News Column

World Bank email reveals internal row over 'light touch' proposal for $50bn loans

July 6, 2014

John Vidal

Environmentalists and human rights campaigners have sounded the alarm at radical plans to ease conditions for World Bank loans, enabling more than $50bn (pounds 29bn) of public money a year to be made available for large power, mining, transport and farming projects.

Leaked emails seen by the Observer reveal that senior figures at the bank feared that light-touch regulation would lead to an increase in "problem projects". Critics are also worried that the door could be opened to large-scale environmental destruction.

Ana Revenga, the bank's vice-president for poverty reduction, says in one of the emails: "It might appear that the bank is interested in lending more, hence lowering standards . . . [It] would likely entail an increase in the number of problem projects and cancellations." The email exchanges indicate that the bank may expand the use of "biodiversity offsetting" - which lets developers destroy nature in one place if they compensate elsewhere. Many social and environmental safeguards appear to have been dropped under the plans, which have not been made public but are at an advanced stage.

The bank group, which loans and guarantees around $50bn a year to over 100 countries to alleviate poverty, is the world's largest development institution, with Britain as its largest donor. Strong safeguards and conditions on its loans and guarantees were put in place after a series of environmentally destructive projects in the 1980s and 1990s such as the Narmada dam in India and the resettlement of hundreds of thousands of people to make way for palm plantations in Indonesia.

A World Bank spokesman said: "A vigorous and healthy internal discussion is an important part of our process. Our work on reviewing our environmental and social safeguards is ongoing. We will submit our views to our board's committee on development effectiveness. We will then engage in further public consultation".

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Source: Observer (UK)

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