Russia’s invasion of Ukraine has caused humanitarian catastrophe and vast economic destruction. Ukraine has asked the International Monetary Fund (IMF) for emergency financing, the European Commission has pledged €1.2 billion to the besieged nation, and the World Bank has positioned itself as a key institution to address Ukraine’s economic and humanitarian fallout. In early March, within two weeks of Russia’s assault, the Bank approved a supplemental loan of ~US$489 million to Ukraine and set up a multi-donor trust fund to coordinate bilateral resources, which has mobilised millions. By June, the World Bank disbursed US$1.8 billion to Ukraine (made up of non-concessional IDA and IBRD loans, guaranteed by the Netherlands, Latvia, Lithuania and the UK). In early August, the World Bank announced another US$4.5 billion in financing for Ukraine via the USA, mainly for pension and social assistance expenditure.
The current prominence of the World Bank’s engagement in Ukraine must be situated in the institution’s broader effort to enhance its legitimacy as an actor during war. Not only has the Bank tripled its budget for disbursements to conflict-affected states since 2017 to US$18.7 billion, but it has announced its intention to be more intensely involved in conflict financing, with the publications Pathways for Peace, co-produced with the UN, and the World Bank Group Strategy for Fragility, Conflict, and Violence 2020–2025 (Strategy 2020–2025).
My latest piece in Security Dialogue, ‘Making War Safe for Capitalism’, critically analyses these Bank publications and the material impact of their interventions during the War in Donbas, which raged in eastern Ukraine from 2014 until the Russian invasion earlier this year. My article argues that the World Bank’s interventions into conflict, which rely on fundamentalist neoliberal assumptions, are antagonistic to the possibilities of peace. I argue that such interventions not only negatively impact the possibility of the cessation of major violence, known as a ‘negative peace’, but prohibit emancipatory, ‘positive’ forms of peace emerging, which promotes social justice and ends economic, social, physical, and other violence. As I explore through an investigation of the Bank’s foundational documents and their actions in Ukraine, the World Bank envisions its role as ensuring ‘good governance’, fostering the conditions for a blooming of ‘human capital’, and ‘crowding in’ private money during war.
The Good Governance Agenda
The World Bank argues that ‘good governance’ is vital for a conflict-affected state. What this means in simple language is that the government must ensure a ‘flourishing market economy’ through the protection of private property, growth, and stable macroeconomic variables, to ensure ‘investor confidence’. Primarily, the Bank wants to make certain that the Ukrainian government can repay its immense debts, which the Bank, IMF and other IFIs have directly contributed to. Indeed, the most recent US$4 billion loan that the World Bank has pledged to Ukraine is on non-concessional terms at the same rate of interest and maturity as for any other ‘middle-income country’, despite Ukraine facing a Russian invasion. Interestingly, and related to this point, the World Bank has only recently (in the last two months) classified Ukraine as a ‘country in conflict’. This is despite Ukraine meeting the Bank’s technical criteria for inclusion as ‘medium-intensity conflict’ over the last eight years; a criteria that institutionally allows Ukraine to access flexible financing, receive concessional lending, or debt waivers.
Although Ukraine’s status as a ‘country in conflict’ has, finally, changed, there has been no moves to give Ukraine concessional terms as is usually offered to countries under this criterion. This is, as I argue elsewhere, because Ukraine holds too much IFI and private debt, which means any debt waivers or forgiveness would be too painful for creditors holding Ukrainian debt. The World Bank directly states that ‘IFIs and bilateral lenders would need to strive to have positive flows to Ukraine over the short run – covering, at prevailing rates, the debt services owed to them for the year’, highlighting that their main concern is the continued ability for Ukraine to service its debts. Indeed, since 2014, throughout the bloody conflict in Ukraine’s east, the Ukrainian government has repaid just the World Bank approximately US$2 billion (of that, US$664 million in interest!), and it appears that the Bank want Ukraine to continue paying its debts – plus interest!
Human capital, or human cattle?
