A leaked document from the World Bank says that the international lending organization is about to scrap key safeguards that protect indigenous peoples and the environment in their project sites. The World Bank, which lends up to $50 billion a year to developing nations, instituted the protective policies after several high-profile development projects in the 1980s and ’90s led to grave human rights abuses and environmental degradation.
The draft policy would allow countries receiving World Bank loans to “opt-out” of abiding by the organization’s rules protecting the rights of indigenous peoples. In response, a coalition of NGOs, activists, and community groups issued a statement to the World Bank warning that the proposed change in policy “represents a profound dilution of the existing safeguards and an undercutting of international human rights standards and best practice.” Even some of the World Bank’s top leaders have expressed reservations about the plan.
If the World Bank presses ahead with the changes, we could see repeats of flagrant abuses from the past that alienate more people than they help, leading to fierce criticism of the international financing system from the left at the turn of the century. Here are three of the World Bank’s past blunders the current safeguards would have prevented that are definitely not worth repeating:
1. The Dam That Displaced 300,000 In India
In 1985, the World Bank made a $450 million loan to the Indian government to build a massive dam in the Narmada Valley of Gujarat state. While Indian authorities and World Bank officials argued that the dam would provide irrigation and drinking water to millions, indigenous peoples living in the protested that the huge reservoir created by the dam would flood their homes and displace hundreds of thousands.
Working with a coalition of activists from across India, the residents demanded that the World Bank stop funding the dam. After the activists’ hunger strikes and civil disobedience attracted the attention of human rights advocates worldwide, the World Bank finally buckled under pressure and allowed an unprecedented independent review in 1991. The review board, headed by a top U.N. official, found that the World Bank had repeatedly broken its own guidelines and legally-binding agreements with the Indian states and called on the Bank to radically overhaul its plan for the dam. But the Bank decided to completely ignored the findings of its own review board, prompting the U.S. Senate Committee on Appropriations to join the calls for an end to the project. Under pressure from governments and activists around the world, the Bank finally agreed to withdraw from the project in 1993. However, in 2000, the Indian Supreme Court approved continued construction. To date, the dam has displaced 300,000 people. The World Bank’s indigenous peoples policy, now under threat of rollback, was instituted as a direct result of international outcry caused by the dam.
2. Palm Oil Plantations That Uproot Millions In Indonesia
Since the 1980s, the World Bank has invested over $2 billion in promoting the global palm oil trade. In Indonesia, which produces half the world’s palm oil, the World Bank funded a massive expansion of palm oil plantations over the past few decades. Now, Indonesia has the highest deforestation rate in the world. According to a report commissioned by the Bank itself, 70 million Indonesians live on or near state forest land, but with palm oil plantations quadrupling in area since 1990, the United Nations Environmental Program (UNEP) has predicted that Indonesia’s natural rainforest will be wiped out by 2032.
Throughout the ’80s and ’90s, the World Bank supported worked with Dictator Suharto’s to deliver one third of all forests to logging companies and another third to palm oil plantations. Only after years of devastation to local communities did the Bank conduct an internal review, which found that poverty skyrocketed throughout the 1990s. Indonesians trapped in the path of the encroaching plantations have reported earning less than half their previous wages after deforestation forced them to take up work on the plantations. Floods, landslides, and droughts also plague regions where forest has quickly disappeared. In 2009, louder and louder criticism finally forced the World Bank to place a two-year moratorium on new lending for palm oil investments. If the World Bank ditches environmental and human rights safeguards, however, palm oil giants won’t face any obstacles going forward.
3. Paraguay’s $15 Billion “Monument To Corruption”
Between 1979 and 1988, the World Bank shelled out $210 million to help build another huge dam on the Argentina-Paraguay border. The Bank signed on with a plan devised by Paraguay’s then dictator, Gen. Alfredo Stroessner, to turn the poor, landlocked nation into an “energy superpower” by building the huge hydroelectric dam. When construction began in 1983, however, demand for electricity lagged 25 percent behind the original forecast, calling into question if the dam should even be built. The World Bank forged ahead anyway. An internal audit concluded “the Bank did not act decisively when confronted with the facts” but instead “accepted repeated violations of major covenants.” The Bank lost nearly $11 billion on the project by 1996 and the dam only operated at 60 percent of its capacity a few years later. But the costs to the local population were even worse.
In the end, 100,000 poor and indigenous people on both sides of the border were displaced and fish populations were decimated, destroying many locals’ primary source of income and food. While the Bank promised to compensate the displaced, many have still not seen a cent. “Not a single business was created to give people real jobs, either on the Argentine side or on our side,” said Jorge Urusoff, a resident of Encarnacion. People living on the edges of the giant reservoir created by the dam are still haunted by sewage-contaminated water that has upped the risk of malaria and other diseases in the area. Argentina’s president throughout the ’90s, Carlos Menem, called the dam a “monument to corruption,” and today the name sticks.
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If the World Bank drops basic safeguards, disasters like these are bound to repeat themselves. “The Bank’s policy review is an opportunity for the World Bank to finally make itself accountable on human rights,” said Jessica Evans, a researcher with Human Rights Watch. “If the Bank’s board allows the draft policy to go out without fixing these major flaws, it sends a message that respect for human rights remains discretionary at the Bank.” This is not what international development should look like.