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Involuntary Chinese resettlement – summary of events

July 20, 2000

Project Cancelled! This article details the events leading to the cancellation of the China Western Poverty Reduction Project.

On July 7, 2000, China withdrew from consideration one of the most controversial projects in World Bank history — the China Western Poverty Reduction Project — in light of strong opposition within the Bank’s Board of Directors. This is a brief overview of the events of the weeks before, and the actions that lead to this momentous decision.

The China Western Poverty Reduction Project was designed to address poverty in Western China. It involved the resettlement of some 58,000 people from eastern Qinghai Province to Dulan Country in the west, and would have supported the creation of a water storage dam, large-scale irrigation, and the transformation of an arid ecosystem populated by Tibetan and Mongolian nomadic herders to an agricultural oasis. When the project came to light during April of 1999, Tibetans in Dulan County smuggled letters out to Tibetan exiles in the West that requested help to stop the project, which they believed threatened their cultural survival. Tibetans form 25% of the population in this region, a number that would be dwarfed by the groups moving in. Their concerns and those raised by an international network of Tibet support groups and human rights organizations were echoed by environmental groups who questioned the sustainability of the project.

On June 18, 1999, the International Campaign for Tibet (ICT), an NGO dedicated to promoting human rights and democratic freedoms for the people of Tibet, filed a claim to the Bank’s Independent Inspection Panel (IP) on behalf of project affected people, claiming that the project violated several of the most important World Bank safeguard policies, including involuntary resettlement, indigenous peoples, environmental assessment and information disclosure. The claim alleged that the project would harm Tibetan and Mongolian herders. Days later, though the rest of the project went forward (components in Gansu and Inner Mongolia), the Board of Executive Directors (EDs, or Board) agreed to withhold funding for the Qinghai project component until the Inspection Panel had conducted a full investigation. The Panel began work in September, and their report was finally delivered to Bank Management, and a limited number of Board members, on April 18, 2000. Though its confidentiality was strictly maintained, rumors began to circulate that the review was scathing.

And it was. Though limited in its mandate to only identify problems in compliance with the Bank’s own policies, the Inspection Panel discovered numerous problems with the project design. Policies on Environmental Assessment, Resettlement, Indigenous Peoples, Natural Habitats, Pest Management, and Information Disclosure had been seriously violated. The Panel found that the initial environmental “B” category that management assigned to the project was wrong and because of that critical studies and analyses were not done. Moreover, the Panel observed that there existed a “climate of fear” in the project area which would make any meaningful consultation with project affected people impossible. Informed consultation is a prerequisite to the Indigenous Peoples, Resettlement and Environmental Assessment policies.

Additionally, the Inspection Panel found deep-rooted problems in policy interpretation at all levels of the Bank, raising fundamental questions about the ability of the management structure to support policy compliance

Under the Panel rules, Management was given six weeks to develop recommendations in response to this devastating report. During that period, ICT, BIC and CIEL met with the new Vice President for the East Asia/ Pacific Region, Jameel Kassum, and informed him that the only acceptable outcome was cancellation of the project.

In the meantime, ICT widely distributed an Action Alert that encouraged people from around the world to fax, email and write their Executive Directors demanding the cancellation of the project. Letters began to pour into the ED offices. At the same time, in Italy, the project was being debated in Parliament, and ICT testified before a Subcommittee of the US Congress. Press articles began to appear, such as an editorial in the Boston Globe, which claimed, “Accountability should mean that the Bank answers to all countries and all peoples, not merely to its biggest borrower, the People’s Republic of China”.

During that six week period, Management negotiated with the Chinese government for ways to move forward with the project. As the Bank’s largest borrower, China has enormous influence within the Bank. As the Panel report pointed out, “In China, things are done differently”. This refers to the fact that Bank operations subject to environmental and social policies in the rest of the world are not held to the same Bank standards in China.

The Management response was due on June 12, but was not finalized until June 21st, when their report was delivered to the Board of Directors along with the Inspection Panel Report. Accompanying the reports was a cover letter from President Wolfensohn, which stated that the project could be brought into compliance once new environmental studies were completed and a new “consultation process” undertaken, but that the real problem with the project was a political one that needed to be dealt with by the Board. Abdicating responsibility, Wolfensohn not only punted the decision to the Board, he also commented on the Panel’s report: “I should note.. that these efforts, largely in response to the controversy, are pushing us into a literal and mechanistic application of the OPs and ODs that was never intended when they were written. This is happening at considerable cost both the China and to the Bank.”

