GETTING THE FACTS STRAIGHT:
ERRORS AND MISREPRESENTATIONS BY THE WORLD BANK EXTERNAL RELATIONS DEPARTMENT IN "A CRITICAL OVERVIEW" OF MORTGAGING THE EARTH"


I. Introduction

 

The World Bank External Affairs Department recently undertook the unprecedented measure of calling on senior management to devote significant time over the past month preparing rebuttals to a single book, "Mortgaging the Earth: The World Bank, Environmental Impoverishment and the Crisis of Development (Boston: Beacon Press, 1994)" A February 15, 1994 memorandum of External Affairs ("Mortgaging the Earth:" Request for Help") explained that preparing rebuttals was "view[ed] as a high priority by the President's Office." This Memorandum was sent to 22 high ranking senior officials, including the Vice President for Sustainable Development, the Chairman and Director of the Environment Department, the Administrator of the Global Environment Facility, two chief economists, and four country directors.

 

The three page summary of what this effort has produced ("Setting the Record Straight...Mortgaging the Earth--A Critical Overview") was circulated recently to all of the Executive Directors of the Bank, and is intended to be circulated to journalists, government officials and parliamentarians in various countries, as well as to Bank staff.

 

This document should be a matter of the highest concern for the public and the Bank's Executive Board, not because of the merits or demerits of the book, or even because of the debate it purports to join on important issues relating to environment, development and the role of the Bank.

 

The public and the Board should be concerned because Mortgaging the Earth"--A Critical Overview" raises troubling questions over the competence and reliability of the Bank's External Relations Department to accurately communicate with the public and the Executive Directors concerning Bank performance in the face of growing international public concern and scrutiny. This three page document contains easily verifiable distortions and at times outright falsehoods clearly contradicting Bank documents, previous, recorded statements of Executive Directors concerning specific projects at Board Meetings, as well as in places blatantly misrepresenting the text of the book. In places it attributes positions and statements to "Mortgaging the Earth." that not only are not present, but which at times are directly are at odds with the main themes and numerous statements in the book.

 

Unfortunately, this is not the first time that the Board has received communications from management seriously misrepresenting and distorting the text of a publicly available, seriously researched study critical of the Bank. The letter of former United Nations Development Programme Director and former U.N. Undersecretary General Bradford Morse, sent to the Bank's President on October 13, 1992, copied to all of the Executive Directors, charged that Bank management "ignore[d] and misrepresent[ed] the main findings of our review," that is, the Bank-commissioned Independent Review of the [India] Sardar Sarovar Projects. That letter contained a number of specific examples to back its charge, and the response of Bank management was a flat denial, without any substantive attempt to reply to the very specific examples enumerated in Morse's October 13, 1992 letter.

 

We invite you to read the following analysis of "Setting the Record Straight...Mortgaging the Earth'--A Critical Overview," read the relevant passages of the book, and judge for yourself. We start with the allegations of "Errors and Outdated Information."

 

 

II. Alleged Errors

 

"Setting the Record Straight..." alleges that "much of the information that Rich uses to make his argument is false, exaggerated, misleading or out-of-date," maintains that "there are simply hundreds of examples of this" and cites four specific examples to make its case to discredit the book. With hundreds of alleged examples to choose from, these four are presumably among those that Bank management and External Affairs have devoted considerable research to, and feel most confident with the accuracy of their information.

 

The methodology employed is one that is professionally and intellectually negligent, and should be a matter of concern for anyone interested the competence and integrity of the Bank. "Setting the Record Straight..." often distorts and misrepresents statements and positions in the book concerning specific projects or facts; it then follows with blanket assertions or denials that often are at odds with the facts as found in the Bank's own documents. Let us take the alleged errors one by one:

 

 

Financial Data: "Setting the Record Straight..." states "the book claims that debt service to the World Bank is eating up the earnings of African countries, such as Uganda. Untrue. World Bank net transfers to Uganda and nearly all African countries are strongly positive."

 

On page 184 of "Mortgaging the Earth" the following figures on net negative transfers are cited directly from the 1993 World Bank Annual Report (Bank 1993 Annual Report, pages 111 and 117 cited in endnote 3, p. 345):

 

The Cote d'Ivoire had a net negative transfer of $618 million to the Bank for the period 1989-93....; in 1993, Nigeria contributed $328 million more to Bank coffers than it received, Egypt $92 million more ($890 million more for 1989-93)....

 

Morocco also had net negative transfers to the Bank for 1993 and for 1989-1993. These four countries account for 31% of the population of Africa. Nigeria and Cote d'Ivoire account for about 24% of the population of Sub-Saharan Africa.

 

On Uganda and the question of debt service to the World Bank consuming the export earnings of African countries, the Bank's response begs the issue and is a non-sequitur. "Mortgaging the Earth," cites (p. 310) a March, 1993 Oxfam report ("Africa Make or Break") that notes that loans from the Bank and IMF account for 36% of the total foreign debt of Sub-Saharan Africa,that Uganda owes 62% of its foreign debt solely to the World Bank, and that this debt is eating up more than 10% of the export earnings of eight Sub-Saharan countries, and more than a third of the export earnings of Zambia and Uganda. The Bank's response does not refute these Oxfam figures concerning the proportion of export earnings from Uganda, Zambia and under countries going to service their World Bank debt. The Bank's reply implies that it is increasing its lending so that annual net transfers from the Bank are currently positive for these countries (a contention certainly not true for Nigeria, Cote d'Ivoire and Egypt). In other words, the Bank's response to concern over its share of the increasingly unsustainable debt in this region of the world is to cite its increased lending, which will only increase the debt....

