July 6, 2000

Canada’s Executive Director to the World Bank explains her position on the China Western Poverty Reduction Project.

The Inspection Panel was created by the Board to ensure that the World Bank lives up to its stated intentions that it is an open, transparent and consultative developmental organization that respects the environment, the indigenous people and the people affected by the projects it implements. It is paramount at this time that the
Board has an effective mechanism to ensure that the spirit of the policies it approves are well implemented and that the people that are affected by them have a venue to express their concerns and seek correction.

The Inspection Panel’s Report on the China Poverty Reduction Project for the Qinghai component is a demonstration of the professionalism of the Panel itself but more importantly, of the significant role that the Panel has to play for the Board and to the public accountability of this institution.

At a time when other Multilateral and International Developmental organizaions are looking at ways to protect the integrity of their Institutions, we the Board of the World Bank, have to live up to expectations and maintain the lead that we have sought to establish with the creation of the independent Inspection Panel. In many instances in the documentation relating to the project there are references to the “special circumstances” of this project referring to the potential political issues surrounding it. We want to ensure that Canada’s view or position on this project is not interpreted in that context. We look at this project and the process surrounding it from an objective point of view that has to do with the diligence and accountability on the part of this institution.

It is clear from the Panel’s report that we have a project today that does not comply with very significant Bank policies. At the outset this chair expressed its view that the environmental classification for this project should have been Category A allowing a full review of its impact. The Inspection Panel confirms that view. It is evident from the
Panel’s report that the process did not allow a meaningful input or consultation from the affected people in the move-out and move-in areas. The Panel’s findings on this subject have the potential to damage the reputation of the Bank at a time when we are promoting
public consultation as a centrepiece of the Poverty Reduction Strategy Paper (PRSP) process. The definition of the project areas has also limited the number of people consulted. No proper Indigenous People Development Plan has been developed taking into account the environment and the various ethnic communities needs. The information disclosure policy was clearly disregarded. Even more importantly, the issue of alternative analysis has been minimized on the basis that similar projects have already been implemented by the Borrower.

We are now faced with considering a project design that is the result of incomplete environmental and social assessment and that is not the result of meaningful consultation with the people that we are most concerned about, the poor of that region that will be affected by its implementation. Reluctantly we could consider accepting a consensus of this Board that would guarantee a project in full compliance with the
Bank’s policies: a full environmental assessment Category A for the Qinghai component, a complete Indigenous People Development Plan that would be adapted to the five cultural areas particularly for the move-out area, the analysis of alternatives that would look at other options especially in the move-out area, a meaningful consultative
process for the people affected by the project according to a broader definition of the “project area”.

We would welcome the presentation of the results of these new studies to the Board for approval. Failing that consensus, we don’t have any choice but to oppose disbursements for this investment.

Again, we believe this is not a problem created by a project under “special circumstances”. This is a problem caused by an organization that has failed to live up to its own standards. It is not a question of interpretation of policies but a question of credibility. In today’s  world it is imperative that the International Organizations live up to those expectations and the Bank is herewith provided with an opportunity to do so.