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I H S A N U G U R D E L I K A N L I , TO D O R D I M I T R O V, R O E N A A G O L L I
MULTIL ATER AL
DEVELOPMENT
BANK S
Governanc e and Financ e
Multilateral Development Banks
Ihsan Ugur Delikanli • Todor Dimitrov
Roena Agolli
Multilateral
Development Banks
Governance and Finance
Ihsan Ugur Delikanli Todor Dimitrov
Istanbul, Turkey Thessaloniki, Greece
Roena Agolli
Thessaloniki, Greece
ISBN 978-3-319-91523-4 ISBN 978-3-319-91524-1 (eBook)

https://doi.org/10.1007/978-3-319-91524-1
Library of Congress Control Number: 2018942751
© The Editor(s) (if applicable) and The Author(s) 2018

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For our families and children as well as all children of the world.
Foreword
During several decades the benefits of multilateralism were taken for granted.
This is no longer the case. In this context, Multilateral Development Banks:
Governance and Finance is a very timely and valuable book that offers a rich
description of Multilateral Development Banks (MDBs), an assessment of
their roles, and a constructive critique with recommendations to enhance
their contribution to the development agenda.
A useful taxonomy of 25 MDBs is proposed and applied for the analysis of
these banks as a whole and by type of MDBs. Having worked for the three
different types of MDBs considered in the book, I can attest that this classifi-
cation makes sense.
This volume is an important contribution to the qualitative and quantita-
tive knowledge about MDBs practices and standards. It addresses misconcep-
tions concerning MDBs, provides a comprehensive review of governance and
funding issues that constrain MDBs’ effectiveness, and suggests means to
overcome those constraints.
It is to be noted that Chap. 3 provides an adequate presentation of the
important issue of additionality, whereas Chap. 5 presents a novel system of
MDB-specific governance principles, which is used in an assessment and in
identifying areas for improvement. It includes the standards developed for
independent evaluation by the MDBs’ Evaluation Cooperation Group
(ECG), considering also other areas relevant for MDBs.
The book concludes with a discussion on the future of MDBs, providing
ideas and suggestions for addressing complex problems, highlighting the
importance of improving governance and strengthening independent
vii
viii Foreword
evaluation, as well as the engagement with stakeholders and the promotion of

synergies across MDBs. Thus it points out ways in which the MDBs can
become more effective and efficient agents of change, playing a key role in
shaping, implementing, and evaluating the development agenda.
Osvaldo Néstor Feinstein

Former manager and advisor at the
World Bank, former senior evaluator and
consultant for IFAD, former senior consultant
with IADB, AfDB, CDB, and several UN and
bilateral development agencies
Preface
Multilateral Development Banks: Governance and Finance is a novel, theory-

inspired, and practice-based guide to the essence and prospects of Multilateral
Development Banks (MDBs). It provides a comprehensive overview regard-
ing virtually all MDBs, involved in lending for international socioeconomic
development. With seven stand-alone chapters, the book represents insights
on a wide range of often misconceived and unattended MDB aspects.
The analysis covers 25 MDBs worldwide to offer unprecedented under-
standing to a broad range of audiences who would be interested in the com-
plexity and the prospects of these institutions. The MDBs are covered as a
family and by groups, rather than presenting each one in detail. The grouping
is based on geographical lending outreach and has three categories of MDBs:
Global, Regional, and Sub-regional.
Unlike similar books and articles, which treat MDBs as banks, the authors
offer a novel perspective by addressing the obscured specifics of multilateral
lending institutions, revealing multiple aspects of their nature and operations,
based on their unique self-regulation and governance. MDBs are addressed in
a forward-looking manner, toward “knowledge banks”, “change agents”, and
even “benchmark setters”, diving into the very essence of the often elusive
additionality (offering of a value that is additional to what is already available
in the market). The variable elements of additionality make an MDB distin-
guished from any other institutions or banks.
The book’s novelty and insight draw on relevant comparisons of the three
regional groups of MDBs, with a focus on their governance and finance, to
outline relative comparative advantages, among other key features. While criti-
cism and reforms were addressed in the past, the book presents the importance
of phased incremental elevations through an evidence-based advancement of
ix
x Preface
values, human capital, and governance. This approach is in contrast with

already known polar ad hoc pressures that led to various stop-and-go reform
campaigns, associated with severe side effects such as “reform fatigue” and staff
disengagement.
The book reflects on the key role of most MDBs in inspiring and advancing
sustainable economic development through the transfer of knowledge and
funding by addressing key global challenges. It provides a constructive elabo-
ration on issues of recent criticism, such as opaque governance, domination
by “donor” countries, controversial requirements and operations, and lack of
inclusiveness. The bold calls for institutional reforms and the recent geopoliti-
cal and social turmoil in the world that have challenged multilateralism for
development (among other post-war values) make the book timely and rele-
vant, with a prospect to remain such for years ahead. Therefore, it is expected
to constructively enhance the ongoing debate, involving a growing network of
stakeholders, directly or indirectly, dealing with MDBs and their agenda (e.g.
OECD and G20).
Originated by a team with experience at a relatively small MDB (the Black
Sea Trade and Development Bank), the book presents a neutral position,
backed by years of diverse experiences at/with numerous MDBs, providing a
hands-on insider perspective. Utilizing their wide networks, as well as insight
from working closely with peer MDBs, the authors offer analysis on a number
of unexplored aspects, drawing from vast ex-post evaluation resources, reflect-
ing the wealth of lessons learned at most MDBs. This makes the book a unique
and hopefully inspiring source of knowledge on a wide range of standards and
practices, for the benefit of practitioners, consultants, government officials,
borrowers, and researchers.
The book is expected to be of particular interest and use to a very wide
range of multilateral as well as bilateral organizations and stakeholders con-
cerned with development. It should also become a key asset to academics and
students with an interest in international finance and development. It may
also be useful to members of the general public interested in the complex
geopolitical context of international development and multilateralism, as they
have never been more important, yet challenged. It is clear that rapid transfor-
mations are taking place toward political and social upheavals, driven by pop-
ulism and nationalism, triggering unprecedented debate about the challenges
of poverty, inequality, peace, and sustainability. This makes the MDBs par-
ticularly relevant and important, at a time when they are pressed to deliver
deeper and wider, faster and better, with even more limited resources.
The opinions and positions expressed in the book belong to the authors
and not to the institutions they are associated with. The authors take
Preface
xi
r esponsibility for all errors and omissions and acknowledge the importance of
contributions by many other people.
The three authors worked jointly on the book upon the idea of Ihsan Ugur
Delikanli. Their primary contribution is as follows:
Ihsan Ugur Delikanli: Chaps. 2, 3, 4, 6, 7.

Todor Dimitrov: Chaps. 1, 2, 3, 5, 6, 7, editing.
Roena Agolli: Chap. 2, index.
Credit for photograph of Todor Dimitrov (back flap): Kalina Dimitrova.
Istanbul, Turkey Ihsan Ugur Delikanli

Contents
1 Introduction 1
2 The Nature of MDBs 9
3 Financial Dynamics 33
4 Current Governance 89
5 Principles of Sound Governance 123
6 Clients’ Perspective 163
7 The Future 177
Glossary 193
Index 203
xiii
List of Figures
Fig. 2.1 Unilateral and multilateral principles 23

Fig. 2.2 Multilateral delegation 24
Fig. 3.1 Subscribed and paid in capital, global MDBs (USD, billion).
Source: Authors’ compilation from MDBs’ annual reports 39
Fig. 3.2 Subscribed and paid in capital, regional MDBs (USD, billion).
Fig. 3.3 Subscribed and paid in capital, sub-regional MDBs (USD, billion).
Fig. 3.4 Equity and paid in capital, global MDBs (USD, billion).
Fig. 3.5 Equity and paid in capital, regional MDBs (USD, billion).
Fig. 3.6 Equity and paid-in capital, sub-regional MDBs (USD, billion).
Fig. 3.7 Total borrowings (USD, billion). Source: Authors’ compilation
from MDBs’ annual reports 44
Fig. 3.8 Gearing ratio (Borrowings + Total equity)/(Loans + Guarantees +
Undisbursed commitments). Source: Authors’ compilation from
MDBs’ annual reports 45
Fig. 3.9 Total assets (USD, billion). Source: Authors’ compilation from
Fig. 3.10 Liquidity asset ratio (Cash and due from banks + Treasury assets)/
Total assets (%). Source: Authors’ compilation from MDBs’
annual reports 47
Fig. 3.11 Liquidity borrowing ratio (Cash and due from banks + Treasury
assets)/Borrowings (%). Source: Authors’ compilation from
xv
xvi List of Figures
Fig. 3.12 Total loans, debt securities and equity investments (USD, billion).
Fig. 3.13 Leverage ratio (%). Source: Authors’ compilation from MDBs’
annual reports 53
Fig. 3.14 Gross income from lending (%). Source: Authors’ compilation
Fig. 3.15 Return on equity (RoE, %). Source: Authors’ compilation from
Fig. 3.16 Administrative costs ratio (Administrative Costs/Gross Income
from Lending and Treasury, %). Source: Authors’ compilation
Fig. 4.1 Governance structure 91
Fig. 6.1 Eligibility and concept review 169
Fig. 6.2 Appraisal and due diligence 170
List of Tables
Table 2.1 Classification of MDBs in terms of regional coverage by lending 10

