Under the Supervision of John Maynard Keynes World Bank evolved in July, 1944 as an institution to eliminate World Poverty in post World War II era. Its main purpose was to provide loans on concessions to under-developed countries and to encourage Private Foreign investment through guarantees. It is supposedly an unprofitable institute with no involvement in politics and provides access to developed economies to maintain the flow of funds (Danaher 1). But this is a scrutinized version of World Bank; in fact, this financial institution has played a calamitous role for under-developed countries including Pakistan due to its association with the US (Danaher 20).Although World Bank has provided Pakistan with loans for developmental purposes but due the indirect impact of certain negative American agendas concerning the World Bank, these loans led to the destabilization of Pakistan’s political fabric and thus, proved destructive for the Country’s economy.
Ever Since the involvement in Pakistan’s economy, Political agendas of the US are dominant in majority of the policies and structures created by the World Bank. During 1977, under Zia-Ul-Haq’s dictatorship World Bank sponsored institutions in the name of “Free Market” and supported dictatorial activities due to which a majority of the financial systems were taken over by Western countries. This led to an increase in the debt of the country which forced the government of Pakistan after Zia’s regime to follow the policies dictated by US. During 1980’s, US and the World Bank because of its increased role in the Government provided aid to Pakistan for training of the Militants in the Cold War Era (Chossudovsky 1).
Among these policies the main aim reflected is to destabilize the country’s Political situations for US’s motives. The status of Pakistan since 9/11 attacks is of a frontline ally in the War against terror. Pakistan has received $3 billion loans from the World Bank and is expecting to receive a $6 billion, to ensure its support in the War on terror (Rajghatta). Recently, Pakistan has been announced a non-creditworthy country due to its dubious role in the War against Terror after Mumbai attacks by the World Bank(Ejaz), thus the funds are manipulated upon country’s role in supporting this War
Political agenda of destabilization can also be reflected in the sponsorship of Kalabagh Dam which led to a major controversy against the Musharraf regime in 2005. The announcement of a Tenfold increase in all such contentious projects after Kalabagh dam reveals the concealed aim of the US(International Investigation). Thus Pakistan’s vulnerability due to the debt which is almost 64.9% of total Foreign Exchange of the Country (Rizvi) helps US to weaken Pakistan internally. The US and the World Bank invisibly control the financial system of Pakistan leading its withered economy to annihilation.
World Bank basically promotes free market and labor in Pakistan and plays a major role in helping Developed countries to takeover Pakistan’s economy in the name of Privatization. Free labor by the World Bank has shrunken the Government’s role in safeguarding rights of the people aggravating the rights of the working class. Due to Privatization, the financial markets are dominated by few Western Interest Groups and the role of the Locals is diminishing (Lloyd and Weismann). In the Action Week against International Financial Institutions, the facts revealed that the extreme class inequalities are due to the disappearance of Government structures (Lloyd and Weismann).
The negative effect upon natural resources is another major loss for Pakistan. According to Oil and Gas journal, Pakistan has about 25.1 trillion cubic feet of gas reserves and 300 million barrels of oil reserves in Balochistan. Pakistan with an external debt of almost $40 billion is forced by the World Bank to sell-off these oil and gas facilities at rock-bottom prices to foreign agencies due to the compulsion of privatization (Chossudovsky 2). This exposes the fact about World Bank‘s role in the indirect US agenda to pave the way for economic crisis and extreme inequality in Pakistan. Thus, these policies are a source of demolition and economic vulnerability in Pakistan.
The fact which provoked World’s Economists to discuss the Negative Effect of World Bank’s role in Pakistan is the unimaginably worst outcomes of a Majority of the projects established. Pakistan is amongst the countries with “high failure of projects” because the success rate of the projects in Pakistan is 55-50% only as compared to 86-90% in China and India (Yousafzai). These failures are due to World Bank’s lack of concern towards actual development in Pakistan. National Drainage Program i.e. NDP funded by the World Bank overlooked the catastrophic outcomes of 6 violations of safeguard policies. These violations led to water logging and salinity which affected the livelihood of 10,000 people in 3 districts of Sindh. The floods in Badin and Thatta resulted in a loss of almost 300 human lives and damaged almost 1.5 acre of land (Inspection panel).
World Bank decided to finance the Kalabagh dam, a $300 Million mega project 2005. This dam was a controversial initiative because of the expected floods in villages around Makhad district near Indus Valley. Almost 5,000 activists, who rose to expose these disastrous effects, have been missing ever since (Sherpao as qtd. in Bosshard). Similarly, President of the World Bank Praful Patel suggested the Iranian Pipeline Project which is expected to result in a loss for Pakistan because the World Bank forced Pakistan to decrease its rent from $1.5 billion to $0.5 billion (Editorial).The detachment of the World Bank toward these outcomes has resulted in a hazardous situation for the Pakistan.
Contrary to the negative effects a World Bank report claims that the funds have played a significant role in increasing the rate of Progress overall. In 1960 World Bank backed the Indus Basin treaty and provided $800 million funds for this purpose. It also granted a loan of $1.2 billion for Tarbela Dam. During the fourth five year plan, agricultural growth increased from 2.3% to 4.4%, a long term framework under OGDC for the Oil and Gas resources in northern Sui was also presented (Pakistan and World Bank partners in progress).
World Bank has also played a major role in poverty alleviation by providing $75 million loan under PPAF and by training almost 200,000 people in various skills (Pakistan:). In the emerging financial crises the World Bank is vital for the existence of Pakistan. Due to the increasing budget deficit the World Bank is the only lifeline for Pakistan (Lieven).
Although World Bank has provided Pakistan with Developmental Funds to initiate projects but at the same time these funds were linked with indirect US policies. The fourth five year plan also resulted in an increased Privatization and inequalities. Similarly despite of the framework by OGDC; there has been an energy crisis due to the foreign dominance on these resources. Poverty alleviation plans have not been successful due the class differences and still 30% of Pakistani population is still below the poverty line. Forced Fulfillment of US’s agendas and destabilization are the costs Pakistan has to pay due to the “debt trap”. Thus, the dictatorial policies are weakening the central government which is a cost higher than these projects.
Conclusively, the arguments clearly point towards the dwindling role of the Government of Pakistan which is over shadowed by the World Bank or indirectly by the US policies. Majority of the projects funded have a hidden link with the US’s agendas and have hindered the path to prosperity. The World Bank through the policies has thus, surrounded Pakistan in an inescapable trap. This trap of dictatorship by the US makes the role of the World Bank catastrophic for “Pakistan as an independent state”.
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