Environmentalists and human rights campaigners have sounded the alarm at radical plans to ease conditions for World Bank loans, enabling more than US$50 billion of public money a year to be made available for large power, mining, transport and farming projects.
Leaked e-mails from the bank, which have been seen by reporters, reveal that senior figures at the lender feared that a new “light-touch” regulation of loans would lead to an increase in “problem projects.”
Critics are also worried that the door could be opened to large-scale environmental destruction and a lack of protection for communities affected by the projects.
“It might appear that the bank is interested in lending more, hence lowering standards ... [It] would likely entail an increase in the number of problem projects and cancellations,” bank vice president for poverty reduction Ana Revenga said in one of the e-mails.
The e-mail exchanges also indicate that the bank may expand the use of controversial “biodiversity offsetting” — which allows developers to destroy nature in one place if they compensate elsewhere.
Many existing social and environmental safeguards appear to have been dropped under the plans, which have not been made public, but are at an advanced stage.
The bank group, which loans and guarantees around US$50 billion a year to more than 100 countries to alleviate poverty, is the world’s largest development institution.
The World Bank has been consistently criticized for its damaging lending policies and because it is dominated by industrialized countries who are accused of dictating policy that affects less-wealthy borrowing nations.
Strong safeguards and conditions on its loans and guarantees were put in place following a series of environmentally destructive bank-funded projects in the 1980s and 1990s.
These saw worldwide protests over mega-projects such as the Narmada Dam in India and the resettlement of hundreds of thousands of people to make way for palm plantations in Indonesia.
However, the World Bank group, which includes the International Finance Corp, the International Bank for Reconstruction and Development and the International Development Association, is in the process of a reorganization and wants to harmonize safeguards and standards between its private and public lending groups.
The e-mails show the bank’s managers are eager to increase its overall lending.
According to the comments from the bank’s vice presidents, this could mean a reduction in bank accountability, with client countries being made to monitor their own projects and a gutting of the bank’s inspection panel — an independent complaints mechanism.
“A vigorous and healthy internal discussion is an important part of our process. Our work on reviewing our environmental and social safeguards is ongoing,” a World Bank spokesman said.
“We will submit our views to our board’s committee on development effectiveness. We will then engage in further public consultation,” he said.
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