Bank Lives for Other Worlds
This is a tale of one of Washington’s most remote institutions, the World Bank, and how it works in microcosm--or, in this case, how it doesn’t work.
It is a story of bumbling and insensitivity, of favoritism and arrogance. All of these traits are on display in a new report by independent inspectors describing how the World Bank rammed through a $40-million project that will disrupt an ethnic Tibetan region of China.
To understand the story, you have to know the context. China long has been a darling of the World Bank because it is a big borrower and often has gone along with the bank’s advice about economic reforms.
Moreover, China sometimes uses World Bank loans to buy power plants, dams and other big-ticket items from the countries that help run the bank. When the U.S. government organized a freeze on World Bank loans to China after the bloody Tiananmen Square crackdown of 1989, other nations rushed to restore lending within less than a year.
“Procurement won out over idealism,” Barber Conable Jr., then president of the bank, explained at the time.
Over time, China got tens of billions of dollars from the World Bank--more money, in fact, than any other nation. But by the late 1990s, the bank noticed the obvious: China was getting more prosperous.
And so China was declared ineligible for the long-term, interest-free loans the bank sets aside for the world’s poorest countries. That means China can still borrow from the World Bank but will have to pay interest on these loans like other relatively wealthier nations.
But wait. Last summer, just before China’s eligibility for cheap loans ran out, Beijing sought and the World Bank hurriedly approved one last goodbye present. It was a $160-million loan, interest-free, with roughly a quarter of the money aimed for China’s Qinghai Province.
Qinghai lies next to Tibet. Some areas of the province are populated by Tibetans and were once part of Tibet. In recent years, Tibetans have complained that the Beijing government is moving ethnic Han Chinese into Tibetan areas, diluting the culture and influence of Tibetans.
In the Qinghai project, China proposed to move 58,000 poor farmers, many of them ethnic Han Chinese, into Dulan County, an ethnic Tibetan area of Qinghai.
Tibetan organizations and environmental groups objected to this plan. The U.S. and Germany sought to block the loan. The World Bank decided to go ahead anyway. But it held up the money for Qinghai until an independent review panel could examine the disputed project.
The three inspectors--development specialists from Canada, the Netherlands and Ghana--recently finished their report. They found that the World Bank violated several of its own policies when it approved China’s proposal.
China enjoyed what amounted to a sweetheart relationship with the World Bank, the report indicates. “Interviews with some staff were punctuated with the refrain that ‘in China, things are done differently’ [by the bank],” the reviewers wrote. In essence, World Bank officials didn’t ask China the sort of questions they would ask elsewhere.
Most revealing of all were accounts of the rigged ways in which the bank did its work in China. When the bank carried out an “assessment” of the impact of the project, for example, it drew boundaries in a special way that left out Tibetan minority villages.
The bank staff conducted a survey of how ordinary people in Qinghai felt about the project. But after a visit to the area, the inspection team concluded that the survey was of dubious validity too, because the people questioned were never guaranteed confidentiality.
The inspectors found some “disturbing and dramatic examples of what can only be described as a climate of fear, through which some individuals nevertheless managed, at great risk, to express their opposition to this project.”
Local Chinese officials dissembled to the inspection team. The inspectors asked to visit one ethnic Mongol village. “On arrival, however, the team discovered that they were in a Han [Chinese] and not a Mongol village.” The inspectors never saw the Mongol village, and Chinese officials gave them “at least three mutually contradictory accounts.”
Please don’t assume this tough report will dissuade the World Bank from giving China the money. The bank’s board is scheduled to act on the Qinghai project July 6. In a letter to the board last week, World Bank President James D. Wolfensohn made clear that the bank’s management intends to make a few changes and then charge ahead anyway.
Wolfensohn’s letter is a masterpiece of hubris. He angrily wrote off the controversy as a matter of “emotions” and “politics” about Tibet--when, in fact, the inspection team seems to have been considerably less emotional and partisan than Wolfensohn himself.
Wolfensohn apologized to China for having to be “patient and flexible” in waiting for the millions of interest-free dollars it will receive from the World Bank.
The protests in Seattle and Washington certainly haven’t taught the World Bank any lessons in humility.
Jim Mann’s column appears in this space every Wednesday.