Wolfensohn’s letter, which did not summarize any of the Panel’s findings, was deliberately leaked to the press and NGOs, presumably to be able to control the spin of what would prove to be a highly public debate about the project. Furthermore, the letter minimized critical issues of environmental assessment and consultation, in the context of the “political issues” raised by the project, and set a dangerous precedent at the highest levels of Management for a more flexible policy interpretation. In response, ICT sent a strongly worded letter to Mr. Wolfensohn protesting his letter and demanding that the Panel report be made public. The letter said, “By summarizing the Management’s Report you are subverting the policy that the Inspection Panel’s report and Management’s response should be released at the same time.”

Adding fuel to the calls for public release of the Panel report was a June 20 bipartisan letter to Wolfensohn from Congresswoman Nancy Pelosi (D-CA) which was signed by 60 members of Congress and called on the Bank to release the Panel report before the Board meeting. “It is imperative that the stakeholders – those affected by the Bank’s projects – have access to the information before, not after, decisions affecting their lives are made”. Another well-timed letter to Wolfensohn was sent on June 20 endorsed by 53 parliamentarians who are members of Global Legislators for a Balanced Environment (GLOBE). “The lack of systemic application (of Bank policies has most recently come to our attention through the response from World Bank management of the Western China Poverty Reduction Project.” Signatories included members of Congress and Parliament from the US, Argentina, Belgium, Canada, Iceland, India, South Africa, Switzerland, Germany, Portugal, Denmark, Austria, Finland, the UK, Netherlands and Sweden.

In response to the growing public pressure and increasing press interest, on Thursday the 22nd, the Bank’s external relations department invited a group of NGOs, along with members of the press, to come to the Bank the following day to read the Panel report and Management’s response, prior to an early public release scheduled for 6:00 PM on Friday June 23. Upon arrival at the Bank on Friday afternoon, however, the group was told that we would have to wait for the report while the Board, which was at that point highly agitated about the possibility of premature release, met to decide what to do. Late that afternoon, in a close vote, the Board decided against release of the two documents. The Bank’s procedures call for the reports to be released after – not before — Board discussion of the project and apparently many board members did not want to bend the rules. (It should be noted however that the US supported the documents’ public release).

Meanwhile, the Financial Times had already obtained a leaked copy of the Panel report and by late in the evening on the 23rd, they had posted the Executive Summary on their web site. Once the Panel report was out, almost every major newspaper picked up the story. Editorials called for the cancellation of the project – first in the LA Times, followed by the Guardian, the FT, the Washington Post and the New York Times. A number of stories covering China’s defense of the project also appeared. Activists responded to the Inspection Panel report as a validation of many of their long-standing concerns with the project.

Inside the Bank, Management was actively promoting their recommendations. They organized a “technical briefing” with the Board which included a promotional video and a power point presentation. They lobbied individual Board members. In a highly inappropriate move, Management also held a video conference with G-7 embassies in Beijing, presumably to ensure that foreign ministry officials would get the message that the project had implications for diplomatic relationships with China.

Meanwhile, BIC organized a group of citizens to lobby Board members with our own analysis of the Panel report and the political implications of the project for the Bank. Our advocacy team included a number of Tibetan officials from the government in exile in Dharamsala; as well as Tibetan activists from ICT Europe, SFT and Milarepa. Meetings were held with EDs or their assistants from Canada, the US, Italy, the UK, Germany, France, Spain, Switzerland, Netherlands, the Nordic countries, and Japan.

In a profound coincidence of timing, our efforts during the week were boosted by the presence in Washington of thousands of Tibetans who were here for the annual Smithsonian Folk Life Festival, which this year was partly dedicated to the preservation of Tibetan culture in exile. With posters of the Dalai Lama all over town and events scheduled throughout the weekend, public attention on the World Bank project was enormous. A July 29 rally in front of the Bank drew a large crowd of Tibetans holding signs that read, “World Bank are you listening? Tibetans say cancel the project”. A group knelt in front of the Bank’s door with their mouths gagged holding a sign that read, “Social Assessment”. The presence of a large group of people from an affected culture at the World Bank headquarters gave support and credibility to NGO demands. Over the weekend, on the eve of a public audience by the Dalai Lama which drew over 50,000 people to the Mall, thousands of Tibetans and their supporters rallied and marched for Tibetan rights, including a stop at the World Bank. The Dalai Lama discussed the project with members of Congress and during his meeting with Madeleine Albright, the US Secretary of State, and noted that “the project would not be a good idea at this time”.

