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
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''
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
""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. …