Table 2.2 Why MDBs are different from banks 28
Table 2.3 MDBs—weighting the M, D, and B 30
Table 3.1 MDBs’ credit ratings and risk weights 54
Table 4.1 Quorum and decision-making, Board of Governors 95
Table 4.2 Voting power of G7 and G20 countries at MDBs 97
Table 4.3 Composition of Board of Directors 102
Table 4.4 Requirements for quorum and decision-making at Board of
Directors’ meetings 104
Table 4.5 Selection of president 109
Table 4.6 Examples of MDB’s committees 113
Table 5.1 MDBs’ adherence to the seven governance principles 157
Table 6.1 Phases in the financing cycle 164
Table 7.1 MDBs’ safeguards 187
xvii
1
Introduction
Rationale
Address Misconceptions, Clarify the Essence of MDBs
Despite existing publications and public discourse, the role, governance, and
potential of Multilateral Development Banks (MDBs) remain obscured by
fragmented and often inaccurate information. These institutions remain
poorly understood, implying the need for an open, comprehensive, and bal-
anced overview, going beyond history and data.
This book sheds light on a number of misconceptions regarding MDBs,
widely spread not only among the public, but even among MDBs’ stakehold-
ers such as counterparts, shareholders, managers, and staff. These misconcep-
tions include but are not limited to the following: (1) MDBs are UN agencies;
(2) MDBs are aid/grant/subsidy funds; (3) all MDBs are subsidiaries of the
World Bank; (4) MDBs are just international commercial/investment banks;
and (5) MDBs provide a key share of financing in some countries but there
are no tangible results.
Chapters 3, 4, and 5 (Financial Dynamics, Current Governance, and
Governance Principles) constitute the core of the book, providing insight for
the bumpy road ahead, outlined at the concluding Chap. 7 (The Future).
These chapters provide a comprehensive review of multiple governance and
funding issues that constrain MDBs’ effectiveness, presenting seven novel
governance principles (Chap. 5), followed by an assessment of reality against
those principles.
© The Author(s) 2018 1

I. U. Delikanli et al., Multilateral Development Banks,
https://doi.org/10.1007/978-3-319-91524-1_1
2 I. U. Delikanli et al.
Compare Global, Regional, and Sub-regional MDBs
The book provides an overview of what the MDBs are often mistakenly
assumed to be, in order to reveal and clarify their distinct nature and modus
operandi, recent evolutions, toward future perspectives, covering all essential
aspects, including the most recent challenges to institutional governance and
finance. This is a timely and forward-looking response to the aggressive pres-
sures on multilateralism and development, fuelled by contemporary tides of
populism, nationalism, and protectionism, already affecting many MDBs and
other international institutions.
Methodology
The book has a specific focus on recent waves of criticism and discontent
with governance and results, both legitimate and ill-informed, that triggered
ad hoc reforms, as well as a proliferation of “new”, “green, lean, and clean”
MDBs. The recent motion of creating “alternative” new MDBs is subject of
a balanced assessment of pros and cons, with the ultimate objective of sug-
gesting feasible improvements in both the “old” and the “new” generations
of MDBs.
Approach
The book covers 25—virtually all—MDBs. While a reference to particular

cases is used along with specific individual examples, the important institu-
tional issues are approached in a forward-looking perspective, dealing with
and comparing three groups of MDBs—Global, Regional, and Sub-regional—
revealing their similarities, differences, strengths, and weaknesses. The goal of
grouping and comparing is to perform “MDB family” mapping in order to
suggest possible enhancements that are relevant for each respective group, as
individual MDB approach would be less meaningful or efficient. Another
goal is to make MDBs more aware of comparative advantages and potential
to improve, toward becoming more synergetic and relevant to the pressing
regional and global challenges of the future.
The methodology used in reviewing the 25 MDBs consists of an interdisci-
plinary process, integrating a number of interrelated components, outlined
below. The issues covered by each chapter are addressed by extensive data
reviews, as well as several rounds of peer-to-peer anonymous direct interviews
Introduction 3
with key MDB staff and management, focusing on the departments involved
with institutional learning and memory—the Independent Evaluation depart-
ments. The analysis is also supplemented by interviews with key MDB bor-
rowers, to reflect their perspective. Most interviews were conducted in the
course of several years, within an ongoing MDB comparative research, cover-
ing 260 respondents from 19 MDBs.
The methodology, along with the main messages of each chapter, should
remain informative and relevant in the years to come, as the focus is on
how to improve MDBs’ functioning, looking at the cross-cutting groups
and issues. Hence, it is aimed at providing practice-based inspiration for
further debate regarding the MDB evolution, with a particular attention
on the need and obstacles to enhance old-fashion institutional governance,
in the light of recent efforts of last generation MDBs to challenge the more
traditional “old” development institutions (perceived as inefficient and
donor-dominated).
Overall, the methodology constitutes an interdisciplinary mapping pro-
cess, catalyzing insights from extensive reviews and discussions, involving the
following key elements: (1) MDB categorization based on geographical out-
reach; (2) development and application of MDB-specific governance assess-
ment framework (principles); (3) an assessment of the outreach and impact of
MDBs, based on key ex-post evaluation results; (4) a financial assessment
framework for MDBs, addressing inherent subsidies and privileges as unrec-
ognized risk mitigation instrument; and (5) evaluating the accessibility of
MDBs to borrowers through a borrower-based perspective. Details on the
approach regarding these five elements are presented below.
Unlike existing research that treats MDBs as banks, hereby they are
addressed by revealing the institutional aspects of their operations, going well
beyond the bank concept—toward high-profile self-regulated knowledge
banks, change agents, and franchise-based standard setters. These concepts
involve relevant comparisons of the three regional groups of MDBs, with a
focus on a feasible and sustainable governance-centered, rather than ad hoc,
reform agenda. The goal is to improve all or most MDBs through an evidence-
based advancement of values, management, staff, and governance, rather than
already known polar pressures that resulted in various stop-and-go reform
campaigns, triggering alarming staff disengagement and overall reform fatigue
across most MDBs.
MDB Categorization
All MDBs are grouped by their regional coverage. This facilitates the process
of understanding and improving different institutions, based on common
denominators rather than extensive piecemeal approach. It is instrumental to
demonstrate the similarities and differences among groups, as well as key
issues and shortcomings without criticizing a particular individual institution.
The ultimate goal is to offer feasible improvements that acknowledge MDBs
as complex related institutions, providing additional value beyond mere
finance, unlike conventional banks. This mainly refers to the provision of
knowledge and public goods—hence arguing that MDBs are primarily knowl-
edge banks and role models that should be treated very differently from any
other financial institutions.
The categorization generally reflects the MDBs’ size and ambition and is
defined as follows:
1. Global MDBs lend to several continents, covering those almost entirely;
2. Regional MDBs lend to just one continent, covering it almost entirely;
3. Sub-regional MDBs focus on a specific region that is smaller than a
continent.
Governance Assessment Framework
The very specific governance systems utilized by MDBs deserve central atten-
tion. For this reason, Chap. 4, dedicated to MDBs’ Current Governance,
followed by Chap. 5, which offers principles to elevate governance, are of
specific importance. The latter chapter is based on a methodology involving a
thorough process of reviewing and assessing respective governance systems
against a set of principles, developed by the authors. This is done at group
levels rather than at each MDB, but outlier cases are also addressed as a source
of insight, from both negative (risk) and positive (potential) perspectives.
Given the extensive experience and communication (including dedicated
interviews over the past four years) of the authors in dealing with those gov-
ernance systems within the MDBs, a particular attention is devoted to the less
obvious but very important details and practices of implementing the gover-
nance rules, as they have substantial implications, rarely understood. The
analysis is steered by a review of critical post evaluations at corporate/
institutional levels, in order to derive common issues.
Introduction 5
Chapter 5 (Governance Principles) presents the development and applica-

tion of a unique governance assessment framework, specifically tailored to
MDBs. This involves MDB-customized institutional matrices, addressing the
role of two couples: formal/visible vs. informal/invisible practices at all levels
measured against seven core principles. Hereby an outlier assessment is also
instrumental in revealing and understanding borderline governance practices
that could inspire improvements, with due respect of existing constraints and
feasibility considerations such as the inherent complexity and inertia in mul-
tilateral dialogue.
Financial Assessments
The application of standard instruments of financial analysis (Chap. 3:

Financial Dynamics) is enhanced by applying an assessment framework for
the MDBs’ financial performance, covering the complexity of their unique
and poorly understood capital structure, risk mitigation, and institutional
nature. This highlights the impact of important aspects such as leverage-based
pricing and respective additionality-based premiums, inherent subsidies, and
privileges, as well as linking financial resources with institutional safeguards
and know-how, especially in a time when the latter is in the lead of provid-
ing a competitive edge. In this light, the financial resources, leverage and actual
performance, are assessed in terms of their role and potential for multiplier
effects, as the empirical evidence suggests that even the MDBs’ combined
financing is a tiny fraction of borrowing countries’ GDP (under 1%). In other
words, the concepts of additionality and catalyzing remain in the lead.
Borrower Perspective
The important perspective of the borrowers is covered by Chap. 6, revealing

the various layers of the typical operational and approval cycle, often causing
frustration among applicants. The ultimate goal is to help MDBs become
more inclusive and user-friendly. The analysis is based on a mix of data sources,
such as MDBs’ policies, ex-post evaluation reports/studies, and interviews
with actual and potential clients, as well as key front office staff—covering a
period of 15 years and at least two MDBs in each group of institutions (Global,
Regional, Sub-regional).
Structure of the Book

