Global Policy Forum

World Bank Revamp Needs Close Scrutiny, Groups Say


By Emad Mekay

Inter Press Service
August 14, 2006

A World Bank plan to merge its environmental and social development units with the department that oversees large infrastructure investment could end up leaving the "wolf guarding the henhouse", a watchdog group says.

The Bank Information Centre, a Washington-based clearinghouse of information on the institution, argues in a policy brief that the new "Sustainable Development Network" will have to be monitored closely to ensure that the Bank does not wrongly promote oil and gas projects, frequently the target of criticism about negative environmental and social impacts, as "development" or "anti-poverty" projects. But the World Bank says the plan offers a golden opportunity to embed environmental and social goals in the long-term development agendas of poor nations.

Announced by World Bank President Paul Wolfowitz in late June, it will join the Environmentally and Socially Sustainable Development (ESSD) departments with the infrastructure and energy units. The new branch will be headed by a single administrator, instead of two -- current Infrastructure Vice President Kathy Sierra.

According to Wolfowitz, the purpose of the consolidation is to strengthen the Bank's "focus on sustainability", and comes as the Bank beefs up lending for infrastructure projects like oil and gas pipelines, mining operations and transportation hubs. "I know there are concerns that environmental issues in this new arrangement could be submerged by infrastructure," Wolfowitz acknowledged. "... To this end, I plan to create a new position to be filled by a world-class environmental expert to lead our efforts."

The announcement was hailed by two major environmental groups, the Nature Conservancy and the World Wildlife Fund (WWF), as a move in the right direction. "Applying world-class environmental standards to large development projects will enable the Bank to take a significant step towards helping millions of impoverished people escape the curse of poverty," said Carter S. Roberts, president of WWF, in a statement.

But the Bank Information Centre, and others, note that the Washington-based lender has sometimes ignored recommended changes of course to better accommodate social and environmental needs, and the current reorganisation may not prove to be an exception. Such reviews -- commissioned by the Bank itself -- include the World Commission on Dams, a 2000 study that urged the Bank to stay away from mega-projects like dams, and the Extractive Industries Review, which advised the Bank to withdraw from oil, gas and mining investments and redirect the funds towards renewable energy.

The London-based Bretton Woods Project, a critic of the World Bank and International Monetary Fund, headlined its description of the integration plan, "Sustainability Dismantled". "Surrendering the structural independence of a department dealing with the environmental and social dimensions of development -- including indigenous peoples, resettlement, biodiversity -- and merging it with a body working on infrastructure such as roads, ports, hydro-electric dams and oil pipelines is hardly an indication that the Bank is serious about protecting ecosystems and livelihoods," the group said.

A senior official at the Bank strongly argued that such concerns are misplaced. "By promoting economic growth strategies based on expanded infrastructure which are environmentally responsible and socially acceptable, we are bringing a sustainable future closer to today's reality," said Robert Watson, chief scientist at the World Bank. "The integration of the two vice presidencies now gives the environment and social experts unprecedented access to influence the Bank infrastructure strategies and policies ...infrastructure development without incorporating environmental and social considerations is unsustainable," he told IPS.

The Bank Information Centre acknowledges in its policy brief that mainstreaming environmental and social sustainability into Bank operations has been a longstanding goal of internal reformers and external critics for the past 20 years. But the group says certain criteria have to be met before the latest development is celebrated. The BIC brief, by long-time Bank watcher Bruce Jenkins, warns that "the environmental and social development staff may simply be grafted onto an entrenched agenda without being able to change its content or character." By 2008, the Bank plans to increase its infrastructure investment to 10 billion dollars, or about 40 percent of its total portfolio, giving far more weight and influence to the infrastructure department in the Bank's investments.

But Watson says that this is "a false assumption". "There is a common vision, and a formidable knowledge base, within the environment and social departments and they are given every opportunity to express their view," he told IPS. "The new sustainable development vice presidency allows for a much more efficient management structure and the elimination of stovepipes. It will allow discussion of critical issues and streamlining of management at all levels in both the headquarters and in the regions and to produce better sustainable results on the ground," he said.

The BIC paper also charges that the pervasive culture among the Bank staff and economists is such that environmental and social issues take a backseat in project planning, especially among senior officials, and that "sustainability is often reduced to mitigation -- 'cleaning up' the negative social and environmental impacts of already-hatched plans."

While Jenkins believes that many may now "feel comfortable" with the new head of the Sustainable Development Network, Kathy Sierra, her position could eventually be taken over by a "mega-infrastructure guru with little interest in sustainability." "The already weak internal checks and balances system will become ever more dependent on personal predilections," he said. Watson strongly defended Sierra's leadership. "She is an outstanding manager, with integrity," he said. "She recognises the importance of investments in infrastructure, but recognises that environmental and social issues are equally important to poverty alleviation and economic growth."

A final concern is that it could be an invitation to bureaucracy. The Sustainable Development Network will be by far the largest department, comprising nearly 60 percent of the Bank's portfolio and requiring more staff and greater hurdles to quick and smooth decisions.

Environmentalists and independent analysts say they will keep a close watch on the details of the reorganisation -- very few of which have been publicly released so far, and which sources say are still being debated within the Bank -- and particularly the 2008 budget, as it will show whether there will be any shift of resources from environmental and social development functions. The most telling indicator, of course, will come with the announcement of new "sustainable" infrastructure initiatives.

"It will indeed be curious to observe how the Bank rolls out its next transnational oil pipeline project with Exxon or [another] oil major under the label of 'sustainable development'," BIC said.



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