Don’t Let the World Bank Off the Hook


"Shut down the World Bank!" reads one of the many placards being carried through Washington D.C. As the international institution holds its annual spring meeting, thousands of activists are venting their anger about everything from world poverty to environmental degradation. While they are correct to point an accusatory finger at the World Bank for making those problems worse, their well-publicized efforts will do little good. The bank has become adept at co-opting key elements of its opposition in order to keep billions in U.S. government money flowing in its direction.

Since first being stung by environmentalist criticism in the early 1980s,the World Bank has repeatedly promised to reform itself. Despite thosepromises, the bank has neither fundamentally reformed its lending practicesnor radically changed the kinds of projects that receive its funding. Bankprojects around the world remain environmentally destructive and sociallydisruptive. By its own account, 2.6 million victims of World Bank lendingin poor countries are having their property confiscated, their homesdestroyed, and their livelihoods ruined.

When the bank hears public criticism of its destructive environmentalrecord, it typically issues a press release announcing renewed commitment toold promises made in prior years' press releases. After two decades of thisbehavior, there is little evidence of tangible improvement. In a recentreview, the bank judged that 25 percent of its projects in 1997-98 had anunsatisfactory outcome, even by its own rather generous standards. It alsoconcedes that only 54 percent of its projects completed could be judged"sustainable," even though sustainable development is now supposed to be amain purpose of the bank.

Environmental groups also have a difficult time identifying reformsuccesses. A 1999 environmentalist report labeled the World Bank's reformprogram a "failure," noting that it had not produced more environmentallysound projects or a greater level of bank accountability to the public.According to the report, endorsed by the Environmental Defense Fund, Friendsof the Earth, Greenpeace and the Sierra Club, "an evaluation of the WorldBank Group's portfolio shows that it does not promote environmentalprotection in its operations and loans."

The bank's most noticeable improvement in recent years has been in itsability to weather criticism, exposure and political opposition. It hasactively courted the support of environmental advocacy groups and hasrhetorically embraced their "sustainable development" creed. The bankcooked its books to make it appear that environmental spending had gone upand provided generous grant funding to nongovernmental organizations (NGOs)in order to make them more dependent on its continued existence. It hasinvited green organizations to its lavish headquarters to solicit theiradvice and to enter into partnerships that improve the bank's image.Despite its documentation of egregious abuses at the World Bank, theleadership of the anti-bank movement does not advocate -- as it sometimesdid -- the only real solution to an institution that has demonstrated zerocapacity for genuine reform: elimination.

Why has the bank's opposition gone soft? The World Bank, recognizing thatenvironmentalist opposition in the early 1990s threatened its veryexistence, made a concerted effort to meet this challenge. An internalWorld Bank report identifies the key to its survival continuing "to build apublic constituency for the Bank's policies and programs, and fordevelopment assistance in general." Central to its strategy was asystematic effort to convert the environmental movement to anaccommodationist stance toward the bank. The greens must advocateincremental changes to the institution, not its elimination.

Beginning in the early 1990s, the bank contacted its most influentialenvironmental critics and invited them to "participate" in the bank's work.According to the bank, this activity has caused "a reduction in NGOcriticism" and a recognition on the part of NGOs that they and the bankshare common interests. The bank claims that a chief benefit of appeasingthe environmental movement is to "improve the overall climate of opinionaround the Bank's work." Most important, environmental groups temperedtheir criticism of the bank during key moments when its budget was beingdebated in Congress.

The environmental groups are now committed to working with and improving theWorld Bank. Implicitly, they believe that World Bank planners, who onceignored environmental considerations with tragic consequences, can now betrusted to implement major development decisions in the Third World. Theysuggest that the bank can become an instrument of "sustainable development."

The World Bank's latest reform effort is eerily reminiscent of earlierefforts that environmental groups denounced as inadequate and diversionary.But this strategy has been effective enough to secure funding prospects onCapitol Hill. If the anti-bank protestors really want to "Break the Bank,"as their signs say, they will work harder to ensure that their ownorganizations do not compromise on this objective.