 

"Setting the Record Straight..." states that for the World Bank "overall net transfers to developing countries as a whole have been positive since 1989." According to the most recent edition of the World Bank's own publicly available debt statistics, net transfers (including interest payments) between the Bank and its borrowers, almost all of which are developing, have been negative for 1989, 1991 and 1992, totalling minus 3.421 billion for the period 1989-1992. Net transfers for the IBRD and IDA combined in 1992 alone were minus 3.304 billion dollars. (World Debt Tables, External Finance for Developing Countries, Vol. 1, World Bank: Washington, D.C., Dec. 1993, pg. 172).

 

 

The Global Environment Facility: "Setting the Record Straight..." states that "the book claims that GEF proposals were 'prepared covertly, almost secretly.' Untrue. They were the result of an unprecedented level of interaction among officials and non-governmental entities."

 

"Mortgaging the Earth" gives a first hand account of the genesis of the GEF in late 1989 and early 1990, citing for example a March 9, 1990 letter sent by several major U.S. environmental groups, the Woods Hole Research Institute and the Union of Concerned Scientists to the President of the World Bank, with copies to the U.S. Secretaries of Treasury and State:

 

We are shocked and dismayed that, despite the special interest and knowledge of NGOs and other members of the public on issues of environment and development, the Bank has refused participation to the public in the formulation and discussion of its [GEF] proposal. The Bank has refused repeated requests of NGOs to review the proposal, to participate formally in the discussion process, and even to meet with Bank staff on this issue. [cited in "Mortgaging the Earth, footnote, p. 177]

 

The book notes that

 

once the GEF proposal was a fait accompli, the growing criticisms of environmental groups in several countries pressured the Bank to set up meetings with NGOs. These meetings, which the Bank subsequently touted as examples of consultation and information-sharing, were one-side affairs where groups were informed of decisions already taken behind closed doors. (pp. 177-78)

 

But who to believe--the NGOs and "Mortgaging the Earth," or the Bank's External Affairs Department? Let us turn to the independent evaluation of the three year pilot phase of the GEF commissioned by its participating nations (and prepared by a significant number of current and former Bank staff)--published in draft form on November 11, 1993--GEF for an answer:

 

Most GEF work to date has been characterized by a top-down approach rather than responding to the needs of governments. It has not involved local communities in an effective way; it has sparked destructive competition among implementing agencies and other global organizations working in the field of biodiversity; it has given inadequate attention to sustainable use of biological resources; it has not meaningfully involved NGOs; it has been excessively dependent on international consulting firms. [emphasis added] (Draft Report of the Independent Evaluation of the Global Environment Facility Pilot Phase, United Nations Environment Programme, United Nations Development Programme, World Bank, November 11, 1993, p. 58, para. 5.28)

 

According to the independent GEF evaluation, "Contact by the Evaluators with developing countries involved in GEF projects sometimes revealed a lack of awareness of the GEF altogether in circles that should have been better involved." (p. 40. para. 4.37) "The desire to move rapidly to develop a substantial portfolio of GEF projects largely precluded attention to national and regional policy frameworks as well as priorities defined by these frameworks." (p. 48, para. 4.64)

 

This is what the Bank's External Affairs Department tells the Bank's Executive Board, the press, and the public at large is "an unprecedented level of interaction among officials and non-governmental entities."

 

 

Tana River GEF project: "Rich claims that the Tana River GEF project includes forced relocation and that it is linked to a new Bank agricultural loan. Both assertions are untrue."

 

Official documents released by the GEF and the Bank, internal Bank memoranda, and reports of the United Nations Development Programme and World Resources Institute directly and unequivocally contradict these blanket denials by the External Affairs Department, and thus raise questions about the competence and credibility of the Bank staff who have prepared "Setting the Record Straight..." Annex II "Report of the [GEF] Chairman to the December 1992 Participants' Meeting" contains a chart summarizing the "Status of First Tranche Investment Projects" for Africa. For the Tana River Primates project, the Annex notes that "Some resettlement may be required. Anticipate need to prepare resettlement plan in accordance with Bank operation directives." This chart in Annex II also identifies $50 million dollars earmarked for a Bank project to be associated with the GEF Tana River Project (though the nature of the project is not specified) Two other GEF projects are described in the same chart in the December, 1992 GEF Chairman's Report as "free-standing," ie. not linked to new Bank loans. The June 15, 1992 "Monthly Operation Summary of Bank and IDA Proposed Projects" identifies a $60 million "Agricultural Sector Management Project II" to be associated with the GEF Tana River Primates project, which is presumably the same $50 million project identified in the GEF Chairman's Report. An internal World Bank memo on the project dated November 21, 1991, "Kenya: Tana River Primate Reserve GEF Project Preparation Mission Report" has an extended discussion on the involuntary resettlement the project would require: "Full resettlement requirements would be limited to Baomo village, and in the extreme case the small number of farmers living on the northern edge of the reserve. A very preliminary estimate of the numbers of people involved would be about 100 households, or 500 to 600 people....The population likely to be affected by the project, however, is greater than the numbers needing to be resettled." (pp. 6-7, para. 26 and para. 30)

