World Bank Debars Chinese Company

The World Bank has announced a new step in its continuing campaign to crack down on corruption associated with Bank projects. The target in this case was a Chinese company involved in a recently concluded project. The case is just the latest in the lender's newly aggressive pursuit of fraud connected with its projects. According to the Bank, more than 400 entities have been sanctioned since 2001. You can find the complete list of sanctioned firms and individuals here.

For all the Bank's efforts at deterring fraud, the problem will likely remain daunting, particularly for the arm of the Bank that engages in concessional lending to the poorest states (the International Development Association). As several large and relatively well-run developing countries "graduate" from eligibility for these loans, IDA will be left lending to a group of fragile states where corruption is endemic. As the Center for Global Development pointed out in a recent report:

IDA's current operational and allocation model focuses explicitly on high-performing countries. IDA addresses postconflict, poorly performing, and fragile states through special side facili-ties. Countries coming out of conflict are financed through carve-outs that bypass the normal performance-based allocation system; nonconflict poorly performing and fragile states are allocated modest funds. Worryingly, the World Bank has long struggled with the challenges of working in and providing staffing for fragile states.

The Multilateralist

Croatia and the Health of the European Union

Croatia formally joined the European Union today, making it the EU's 28th member. Brussels is trumpeting the move as evidence of the EU's continued vitality:

Croatia's accession reaffirms that the perspective of European integration remains open to all aspirant countries which show the necessary will to implement political and economic reforms and prove their respect for European values such as the rule of law, democratic principles and human rights. This transformative impact of the enlargement process benefits the country, but also the whole European Union and demonstrates the importance of a credible enlargement policy.

Ivan Vejvoda of the German Marshall Fund agrees:

The Western Balkans – an area at the heart of geographical Europe – is completely surrounded by EU and NATO member states, and thus EU integration is necessary to fully stabilize peace and create sustained security. With this enlargement, the EU’s credibility has been enhanced, its soft-power vindicated, and the people and leaders in candidate countries see that their democratic reform efforts are being recognized and rewarded.

Yet Croatian leaders have often fielded questions about whether accession makes sense given the EU's troubles. Via Sky News:

President Ivo Josipovic told Croatia's Nova TV that journalists from EU countries had repeatedly asked him why the nation wanted to join the bloc.

"My counter question was: 'You come from the EU. Is your country preparing to leave the bloc?' They would invariably reply: 'Of course not.' Well, there you go, that's why we are joining, because we also believe the EU has a future," he said.

Croatia will not join the eurozone at the moment, but unlike several other EU members, it doesn't have the option of remaining outside the common currency indefinitely. The European Central Bank explains:

Croatia will not adopt the euro immediately but will do so once it has fulfilled the requirements laid down in the Treaty on the Functioning of the European Union. Unlike Denmark and the United Kingdom, Croatia does not have the right to opt out of adopting the single currency.

Both the ECB and the European Commission will prepare convergence reports every two years, or at the request of a Member State which has not yet adopted the euro. These reports provide the basis for the EU Council’s decision on whether the Member States concerned fulfil the necessary conditions for adopting the euro.