The Crown Capital Management International Relations Forum The Crown Capital Management B..
The Crown Capital Management Blog Why the World Bank Continues to Fund Environmental Destruction10 Years AgoThe Crown Capital
Management Blog Why the World Bank Continues to Fund Environmental Destruction
1800 ongoing projects and more than $30 billion in annual disbursements, the
World Bank is the world’s most powerful development institution. More than
anything, the lender prides itself in undertaking the most complex, difficult
initiatives in the developing world.
Building
a pipeline from remote oilfields in Chad through Cameroon’s rainforest was just
the right challenge for the World Bank’s ambitious approach. The multi-billion
dollar project – the largest investment on the African continent – involved
numerous oil companies and financiers from around the world. An innovative
benefit-sharing mechanism and an environmental panel of experts were created to
ensure that the pipeline would raise the living standards of the poor in a
sustainable way. When it was approved in 2000, the US government called the
project a “prism” through which the world would view the World Bank and its
approach to development.
Fast
forward to 2009. The pipeline has been built, and the oil has begun to flow.
Fueled by the new revenues, Chad’s military budget has grown more than 20-fold,
civil unrest and corruption have soared, and the benefit-sharing scheme has
unraveled. Infant, child and maternal mortality are rising. Oil has once again
become the devil’s excrement for a poor African nation. Meanwhile, a part of
the forestry reserve that was supposed to offset the pipeline’s ecological
footprint in Cameroon is being flooded by a reservoir – courtesy of the World
Bank.
If
the Chad-Cameroon pipeline is a prism, what is wrong with the World Bank’s
approach? A new book by Bruce Rich, a veteran Bank observer and critic,
provides a compelling answer. Entitled, Foreclosing the Future, the book is
based on three decades of experience in battling the Bank and a treasure trove
of internal documents.
Where
the state is weak and civil society lacking, a rapid influx of aid or oil
revenues can easily undermine democracy and the rule of law. Unless governance
is strengthened first, aid dollars may not actually lead to social development.
Yet the World Bank does not have the patience for slow, messy, participatory
processes. Its senior management equates lending volumes with development
impact, and the staff is under relentless pressure to move money out the door
quickly. As an internal Bank report found in 1997, this pressure leads to a
culture in which “the lessons from past experience are well known, yet …
generally ignored in the design of new operations”.
Bruce
Rich illustrates the contradictions of the World Bank’s lending culture through
an extended series of projects and initiatives. He describes dams that
impoverished local communities and fostered corruption, forestry projects that
caused massive deforestation, and coal-fired power plants which bypassed the
poor for whose benefit they were supposedly built. He documents repeated
promises to learn from past mistakes – and cosmetic reforms that failed to
address the Bank’s flawed business model.
Bruce
Rich calls the focus on lending volume rather than development outcomes the
World Bank’s “original sin”. The problem has been documented and acknowledged
in numerous internal reports. Yet when the opportunity for the next big
pipeline, dam or coal mine arises, the interest of the aid bureaucracy in
keeping the lending tap wide open frequently prevails. Bruce Rich compares the
internal reports that document the lessons of past experience with the chorus
in a Greek tragedy – a tragedy not for the Bank, but for the poor and the
environment.
The
new book offers a passionate and sharp-tongued but well-informed analysis. Rich
doesn’t spare the World Bank management with critique, but is aware that the
buck doesn’t stop there. The governments who own and oversee the Bank recognize
its failures, but will not take steps that put contracts for their equipment
suppliers and the steady supply of raw materials at risk. Ultimately, the
author says, the World Bank is “a microcosm of global society’s geopolitical and
environmental contradictions”.
What
needs to be done? Bruce Rich calls for a reorientation of the World Bank’s
priorities to reward the quality of outcomes rather than the quantity of
lending. This, he argues, would allow the institution to become a “beacon” of
good social and environmental practice, for others to follow. The author is
short on specifics, and the chances of this happening are slim. Yet his new
book is a welcome memory pill as the World Bank enters a new cycle of ignoring
the lessons of past mistakes.
|