 

Moreover, two internationally respected agencies--the United Nations Development Programme and the World Resources Institute--have criticized the Bank's plans for forcible resettlement of local populations in the Tana River Project. An August 21, 1992 memorandum sent by two WRI staff to the World Bank GEF Review Team stated: "The rationale for the current Tana River GEF project design is based on a disturbing assumption about the relation between conservation and human beings. It proposes interventions--large scale resettlement in particular--that will remove and adversely affect thousands of people living within the proposed project area." A February 5, 1992 memorandum from the United Nations Development Programme to the Bank Task Manager for the Tana River Project states

 

the issue of paying costs of resettlement with GEF funds requires a policy decision. This type of decision is not made by any one of the Implementing Agencies, but rather by the IC or the Participants themselves....given that resettlement appears to be a foregone conclusion rather than an option at this stage, we do not believe it would be appropriate to use [UNDP] pre-investment funds to investigate the actual mechanisms of resettlement without a policy decision on this matter....We would encourage you to include an additional activity to obtain information not only about, but actually from local people....(emphasis added) (pp.1-2)

 

The Bank's insistence in continuing with plans for the forcible resettlement of local people has prompted growing local resistance and protests against the project, which are fully documented in the June, 1993 issue of "Impact: Newsletter of the Climate Network Africa," pp. 10-15., as well as in the Kenyan Press (see Kenya Times, "Residents Reject World Bank Plan, May 8, 1993.")

 

 

Green Revolution: "Setting the Record Straght..." states that "the book draws from reports from the mid 1970s to conclude that new technologies have hurt the poor in India. In fact, a rich array of later studies have demonstrated that rural poverty declined in the 1970s, that small farmer incomes increased faster than those of large farmers, and that employment and income opportunities for the landless rose."

 

It would appear that the Bank's External Affairs Department, in hastily circulating xeroxed pages of "Mortgaging the Earth" to Bank management for comment, neglected to xerox and circulate the more than 850 endnotes on pages 319-362, and indeed neglected to send Bank staff other pages of the book that could have corrected embarrassing misrepresentations and mistakes in the Bank response. For India the book specifically cites studies published in development journals from the early and mid-1980s on the failure of Bank style approaches to reach the poor (see pp. 89-90, and especially endnotes 26, 31, 32, and 45, pp. 332-33), not studies from the mid-1970s.

 

"Mortgaging the Earth" does cite--in a footnote to the text on page 91--two classic studies on the Green Revolution in Mexico and elsewhere (by Cynthia Hewitt de Alcantara and Keith Griffith) from the mid-1970s, which would appear to be what the somewhat garbled External Affairs Department response is referring to, but these are hardly exclusive or determining sources for the argument of the book, which concerns not so much the success or failure of the "Green Revolution" in general, but of the Bank's agricultural operations in India and elsewhere in particular. The book cites and summarizes the conclusions of six major books addressing the Bank's success in poverty alleviation published in English, German and French between 1980 and 1989; five of these works unequivocally conclude that the Bank lending programs and policies not only did not improve the lot of the poorest of the poor in the 1970s, but contributed to increasing inequality. (see footnote, p. 87, "Mortgaging the Earth.")

 

More importantly, the book cites much more recent internal Bank studies that confirm the troubled record of the Bank poverty oriented projects in the agricultural sector in India and elsewhere. A 1991 Bank India Agriculture Operations Division review of Bank-financed irrigated agriculture projects completed in India concluded that economic rates of return for earlier (1970--84) Bank irrigation projects in India, of which many of the later ones were poverty oriented, had been overestimated and that "the most reasonable conclusion is that project performance and economic viability have ben poor all along for most projects.." (see "Mortgaging the Earth," p. 98). In 1989 the Bank's Operations Evaluation Department examined 82 Bank agricultural projects approved between 1975 and 1982--the prime years for Bank 'poverty alleviation' agricultural projects--and judged 45% to be "unsatisfactory" in outcome, noting that out of 21 irrigated agriculture projects the Bank had financed, "agricultural production declined after [the] investment phase was completed, and the physical infrastructure financed appears less durable than expected." (cited in "Mortgaging the Earth, p. 97.)

 

 

Forest Projects: "Setting the Record Straight..." states that "the book claims that projects in Guinea and the Cote d'Ivoire financed logging and that the Cote d'Ivoire project displaced 200,000 people", but that "no logging was financed and no involuntary resettlement was supported." [emphasis added]

 

Guinea: The discussion of the Guinea Forestry and Fisheries Project, now known as the Guinea Natural Resources Management Project is found on pp. 164-65 of "Mortgaging the Earth," and is based on the Appraisal Report, Minutes of the Meeting of the Board of Executive Directors, as well as on a World Wildlife Fund, U.S. critique of the project that was circulated to Executive Directors when they considered the project in late 1989. The original project document (Appraisal Report) which the Board discussed and approved was vigorously criticized by WWF, EDF and other groups as well as in a hearing in the German Bundestag. The subject of this controversy concerned precisely what the Bank's External Relations Department denies: logging. The Appraisal Report has not changed and has not been modified: an important thrust of the Guinea project as approved is the construction of up to 75 kilometers of access roads around two forest reserves totalling 150,000 hectares, of which 106,000 hectares are still intact forest. The project finances a "forest management plan" prepared in close consultation with the Bank, and, in the words of the Bank Appraisal Report "two-thirds of the remaining 106,000 hectares of forest could be used for timber production...," i.e. logging. The same report points out that at that the time of project approval timber harvesting (illegal, since at the time there was a government ban on logging in the forest reserves) was less than 1000 cubic meters annually. After the completion of the Bank-financed forest management plan, sawn log production in the Bank project area was projected to increase from 9705 cubic meters annually in the second year of the project to 87,750 meters annualy by year ten.