The book consists of seven chapters: 1. Introduction; 2. The Nature of MDBs;
3. Financial Dynamics; 4. Current Governance; 5. Principles of Sound
Governance; 6. Clients’ Perspective; 7. The Future. The chapters are related and
naturally flow in that order. However, they also represent a stand-alone over-
view of the respective subjects. While the first two chapters are more descrip-
tive, the other five are more analytical and forward-looking, balancing
information with insight.
Chapter 2 contextualizes MDBs in terms of their institutional emergence,
role, and evolution, starting with the broader issues of roots, categorization,
and challenges. It groups the 25 MDBs into Global, Regional, and Sub-
regional, to facilitate the scope of analysis. The nature of MDBs as complex
public institutions is outlined, revealing common misconceptions. The review
delves into a number of specific MDB conceptual features that are often
poorly presented and understood—from the wider issues of multilateralism
and development to the more specific political and extraterritorial dimen-
sions, moving toward knowledge bank concepts.
Chapter 3 presents the complexity of MDB finance, revealing major differ-
ences with other institutions that may look similar, as well as across the three
MDB groups. It covers capital formation, deployment and structure, borrow-
ing and catalytic capacity, lending outreach and terms, as well as the impor-
tance of inherent subsidies, safeguards, additionality, credit ratings, and so on.
While this chapter is inevitably more technical, it is written so that the wider
public and policymakers can also grasp the key messages, if not all of the
addressed financial metrics and concepts.
Chapter 4 goes beyond the mere description of typical MDB governance
systems, as this issue is at the core of most MDB challenges and future evolu-
tion. It looks at multiple written and unwritten governance elements, identi-
fying shortcomings and ill-based reforms that were often counterproductive,
with the goal to highlight the way ahead.
Chapter 5 presents a set of novel MDB governance principles, developed
by the authors. They cover virtually all aspects of governance, from the need
to distinguish several Board roles and capacity, to the overshadowed impor-
tance of attracting, motivating, and nurturing the right mix of dedicated
human capital. An assessment of governance against the new principles is also
offered, to inspire possible improvements.
Chapter 6 is a reflection on the implications arising from key issues
addressed so far from a very practical borrower perspective. In addition to an
Introduction 7
overview of the eligibility and application process, it also reveals issues of frus-
tration and opacity that stem from an insufficient understanding of MDBs’
complexity. Ultimately, the chapter aims at helping potential and actual cli-
ents, with a focus on private sector borrowers, to navigate the unchartered
waters of MDB approval and project cycles.
The concluding Chap. 7 presents the actual and potential role of MDBs as
agents of global change, as institutions with sustainable impact, beyond the
mere objects of financing. This deals with their raison d’être and is built upon
the main messages and conclusions of earlier chapters, suggesting how MDBs
can better play this important role as a system of related institutions. Naturally,
MDBs as knowledge institutions are addressed in relation to the independent
evaluation function and the wealth of lessons registered, but not necessarily
learned. The focus is on how MDBs may further excel in providing first-rank
international leadership in high standards of norms and practices, across sec-
tors and countries, beyond ideologies and politics—a worthwhile challenge.
The chapter looks openly into the future of MDBs, in a global context, with
direct reference to technological advancements and the UN Sustainable
Development Goals, among other factors. It is a forward-looking reflection of
all other chapters, suggesting a feasible and comprehensive reform agenda
beyond the traps of the past. Key highlights include the need to elevate gov-
ernance, improve the use of independent evaluation, enhance engagement
with stakeholders, as well as ensure synergies across MDBs at a time of unprec-
edented technological and social shifts with high impact.
2
The Nature of MDBs
Introduction and Categorization

The chapter analyses the nature of Multilateral Development Banks (MDBs),
revealing what makes these institutions specific and different from others. The
important institutional issues are approached in a forward-looking perspec-
tive, dealing with and comparing three groups—Global, Regional, and
Sub-regional—revealing similarities, differences, and some comparative
advantages with the clear notion that regarding their categorization, they all
belong to a complex system of public institutions. The categorization helps to
perform MDB family mapping, allowing enhancements that are relevant for
each respective group, as individual MDB approach would be less meaningful
or efficient. A key goal is to reveal comparative advantages and potential to
improve, toward becoming more synergetic and relevant to the pressing
regional and global challenges of the future.
All MDBs are categorized in respect of their regional coverage. This facili-
tates the process of understanding similarities and differences among them,
based on common denominators rather than extensive individual assessments.
The regional classification generally reflects the MDBs’ size and ambition and
is defined as follows:
1. Global MDBs lend to several continents, covering those almost entirely;
2. Regional MDBs lend to just one continent, covering it almost entirely;
3. Sub-regional MDBs focus on a specific region that is smaller than a
continent.
© The Author(s) 2018 9

I. U. Delikanli et al., Multilateral Development Banks,
https://doi.org/10.1007/978-3-319-91524-1_2
This categorization is relative, as there are overlapping and border cases,

arising from the dynamic nature of MDBs. While most MDBs naturally fall
in those three categories, particularly those who directly target a continent
such as the Asian Development Bank (AsDB) and African Development Bank
(AfDB), there are some outlier institutions that are quite specific, targeting
countries that are not necessarily belonging to one region/continent. The fluid
nature of the classification means that its key role is to facilitate the analysis
rather than push MDBs into watertight boundaries.
The MDBs’ categorization, based on geographical lending outreach, is pre-
sented in Table 2.1.
Table 2.1 Classification of MDBs in terms of regional coverage by lending

Bank/Regional
coverage Established Full name
Global
World Bank
IBRD 1945 International Bank for Reconstruction and
Development
IFC 1956 International Finance Corporation
IDA 1960 International Development Association
IFAD 1977 International Fund for Agricultural Development
Regional
CEDB 1956 Council of Europe Development Bank
EIB 1958 European Investment Bank
IDB 1959 Inter-American Development Bank
AfDB 1964 African Development Bank
AsDB 1966 Asian Development Bank
IsDB 1975 Islamic Development Bank
EBRD 1991 European Bank for Reconstruction and Development
NDB 2014 New Development Bank (formerly referred to as the
BRICS Development Bank)
AIIB 2015 Asian Infrastructure Investment Bank
Sub-regional
CABEI 1960 Central American Bank for Economic Integration
EADB 1967 East African Development Bank
CDB 1969 Caribbean Development Bank
CAF 1970 Development Bank of Latin America (formerly
referred to as the Corporación Andina de Fomento)
IIB 1970 International Investment Bank
BADEA 1973 Arab Bank for Economic Development in Africa
WADB 1973 West African Development Bank
NIB 1976 Nordic Investment Bank
PTA 1985 Eastern and Southern African Trade and Development
Bank or the Preferential Trade Area Bank
BSTDB 1997 Black Sea Trade and Development Bank
ETDB 2005 Economic Cooperation Organization Trade and
Development Bank
EDB 2006 Eurasian Development Bank
Source: Authors’ compilation
The Nature of MDBs 11
It is noteworthy that this classification is not absolute, as there are several

overlapping and border cases, often arising from the dynamic nature of
MDBs. While some MDBs such as the AsDB and AfDB directly fall into the
regional group, some outlier institutions are not so easy to categorize. Good
examples of outlier cases are the European Bank for Development and
Reconstruction (EBRD), the European Investment Bank (EIB), the Islamic
Development Bank (IsDB), and the New Development Bank (NDB):
1. EBRD’s mandate focuses on the former communist countries but since

recently it also covers Turkey, Greece, and even parts of Africa. Due to the
wide scale/coverage that is deemed equivalent to a continent, EBRD falls
in the Regional group.
2. Likewise, the EIB, the infrastructure finance arm of the EU, is focused on
the EU member states but also invests elsewhere—in African, Pacific, and
Caribbean countries. It is also noteworthy that the EIB, like a few other
MDBs, is not exactly a “Development” Bank, except in the recently origi-
nated activities outside the EU. With all these in mind, the EIB also
belongs to the Regional group, as its geographical scope is considered
equivalent to a continental coverage.
3. The IsDB invests in many countries across the world and is therefore not
focused on a specific region, but still comes short in having a global cover-
age in terms of two or more entire continents and therefore falls in the
Regional group as well.
4. The NDB covers just a few countries (BRICS—Brazil, Russia, India,
China, and South Africa) across different continents. However, as those
countries are particularly large and do not fit a specific sub-region, it also
falls in the Regional group.
These examples illustrate the overlapping and relative nature of the categoriza-
tion, implying that it is utilized to facilitate the analysis rather than to assume
absolute boundaries across the three groups.
The Bretton Woods Institutions

