored Congress’ orders is appalling. The US must rectify the situation, and have the Treasury explain how it could ignore Congress and disregard the protection of indigenous groups.”

You can consult the full report here : Moral Bankruptcy - World Bank Reinvents Tainted Aid Program for Ethiopia



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