 

Thus, that the project as approved finances a "forest management plan" that supports increased timber harvesting over a considerable area of Guinea's two largest remaing rainforest reserves, and that the project documents to this date show no substantial change in this focus would seem to be beyond dispute. It is true that implementation of the project has fallen behind, and that the Bank's task manager for the project claimed in November, 1991 that the Appraisal Report as approved by the Board no longer represents the focus of the project, which it is claimed, is now forest protection. However through 1992 on-site interviews by Environmental Defense Fund staff with the Guinean project coordinator and experts working for the German government, which is co-financing the project, revealed that no changes in the project documents had been made and that they still viewed the the Appraisal Report as the operative document.

 

The July, 1990 Environmental Assessment conducted by the World Conservation Union (IUCN) also recommended that the project documents "be modified to make unequivocally clear the priority accorded by the [Guinean] State to the conservation of ecological and environmental values of the forest ecosystems" targeted by the project. (IUCN, Rapport de l'Etude d'Impact Ecologique d'un Project d'Amenagement Forestier Concernant Les Forests Classees de Ziama et de Diecke en Republique de Guinee, Juillet, 1990, pp. x-xi.) But this recommendation has never been carried out.

 

Cote d'Ivoire: Nowhere does the book claim that the project has (already) displaced 200,000 people, and for the Bank's External Affairs Department to do so is an unequivocal misrepresentation. "Mortgaging the Earth" describes the evolution of this project and its plans--still under implementation--since April 3, 1990, when the U.S. Executive Director refused to approve this $80 million loan, specifically citing the lack of a convincing forest conservation strategy and the lack of resettlement provisions "for as many as 200,000 people." The book cites a New York Times article of 14 October, 1991 (pp. 165-166, footnote) that states that internal World Bank memos reveal that the Cote d'Ivoire project could result in the "largest forced resettlement ever carried out under a bank-financed project in Africa...possibly including several hundred thousand people [who] may be driven from their forests, and resources are available for their resettlement in agricultural areas." (Keith Bradsher, "Rain Forest Project in Africa Stirs Debate at World Bank, New York Times, 14 October 1991.) The book cites a January 7, 1992 statement of the U.S. Executive Director before the Bank's Board concerning the Bank-financed Cote d'Ivoire forestry project complaining that "despite the fact that there is still little data on the resettlement, the provision of logging contracts is proceeding faster than expected," and he raises the possibility "of a mad rush to get as much valuable timber out as possible." (statement of E. Patrick Coady, U.S. Executive Director to the Executive Board, 7 January 1992 [U.S. Treasury Department, typewritten). At that same meeting of the Bank's Board, several Executive Directors "stated there had been no progress in the area of resettlement." (World Bank, Summary of Joint Meeting of the Executive Directors, January 7, 1992, March 12, 1992, p. 21, para. 137)

 

The project's "forest management" strategy financed by the Bank involves the extending of long term logging concessions to private companies in an area of a half million hectares. But Bank staff and the External Relations Departmetn claim that there is an erroneous impression that the project involves logging, a contention which has not succeeded in convincing numerous NGOs as well as more than one Executive Director. The most recent report to the Board on the Cote d'Ivoire Forestry Sector Project (June 2, 1993), which was not cited in "Mortgaging the Earth" since it was available only after the book had gone to press, has an extended discussion of the logging and resettlement issues, noting that the resettlement of 40,000 people in coming years is still envisaged. (p.6, para. 17) The figure of 40,000 to be forcibly displaced is repeated in the April 8, 1994 Bank report "Resettlement and Development: The Bankwide Review of Projects Involving Involuntary Resettlement, 1986-1993", p. 4/12.

 

Tropical Forest Action Plan: If the Bank staff who prepared "Setting the Record Straight..." were students graded on their ability to read a text and accurately summarize its content, they would fail. Nowhere does "Mortgaging the Earth" "imply" or state that "the Bank was involved in the Cameroon Tropical Forestry Action Plan," as "Setting the Record Straight..." claims. The book states explicitly, at the top of page 163 that the national forest action plan for Cameroon was prepared by the Food and Agriculture Organization (FAO) of the United Nations. No mention whatsoever is made of the World Bank in the book's discussion of the Cameroon TFAP. Preceding this discussion, at the bottom of page 162, the book notes that "by 1990, 21 nations had completed forestry sector reviews nuder the aegis of the TFAP, and the World Bank was the leader or a major participant in 8." On the page following the Cameroon TFAP discussion, page 164, the book notes that as the problems of the TFAP became evident, "the Bank astutely distanced itself form the TFAP, taking the tack that its forestry projects were not necessarily related, and Bank staff criticized some TFAP plans."

