Global Policy Forum

SEEN Reviews the 2005 World Bank Annual Meeting

Sustainable Energy and Economy Network
September 28, 2005

A double standard emerged from the World Bank's annual meeting this month in Washington, D.C. The Bank's leadership remained an ardent supporter of export-oriented oil extraction while, at the same time, it claimed leadership in the global climate debate. Paul Wolfowitz, the former Pentagon No. 2 and current Bank president, has fused the World Bank's interests with those of the U.S. and U.K. governments. The Bank is attempting, outside the globally negotiated Climate Convention, to dominate policy through a new, independent, investment framework.

The Bank's potential role in project finance parallels the profusion of side agreements -- like the secretly negotiated U.S./Australia/Asia pact -- that shun the Climate Convention. All of this adds up to a major trend away from multilateralism in global climate governance, consistent with a broader Bush administration foreign policy agenda. Further evidence of this drift came in an Independent article on Sept. 25.

"Tony Blair has admitted that he is changing his views on combating global warming to mirror those of President Bush - and oppose negotiating international treaties such as the Kyoto Protocol," reported Geoffrey Lean and Christopher Silvester. Prior to the meeting, SEEN noted how the World Bank under Paul Wolfowitz aggressively staked a larger claim in global climate policy. Wolfowitz refined the shared U.S./U.K./World Bank initiative at the G-8 Summit in Gleneagles. Wolfowitz and the Bank then called their self-created G-8 Communiqué a global mandate.

SEEN director and Institute for Policy Studies fellow Daphne Wysham said, "Climate leadership and science should be left to the multilateral framework of the UN, not hijacked by the World Bank, an unrepresentative institution that profits from fossil fuels and carbon trading." The World Bank also continues to ignore the recommendation of its own commission, the Extractive Industries Review, to stop backing coal and oil projects. Such self-contradictions did not prevent the World Bank from announcing during the 2005 annual meeting that it has "launched work on an Investment Framework for clean energy and sustainable development."

The outside world also learned of a planned follow-up meeting to the G-8 meeting, a so-called Gleneagles Dialogue on climate change and energy, to be held on November 1. The UK government said about 20 governments would be allowed to attend; civil society organizations are not invited. SEEN believes that the "Gleneagles Dialogue," initiated by the G8 -- which controls the Bank and consumes most of the oil from the Bank's extractive projects -- inherently disenfranchises the world's other 180+ countries, regardless of the World Bank's and the G8's stated intentions. (See Wrong Turn from Rio for further background on the power dynamics that play out at the level of the World Bank's board of directors.)

Far from providing the sort of leadership asked of the World Bank at the 1992 Earth Summit, the World Bank Group finances fossil fuel projects in the global South and East at a rate far outpacing that of renewables and energy efficiency: 17 to 1. The Bank, particularly its private finance arm, the International Finance Corporation (IFC), remains committed to oil extraction projects, as IFC Vice President for Operations Assaad Jabre said at a press briefing on September 21, 2005. Most (over 80%) of these projects are for export back to the G8 countries, not--as is often stated in World Bank literature--to meet the energy needs of the poorest two billion.

In fact, the World Bank Group has yet to even study the impact of its energy sector investments on these two billion poor, largely living in rural areas, who remain without access to more than biomass for heating or lighting. Our own research shows that less than 5% of the World Bank Group's investments are targeted at the poorest one-third of the planet. Ignoring this information -- and countless other studies that show just how harmful investment in extractive industries is to the stated poverty alleviation and sustainable development goals of the World Bank, the G8 communiqué -- simultaneously supports more fossil fuel extraction AND renewable/energy efficiency finance. This is the Bank's current game.

This is not a climate-friendly formula; furthermore, because all IFC loans are made directly to corporations like Exxon-Mobil and Halliburton, it represents a form of government subsidy for fossil fuels that the Climate Convention and the Kyoto Protocol aim to abolish. The World Bank also continues to resist pressure to calculate greenhouse gas emissions from its oil, coal, and gas extraction projects. Because public and private banks take their cues from World Bank standards, the main financiers of climate change remain unaccountable for their destabilizing investments.


SEEN's latest Fact Sheet on the World Bank and climate change.

A Wrong Turn from Rio: The World Bank's Road to Climate Catastrophe. SEEN's comprehensive review of World Bank climate malpractice.

The Energy Tug of War: The Winners and Losers of World Bank Fossil Fuel Finance. SEEN's examination of World Bank fossil fuel projects benefit Northern corporations, with Halliburton leading the pack, not the global South.

A New Plan for the World Bank, Commentary by Daphne Wysham.

Dancing With the Wolf: The World Bank President's Reputational Risk, by Charlie Cray and Jim Vallette The Paul Wolfowitz Chronology, by Jim Vallette.

The World Bank marries the Pentagon, a Mobilization for Global Justice Action Calendar of Events compiled by the Bank Information Center.




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