On Sunday July 2nd, Students for a Free Tibet, Milarepa and ICT activists decided to undertake a continuous vigil in front of the bank until the Board meeting, scheduled for the 6th. A handful of activists, surrounded by Tibetan flags, prayer flags and giant puppets, spent four days and five nights protesting across the street from the Bank, leafleting Bank staff and passersby.

NGOs and parliamentarians around the world kept the pressure on. Japanese NGOs met with their Finance Ministry; NGOs in Italy, the UK and Canada met with government officials; letters to the Bank’s EDs came in from NGOs and members of parliament from Switzerland, France, Italy, Paraguay, Brazil, Poland and Scotland. The European Parliament passed a resolution to “ask the World Bank to suspend the decision on the WCPRP and to monitor all the potential effects of this project on the ethnic, cultural and social balance of Tibet”.

Finally, on June 6th (auspiciously the Dalai Lama’s 65th birthday), the Board met to discuss the project. The EDs began their meeting at two in the afternoon, and broke at 9:00 PM after reaching a frustrating impasse that fractured along North/South lines. The meeting began with statements read aloud by most of the 24 EDs. The US and Japan were strongly opposed to the project going forward on the grounds that it was not technically feasible and even with management’s proposal to fix the project, they believed it would continue to violate the Bank’s safeguard policies. European, Canadian and Australian Directors had more compromised positions, some proposing that the recommended studies go ahead but insisting that the whole project be brought back to the board for approval at the end of the 15-month study period and before disbursement of funds. Strong statements criticizing management’s report were made by Italy, Australia, Canada, the Nordics and France; questions were raised by a number of EDs, both North and South, about the credibility of Management to carry out additional studies and consultations given the fact that they had lied to the Board in 1999 when they insisted that they project was in compliance with all Bank policies. While many Southern EDs also had strong statements about the compliance issues raised, they were ultimately in favor of the project moving forward as proposed by Management. The Brazilian Director, Murilio Portugal, apparently gave strong support to the Inspection Panel and defended the Panel’s work by noting that they had produced the best report to date

Despite strong statements and heated debate, China and Bank Management, including Mr. Wolfensohn, were unwilling to agree to allow the Project to be brought back to the Board, and a majority of the Board rejected Management’s proposal. Unable to reach consensus, the Board adjourned around 9:00 PM. The group outside remained, shouting “World Bank Vote NO” until the EDs exited the building.

Overnight, the Chinese apparently decided that they would not be able to tolerate the condition that the project come back to the Board, and early Friday morning, when the Board reconvened, they announced they would withdraw the project. That announcement, however, was not made until late in the AM. Board members continued to debate for another couple of hours, in regards to which of the documents would be released to the public. The Panel rules call for full public release of the Panel Report and Management’s Response. However, in this case the Management response included a controversial annex entitled, “Country Focus and Safeguard Policies: Institutional Issues”, which several Board members apparently wanted to remove from the package. At the end of the meeting, however, it was agreed that they could not bend the rules and Management’s report would need to be released in its entirety.

Activists gathered outside the Bank continued their vigil throughout the morning, shouting “Give Us an Answer” over and over until we received official word that the project was withdrawn. After a victory lap around the World Bank building, a thrilled group of about 25 Tibetans and supporters gathered around the Tibetan flag to celebrate in various culturally appropriate ways — the Tibetan national anthem was sung while cheap champagne was passed around the circle.

The story does not end here however. This controversy, following on the heels of the Chad-Cameroon pipeline and April World Bank/IMF protests, has brought critical issues of Bank practices and policies to the forefront of international debate. Both the United States and China are calling for major changes in the way that the World Bank conducts its business, albeit with very different ideas about what needs to change. Activists will need to follow up on the profound institutional weaknesses that the Inspection Panel report highlighted, in particular the Bank’s commitment to its policies that are designed to prevent harm and promote sustainable development objectives. Moreover, China has decided to go forward with the project with its own financing, thus presenting another challenge to human rights and pro-Tibet activists.

One final note about outcomes: Beyond the immediate success of forcing the Bank to reject this project, we also succeeded in ensuring that the Bank’s Board of Directors endorse the relevance and importance of the Safeguard Policies, and reaffirm the accountability process represented by the Inspection Panel.

We want to take this opportunity to thank all of the dedicated activists from around the world who generated such an effective protest against this project. This outcome would have not been possible without the creative, relentless energy of the Tibet support networks, MDB-reform networks, and dedicated government officials in the US and elsewhere to ensure that the Bank not put its stamp of approval on China’s heinous population transfer policy.

With warmest regards,

Kay Treakle, Liz Sweet
BIC, July 20, 2000

Categories: Export Credit

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