They will modify them only if continued pursuit promises to result in economic breakdown threatening their political survival. Bankrolling Communism Loans to communist governments have been the fastest growing part of the bank's portfolio in the 1980s. An aid agency desperate to find new recipients has found them in the worst managed economies in the world. Today, the Yugoslavian economy is in shambles, inflation is over 120 per cent, and the economy is so rigid and controlled that the different states of Yugoslavia have almost no trade with each other. But Hungarian reform is largely an illusion and a failure.
China is now the bank's second largest borrower, after India.
The bank rushed into China as soon as Beijing announced that it would consider accepting foreign loans, and the bank has been searching for justifications for its China binge ever since. In other words, the Chinese economy is so poorly managed that it needs subsidized loans. Now the Soviet Union appears to be on the verge of gaining World Bank membership and subsidized loans. World Bank projects have often caused great environmental harm. The bank is spending almost half a billion dollars to dam up the largest westward-flowing river in India, a massive scheme that will displace over two million people, flood 900 square kilometers, and destroy 33,000 hectares of the country's dwindling forest cover, including some of its best teak and bamboo.