Wall Street Journal
June 25, 1999

WASHINGTON–Brushing aside U.S. objections, the World Bank board agreed to fund a highly controversial Chinese anti-poverty program that includes resettlement of 58,000 impoverished ethnic-Chinese farmers onto fertile lands historically inhabited by Tibetans. (Excerpt)

But, in an unusual last-minute compromise, the bank’s board and the Chinese government agreed yesterday to delay the most hotly disputed element of the $160 million project loan– the resettlement in Qinghai Province- until it’s reviewed by an internal bank watchdog panel. “The fact that this component of the project will not start, nor will any monies be drawn for it, until the results [of the review] are known, should allow critics and supporters alike the space and time for full and open consideration of all issues,” bank President James D. Wolfensohn said in a written statement. In keeping with its standard practice, the 24-person board, which represents 182 member countries, didn’t hold a formal vote. During the closed-door discussions, however, U.S. and German representatives spoke against approval, and France, Canada and several others withheld support- a rare rift in an organization generally run by consensus. Mr. Wolfensohn brokered the compromise in an effort to reconcile the Chinese and U.S. positions and prevent a contentious board meeting.  Nonetheless, the U.S. gave it a thumbs down.  “We voted against this loan because we believe that it did not meet the appropriate high standards for a loan of this type with respect to the environment, disclosure and resettlement,” a senior U.S. official said. The dispute has bruised Sino-American relations, already battered by the North Atlantic Treaty Organization’s bombing,of the Chinese Embassy in Belgrade. The entire project includes health, education and other anti-poverty measures in three areas of Western China.