By the late 1930s and early 1940s, the concept of economic development in
the contemporary sense began to emerge. The economic and social needs of
the post-war world were primarily addressed by the prominent British
economist John Maynard Keynes, inspiring policy makers. Harry Dexter
White, an American economist, was a key figure in envisioning the set of
institutions that had to be created over the visions of John Maynard Keynes.
In 1942, White paved the path toward the fundamentals of a development
policy as he prepared a proposal for a “United Nations Stabilization Fund and
a Bank for Reconstruction and Development of the United and Associated
Nations” which would provide the basis for post-war international monetary
reform (Anderson-Gold 2011).
White considered the Keynes’ principles from a more general perspective
and used them in the US proposal to suggest national and international poli-
cies that would (1) foster economic growth by encouraging international eco-
nomic and monetary cooperation through the stabilization and regulation of
the national systems of exchange rates and (2) encourage economic and social
security in war-torn areas of Europe through rebuilding economic and finan-
cial infrastructure throughout massive supply of capital that will be needed for
reconstruction, relief, and economic recovery (Stiglitz 2003).
The proposal called for the creation of two related institutions with
resources, powers, and structure adequate to meet the major post-war needs.
For international currency matters, the International Monetary Fund (IMF)
was to be established, which would recommend and enforce rules to install a
system of convertibility of currencies and ensure a degree of exchange-rate
stability—indispensable for a multilateral system of payments and trade. For
assisting the economic development and reconstruction of post-war Europe,
the International Bank for Reconstruction and Development (IBRD) was to
be established—broadly recognized as the World Bank, with the purpose of
providing funding and technical assistance for the economic reconstruction of
war-ravaged areas of Europe, mainly by encouraging capital inflows into the
region from surplus countries (Lipscy 2015).
In 1944, the United Nations Monetary and Financial Conference took
place at the Mount Washington Hotel in Bretton Woods, New Hampshire.
The broadly referred to as Bretton Woods Conference agreed to regulate the
international monetary and financial problems after the conclusion of the
World War II, and sealed the negotiation for the establishment of the World
Bank and the IMF. The agreement is a milestone toward more orderly inter-
national relations and multilateralism on a global scale and toward having
agencies predominantly adapted to maintain such relationships. The United
States, of course, was and still is a dominant element.
With the Congress’ approval of the Marshall Plan in 1948, the US pre-
eminence was confirmed (Bordo and Eichengreen 2007). The organizational
patterns of the IMF and the IBRD gave birth to a new track of thought—
development diplomacy, where the American role was critical.
Proliferation: Global, Regional, and Sub-regional

The World Bank and the IFAD
Established in 1944, the World Bank is the world’s largest provider of devel-
opment finance, which lends worldwide to more than a hundred countries in
several continents. Many of the features that were implemented and recog-
nized in the context of the World Bank became a standard for most of the
other MDBs set up later on.
From the outset, the World Bank was an institution which was to be owned
and whose capital would be provided by governments. The commencing
authorized capital ($10 million) comprised 20% paid-in capital or seed
money and 80% callable or guaranteed capital. The callable capital worked as
guarantee fund against which the World Bank could borrow commensurately
large amounts in the international capital markets. Albeit, this was not as a
matter of fact paid by the member countries, it still determined the credit
rating of the Bank (Culpeper 1997).
The capital structure, which evolved under the aegis of the World Bank,
became a cornerstone of the international financial system. It was considered as
a mechanism to secure the obligations to the bondholders in the capital market
to a guarantee by shareholders to pay off the needed amount to the full value
of bonds outstanding. Thus, the bonds issued by the World Bank depended on
the implicit guarantee of the shareholders, rather than on the loan repayments
of the borrowing countries. Given the innovative side of this mechanism, dur-
ing the 1950s, the World Bank managed to successfully raise money on the
international capital markets, even though it was quite modest in size and lent
to few countries that could afford the market interest rate (Harriss 2002).
With the increase in the scale and complexity, the World Bank established
several affiliated institutions. The first addition was the International Financial
Corporation (IFC) in 1956, which was created to supplement the IBRD’s
governmental orientation, by lending to private corporations, usually together
with other investors. The second addition was the International Development
Association (IDA)—created in 1960 to offer concessional or soft lending to
government and private sector firms in low-income countries.
The establishment of IDA as one of the principal component of the World
Bank Group1 shifted the balance of power between shareholders and manage-
ment in the World Bank. The IBRD was funding its lending operations pri-
marily by selling low-interest, high-rated bonds, backed by prudent financial
policies and strong financial support of their members. The accumulated
funds were then on-lent at slightly higher interest rate with relatively long
maturities (15–20 years) to creditworthy countries. However, concessional
loans of IDA had an interest rate of zero or less than 1% and were made on
terms up to 40 years, usually with a 10-year grace period. As the funds for
concessional lending could not be obtained from private markets, member
countries made direct contributions to fund IDA, causing the balance of
power between shareholders and management to shift to donor members.
Along with the World Bank, the International Fund for Agriculture
Development (IFAD) is a global international financial institution and spe-
cialized agency of the United Nations, providing development finance world-
wide. Although IFAD is an outlier as noted in Chap. 1, it is included in the
categorization of MDBs, as it has recently started to borrow from the interna-
tional financial markets, essentially operating as an MDB. The agency was
established in 1974 at the World Food Conference in Rome, in the wake of a
global food shortage, which caused widespread famine, especially in the
African countries. Three years after the Rome conference, IFAD was set up as
an international financial institution. Since then, it has specialized in financ-
ing agricultural development projects aimed at food production in developing
countries (Mosley and Hulme 2006).
The Regional MDBs
The members of regional MDBs are regional developing countries and donor
countries, which can be both regional and non-regional. These institutions
were modeled around the IBRD concept, to lend to one continent, covering
it almost entirely. Two significant factors triggered the creation of these MDBs.
The first one was the aspirations of developing and/or financially distressed
countries for greater regional autonomy and economic stability, by addressing
regional and national needs. The second one was the US geopolitical and geo-
economic strategic interest during the Cold War. The latter factor was crucial
for overcoming the US defiance toward the establishment of the Inter-
American Development Bank (IDB) and the AsDB. The respective response
of the Soviet Bloc countries, who did not participate in IBRD or the follow-
up regional MDBs, was to create in 1963 their own sub-regional MDB (The
Moscow-based International Bank for Economic Cooperation, still operating
today as the International Investment Bank [IIB]).
In Latin America, the proposal for a regional Inter-American Bank pre-
dated the idea for the World Bank. Latin American countries requested the
United States’ help to improve the international cooperation in the region at

the First International American Conference in Washington DC, in 1890.
However, their demands for greater development financing were only
answered in 1959, as a response to the US concerns about the spread of com-
munism in the repercussions of the Cuban revolution (Santiso 2000).
The initiative for the IDB came from politicians who were advocating for
cooperation and integration in regional forums, established by developing
nations to discuss solutions for the marginalized nations in the post-war world
order. The establishment of the IDB was ratified by 18 countries (the United
States and 17 regional members). The United States was the largest share-
holder of the IDB, controlling 42% of the voting power. In the 1970s, Canada
and then non-regional countries, such as Japan and European countries, were
admitted as non-borrowing or donor members. Unlike the World Bank where
the voting share was heavily weighted in favor of developed nations, the IDB
provided in its establishing articles that the voting share of regional developing
countries could not be less than 50% of the total. The IDB was granted a built-
in soft-loan facility, known as the Fund for Special Operations (FSO), and in
1986, the Inter-American Investment Cooperation (IIC) was established as a
private sector affiliate, analogous to the IFC in the World Bank, focusing on
financing of small- and medium-sized enterprises (Ocampo 2007).
In the interim, two regional MDBs emerged in Europe, the Council of
Europe Development Bank (CEDB) in 1958 with an exclusively social man-
date (dealing with problems of refugees and displaced people in Europe after
the World War II) and the EIB, the European Union’s long-term lending
institution established in 1958, to facilitate the European integration and
supplement the IBRD in offering market-based loans for infrastructure, sus-
tainable development, and private sector development. Both MDBs were
borrower-led and did not accommodate non-borrowing or donor sharehold-
ers, as a main difference to IBRD.
In contrast to the IDB, the initiative for the AsDB came from a relatively
developed donor country—Japan, who had a prevalent influence by tradition.
The AsDB came with an explicit mandate to foster economic growth and
cooperation in Asia by investing in potentially viable projects in infrastruc-
ture. By 1974, a concessional loan facility was established—the Asian
Development Fund (AsDF), the general purpose of which was to lend to low-
income countries in the region.
The most distinguishing feature in the organizational dynamics of the
AsDB is its strong Japanese influence. It was the only MDB at that time where
the United States has been co-dominant with another shareholder (upon
inception, the United States and Japan had each 17.1% of the votes; later
declining to 12.7%). In order to preserve the Asian influence, the AsDB’s