 

 

III. Misrepresenting the Thesis of the Book and Begging the Basic Question:
The Bank's Performance

 

It is a gross distortion to state, as the "Setting the Record Straight..." does, that "the book sees the development record as one of near universal failure;" and to assert that the book "takes little interest" in the progress and welfare of citizens of developing nations. A key theme of "Mortgaging the Earth", occupying a substantial part of the book, which "Setting the Record Straight..." ignores, is an institutional and historical analysis of the "pressure to lend" in the Bank, which the book asserts is an overriding factor in the Bank's inability to ensure environmental, developmental and social quality in its operations. An even more important theme of the book is the emergence of a more vigorous civil society in developing nations, and particularly of NGOs that increasingly are linking with groups in other countries, to criticize, and at times physically oppose, Bank-financed projects and policies. Above all, the book is a critique of World Bank-style development, and contrasts this with the alternatives and criticisms raised by non-governmental groups mainly in the developing world.

 

Much of the analysis of the first chapter (set in Thailand in 1991), for example, is based on the literature and critiques of Thai social, poverty alleviation and environmental groups; it contrasts the critique of Thai NGOs of Bank-style development (see the section "Development or Destruction," pp. 9-15), with the locally based, poverty-oriented alternatives these same Thai groups suggest could be models for a more effective, locally managed approach (see the section "Development as if People Mattered," pp. 18-20). Similarly, Chapter 10 discusses alternative development institutions that might better serve the goals of poverty alleviation, and suggests areas where the Bank's comparative advantage (lending to governments, promoting economically and environmentally more rational policies) could truly be effective, e.g. promoting demand-side management and improved technologies in the energy sector, promoting sustainable agriculture approaches (Integrated Pest Management, for example) in the agricultural sector.

 

The Bank critique cites various general statistical indicators of improvements in social welfare in developing countries, as well as "a dramatic trend towards democratic forms of government" and charges that "Rich's book has ignored" this "overall picture of substantial achievement." The implication is that there is only one model of development--the World Bank model--that the Bank is somehow associated with whatever social and economic progress has taken place in the developing world.

 

But the thesis of the book that too often Bank operations have not brought these benefits to the poor and the powerless, and that international development efforts would more wisely encourage a diversity of approaches to development and competition among these approaches rather than concentrating increased resources in the Bank. The book shows that although poverty alleviation is the Bank's constantly stated "overarching objective," the poor often have not benefitted from, and indeed in specific cases have been made worse off by Bank operations. Moreover, there is a disturbing record of the Bank's actively supporting governments and governmental behavior that suppresses and ignores human rights and the values of democracy and civil society. (e.g. see Chapter IV, pp. 99-102).

 

Finally, on another level the book does attempt to raise philosophical and historical questions about the nature, definition, and connections between economic development and material growth, contributing to a 20-year ongoing debate. It links this debate to fundamental questions about the overriding values that should prevail in organizing and governing human societies. "Mortgaging the Earth makes no pretention to have the answers to the so-called 'limits to growth' debate; but it vigorously criticizes the Bank for trivializing and ignoring the seriousness of this debate and the stakes involved, as politically unpalatable as the possible conclusions may be. One can accept or reject in part or in whole this broader debate, while focussing on the book's more specific institutional analysis, backed by numerous case studies and extensive documentation, of the Bank's troubled performance. Chapter 7 of "Mortgaging the Earth" attributes these to competing and contradictory institutional goals and pressures, both internal and external.

 

 

IV. Misrepresenting the Book's Methodology

 

"Setting the Record Straight..." accuses the author of "analysis by vignette," i.e. of choosing the worst examples of World Bank and country performance and then generalizing. Any full reading of the book, however, clearly reveals that this is not the case. First, in some cases not only the worst but the best projects and country experiences--according to Bank criteria--were chosen. Thailand figures in the first chapter not because it is known as an example of failure, but because it has often been cited as a model of successful development, both in general and with respect to the Bank's operations. The chapter presents, and cites broadly from the statements and literature of Thai NGOs representing the poor who say there is another side to this success story, one of environmental and social impoverishment that should be avoided in future efforts. The book cites Yale political scientist's James C. Scott's study of the relative impoverishment of Malaysian villagers in a World Bank irrigation scheme ("Weapons of the Weak," Yale University Press, 1985) among other reasons because the project in question was extraordinarily successful in overfulfilling its agricultural production and appraised rate of economic return goals. ("Mortgaging the Earth, p. 92).

 

The generalizations of Bank performance in the book are often based on internal, confidential Bank studies and case studies by outside researchers, all of which are carefully referenced in the book's more than 850 endnotes. The vignette-like descriptions of specific projects make concrete the human and social impact of what these studies have documented for years: the failure of Bank-style development to improve the situation of the poorest of the poor, to conserve the ecosystems un which they often depend for survival (hence "environmental impoverishment"), and, as documented for the past decade and a half by the Wapenhans Report, the "steady and pervasive" decline in quality of the Bank's portfolio as judged by the most basic indicators of project performance (see pp. 254-56). "Mortgaging the Earth" cites reports of the Bank's Operations Evaluation Department (OED) on the alarming failure rate of McNamara -style agricultural poverty lending (45% failure rate for 82 agricultural projects approved between 1975 and 1982), other internal Bank studies documenting the failures of large-scale 'poverty alleviation' agricultural programs in Northeast Brazil and in India (see "Mortgaging the Earth, pp. 97-99), as well as case studies from development journals.

