NGOs criticise World Bank's new lending plan for poorer countries

By John Vidal, The Guardian (October 21, 2011)

NGOs say Programme-for-Results Lending would allow countries to sidestep tough social and environmental safeguards that recipients of World Bank loans must normally meet

It's couched in 60 pages of near-incomprehensible economic-speak, but a radical World Bank plan to set up a new way to lend money to developing countries is being called a potential disaster for indigenous peoples, the environment and human rights.

The proposal, called A New Instrument to Advance Development Effectiveness: Programme-for-Results Lending (P4R), would lend money according to results achieved by projects. The proposal was published in February, and phase II consultations ended recently. Board approval is expected by the end of the year. Some of the NGOs that keep an eye on the bank's activities – International Rivers, Friends of the Earth US and Bank Information Centre – say the clear intention is to allow countries to sidestep dozens of tough, and expensive, social and environmental safeguards which recipients of World Bank loans must normally meet.

According to the proposals, the new instrument would eliminate or greatly dilute 25 existing safeguards and policies. They include those that apply to forced resettlement, natural habitats, physical and cultural resources, indigenous peoples, forests, safety of dams, natural habitats, and environmental action plans. Most of these policies have taken years of pressure by NGOs to secure.

The bank, which lends more than $50bn a year, is one of the world's largest providers of loans for mega-projects, many of which are particularly damaging to local people, the environment and the climate. If countries wanting to build giant dams, roads, power and water projects are to be largely freed from acting in a socially responsible way, the NGOs fear bank lending could lead to more forced evictions and human rights abuses.

"This is an extremely dangerous initiative that could undermine the rights and protections for communities around the world," said Karen Orenstein, of Friends of the Earth US. "It could undermine decades of work on social safeguards. Given the World Bank's involvement in the Green Climate Fund, it's critical that we don't let such challenges to safeguards set a precedent that can be adopted by the GCF.

"This is the latest development in an alarming trend at the World Bank, in which the institution has created numerous forms of financing to which safeguard and accountability standards are very difficult to apply, if [they are] not completely exempt. A P4R loan could be given to a government for a forests-related programme that ultimately results in land-grabbing and indigenous rights violations. But under P4R, World Bank indigenous peoples policies would not apply to this loan, nor would normal disclosure standards."

The bank argues in its proposals that its accountability mechanism could be used for P4R, but acknowledges that loans could be used to fund activities with significant adverse environmental and community impacts.

"Bank support will help member countries to improve the design and implementation of their own development programmes in infrastructure, education, health and other sectors. While results are at the centre of all that the bank does, Programme-for-Results will place more direct emphasis on development results by linking disbursements to results or performance indicators that are tangible, transparent and verifiable," it says.

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