charter requires at least a 60% voting majority for regional members, includ-
ing non-borrowing nations—Australia, Japan, and New Zealand. As such, the
AsDB has always been classified as a donor-dominated institution (Kilby
2006).
The AfDB was funded entirely by borrowing members. Its initiative came
from Africa, and for the first 18 years, membership at AfDB was restricted
only to African countries. The founders believed that the admission of non-
regional donor members would endanger the ownership and governance, and
also threaten the newly gained independence of the African countries. Such a
view is still valid for some of the newer MDBs with a particular reference to
sub-regional ones, addressed further.
The absence of a developed member in the region divested the AfDB of
funds. South Africa was the only exception, but its membership was pro-
scribed until 1995 on account of its apartheid policies. Soon after its founda-
tion, it became a conundrum to raise the financing resources in the
international capital markets based on the African callable capital subscrip-
tion. Eventually, the AfDB fettered itself to lending only out of its paid-in
capital. Originally its authorized capital was $250 million, nearly one half of
which was expected to be paid-in capital—but only $52.6 million was actu-
ally paid in, which shrunk the lending potential and credibility even further.
In the early 1970s, having come to the conclusion, that it was better to
gambit some measure of autonomy with the purpose of building a more influ-
ential institution, the AfDB started discussions to open membership to non-
regional countries. In 1973, a concessional financing facility, known as the
AfDF, was created to direct concessional resources from donor countries to
the region. The AfDF was inaugurated with $82.6 million in grants from 13
non-regional members (mainly Japan and Canada). Despite intense polemics
among the African members, the voting power in the AfDF was split 50–50
between regional and non-regional members.
By 1992, 25 non-regional countries, including the United States, had
received the assent to membership in the AfDB and controlled 35.5% of the
voting share, while regional members accounted for a majority of 64.5%.
Developing member countries held a voting majority, but in fact, the devel-
oped country minority shareholders controlled access to resources and capital
increases and replenishments.
In the early 1970s, substantial progress was made in the field of regional
financial cooperation even in the Arab region with the establishment of the
IsDB in 1974. The capital was subscribed in a new account currency, the
Islamic Dinar (ID), and at its inception, the 22 member countries contrib-
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of the rest. It was a scene of fiends: but in vain; for though they
appeared ready enough to quarrel and fight amongst themselves,
there was no move to attack the enemy. All was confusion; the
demon of discord and madness was among them, and I was glad to
see them cool down, when the dissentients to the assault proposed
making a round to-night and attacking to-morrow.”
And so this precious game of “if you will I will,” and “you hit me
first,” was continued for many days,—more days indeed than the
reader would guess if he were left to his own judgment. The row
between Subtu and Illudeen took place on the 31st of October, and
on the 18th of the following January the enemy was routed and his
forts destroyed.
One of the most favourite of Dayak war weapons is the
“sumpitan,” a long hollow reed, through which is propelled by the
breath small darts or arrows, chiefly formidable on account of the
poison with which their tips are covered. According to Mundy and
other writers on Bornean manners and customs, the arrows are
contained in a bamboo case hung at the side, and at the bottom of
this quiver is the poison of the upas. The arrow is a piece of wood
sharp-pointed, and inserted in a socket made of the pith of a tree,
which fits the tube of the blow-pipe. The natives carry a small
calabash for these arrow heads, and on going into action prepare a
sufficient number, and fresh dip the points in the poison, as its
deadly influence does not continue long. When they face an enemy
the box at the side is open; and, whether advancing or retreating,
they fire the poisoned missiles with great rapidity and precision:
some hold four spare arrows between the fingers of the hand which
grasps the sumpitan, whilst others take their side case.
In advancing, the sumpitan is carried at the mouth and elevated,
and they will discharge at least five arrows to one compared with a
musket. Beyond a distance of twenty yards they do not shoot with
certainty, from the lightness of the arrow, but on a calm day, the
range may be a hundred yards. The poison is considered deadly by
the Kayans, but the Malays do not agree in this belief. “My own
impression is,” says Captain Mundy, “that the consequences
resulting from a wound are greatly exaggerated, though if the poison
be fresh death may occasionally ensue; but, decidedly, when it has
been exposed for any time to the air it loses its virulence. My servant
was wounded in the foot by an arrow which had been kept about two
months; blood flowed from the puncture, which caused me
considerable alarm; but sulphuric acid being applied in conjunction
with caustic directly afterwards, he felt no bad effects whatever.”
All the tribes who use the sumpitan, from their peculiar mode of
fighting, and the dread of the weapon, are called Nata Hutan, or
“Wood Devils.” Besides the sumpitan they also wear the “ilang,” or
sword, which is carved at the angle in the rude shape of a horse’s
head, and ornamented with tufts of hair, red or black; the blades of
these swords are remarkable, one side being convex, the other
concave. They are usually very short, but of good metal and fine
edge. These warriors wear coats of deer hide, and caps of basket
work, some fantastically decorated; and a shield hung over their
backs of stout wood, in addition to the weapons already mentioned,
forms their equipment for service. It is really curious to witness their
movements when the order is given to go out to skirmish—one by
one, with a quick pace, yet steady and silent tread, they glide into the
bushes or long grass, gain the narrow paths, and gradually
disappear in the thickest jungle.
The chief weapon used by the Amazonian Indians closely
resembles the Dayak sumpitan, and is called “pucuna.” Its
manufacture and use is thus graphically described by Captain Reid:
—
“When the Amazonian Indian wishes to manufacture for himself a
pucuna he goes out into the forest and searches for two tall straight
stems of the ‘pashiuba miri’ palm. These he requires of such
thickness that one can be contained within the other. Having found
what he wants, he cuts both down and carries them home to his
molocca. Neither of them is of such dimensions as to render this
either impossible or difficult. He now takes a long slender rod—
already prepared for the purpose—and with this pushes out the pith
from both stems, just as boys do when preparing their pop-guns from
the stems of the elder-tree. The rod thus used is obtained from
another species of Iriartea palm, of which the wood is very hard and
tough. A little tuft of fern-root, fixed upon the end of the rod, is then
drawn backward and forward through the tubes, until both are
cleared of any pith which may have adhered to the interior; and both
are polished by this process to the smoothness of ivory. The palm of
smaller diameter, being scraped to a proper size, is now inserted into
the tube of the larger, the object being to correct any crookedness in
either, should there be such; and if this does not succeed, both are
whipped to some straight beam or post, and thus left till they become
straight. One end of the bore, from the nature of the tree, is always
smaller than the other; and to this end is fitted a mouthpiece of two
peccary tusks to concentrate the breath of the hunter when blowing
into the tube. The other end is the muzzle; and near this, on the top,
a sight is placed, usually a tooth of the ‘paca’ or some other rodent
animal. This sight is glued on with a gum which another tropic tree
furnishes. Over the outside, when desirous of giving the weapon an
ornamental finish, the maker winds spirally a shining creeper, and
then the pucuna is ready for action.
“Sometimes only a single shank of palm is used, and instead of
the pith being pushed out, the stem is split into two equal parts
throughout its whole extent. The heart substance being then
removed, the two pieces are brought together, like the two divisions
of a cedar-wood pencil, and tightly bound with a sipo.
“The pucuna is usually about an inch and a half in diameter at the
thickest end, and the bore about equal to that of a pistol of ordinary
calibre. In length, however, the weapon varies from eight to twelve
feet.
“This singular instrument is designed, not for propelling a bullet,
but an arrow; but as this arrow differs altogether from the common
kind, it also needs to be described.
“The blow-gun arrow is about fifteen or eighteen inches long, and
is made of a piece of split bamboo; but when the ‘patawa’ palm can
be found, this tree furnishes a still better material, in the long spines
that grow out from the sheathing bases of its leaves. These are
eighteen inches in length, of a black colour, flattish though perfectly
straight. Being cut to the proper length—which most of them are
without cutting—they are whittled at one end to a sharp point. This
point is dipped about three inches deep in the celebrated ‘curare’
poison; and just where the poison mark terminates, a notch is made,
so that the head will be easily broken off when the arrow is in the
wound. Near the other end a little soft down of silky cotton (the floss
of the bombax ceiba) is twisted around into a smooth mass of the
shape of a spinning-top, with its larger end towards the nearer
extremity of the arrow. The cotton is held in its place by being lightly
whipped on by the delicate thread or fibre of a bromelia, and the
mass is just big enough to fill the tube by gently pressing it inward.
“The arrow thus made is inserted, and whenever the game is
within reach the Indian places his mouth to the lower end or
mouthpiece, and with a strong ‘puff,’ which practice enables him to
give, he sends the little messenger upon its deadly errand. He can
hit with unerring aim at the distance of forty or fifty paces; but he
prefers to shoot in a direction nearly vertical, as in that way he can
take the surest aim. As his common game—birds and monkeys—are
usually perched upon the higher branches of tall trees, their situation
just suits him. Of course it is not the mere wound of the arrow that
kills these creatures, but the poison, which in two or three minutes
after they have been hit, will bring either bird or monkey to the
ground. When the latter is struck he would be certain to draw out the
arrow; but the notch, already mentioned, provides against this, as
the slightest wrench serves to break off the envenomed head.
“These arrows are dangerous things—even for the manufacturer
of them—to play with: they are therefore carried in a quiver, and with
great care—the quiver consisting either of a bamboo joint or a neat
wicker case.”
To return, however, to our savage friends the Borneans. Like
almost all savages under the sun, they have their war dances:—
“We had one day a dance of the Illanuns, and Gillolos; they might
both be called war dances, but are very different. The performer with
the Illanuns is decked out with a fine helmet (probably borrowed from
our early voyagers) ornamented with bird-of-paradise feathers. Two
gold belts crossed like our soldiers, over the breast, are bound at the
