Close Down the Masters of Reinvention
The Case for a World Bank Shut Down
THE MASTERS OF REINVENTION are at it again. In a time-tested stratagem, World Bank officials now readily admit that the Bank has committed grievous errors in the past. But now, they say, things are different.
The Bank has adopted this mea culpa strategy over and over again during the past couple decades, as we document in the sidebar on pages 6 and 7. Little changes after these declarations of previous mistakes, but the acknowledgement of prior wrongdoing and failure does help deflect criticism.
Today, acknowledging the problems accompanying road building, dam construction and other mega infrastructure projects, Bank officials say they have turned their attention elsewhere. We have a renewed focus on poverty, they say.
Repeated ad nauseum, this line has served the Bank well, especially in media coverage following the April protests against the Bank and International Monetary Fund (IMF) in Washington, D.C.
Here's the problem with the Bank's new story: On the one hand, it is continuing to support an array of megaprojects with hugely destructive consequences for the environment and especially for the poor. On the other hand, much of the Bank's poverty focus is likely to make living conditions for the poor even worse.
Ask the people in Laos, or Chad, if they have seen evidence of the Bank's shift away from major infrastructure projects. In Laos, the World Bank is lending support to the Nam Theun 2 Dam, imperiling the well-being of indigenous populations, endangered species and the financial future of Laos, as Witoon Permpongsacharoen explains in an interview in this issue. In Chad and Cameroon, the Bank in early June committed itself to lending catalytic support to an oil development and pipeline project, to be carried out by Exxon-Mobil, the Malaysian company Petronas and Chevron, that threatens to replicate the environmental, human rights and development nightmare of Shell's oil development in the nearby Niger Delta.
"It's clear that many of their projects create poverty," says Witoon when asked about the Bank's new poverty focus. "Many Bank projects destroy people's lives. They can no longer live in their rural area."
Meanwhile, the Bank is increasingly complementing its direct support for major projects in developing countries with key insurance and financial support for foreign corporate investment in developing countries. Noting the increasing velocity of private capital flows into the Third World -- at least to selected regions and in selected sectors -- the Bank is placing increasing importance on its International Finance Corporation (IFC), as well as its Multilateral Investment Guarantee Association (MIGA), both corporate welfare enterprises. The IFC provides loans to and takes equity positions in private sector projects. It has a strange penchant for backing oil, mining, gas and major banking investments. MIGA provides political risk insurance and related to services to similar types of private investments. Big, especially foreign corporations, are the main winners from these projects, which frequently do nothing to promote real development -- or set it backwards.
What about Bank loans that are intended to address poverty? It turns out that many of these are adjustment loans, which in the past fiscal year for the first time accounted for more than half of the Bank's total fiscal commitments. According to Bank definitions, a whopping 69 percent of its adjustment loans were poverty-focused (on a cure, supposedly, not to make things worse).
The World Bank's structural adjustment loans, combined with those of the IMF, have wreaked havoc in developing countries. Sub-Saharan Africa, the region of the world most subjected to structural adjustment over the past two decades, has seen income levels plummet and poverty increase. Developing countries that have done well in recent decades have generally ignored key structural adjustment prescriptions. …