World Bank Needs US-Led Reform

Environmental Defense today called on Congress to link $1 billion in annual US taxpayer contributions to the World Bank to improved performance by the financial institution. The World Bank and International Monetary Fund (IMF) are expected to be the target of protests Sunday and Monday during their annual spring meetings.

“Protestors’ calls to close down the World Bank are extreme, yet the growing public concern about the human and environmental impacts of global finance policies needs to be taken seriously,” said Bruce Rich, head of the international program at Environmental Defense.

The Bank claims its mission is to alleviate poverty and promote sustainable development, yet the Bank’s own reports show that over half of its projects are not likely to produce sustainable results, a failure rate that has not changed for a decade. In the poorest countries, where the protestors and a recent Congressional Commission have suggested the Bank should focus more, 60 to 70 percent of Bank projects aren’t likely to be sustainable.

“The Bank has swerved badly off course because of perverse internal incentives that reward staffers for pushing money out the door,” said Rich. “Five years ago Bank President James Wolfensohn promised to change this culture. Instead, he has accelerated loan processing, and overseen the weakening of environmental and social policies.”

Environmental Defense also called on the Bank to end its support for huge environmentally destructive private-sector projects by the International Finance Corporation and the Multilateral Investment Guarantee Agencies, its private finance arms, whose environmental and social performance is considerably worse than the rest of the World Bank Group. Environmental Defense also called for swift passage of the bi-partisan Ecosystem and Indigenous Peoples Protection Act, introduced by Rep. Christopher Cox (R-CA), which requires the US to reduce the amount of tax dollars it contributes to the Bank if the Bank approves environmentally harmful projects or violates its own policies.