waist with a fantastical garment reaching half-way down the thigh,
and composed of various coloured silk and woollen threads one
above another. The sword or kempilan is decorated at the handle
with a yard or two of red cloth, and the long upright shield is covered
with small rings, which clash as the performer goes through his
evolutions. The dance itself consists of a variety of violent warlike
gestures; stamping, striking, advancing, retreating, turning, falling,
yelling, with here and there bold stops, and excellent as to aplomb,
which might have elicited the applause of the opera-house; but
generally speaking, the performance was outrageously fierce, and so
far natural as approaching to an actual combat; and in half an hour
the dancer, a fine young man, was so exhausted that he fell fainting
into the arms of his comrades. Several others succeeded, but not
equal to the first, and we had hardly a fair opportunity of judging of
the Maluku dance, from its short continuance; but it is of a more
gentle nature, advancing with the spear, stealthily casting it, then
retreating with the sword and shield. The Maluku shield, it should be
observed, is remarkably narrow, and is brandished somewhat in the
same way as the single-stick player uses his stick, or the Irishman
his shillalah, that is to say, it is held nearly in the centre, and whirled
every way round.”
The following extract from Sir J. Brooke’s Bornean Journal will
serve to initiate the curious reader in the peculiarly horrid custom of
“head-hunting,” as observed in this part of the world. Close to the
Rajah’s residence were located a party of Sigo Dayaks, who happily
discovered in good time an incursion of their deadly enemies the
Singés into their territory:—
“The Sigos taking the alarm, cut off their retreat and killed two of
the Singé Dayaks, and obtained altogether five heads, though they
lost two, and those belonging to their principal warriors. This news
reaching me, I hurried up to the hill and arrived just after part of the
war party had brought the heads. On our ascending the mountain we
found the five heads carefully watched about half a mile from the
town, in consequence of the non-arrival of some of the war party.
They had erected a temporary shed close to the place where these
miserable remnants of noisome mortality were deposited, and they
were guarded by about thirty young men in their finest dresses,
composed principally of scarlet jackets ornamented with shells,
turbans of the native bark cloth dyed bright yellow and spread on the
head, and decked with an occasional feather, flower, or twig of
leaves. Nothing can exceed their partiality for these trophies; and in
retiring from the war path, the man who has been so fortunate as to
obtain a head, hangs it about his neck, and instantly commences his
return to his tribe. If he sleep on the way, the precious burden,
though decaying and offensive, is not loosened, but rests in his lap,
whilst his head (and nose) reclines on his knees.
“On the following morning the heads were brought up to the
village, attended by a number of young men, all dressed in their
best, and were carried to Parembam’s house, amid the beating of
gongs and the firing of one or two guns. They were then disposed of
in a conspicuous place in the public hall of Parembam. The music
sounded, and the men danced the greater part of the day, and
towards evening carried them away in procession through all the
campongs except three or four just above me. The women in these
processions crowd round the heads as they proceed from house to
house, and put sirih and betel-nut in the mouths of the ghastly dead,
and welcome them. After this they are carried back in the same
triumph, deposited in an airy place, and left to dry. During this
process, for seven, eight, and ten days, they are watched by the
boys of the age of six to ten years, and during this time they never
stir from the public hall: they are not permitted to put their foot out of
it whilst engaged in this sacred trust. Thus are the youths initiated.
“For a long time after the heads are hung up, the men nightly
meet and beat their gongs, and chant addresses to them, which
were rendered thus to me. ‘Your head is in our dwelling, but your
spirit wanders to your own country. Your head and your spirit are
now ours; persuade, therefore, your countrymen to be slain by us!
Speak to the spirits of your tribe; let them wander in the fields, that
when we come again to their country we may get more heads, and
that we may bring the heads of your brethren, and hang them by
your head,’ etc. The tone of this chant is loud and monotonous, and I
am not able to say how long it is sung, but certainly for a month after
the arrival of the heads, as one party here had had a head for that
time, and were still exhorting it.
“These are their customs and modes of warfare, and I may
conclude by saying, that though their trophies are more disgusting,
yet their wars are neither so bloody, nor their cruelties so great, as
those of the North American Indian. They slay all they meet with of
their enemies, men, women, and children; but this is common to all
wild tribes. They have an implacable spirit of revenge as long as the
war lasts, retort evil for evil, and retaliate life for life: and as I have
before said, the heads are the trophies, as the scalps are to the red
men. But on the contrary, they never torture their enemies, nor do
they devour them, and peace can always be restored amongst them
by a very moderate payment. In short, there is nothing new in their
feelings or in their mode of showing them, no trait remarkable for
cruelty, no head hunting for the sake of head hunting. They act
precisely on the same impulses as other wild men: war arises from
passion or interest, peace from defeat or fear. As friends they are
faithful, just, and honest; as enemies, bloodthirsty and cunning;
patient on the war path, and enduring fatigue, hunger, and the want
of sleep with cheerfulness and resolution. As woodmen, they are
remarkably acute, and on all their excursions carry with them a
number of ranjows, which, when they retreat, they stick in behind
them at intervals at a distance of twenty, fifty, or a hundred yards, so
that a hotly-pursuing enemy gets checked, and many severely
wounded. Their arms consist of a sword, an iron-headed spear, a
few wooden spears, a knife worn at the right side, with a sirih pouch
or small basket. Their provision is a particular kind of sticky rice
boiled in bamboos. When once they have struck their enemies, or
failed, they return without pausing to their homes.”
Among the Dayaks and the Samoans heads are the precious war
trophies; among the Indians of North America the scalp alone
suffices; the Tinguian of the Philippine Islands, with a refinement of
barbarism far excelling his brother savage, must have his enemy’s
brains. While La Gironiere was sojourning at Palan, one of the
seventeen villages of which Tinguia is composed, news arrived that
a battle had been fought and several renowned warriors captured.
Therefore there was to be a brain feast.
“Towards eleven o’clock the chiefs of the town, followed by all the
population, directed their steps towards the large shed at the end of
the village. There every one took his place on the ground, each party
headed by its chiefs, occupying a place marked out for it beforehand.
In the middle of the circle formed by the chiefs of the warriors were
large vessels full of basi, a beverage made with the fermented juice
of the sugar-cane, and four hideous heads of Guinans entirely
disfigured,—these were the trophies of the victory. When all the
assistants had taken their places, a champion of Laganguilan y
Madalag, took one of the heads and presented it to the chiefs of the
town, who showed it to all the assistants, making a long speech
comprehending many praises for the conquerors. This discourse
being over, the warrior took the head, divided it with strokes of his
hatchet, and took out the brains. During this operation so unpleasant
to witness, another champion got a second head and handed it to
the chiefs; the same speech was delivered, then he broke the skull
to pieces in like manner and took out the brains. The same was done
with the four remaining skulls of the subdued enemies. When the
brains were taken out, the young girls pounded them with their
hands into the vases containing the liquor of the fermented sugar-
cane; they stirred the mixture round, and then the vases were taken
to the chiefs, who dipped in their small osier goblets through the
fissures of which the liquid part ran out, and the solid part that
remained at the bottom they drank with ecstatic sensuality. I felt quite
sick at this scene so entirely new to me. After the chieftains’ turn
came the turn of the champions. The vases were presented to them
and each one sipped with delight this frightful drink, to the noise of
wild songs. There was really something infernal in this sacrifice to
victory.
“We sat in a circle, and these vases were carried round. I well
understood that we were about undergoing a disgusting test. Alas! I
had not long to wait for it. The warriors planted themselves before
me and presented me with the basi and the frightful cup. All eyes
were fixed upon me. The invitation was so direct that to refuse it
would perhaps be exposing myself to death. It is impossible to
describe the interior conflict that passed within me. I would rather
have preferred the carbine of a bandit five paces from my chest, or
await, as I had already done, the impetuous attack of the wild
buffalo. I shall never forget that awful moment; it struck me with
terror and disgust; however, I constrained myself, nothing betraying
my emotion. I imitated the savages, and dipping the osier goblet into
the drink, I approached it to my lips and passed it to the unfortunate
Alila (Gironiere’s servant and companion), who could not avoid this
infernal beverage. The sacrifice was complete, the libations were
over, but not the songs. The basi is a very spirituous and inebriating
liquor, and the assistants who had partaken rather too freely of it
sang louder to the noise of the tom-tom and the gong, while the
champions divided the human skulls into small pieces destined to be
sent as presents to all their friends. The distribution was made during
the sitting, after which the chiefs declared the ceremony over. They
then danced. The savages divided themselves into two lines, and
howling as if they were furious madmen, or terribly provoked, they
jumped about, laying their right hand upon the shoulder of their
partners and changing places with them. These dances continued all
day; at last night came on, each inhabitant repaired with his family
and some few guests to his abode, and soon afterwards tranquillity
was restored.”
In defending the system of warfare practised by the Dayaks,
Rajah Brooke specially instances the thirst for blood and general
cruelty evinced by the savage Indian warrior of North America. Like
other barbarians the North-American Indian has his European and
American champions—Catlin among the latter—who profess to see
in this savage nothing vile or mean or cruel, but, on the contrary, all
that is brave, generous, and hospitable. The said champions,
however, overlook the fact that bravery and generosity as exhibited
amongst one’s friends are but insignificant virtues as compared with
what they are when displayed towards an enemy; indeed, in the
former case they may scarcely be reckoned virtues at all, but merely
social amenities, lacking which, man ceases to be companionable.
As enemies, how do North-American savages treat each other? Let
what has already been said on this subject in these pages, as well
as what here follows, furnish an answer to the question.
CHAPTER XXII.
Wooing a war dream—Companions in arms—The squaw of sacrifice

