The ‘political indifference’ of the World Bank: the case of Brazil, 1948‒1988

An intriguing question regarding the relationship between international financial institutions (IFIs) and their Latin American borrowers concerns how and why regime type influences the degree to which the parties are prepared to sign loan agreements. Some scholars highlight a ‘democratic advantage’, while others argue that, on the contrary, a ‘democratic disadvantage’ is evident. This article engages with this scholarly debate, offering a historical perspective on the World Bank’s (WB) lending patterns vis-à-vis Latin America during the Cold War, and more specifically between 1948 and 1988, a period that witnessed both democratic and authoritarian regimes in the region. Drawing on never-before-examined documents from the WB archives and additional primary sources, and analysing WB lending to its four largest Latin American borrowers – Mexico, Colombia, Argentina and particularly Brazil – the article posits a third option, arguing that neither a democratic advantage nor a democratic disadvantage was evident during the period under study. Adhering to its self-declared principle of ‘political neutrality’, as outlined in its Articles of Agreement, and emphasising economic factors, the WB exhibited a clear tendency toward pragmatism and ‘political indifference’. This approach enabled the Bank to maintain its involvement in politically unstable countries like Brazil with minimal interruptions.