 

Moreover, Chapter 6 examines the environmental and social performance of the Bank since 1987 in a number of key areas--forestry, energy, rehabilitation of the millions of poor forcibly displaced by Bank projects--and documents in detail a disquieting record of across the board failures in approach and implementation, citing statements by Bank Executive Directors, internal Bank reports and documents, and outside studies by a number of non-governmental organizations and think tanks. Chapter 9 brings the 'generalizations' of failures in Bank performance to date by citing key conclusions of the Morse and Wapenhans Reports (pp. 249-56), both commissioned by the Bank itself in response to growing international criticism and pressure, and to mounting evidence of portfolio problems that could no longer be ignored as they had been for over a decade.

 

"Setting the Record Straight..." criticizes the book for not attempting to prove what it calls the 'counter-factual'--i.e. what would have happened if the Bank had not financed the projects and programs "Mortgaging the Earth" criticizes. In the sense that "Setting the Record Straight..." intends this criticism, this rationale is absurd: it implies that whatever the problems, no matter how flawed or problematic a project or policy, the situation would have been worse if the Bank were not involved and had not loaned millions or hundreds of millions of dollars to attempt to make the project or policy better.

 

But even here, External Relations obviously has not read the book very carefully: In specific cases, "Mortgaging the Earth" indeed cites the conclusions of internal Bank documents and internationally known scientific researchers as to what probably would have occurred if the Bank had simply not been involved. For example, the Bank's Operations Evaluation Department itself concluded in the "Summary and Conclusions" of its draft evaluation of the Bank's involvement in the Brazil Polonoroeste Program that if the Bank had refused to fund the program it would have bought time for the rainforest and its people, and reduced the legitimacy of unsustainable frontier agricultural schemes ("Mortgaging the Earth, p. 173, see endnote 49, p. 344). NASA and Brazilian government scientists have published several articles directly linking the Bank's development policy and financing in Brazil with accelerated deforestation in the Amazon in the 1980s (see "Mortgaging the Earth," endnote 5, p. 323.)

 

Finally, the section on "Methodology" in "Setting the Record Straight..." oversimplifies and distorts the book's discussion on structural adjustment (pp. 186-189). There is no blanket statement in "Mortgaging the Earth," that, as the Bank's response claims, "structural adjustment programs...have led to slower growth, cutbacks in health spending and have failed to promote exports." Rather, "Mortgaging the Earth" cites "numerous case studies" by UNICEF, OXFAM, and the United Nations Economic Commission for Africa, as well as case studies published by the World Resources Institute and several prominent public health and development journals that all reach the conclusion, in the book's words, that "too often" in specific, documented cases, Bank-Fund adjustment programs have unnecessarily contributed to reduced educational, health, and environmental protection measures and reductions in real wages and living standards for groups of the poorest and most vulnerable. The main point of the discussion on adjustment in the book is to show how in practice the Bank is subject to contradictory pressures both internally and externally, namely that in the case of adjustment "a clear contradiction emerged between the Bank's efforts to deal with the macroeconomic crises of debt and adjustment and its purported goals of poverty alleviation and increased attention to environmental concerns (p.186)."

 

The Bank's argument that things somehow would have been still worse without the adjustment programs (comparing its function to that of a hospital for a sick economy...) is above all an argument not with the author of "Mortgaging the Earth," but with the authors and institutions that prepared all of these studies. The Bank's contentions, rather than convincing its critics, are increasingly disputed and challenged. A recent, March, 1994 OXFAM press release, has the following to say about the Bank's analysis of its role in adjustment and Africa, commenting on the recently released Bank report "Adjustment in Africa: Reforms, Results, and the Road Ahead:"

 

Oxfam rejected the Bank's claim that structural adjustment programmes (SAPs) were bringing recovery to the continent. The organization also rejected the report's claim that adjustment was reducing poverty....Describing the World Bank report as a blend of half-truths, over-simplification and institutional propaganda, the Oxfam statement [concerning the Bank's recent report on adjustment in Africa] says that the organization has lost any claim to intellectual and political credibility. ("Oxfam statement on Adjustment in Africa: World Bank report study in complacency says Oxfam," Oxfam Press Release, 12 March, 1994.)

 

 

V. Charges of "An Elite, Northern Perspective"

 

This charge for anyone who even reads the preface of "Mortgaging the Earth," let alone the text, is blatant misrepresentation and misinformation. It is one thing to disagree with much of "Mortgaging the Earth," and the arguments presented, but it is impossible to deny that much of the book deals with, and describes the arguments, criticisms and campaigns of developing country community groups and NGOs against World Bank-financed projects and programs. Documents, letters, and reports of developing country groups are quoted at length throughout the book, as well as examples of Bank's management's consistent and repeated refusals and failures to adequately respond to these communications.

 

The first two chapters of the book cite at length the statements, documents and campaigns of developing country NGOs in Thailand, Brazil, India and Indonesia concerning specific Bank programs and projects, an approach which is continued throughout when Bank projects are discussed. If the Bank's External Relations Department were as interested in bringing to its readers a developing country poor perspective as it purports, it might have examined the reference to NGOs in the Index (p.372) with its numerous page references, cited the discussion on NGOs in numerous developing countries on pages 131-136. For longer, more eloquent statements of developing country poor addressed to the Bank, External Relations could also ponder--and critique if it chooses--the criticisms in the unanswered letter sent by Chico Mendes weeks before his murder to the President of the World Bank on page 167, and the statement of the Indian NGO Movement Against Destructive Development, Jan Vikas Andolan, cited extensively on page 153--to mention only a few of the numerous examples cited in the book.

