World Bank Growing Sensitive to Environmental Impact of Projects / Growth Must Allow Environmental Protection, Says President

Article excerpt

WASHINGTON - The World Bank and other international development institutions are coming under increasing pressure to s top financing what critics, including the Reagan administration, complain are environmentally destructive projects.

The big banks are starting to display sensitivity to the criticism and to make promises of change. In his first major speech as new president of the World Bank, Barber Conable said recently that the bank must ""balance growth with environmental protection.''

As he spoke, environmentalists from five continents demonstrated nearby to protest what they said were the environmentally destructive lending policies of the World Bank and other international development institutions, including the Inter-American Development Bank, the Asian Bank and the African Bank.

This month, an international consortium of conservation organizations, led by the Environmental Defense Fund, sent Conable a report condemning a World Bank-financed project in Indonesia that is seeking to resettle hundreds of thousands of people from the island of Java to more sparsely settled areas in the Indonesian portions of Borneo and New Guinea. The report said the project would destroy millions of acres of virgin rain forest while placing the emigrants in an environment that would not sustain long-term development.

Bruce Rich, a lawyer for the Environmental Defense Fund, said the Indonesian project ""is only the latest example of systematic World Bank environmental negligence that has been documented in 17 congressional hearings over the past three years.''

The Reagan administration, members of Congress and environmental groups are now putting heavy pressure on the development banks to finance only environmentally sound projects.

These critics say many loans by these multilateral banks are actually blocking economic progress in some poor countries because the projects they support often help destroy natural systems like forests, farmland and watersheds that are essential for sustainable development. The large-scale, capital-intensive projects often displace local populations and can destroy their culture, the critics say.

Earlier this year, for example, there were strong protests when the World Bank announced, over the objections and dissenting vote of the United States, approval of a $500 million loan to Brazil fora series of large-scale hydroelectric projects. The loan was the first of three, totaling over $1 billion, that the bank is planning for hydroelectric projects in Brazil.

Hugh W. Foster, the alternate U.S. executive director of the World Bank, in opposing the loan at the board meeting, used words like ""folly'' and ""environmental disasters'' to describe the power projects the bank proposes to finance.

Environmental groups said they were ""dismayed and distressed by the environmental negligence which characterizes this loan.''

They said hundreds of square miles of vital tropical forest would be flooded and indigenous people displaced.

The bank's vice president for operations, S. Shahid Husain, said last month that the power projects in Brazil were already well advanced and that the bank's participation would help ""mitigate'' environmental damage.

Rich said loans for environmentally destructive projects by the big development banks were ""a critical issue.'' Noting that the multilateral institutions make development loans totaling over $20 billion a year and that these loans generate twice again as much development money from public and private sources, he said the activities of the World Bank and other development banks ""are very important.''

""They can determine the ecological health of two-thirds of the world,'' he said.

The Reagan administration, acting under legislation passed by Congress late last year, is pressing the development agencies to make environmental concerns a more central part of their planning and lending activities. …