In the last two years, the World Bank group has prioritized assisting private sector-led growth, a strategy that leaves it open to the charge of promoting "corporate welfare." As more people learn about the work of two World Bank divisions, the International Finance Corporation (IFC), which makes equity investments in private sector projects in the "developing world," and the smaller Multilateral Investment Guarantee Agency (MIGA), called for closing or "privatizing" the agencies have increased. MIGA was created by the World Bank in September 1985 for the broadly defined purpose of "enhanc[ing] the flow to developing countries of capital and technology for productive purposes under conditions consistent with their developmental needs, policies and objectives, on the basis of fair and stable standards for the treatment of foreign investment." Most of MIGA's 130 staff members are based in Washington DC. 

MIGA fulfills its mandate in three ways. 

First, it disseminates information on the investment climate in the developing world to potential investors through two main Internet resources: IPAnet, launched in 1995 and PrivatizationLink, established in 1998. The two services are free, requiring only selection of a user ID and password. Registrants to these two services have ".nearly quintupled in only two years from 3,273 in June 1997 to 15,674 in June 1999 (and more than 19,000 today [June 28, 2000])." (MIGA Review 2000) MIGA also provides technical assistance to national investment promotion agencies (IPAs). 

MIGA assists IPAs and interested parties in several areas, including devising investment promotion strategy, staff training and capacity building, Internet use, and analysis of investors and sectors. Between 1994 and 2000, 63% of MIGA's capacity building activities were conducted in IDA-eligible countries and 38% were in African countries. In this field, MIGA's competitors include the Foreign Investment Advisory Service (FIAS) of the IFC, the United Nations Industrial Development Organization (UNIDO) and private consultants. 

Finally, MIGA'S most important function is providing insurance against non-commercial risk to private investors for projects in the developing world. While these investors have historically been large, developed-country-based corporations, MIGA is gradually shifting its emphasis to small and medium sized enterprises in borrowing countries and investments from one borrowing country to another. Its competitors in this area include major private insurers, as well as public, nationally based insurers. The non-commercial risks MIGA has traditionally insured against are expropriation, transfer restriction, breach of contract, and war and civil disturbance. 

Because MIGA is not unique in any of its functions, nor is it indispensable, its operation under the auspices of the World Bank raises a few concerns. 

First, the undemocratic nature of the World Bank voting structure gives more voting power to the 22 creditor countries while MIGA's programs have greater impact on the 130 borrowing countries. This raises serious questions about who the primary beneficiaries of MIGA are. 

In addition, the vertical integration of developing country economies from capital (lending), to design (structural adjustment), to marketing (MIGA assisted IPA marketing) to, finally, subsidized sale (MIGA insurance of privatized industries) could potentially preclude any opportunities for the creation of multifaceted economic solutions for development problems. 

Rather, we see the World Bank management of developing economies according to a monolithic program of public-assisted corporate exploitation. Given the implications of such total control, it may be better to leave IPA assistance and investment marketing to organizations outside of the Bank, such as UNIDO. 

As for its insurance program, MIGA is easily surpassed by its private counterparts. MIGA represents only 5% of the corporate insurance market and clients have consistently reported greater satisfaction with private insurers. MIGA's strategy for competing in the highly competitive political risk insurance market is to create a niche for itself by insuring small and medium sized enterprises (SMEs) and projects in IDA countries. However, the ability of SMEs to generate revenue to cover the expense of insurance and to positively affect development in the ultra-competitive global economy is doubtful. Thus, MIGA is using public funds to contribute to less stable portfolios and to support projects with dubious development value. 

A quick examination of the first and only claim paid by MIGA illustrates the tendency to socialize costs for private profit. After a lengthy period of discussion and arbitration, MIGA paid a $15 million claim and $220,000 in interest to Enron Corporation of Houston, Texas under breach of contract protection for a power project in Indonesia that was postponed due to the Asian financial crisis. Of that total, MIGA received $10.5 million from reinsurers, $660,000 from the government of Indonesia for the expenses incurred in dealing with the claim and a further $220,000 as refund of the interest. Enron essentially incurred no losses as a result of the power project not being completed. The government of Indonesia paid $880,000 without a power project. MIGA, a public agency with 35% of its total assets provided by taxpayers from shareholder governments, lost $4.5 million. Enron's premium amount even at $200,000 a year, would take 22.5 years to reach $4.5 million. 

There is also little transparency as to the obligations, both formal and informal, a country incurs by dealing with MIGA nor is there much transparency in the processes and procedures that led to Indonesia's $880,000 payment. While one could argue that in most cases these insurance policies would cost the public nothing, we must question the value of risking public funds on guaranteeing the private investments of corporations or individuals who are not obligated to work in the public interest. MIGA does not contractually require clients to credibly project, nor later prove, any venture's development impact to the public's satisfaction. We must question why MIGA is even considering insurance for non-commercial risks that ".may include coverage for environmental risks, kidnap and ransom, strikes, consumer boycotts, intellectual property rights and weather, provided that these will contribute to increasing foreign direct investment flows" (MIGA Review 2000, emphasis added). 

Should public funds go to "increasing foreign direct investment flows" in a manner that reduces public leverage on business? Environmental risk insurance will have the public paying for corporate negligence. Strike and consumer boycott insurance need not be limited to the host country, it could equally apply to organized boycotts within the target market or solidarity strikes Why should the public give money to MIGA to ensure that popular mobilization and the exercise of individual and collective rights will not harm profit margins? MIGA illustrates the danger and absurdity of publicly funded institutions that are unaccountable to the public. The fact that MIGA policies erode the public's ability to participate in development decisions and deliberately limit the effectiveness of public protest, clearly demonstrates how the profit motive of corporate ideology has infused the international institutions charged with aiding development. Given these serious concerns and the fact that MIGA does not make a unique or even necessary contribution to any nation's development, we must question whether MIGA has any legitimate reason to exist.