 

The basis of the contention in "Setting the Record Straight..." that "Mortgaging the Earth" represents an "Elite, Northern Perspective" appears to be the claim that the book "portrays developing countries as beholden to donors," and that the Bank's lending is only a small percentage of total investment in developing nations. The book never claims that the Bank is solely responsible for the problems in the projects it finances--in the first paragraph of the last chapter (p.281) "Mortgaging the Earth" puts special emphasis on the role of the Bank as an "accomplice" of national government agencies in the problems the book describes. In the strange public relations dialect of the Bank External Relations Department, "rich, northern perspective" translates not as concern for the expressed opinions and views of poor people in developing nations, well documented by numerous NGOs indigenous to these countries (and discussed at length in "Mortgaging the Earth"), but as trying to hold the Bank responsible for the consequences of the projects it finances and holding it accountable for not implementing its own declared policies and binding operational directives in those projects.

 

"Setting the Record Straight..." attributes a position to "Mortgaging the Earth" on energy efficiency which once again is blatant misrepresentation. Nowhere is there any statement in the book that "opposes additional power generation, arguing instead that developing countries should make existing supplies go further." The juxtaposition of this misinformation with statements a bit later such as "Rich's prescriptions for developing countries are in sharp contrast to the expressed desires of the citizens of these countries" and "The billion who currently have to use sticks and dung for their energy want access to electricity"--is a descent into cheap demagogy unworthy of any professional, public institution.

 

What the book suggests is what numerous other studies have suggested for years, but which the World Bank has largely ignored in practice in its energy lending: not to halt construction of all new power plants in developing countries--a patently absurd position---but to develop a more economically rational energy investment approach that would obviate the need for as much as 50% of projected new generation investments over a given time period by emphasizing concurrent investments in so-called end-use efficiency and demand-side management.

 

The discussion on energy efficiency on pages 169-71 of the book cites the conclusions of numerous studies conducted by the developing country experts such as Amulya Reddy of India and Jose Goldemberg of Brazil, as well as the International Institute for Energy Conservation, World Wildlife Fund, World Resources Institute, the American Council for an Energy Efficient Economy, and even the World Bank--which all conclude that as much as half of projected new generating investments in Brazil, India and other developing nations could be cut "through investments in state-of-the-art industrial equipment, lighting systems, air conditioners, and other energy saving improvements and appliances. The cost of such end-use efficiency investments is often a third or a quarter of the cost" of new generating plants. This section of the book concludes with a citation from a leaked internal Bank memorandum that concludes that if "20 percent of commercial energy in developing countries were saved, total gross savings for developing countries would amount to U.S. $30 billion per annum or about...two-thirds of the official development assistance from OECD and OPEC countries in 1987."

 

It is the Bank's continued negligence of what is now a virtual consensus among responsible energy analysts outside the Bank that is needlessly promoting policies and investment plans that are hurting the economies of developing nations and the poor on an enormous scale.

 

 

VI. "Current Thinking on Sustainable Development"

 

Once again the Bank External Relations Department misrepresents and distorts the text and arguments of the book. The thrust of the External Affairs Department's approach is to assert that "Mortgaging the Earth" is 'anti-growth,' and is critical of the Rio Earth Summit and the Brundtland Report, contrary to an alleged "mainstream" and "consensus" represented and led by the Bank. "Setting the Record Straight..." here purports not only to speak for the poor, but to represent "the environmental community" and the thoughts of "most serious environmental thinkers." There is an incontrovertible record of growing environmental criticism of the Bank's practices around the world since the late 1980s, and the more recent newly aggressive criticisms of poverty oriented and human rights organizations, including OXFAM and numerous church groups. The President of the Bank noted himself at the February 22, 1993 meeting with the Bank's Vice-Presidents with the President of the Bank that "he was concerned by...the Bank's increasingly negative external image" but regrettably concluded that "the Bank needs to adopt a pro-active approach to external communications rather than trying to defend itself ex post against criticism from well-organized environmental and human rights groups." ("Highlights from the President's February 22 Meeting with VPs, February 23, 1993, internal World Bank memorandum).

 

The pretention of the Bank's External Relations Department that it speaks not only for the "poor" and the "environmental community," but also on behalf of an alleged "consensus" of "most serious environmental thinkers," is not only self-deluded and erroneous, but in itself is a serious misrepresentation and disservice to the Bank's Executive Board and to the public the Bank's External Relations Department is trying to influence.