The World Bank places ‘investing in human capital’ at the top of priority issues in violent conflict, and Strategy 2020–2025 is replete with the phrase. The Bank aims to mould conflict-affected people to be ‘market actors’ that invest in themselves and pursue their individual interests – and thus, delegitimise collective action and put the burden of social support on people themselves (rather than the state or other collective institutions). For example, in the World Bank’s document that outlines what Ukraine must do in the short- and medium-term, the Bank calls on the government to minimise social support spending. They state that ‘important political decisions will need to be made regarding the eligibility for and benefit size of the war veterans’ benefit, to address potentially crippling fiscal burdens’, which seems to suggest that not all Ukrainian Army veterans will have post-duty support. Further, the Bank also demands Ukraine to continue annually indexing pension benefits and minimum income to inflation, at most – keeping social support payments at the bare minimum despite the humanitarian need. Instead of the state supporting veterans, pensioners, or the poor, the Bank argues that the war may ‘present an opportunity to think differently about social services…no longer primarily institution-based (e.g., orphanages, old age homes, institutions for those with disabilities), but oriented toward home-and community-based care’ (emphasis added); displacing the responsibility for social support onto the individuals and families (predominantly women) themselves.
Private Capital, the Saviour
The ‘private sector’ is venerated to near Biblical proportions in both Pathways for Peace and Strategy 2020–2025 and is the most important social actor in Ukraine from the Bank’s perspective. Throughout the Donbas war, rather than demonstrate concern for the deterioration of human development for millions of conflict-affected Ukrainians, the World Bank has focused on increasing Ukraine’s ranking in the Ease of Doing Business Index, from 137th place, prior to the war, to 64th as of 2020. In the face of Russia’s 2022 invasion, the Bank argued that the most important area for the Ukrainian government to immediately focus on is ‘Ukraine’s private sector’; as the country is told to ‘reinvent’ itself as a ‘competitive private sector and an EU orientation’. Then, in the medium-term, taxes for business need to be decreased, with more privatization, in order to ‘shore up business confidence’. The World Bank believes that private business is the primary social unit in Ukraine and the advance of business interests to be the most important strategy during an acute humanitarian crisis.
War and Profit
In Strategy 2020–2025, the World Bank argues that engaging in conflict-affected scenarios is ‘fundamentally different’ from settings of peace. The Bank emphasises that its interventions are ‘best-fit’ and avoid ‘one-size-fits-all solutions’. However, this rhetorically soothing balm is betrayed by the requirement of constructing neoliberal, market institutions plastered across all pivotal Bank documents. There may not be a ‘cookbook that prescribes recipes’, as the Bank asserts, but only one chef is permitted, and the cake has already been baked; meaning that the overarching goal of ensuring a neoliberal market economy under the tutelage of the IFIs is a fait accompli. The Bank has, revealingly, flaunted the unique reform opportunities presented by the peri-conflict context, asserting that opposition to reforms are ‘in a weakened condition’ and structural adjustments are ‘more feasible’.
In Ukraine, as the Russian invasion continues, the Bank has pledged more loans and financing, though with significant strings, and debt, attached. This may be problematic, as Ukraine’s public external debt is about US$57 billion, with the country is expected to pay back US$14 billion of it across 2022 and 2023. Approximately US$22.7 billion of Ukraine’s public external debt is held by private bond holders, with a payout of US$1 billion due this month, and another US$22 billion of Ukraine’s debt is owed to the IFIs, particularly the IMF and World Bank – with US$2 billion of debt payments and US$178 million in ‘surcharges’ owed just to the IMF this year.
It is then necessary to ask can the World Bank’s interventions ever hope to advance peace? Throughout Ukraine’s eight years of war, the assumptions underpinning the World Bank’s ‘peace strategy’ have been demonstrated as problematic: eviscerating the state and the possibility of collective solidarity, instrumentalising people as cattle for capital, and relying on a purely profit-driven private sector to create ‘sustainable solutions’, which have not worked for the conflict-affected people in Ukraine, as humanitarian need, inequality, and poverty remain dire.