—On the march—Bragging warriors—Deeds of Indian men of war
—Swallowing an Indian’s horse—The belle of the party—An
instance of Indian heroism—How to serve an enemy—Savage
Duelists—A story of a precious scalp—The Indian warrior’s
confidence in dreams—Concerning Indian canoes—A boat made
up with stitches—Women boat-builders—Samoan warfare—The
Samoans’ war tools and symbols—A narrow escape—“Perhaps
upward the face!”—A massacre of Christians—Treachery of the
Pine Islanders—The fate of “The Sisters”—The scoundrelly
Norfolk Island men—A little story told by Mr. Coulter—The useful
carronades—The “one unnecessary shot”—How it might have
been.
r. Kohl informs us that, when a chief of the North-
American Indians is meditating a war expedition, it is
of the first importance that he should “dream” about it.
He does not, however, choose to wait for his dream in
the ordinary manner, but seats himself for the express purpose,
concentrates his every thought on the subject, and seeks to gain
good dreams for it before he proceeds to carry his war project into
execution.
He keeps apart from his family, and, like a hermit, retires to a
solitary lodge built expressly for the purpose. There he sits whole
evenings on a mat, beating the drum and muttering gloomy magic
songs, which he will break off to sigh and lament. He has all sorts of
apparitions while lying in his bed; the spirits of his relatives murdered
by the enemy visit him, and incite him to revenge. Other spirits come
and show him the way into the enemy’s camp, promise him victory,
tell him at times accurately where and how he will meet the foe and
how many of them he will kill. If his drum and song are heard
frequently in the evenings, a friend will come to him, and sitting down
on the mat by his side will say: “What is the matter with thee, Black
Cloud? Why dreamest thou? What grief is oppressing thee?” The
Black Cloud then opens his heart, tells him how his father’s brother
was scalped three years back by their hereditary enemies, the Sioux,
his cousin last year, and so on, and how thoughts of his forefathers
has now come to him. They have often appeared to him in his
dreams and allowed him no rest with their entreaties for vengeance.
He will tell him, too, a portion of the auguries and signs he has
received in his dream about a brilliant victory he is destined to gain
and of the ways and means that will conduct him to it. Still only a
portion, for he generally keeps the main point to himself. It is his
secret, just as among us the plan of the campaign is the
commander-in-chief’s secret.
The friend, after listening to all this, if the affair seems promising,
will take to the drum in his turn, and aid his friend with his dreams.
The latter, if placing full confidence in him, appoints him his
associate or adjutant, and both place themselves at the head of the
undertaking. They always consider it better that there should be two
leaders, in order that if the dreams of one have not strength enough
the other may help him out.
These two chefs-de-guerre now sit together the whole winter
through, smoke countless pipes, beat the drum in turn, mutter magic
songs the whole night, consult over the plan of operations, and send
tobacco to their friends as an invitation to them to take part in the
campaign. The winter is the season of consultation, for war is rarely
carried on then, partly because the canoe could not be employed on
the frozen lakes, and partly because the snow would betray their trail
and the direction of their march too easily.
If the two are agreed on all points, if they have assembled a
sufficient number of recruits and allies, and have also settled the
time of the foray—for instance, arranged that the affair shall begin
when the leaves are of such a size, or when such a tree is in
blossom, and this time has at length arrived, they first arrange a
universal war dance with their relatives and friends, at which the
women are present, painted black like the men. The squaws appear
at it with dishevelled hair, and with the down of the wild duck strewn
over their heads. A similar war dance is also performed in the lodges
of all the warriors who intend to take part in the expedition.
If the undertaking and the band of braves be at all important, it is
usually accompanied by a maiden, whom they call “the squaw of
sacrifice.” She is ordinarily dressed in white: among the Sioux, for
instance, in a white tanned deer or buffalo robe, and a red cloth is
wrapped round her head. Among several prairie tribes, as the Black-
feet, this festally adorned sacrifice squaw leads a horse by the bridle,
which carries a large medicine-bag, and a gaily decorated pipe.
Among the Ojibbeways, who have no horses, and usually make their
expeditions by water, this maiden is seated in a separate canoe.
When all have taken their places in full war-paint, they begin their
melancholy death-song and push off.
If the expedition is really important—if the leader of the band is
very influential—he will have sent tobacco to other chiefs among his
friends; and if they accept it, and divide it among many of their
partisans, other war bands will have started simultaneously from the
villages, and come together at the place of assembly already
arranged.
They naturally take with them as little as possible, and are mostly
half naked in order to march easily. They do not even burden
themselves with much food, for they starve and fast along the road,
not through any pressure of circumstances, but because this fasting
is more or less a religious war custom.
They also observe all sorts of things along the road, which are in
part most useful, precautionary measures, in part superstitious
customs. Thus, they will never sit down in the shade of a tree, or
scratch their heads, at least not with their fingers. The warriors,
however, are permitted to scratch themselves with a piece of wood
or a comb.
The young men who go on the war trail for the first time, have, like
the women, a cloth or species of cap on the head, and usually walk
with drooping head, speak little, or not at all, and are not allowed to
join in the dead or war songs. Lastly, they are not permitted to suck
the marrow from the bone of any game that is caught and eaten
during the march. There are also numerous matters to be observed
in stepping in and out of the canoes on the war trail. Thus, the foot
must not on any condition be wetted.
The only things they carry with them, besides their arms and
pipes, are their medicine-bags. These they inspect before starting,
as carefully as our soldiers do their cartridge-boxes, and place in
them all the best and most powerful medicines, and all their relics,
magic spells, pieces of paper, etc., in order that the aid of all the
guardian spirits may be ensured them.
The same authority gives us a sample of Indian war dances and
speeches:
“By the afternoon all were ready, and the grand pipe of peace,
they intended to hand to the great father, was properly adorned with
red feathers, blue drawings, strings of wampum, etc.
“It occurred to me that although it was after all but a ceremony, the
Indians regarded the matter very solemnly and earnestly. According
to traditional custom the pipe of peace passed from tent to tent and
from mouth to mouth among the warriors. When each had smoked,
the procession started and marched with drums beating, fluttering
feather-flags and flying-otter, fox, and skunk tails through the village,
to the open space before the old fort of the North West Company.
Here they put up a wooden post, and close to it their war flag, after
which the dances, speeches, and songs began.
“A circle of brown skinned dancers was formed, with the
musicians and singers in the centre. The musicians, a few young
fellows, cowered down on the ground, beat a drum, and shook a
calabash, and some other instruments, which were very primitive.
One had only a board, which he hammered with a big knife, while
holding his hollow hand beneath it as a species of sounding board.
The principal singers were half a dozen women wrapped up in dark
cloaks, who uttered a monotonous and melancholy chant, while
keeping their eyes stedfastly fixed on the ground. The singing
resembled the sound of a storm growling in the distance. To the
music the warriors hopped round in a circle, shaking the otter, fox,
and beaver tails attached to their arms, feet, and heads.
“At times, the singing and dancing were interrupted; adorned with
flying hair and skins, a warrior walked into the circle, raised his
tomahawk, and struck the post a smart blow, as a signal that he was
going to describe his hero deeds. Then he began to narrate in a loud
voice, and very fluently, some horrible story in which he had played
the chief part. He swung the tomahawk, and pointed to the scars and
wounds on his naked body in confirmation of his story, giving the
post a heavy blow now and then. Many had painted their scars a
blood-red colour, and their gesticulations were most striking when
they described the glorious moment of scalping. Although
surrounded by many kind interpreters, who translated all that was
said at once into English or French, I fear it would lead me too far
were I to write down all that was said. Here is a specimen, however:
—
“Many speeches were begun in a humorous fashion. One little
fellow bounded into the circle, and after striking the post, went on,
‘My friends, that I am little you can all see, and I require no witnesses
to that. But to believe that I, little as I am, once killed a giant of a
Sioux, you will need witnesses.’ And then he plucked two witnesses
out of the circle. ‘You and you were present;’ and then he told the
story just as it had occurred. Another with a long rattlesnake’s skin
round his head, and leaning on his lance, told his story objectively,
just as a picture would be described:
“‘Once we Ojibbeways set out against the Sioux. We were one
hundred. One of ours, a courageous man, a man of the right stamp,
impatient for distinction, separated from the others, and crept onward
into the enemy’s country. The man discovered a party of the foe, two
men, two women, and three children. He crept round them like a
wolf, he crawled up to them like a snake, he fell upon them like
lightning, cut down the two men and scalped them. The screaming
women and children he seized by the arm and threw them as
prisoners to his friends who had hastened up at his war yell; and this
lightning, this snake, this wolf, this man, my friends, that was I. I
have spoken.’
North American Weapons.
“In most of the stories told us, however, I could trace very little that
was heroic. Many of them, in fact, appeared a description of the way
in which a cunning wolf attacked and murdered a lamb.
“One of the fellows, with one eye painted white, the other coal-
black, was not ashamed to tell loudly, and with a beaming face, how
he once fell upon a poor solitary Sioux girl and scalped her. He gave
us the minutest details of this atrocity, and yet at the end of his
harangue, he was applauded, or at least behowled, like the other
orators. All the Indians stamped and uttered their war yell as a sign
of applause, by holding their hands to their mouths trumpet fashion.
At the moment the man appeared to me little less ferocious than a
tiger, and yet when I formed his acquaintance at a latter date, he
talked most reasonably and calmly like an honest farmer’s lad. Such
are what are called the contradictions in human nature.
“Very remarkable in all these harangues, was the unconcealed
and vain self-laudation each employed about himself. Every speaker
considered his deed the best and most useful for the whole nation.
Each began by saying that what his predecessors had told them was
very fine, but a trifle when compared with what he had to say about
himself. It was his intention to astonish them once for all. His totem
was the first in the whole land, and the greatest deeds had always
been achieved by the spotted weasels (or as the case may be) and
so he, the younger weasel, not wishing to be the inferior to his
forefathers, had gone forth and performed deeds the description of
which would make their hair stand on end,” etc.
Among other tribes of North-American warriors, the braves were
armed with small tomahawks, or iron hatchets, which they carried
with the powder-horn in the belt on the right side, while the long
tobacco pouch of antelope skin hung by the left side. Over their
shoulders were leather targets, bows and arrows, and some few had
rifles—both weapons were defended from damp in deer-skin cases
—and quivers with the inevitable bead-work, and the fringes which
every savage seems to love.
Speaking of an army of Indian warriors “shifting camp,” Burton
says, in his curious book “The City of the Saints”:—“Their nags were
lean and ungroomed; they treat them as cruelly as do the Somal; yet
nothing short of whiskey can persuade the Indian warrior to part with
a favourite steed. It is his all in all,—his means of livelihood, his
profession, his pride. He is an excellent judge of horse-flesh, though
ignoring the mule and ass; and if he offers an animal for which he
has once refused to trade, it is for the reason that an Oriental takes
to market an adult slave—it has become useless. Like the Arab, he
considers it dishonourable to sell a horse: he gives it to you,
expecting a large present, and if disappointed he goes away
grumbling that you have swallowed his property.
“Behind the warriors and braves followed the baggage of the
village. The lodge-poles in bundles of four or five had been lashed to
pads or packsaddles girthed tight to the ponies’ backs, the other
ends being allowed to trail along the ground like the shafts of a truck.
The sign easily denotes the course of travel. The wolf-like dogs were
also harnessed in the same way; more lupine than canine, they are
ready when hungry to attack man or mule; and sharp-nosed and
prick-eared, they not a little resemble the Indian pariah dog. Their
equipments, however, were of course on a diminutive scale. A little
pad girthed round the barrel with a breastplate to keep it in place,
enabled them to drag two short light lodge-poles tied together at the
smaller extremity. One carried only a hawk on its back; yet falconry
has never, I believe, been practised by the Indian. Behind the ponies
the poles were connected by cross sticks upon which were lashed
the lodge-covers, the buffalo robes, and other bulkier articles. Some
had strong frames of withes or willow basket-work, two branches
being bent into an oval, garnished below with a network of hide-
thongs for a seat, covered with a light wicker canopy, and opening
like a cage only on one side; a blanket or a buffalo robe defends the
inmate from sun and rain. These are the litters for the squaws when
weary, the children and the puppies, which are part of the family till
used for beasts. It might be supposed to be a rough conveyance; the
elasticity of the poles, however, alleviates much of that
inconvenience. A very ancient man, wrinkled as a last year’s walnut,
and apparently crippled by old wounds, was carried probably by his
great-grandsons in a rude sedan. The vehicle was composed of two
pliable poles, about ten feet long, separated by three cross-bars
twenty inches or so apart. In this way the Indians often bear the
wounded back to their villages. Apparently they have never thought
of a horse litter, which might be made with equal facility, and would
certainly save work.
“Whilst the rich squaws rode, the poor followed their pack-horses
on foot, eyeing the more fortunate as the mercer’s wife regards what
she terms the carriage lady. The women’s dress not a little
resembles their lords’—the unaccustomed eye often hesitates
between the sexes. In the fair, however, the waistcoat is absent, the
wide-sleeved skirt extends below the knees, and the leggings are of
somewhat different cut; all wore coarse shawls, or white, blue, or
scarlet cloth-blankets around their bodies. Upon the upper platte, we
afterwards saw them dressed in cotton gowns after a semi-civilized
fashion, and with bowie knives by their sides. The grandmothers
were fearful to look upon; horrid excrescences of nature, teaching
proud man a lesson of humility. The middle aged matrons were
homely bodies, broad and squat like the African dame after she has
become mère de famille; their hands and feet are notably larger from
work than those of the men, and the burdens upon their back caused
them to stoop painfully. The young squaws—pity it is that all our
household Indian words, papoose for instance, tomahawk, wigwam,
and powwow, should have been naturalised out of the Abenaki and
other harsh dialects of New England—deserved a more euphonious
appellation. The belle savage of the party had large and languishing
eyes and teeth that glittered, with sleek long black hair like the ears
of a Blenheim spaniel, justifying a natural instinct to stroke or pat it,
drawn straight over a low broad quadroon-like brow. Her figure had
none of the fragility which distinguishes the higher race, who are
apparently too delicate for human nature’s daily food. Her ears and
neck were laden with tinsel ornaments, brass wire rings adorned her
wrists and fine arms, a bead-work sack encircled her waist, and
scarlet leggings fringed and tasselled, ended in equally costly
mocassins. When addressed by the driver in some terms to me
unintelligible, she replied with a soft clear laugh—the principal charm
of the Indian, as of the smooth-throated African woman—at the
same time showing him the palm of her right hand as though it had
been a looking-glass. The gesture I afterwards learned simply
conveys a refusal. The maidens of the tribe, or those under six, were
charming little creatures with the wildest and most piquant
expression, and the prettiest doll-like features imaginable; the young
coquettes already conferred their smiles as if they had been of any
earthly value. The boys had black beady eyes like snakes, and the
wide mouths of young caymans. Their only dress when they were
not in birthday suit was the Indian laguti. None of the braves carried
scalps, finger-bones, or notches on the lance, which serve like
certain marks on saw-handled pistols further east, nor had any man
lost a limb. They followed us for many a mile, peering into the hinder
part of our travelling wigwam, and ejaculating “How, How,” the
normal salutation.”
Here is an instance at once of Indian warrior heroism on the one
side and fiendish ferocity on the other that occurred at the late
engagement between a small war party of the Chippewas and a
greatly superior party of Sioux, near Cedar Island Lake. The
Chippewas, who were en route for a scalping foray upon the Sioux
villages on the Minnesota, here fell into an ambuscade, and the first
notice of danger which saluted their ears was a discharge of fire-
arms from a thicket. Four of their number fell dead in their tracks.
Another, named the War Cloud, a leading brave, had a leg broken by
a bullet. His comrades were loth to leave him, and, whilst their
assailants were reloading their guns, attempted to carry him along
with them to where they could gain the shelter of a thicket a short
distance to the rear. But he commanded them to leave him, telling
them that he would show his enemies how a Chippewa could die.

