"Sibling Rivalry, Bretton Woods, IMF and the World Bank"

Henry C.K. Liu

The so-called Bretton Woods twins: the IMF and the World Bank, because
of recent noises made by Stiglitz, appeared to be at odds in their
policy focus. But this is mere sibling rivalry.In late 1995, in the face of threats from the US Congress to cut US
contributions to the bank, the World Bank embarked on a high profile
advertising campaign to underline its importance to the economies of
donor countries. The World Bank announced that, "It [the Bank] doesn't
just lend money, it helps developing countries become tomorrow's
markets."

Social welfare have transformed into corporate welfare, with the Bank
clinging onto the the party line that what is good for Northern industry
is good for the poor of the South. The amount of money it is throwing
in the direction of the private sector and the Bank's new belief that
corporations can do development on their own, without government
involvement. This is manifested in the Bank's shift from project
lending to "policy" lending in the form of loans for removing trade
barriers, privatizing government-owned companies and restructuring whole
sectors of the economy in order to allow the entry of multinationals.
Private sector projects have weaker information and disclosure policies,
less accountability and less stringent environmental policies than
public sector projects.

The World Bank has been one of the most powerful forces behind genetic
erosion around the world for the last 50 years. This devastation has
resulted from a wide range of activities in most of the sectors at the
bank - in particular, agriculture, energy, forestry, infrastructure and
industry. In the 1950s, the Bank's agricultural focus was on cash
crops (such as cacao, rubber and palm oil), which started the decline of
diversity in farming systems and the crops themselves.

When the Ford Motor Company fell into decline after Ford's death in
1947, it was "saved" by the "Whiz Kids" who managed to turn the company
back toward profits by producing the worse cars in the industry through
the application of systems approach to management in which the quality
and safety of a product was only a trade-off component in the quest for
profitability. The Whiz Kids were led by Robert S. McNamara who went on
to mislead Johnson into the Vietnam War quagmire as the Secretary of
Defense who promised to win an unwinnable war by committing more and
more troops and money, after which he went on to become president of the
World Bank (1968-81) with equally disastrous impact on the world's
poor. McNamara's top-down anti-poverty strategy accelerated a process
of agricultural modernization and integration into the global market
that increased inequality, exacerbated poverty and had a devastating
impact on biodiversity and the environment.

Ambitious land-clearing and settlement projects were another important
component of the Bank's purported poverty alleviation strategy in the
McNamara era. These often involved the decimation of vast areas of prime
biodiversity habitats, particularly tropical rainforests. For example,
in the 1970s, the Bank approved a series of loans that cleared 1.3
million acres, or 6.5%, of Malaysia's rainforests, mainly to install
monocultural plantations for the production of palm oil. Such areas
experienced dramatic losses in biodiversity: in one fell swoop,
diversity plummeted from thousands of species per hectare to a single
lonely palm tree. All told, plantation forestry systems cover some 11
million hectares today, and they are still expanding.

These kinds of escapades continued into the 1980s. Brazil's infamous
Polonoreste agricultural development' program, funded by the Bank to
the tune of $443 million, single-handedly increased the deforestation of
the Brazilian Amazon from 1.7% in 1978 to 16.1% in 1991. More than half
the loans financed the paving of a 1,500 kilometers dirt track through
the rainforests of Rondnia. Most of the rest went into constructing
feeder and access roads, and the establishment of 39 rural settlement
centers to consolidate and attract settlers who were to raise tree crops
(mainly cocoa and coffee) for export. Instead of the tens of thousands
of settlers anticipated, half a million arrived in the space of 5 years.
Agricultural extension services and credit never materialized and
resettlement officials were overwhelmed. In order to survive, the
settlers tried, largely unsuccessfully, to grow crops such as rice,
beans and maize in the poor soils, which would become exhausted in a
year or two. Slash and burn went completely out of control, as the
settlers were constantly forced to move on. Needless to say,
the impact on the fragile rainforest environment was devastating. By the
mid-1980s, the burning of Rondnia was identified by NASA as the single
largest, most rapid human-caused change on earth visible from space.

Indonesia's Transmigration program had an equally devastating impact on
both biological and cultural diversity. Between 1976 and 1986 the Bank
lent $630 million to support the movement of millions of Javanese people
to the outlying islands. In addition, it provided an additional $734
million for agricultural development, which either did not materialize
or was used to provide rice which people tried, and failed, to grow in
totally inappropriate environments, razing the environment in the
process. By the late 1980s, transmigration was responsible for
deforestation rates in the fragile forests of the outer islands reaching
a rate of 5,000 square kilometers a year. The results of the program
were particularly devastating in Irian Jaya, one of the world's great
reservoirs of biological and cultural diversity. Here, transmigration
was little more than an attempt to "Javanize" what the authorities
viewed as backward and disrespectful ethnic groups. The original plan
was to match the 1 million ethnic people, belonging to numerous tribal
groups speaking more than 200 languages, with 1 million Javanese. This
target was never actually reached because the program proved so
disastrous, but transmigration did have its desired effect in decimating
Irian Jaya's social and cultural fabric.

In the wake of the Bank's advertising campaign, the US Treasury
subsequently brought out a report demonstrating that in just two years
(1993 to 1995), the World Bank and other multinational development banks
had channeled nearly $5 billion to US firms. One major beneficiary was
Cargill, the third largest food corporation in the world. Cargill's
1995-96 sales were a mind-boggling $56 billion, which is roughly
equivalent to the GNP of Pakistan, Venezuela or the Philippines.
Company earnings reached almost $1 billion and profits were 34% higher
than the previous year.

Bioprospecting is the 20th century `politically correct' version of the
age-old practice of appropriating the genetic heritage and knowledge of
local communities around the world. Unlike their counterparts in the
colonial era, today's bioprospectors (either corporations or scientific
institutions serving their interests) recognize that they can not get
away with raiding local communities' resources for free any more, and
that they must pay for access to those resources. Bioprospecting is
becoming quite a boom industry, and the Bank has recently recognised it
as a potentially lucrative and green investment. But the attraction of
corporations, aid agencies and funders to this new industry is not
shared by many NGOs and local communities. Bioprospecting deals have
almost without exception been characterized by inadequate consultation
with and compensation for local communities, and the extension of the
reach of the global market, which is rarely of benefit to the
communities involved.

In late 1993, the IFC and the Global Environment Facility (GEF) created
quite a stir when they met with private foundations to discuss their
interest in investing in investing money in venture capital funds to
"exploit the knowledge stock" of traditional communities. Project ideas
included ecotourism, the screening of plants for medicinal and other
potential applications, buying up the knowledge of traditional
communities, and even selling the rights to "charismatic" ecosystems to
large corporations for public relations value. NGOs and local
communities responded with outrage that the Bank, with its supposed
mission of helping the poor, would consider investing in
commercialization activities that most local people consider unfair,
unethical and even sacrilegious.

Much of this post is based on information provided by:
http://ecoethics.net/hsev/biod-8.htm