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The Guardian: Sorry to spoil the World Bank party, but hasn’t it lost its way?

The Guardian: Sorry to spoil the World Bank party, but hasn’t it lost its way?

“World Bank money has left a legacy of environmental and social devastation, from cyanide spills in Peru to land expropriation and water pollution at oil pipelines in Chad”

Hannah Ellis

23 July 04

Imagine a bank investing around $55bn a year in the world’s economy with the specific mandate of alleviating poverty. This is supposed to be the World Bank. It turns 60 next month – but I won’t be sending a birthday card.

The World Bank finances energy projects, often run by multinational energy corporations, including Shell and BP, in developing countries. More than 80% of the energy extracted is exported and used in the developed world. World Bank money has left a legacy of environmental and social devastation, from cyanide spills in Peru to land expropriation and water pollution at oil pipelines in Chad. The bank has blindly chanted an “economic growth” mantra to those who have questioned the appropriateness of this investment, presenting a dogmatic argument that these projects will inevitably help the poor.

This cannot go on. The World Bank has already received an unwelcome early birthday present in the form of its own Extractive Industries Review (EIR). Three years’ research over four continents, involving governments, multinationals, academics, civil society and affected communities, has concluded that the bank’s involvement in oil, mining and gas has failed the world’s poor.

A bank with a mission of alleviating poverty must be able to prove that its projects have the potential to deliver. As a provider of public subsidy, the bank should have environmental and social standards, as well as economic ones, guiding its investments to ensure that its involvement in projects is responsible and sustainable.

The EIR concluded that free, prior and informed consent of affected communities, respect for human rights, the protection of internationally established “no-go” zones in areas of armed conflict, and high spiritual or scientific value must be prerequisites to ensure that extractive industry projects have the potential to promote sustainable development and alleviate poverty.

The review’s conclusions have received huge international support. This ranges from governments, indigenous people and religious leaders, including Desmond Tutu, and yet not from the British government. As Agnes van Ardenne, the Netherlands’ development minister, says: “The World Bank’s mission is real poverty alleviation for the poorest. The question is whether oil and mining can really alleviate poverty. An independ ent report indicates clearly that the World Bank needs to undertake other activities to do so. This has been discussed before and it sounds like great advice to me.”

The World Bank board meets next month to decide what to do about the EIR. The bank, highly critical of the review, seems keen to bury it. The only hope now for those affected by the environmental and social devastation caused by these projects is that the shareholders of the bank will demand change.

The EIR recognises that climate change will affect the world’s poor the hardest, and it recommends that the World Bank stop financing oil and coal projects. The bank does not accept this recommendation, but admits that a radical shift in its energy portfolio – currently under 20% renewables, compared to 80% fossil fuel – is required. Meanwhile it has held on to its relationship with the extractive industry by arguing that it can limit the potential for social and environmental devastation these projects might cause.

Despite the World Bank being able to provide no evidence to suggest this added value, the argument itself misses the target. The question is not what World Bank money will do for a project, but what a project will do to alleviate poverty. The answer is clear and is repeated by parliamentarians, religious leaders, scientists and communities around the world. The World Bank is turning 60 this year. It is time for the bank to deliver or retire.

Hannah Ellis is international financial institutions campaigner for Friends of the Earth

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