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Multilateral Development Banks:

Governance and Finance Ihsan Ugur

Giving aid effectively the politics of environmental

Valuing Banks: A New Corporate Finance Approach 1st

Mexican Banks and Foreign Finance: From

Global governance and development 1st Edition Ocampo

Moon Academy 1st Edition Catherine Banks [Banks

Lonely Lioness 1st Edition Catherine Banks [Banks

Decentralised Governance Development Programmes and

Regional Integration, Development, and Governance in

ISBN 978-3-319-91523-4 ISBN 978-3-319-91524-1 (eBook)

Library of Congress Control Number: 2018942751

© The Editor(s) (if applicable) and The Author(s) 2018

Cover image: © RooM the Agency / Alamy Stock Photo

Printed on acid-free paper

evaluation, as well as the engagement with stakeholders and the promotion of

Osvaldo Néstor Feinstein

Multilateral Development Banks: Governance and Finance is a novel, theory-

values, human capital, and governance. This approach is in contrast with

Ihsan Ugur Delikanli: Chaps. 2, 3, 4, 6, 7.

Credit for photograph of Todor Dimitrov (back flap): Kalina Dimitrova.

Istanbul, Turkey Ihsan Ugur Delikanli

2 The Nature of MDBs 9

5 Principles of Sound Governance 123

Fig. 2.1 Unilateral and multilateral principles 23

Table 2.1 Classification of MDBs in terms of regional coverage by lending 10

© The Author(s) 2018 1

Compare Global, Regional, and Sub-regional MDBs

The book covers 25—virtually all—MDBs. While a reference to particular

Governance Assessment Framework

Chapter 5 (Governance Principles) presents the development and applica-

The application of standard instruments of financial analysis (Chap. 3:

The important perspective of the borrowers is covered by Chap. 6, revealing

Structure of the Book

Introduction and Categorization

© The Author(s) 2018 9

This categorization is relative, as there are overlapping and border cases,

Table 2.1 Classification of MDBs in terms of regional coverage by lending

It is noteworthy that this classification is not absolute, as there are several

1. EBRD’s mandate focuses on the former communist countries but since

The Bretton Woods Institutions

Proliferation: Global, Regional, and Sub-regional

The Regional MDBs

United States’ help to improve the international cooperation in the region at

declining to 12.7%). In order to preserve the Asian influence, the AsDB’s

Wooing a war dream—Companions in arms—The squaw of sacrifice

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Istanbul, Turkey Ihsan Ugur Delikanli

2 The Nature of MDBs 9

5 Principles of Sound Governance 123

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Compare Global, Regional, and Sub-regional MDBs

Governance Assessment Framework

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