 

"Mortgaging the Earth"--and Chapter 9 in particular which discusses the issues at stake at the Rio Earth Summit--does not claim to have the answers about "sustainable development." It does seek to raise questions and criticisms concerning contradictions in the Brundtland Report, and the meaning of "sustainable development"--itself. The term is, as the book states, a general but empty formulation which everyone can support, but for which there are differing, even opposing views about its specific, concrete implications with respect to current patterns of economic growth. The book criticizes the Bank for precisely the approach embodied in "Setting the Record Straight...", in particular the intellectually dishonest attempt to assert there is a consensus both outside and inside the World Bank on issues of sustainable development where none exists. The book is not "anti-growth," nor is it "pro-growth,"--it raise questions based on numerous studies and essays--including those of two Nobel Prize winning economists--on the nature and relation of growth to development, and whether it can continue at current rates and patterns. One of the main sources for this discussion is a report released as a working paper by a senior economist and senior ecologist in the Bank's Environment Department entitled "Building on Brundtland," subsequently published as a book. This collection of essays was a direct attack on the underlying theses of the 1992 World Development Report, and the viewpoints expressed in the section of "Setting the Record Straight..." entitled "Current Thinking on Sustainable Development." "Mortgaging the Earth" notes on page 267 that this working paper was prepared by dissidents within the Bank and that it

 

argue[s] that human societies had entered a critical historical transition from "empty-world" to "full-world" economics. Two Noble Prize laureates in economics--Jan Tinbergen (1969) and Trygve Haavelmo (1989)--contributed pieces, and the environment ministers of Indonesia and Brazil (Emil Salim and Jose Lutzenberger) "warmly endorse[d] the clear thinking expressed" in the book.

 

The Bank's External Relations Department either is not aware of, or knowingly ignores, the vigorous debate and lack of consensus within the Bank--not to speak of the outside world--of what sustainable development may ultimately entail for human societies.

It is true that the book is highly critical of the Earth Summit (pp. 262-69)--for the neglect of critical issues essential for any discussion of environment and development that governments for various reasons gave little attention to at the conference: population (including the greater impact of industrialized countries' populations on the global environment than the South), the need to improve the environmental quality of existing foreign assistance, the need for debt relief for the South, the environmental legacy of the World's military establishments, and the need for a reasoned, scientific debate on the future relationship between material grown and economic development that goes beyond the formulations of the 1992 World Development Report, which were vigorous questioned in the Bank Environment Department Working Paper cited above.

 

Some of the assertions the Bank's External Relations Department makes in this section are so ill-formulated, and imprecise as to defy any rational understanding of what methodology or research enables Bank staff to make them: "Most serious environmental thinkers would now recognize that...without education and higher income levels, the population in Africa, for example, will rise seven-fold." The issue here is not that education and higher income levels are economically, environmentally and socially desireable in Africa, but how the Bank can assert that "most serious environmental thinkers" (which ones? how many are 'most?') "would" (is this a thought exercise? Have Bank staff asked any serious environmental thinkers what they 'would' think?) "recognize" that population in Africa will somehow rise exactly--or even approximately "seven-fold" (why not eight-fold or twelve-fold--or six-fold?) in a non-defined period of time (over 10 years? 50? A hundred? Two hundred?), "without higher education and income levels" (How much education? How high an income? What is the record of World Bank loans and programs in furthering education and income in Africa in recent years (Oxfam has written a lot on this recently ....) And how much will population growth be reduced? From seven-fold to six-fold? To zero?)

 

Similarly the assertion that "they [most serious environmental thinkers] recognize that two-thirds of tropical deforestation is caused by poverty and can't be stopped without accelerated development and economic growth" is, apart from the dubious reference to the fictitious "they" of "most serious environmental thinkers," also a misleading distortion of a complicated issue. The Bank's blaming the poor for deforestation has been strongly denounced by developing country environmental organizations, for example the Friends of the Earth Brazil and several Malaysia-based NGO networks, including the Asia-Pacific Peoples' Environmental Network and the World Rainforest Movement (see "Mortgaging the Earth, p. 162).

 

What numerous studies over the past decade and a half have established, is that over two-thirds of tropical deforestation is caused by conversion of forests for agricultural purposes. (See, for example, "Conversion of Tropical Moist Forests," National Academy of Sciences, Washington, D.C., 1980) The decision makers, investors, and planners of such activities are the moving agents of the deforestation, not the poor who only follow in the social space opened up for them. Much of the deforestation that occured in the Amazon rainforest in the 1970s and 1980s occured as a consequence of government policies, subsidies and internationally financed colonization and infrastructure schemes, a conclusion documented in a 1989 World Bank publication (Dennis J. Mahar, "Government Policies and Deforestation in Brazil's Amazon Region," World Bank, 1989). In fact, according to one internal World Bank Operations Evaluation Department study on Brazil, these colonists were uprooted from their lands not through poverty, but through a certain model of agricultural investment:

 

The analysis of extensive rural outmigration during the past several decades, in short, indicates that this phenomenon was not so much a response to relative levels of poverty in the various parts of Brazil as it was a reflection of the timing and rhythm of agricultural modernization. (cited on pp. 155-156, "Mortgaging the Earth")

 

Finally, if the authors of "Setting the Record Straight..." are seriously interested in the views of "serious" environmental thinkers concerning "Mortgaging the Earth" and the World Bank, they might start by reading the back cover of the book, which has favorable comments by Lester Brown, Herman Daly, Richard Falk of Princeton, and Jerome Levinson, General Counsel of the Inter-American Development Bank for twelve years.

 

 

 

VII. Conclusion

 

Institutions such as the World Bank have a potentially positive role in influencing governments and investors to engage in activities and policies that are environmentally more sustainable. Vigorous and frank debate with critics of the Bank can play an important role in making the public more aware of developmental and environmental issues. But documents of the caliber of "Setting the Record Straight...," do an immense disservice not only to the image of the Bank, but to informed public discussion.