Export Credit

World Bank Backgrounder # 49

June 8, 1995

The leaders of the world’s seven most industrialized countries will meet next week in Halifax, Nova Scotia, to discuss the future of the World Bank and the International Monetary Fund, and are expected to press the Bank to become more transparent and to make sustainable development a top priority.

According to sources from the Italian G-7 delegation, both Canadian and German officials are anxious to get environmentally friendly language into the summit communique, as are environment ministers from all of the G-7 countries. The G-7 interest in the environment and sustainable development was confirmed this week when a draft of the communique, stressing the need for more action on the environment, was leaked to the press.

But according to critics such as Probe International’s Patricia Adams, no good will come of the effort. “The rhetoric is cheap and the record of the Bank in promoting sustainable development is bad,” she said. The critics point out that the Bank has been publicly committed to sustainable development since the mid-1980s, but has continued to fund projects that have had the opposite effect:

India’s Sardar Sarovar dam has impoverished tens of thousands of people and destroyed fertile land along the Narmada River. A 1992 review of the World Bank’s 10-year involvement in the project accused the Bank of “gross delinquency in the handling of environmental matters.”

World Bank projects have forcibly resettled millions of people worldwide. Since 1986, numerous internal reviews have found that populations displaced by Bank projects rarely improve or restore their former living standards, as Bank policy requires. Nothing has changed: a 1994 review found that one-half of projects involving forced resettlement had no documented resettlement plan at all.

The World Bank-controlled Global Environment Facility has failed to protect the global environment. Created in 1991, the GEF is charged with financing projects to mitigate ozone depletion, global warming, and the loss of biological diversity. Critics, however, point to GEF projects that have destroyed environments rather than protecting them, and to the facility’s mandate of making taxpayers, rather than polluters, pay to clean up the environment as evidence of the GEF’s failure.

To answer critics’ charges that it has failed to achieve sustainable development, the World Bank has implemented a number of reforms including an Independent Inspection Panel to hear the complaints of citizens whose environments and economies are affected by Bank projects, and a new access to information policy that promises the release of more environment-related Bank documents. However, under the new information policy, borrowing governments can veto the release of virtually all important documents, while the inspection panel remains firmly under the control of the Bank’s Board of Executive Directors, the same group that approves destructive loans in the first place. Critics remain unimpressed by the recent reforms.

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