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borrowing countries and provides policy advice to the borrowing countries. While the
research and monitoring are quite well received by the beneficiaries, the advice is not
always welcome. As it is tight to the attractive loans and grants, the borrowing countries
accept it as a condition as long as the loans and grants are attractive.
Similarly, the inclusion of the environment can be seen as adding new products by
supporting projects with environmental benefits and changing old products by avoiding
or mitigating negative environmental impacts up to the point of avoiding these
types of loans altogether. Gutner (2002) emphasizes that the peculiarities of environmental
behavior of MDB is that their definitions are not always clear cut and that
they vary over time, particularly when projects consist of a number of components of
which there might be those with the intentions of providing environmental benefits
and at the same time having negative environmental impacts.
The use of reporting to the principals and their monitoring was restricted to conventional
ex post reporting and the presentation of individual projects to the board of
ED and their approval. Kapur rates the degree of control with respect to project approval
and reporting as being rather low as the informational advantage is high of the
side of the World Bank vis-à-vis the Board of Executive Directors which have seldom
equivalent resources to master the details. A better equipped monitoring instrument
is the evaluation department, now called Independent Evaluation Group, which reports
to the ED board. Interestingly, this is a newer development as the department
was created by the Bank’s President in 1973 (World Bank 2003f) to inform the President
and the senior management about project performance ex post. The construction
of the evaluation department is not independent as an external auditor with interrogative
rights, but relies on the cooperation of the project managers. Although the
World Bank and the OED emphasize its independence and its objectivity, these
claims were not fully believed as the separate one-time valuation commissions
(Wapenhans-Report: World Bank 1992; Morse and Berger 1992) and the establishment
of the Inspection panel in 1993 show. The creation of these control mechanism
was, however, not meant to improve the degree of information of the principals, but
to external third parties (Fox 2002).
The use of screening and selection devices is applied differently for the President
and the management and the staff. With five year tenure and the potential for renewal,
the selection of the President of the World Bank has the potential to select a
person with similar preferences as the collective principal and provide an incentive to
maintain these preferences. The practiced process of selection, based on the prerogative
of the US, has been criticized for its limited range of candidates, closed door
procedures and its bias for US preferences based on domestic political compromises,
and not on experience in development policy (Kapur 2000). The staff screen-