Still Waiting - World Bank failes to alleviate poverty

Ecologist, The, Sept, 2000 by Bruce Rich

As with other QED reports, the analysis on both Poverty and Environmental Assessments was devastating, but the follow-up by Bank management virtually non-existent.

Amnesia, 'clientitis', and unaccountability

The new internal review entity called the Quality Assurance Group -- touted by Wolfensohn and Bank management as one of the key institutional changes that would bring about the much heralded 'culture of development effectiveness' -- concluded in April 1997, a year long review of key areas of the Bank's ongoing lending portfolio. It examined 150 projects in detail across 14 major areas. The Synthesis Report summarising these reviews was an indictment of the Bank's chronic, institution-wide inability to learn from past experience, the lessons of which were "well known but generally ignored", the report noted, in new lending operations. In the words of the Quality Assurance Group, the Bank had pervasive "institutional amnesia".

One of the factors behind this was that the thrust of the cultural change Wolfensohn claimed to promote was, once again, contradictory: improved project quality and, simultaneously, more responsiveness to the Bank's clients. But the Bank's clients have always been, and will in large part remain, borrowing governments and government agencies. The crisis of the culture of approval had become so overwhelming precisely because of the Bank's desire to please or not offend its government borrowing clients.

This problem is compounded by the lack of adequate accountability for socially and environmentally-detrimental project violations that have arisen as a result. Only the Independent Inspection Panel is willing to undertake credible efforts to hold Bank management accountable for violations. But it has a debilitating Achilles heel: the requirement that all investigations be approved by the Bank's Executive Board made up of developing country members who lobby heavily not to have the performance of their governments scrutinised.

Thus, when massive violations of Bank policy were alleged in the implementation of the Rondonia Natural Resources Management Project in Brazil, the Bank's Board, in January 1996, rejected a full investigation by the Panel, allowing it to review the project only after periods of six and 18 months. When it did, it found: "Deforestation has continued at high historical levels", and "illegal timber cutting and settlement in protected areas" continue. It also found "little progress in implementing a sustainable health plan for indigenous people". Similar results arose from complaints about two massively mismanaged projects in Brazil and India: the Itaparica dam resettlement project (the single most expensive resettlement project in Bank history, with $63,000 allotted per family, almost all which disappeared in corruption), and the National Thermal Power Sector Loan, (which involved pouring billions into a vast coal-fired power development at Singrauli, with disastrous neglect of resettlement and environmental con ditions). Again, the governments of Brazil and India lobbied furiously against inspections of abuses. The Brazilian government succeeded in mobilising all of the borrowing countries in opposing the Panel (after all, any one of them could be the next target of the Panel...), as well as Italy, France, Belgium and Korea. The inspection was squelched, with countries holding 52 per cent of the Bank's shares voting against, and 48 per cent in favour. In the case of Singrauli, the Board approved an investigation, but prohibited the Panel from any site visits in India, limiting it to a desk-bound review of Bank documents in Washington.