The World Bank now espouses a "green" philosophy and claims it will no longer fund environmentally destructive projects. But behind the rhetoric, Bank staff maintain their old posture, as seen in a 1993 confidential memo from John Briscoe of the Bank'swater department to Ismail Serageldin, Vice President for Sustainable Development. A brief section from the memo:

"[The] environmental establishment at the Bank...is increasingly seen as a policeman, not a unit assisting our staff and borrowers to do better..."

Bank President Lewis Preston himself acknowledged in July that the institution "has not recognized the importance of the environment."

Two years ago 167 nations gathered at the Earth Summit in Rio de Janeiro and endorsed the idea that "sustainable development" would stimulate equitable economic growth while enhancing protection for the global environment.

In response to pressure to increase financing for global environmental protection, the World Bank took the lead in 1991 in establishing the Global Environment Facility (GEF). The GEF would enable the institution to become the key agency in financing two key environmental conventions - the Framework Convention on Climate Change and the Biodiversity Convention, both signed in Rio. Administration of the GEF not only gives the Bank new government funds to administer, it also provides a "green" cover for many environmentally destructive bank loans.

Southern countries opposed establishment of the GEF under World Bank control because they feared the GEF would only fund those environmental projects which the rich countries deemed a priority. Indeed, a recent official evaluation of the GEF has already concluded that its approach has been ineffective because it has reproduced the usual top-down, non-participatory way of doing business.

The other key environmental convention which has World Bank involvement is the Multilateral Fund which, under the Montreal Protocol on Substances that Deplete the Ozone Layer, is to help developing countries switch to ozone-friendly technologies.

As expected, little progress has been made in carrying out environmental reform in the global economic arena. As it marks its fiftieth anniversary this year, the World Bank is a key obstacle to achieving sustainable development. Its outdated development model and poor project design help bring about the plundering of natural resources and the impoverishment of millions.

Some Examples Of Environmental Disasters Caused By The World Bank:

The World Bank has financed highways through the rainforests of northwest Brazil, accelerating their destruction.

In Indonesia, the bank granted the government loans of $630 million to implement the Transmigration Project, which resettled millions of poor farmers in areas of pristine rainforest. Ironically, it cost an average of $7,000 to move each settler -- more than 13 times the per capita income of residents of some of the area colonized.

The Bank is a major lender to projects which will cause global warming, such as large-scale coal power plants and open pit coal mines. In India, the Bank recently agreed to help finance 15 new coalfired power plants and openpit coal mines within the next ten years, which will be the largest new source of greenhouse gas emissions on earth.[see the Climate Factsheet for more info].

History

In the 1970s, the bank adopted a technocratic approach to development that supported large-scale, capital-intensive technologies--such as dams--and implemented a top-down planning process to set lending priorities. The result? Environmental havoc. Poverty projects that opened land for export-oriented agriculture, commercial forestry, and cattle ranching destroyed millions of acres of forests and displaced millions of poor and tribal peoples, locking them into poverty.

Publicity about this destructive record forced a "greening" of the bank in the mid-1980s, and led to the establishment in 1987 of an Environment Department and a requirement for Environmental Impact Assessments for some projects. But the World Bank is still hooked on destructive, massive infrastructure projects.

A 1992 internal review of the bank's $140 billion portfolio found 37 percent of recently evaluated projects ignored social and environmental policies or failed to meet performance goals. A quarter of all agriculture and irrigation projects were in trouble, as were roughly a third of those meant to fight poverty.

If the World Bank's lending portfolio is not shifted to environmentally sustainable projects, it will undermine the potential of vital international environmental agreements. Disregarding the threat of global climate change, the Bank spends 40 percent of its energy loans on oil and gas development; 15 percent on coal; and most of the rest on electrical transmission from fossil-fuel powered generators.

The Bank has been charged with administering most of the funds provided under the Montreal Protocol on Substances that Deplete the Ozone Layer to help poor countries switch to ozone and climate-friendly chemicals. But so far, the bank continues to fund primarily technologies which use ozone-destroying HCFCs and global warming HFC chemicals.

Bank Structural Adjustment Breeds Environmental Havoc

With its narrow focus on generating economic growth, the Bank has often ignored the environmental and social impact of its projects. In Ghana, as a result of World Bank structural adjustment loans, economic growth rates of over 3 percent were achieved in the 1980s. However, this "success" was achieved by expanding mineral production and logging at a rate that could be characterised as pillage. Timber exports from Ghana increased so fast that the country's tropical forest has now been reduced to less than 25 percent of its original size.

Now that even the Bank's President has publicly recognized it has a problem with its environmental record, he has to do something about it. The Bank must shift to supporting clean energy, ozone-friendly technologies, and the active involvement of forest peoples in smaller-scale forestry initiatives. It must also change its evaluation and incentive structures which judge the success of a project on its quality rather than the quantity of projects.

Greenpeace Demands

Donor governments should withhold their contribution to the World Bank until more democratic and open policies, and environmentally sustainable projects, are implemented.

The bank should:

• Be more open and accountable to governments, taxpayers, and the poor.
• Be held accountable to the principles agreed at the Earth Summit and to the international conventions on climate change, protection of the earth's ozone layer, and biodiversity; - shift its loan portfolio to smaller, participatory development projects.
• Stop ecologically destructive projects, to scale back the financing, role and power of the Bank, and to redirect funds into a variety of development assistance alternatives.

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