Inner Turmoil at the World Bank
- By Matt Bivens
- Mar. 22 2004 00:00
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The rallies faded after Sept. 11, 2001, but now a ghost of protests past has returned. The ghost is that of Prague 2000, when the IMF and World Bank were trying to enjoy another mutual admiration session as crowds outside were tearing up the cobblestones of old Prague. James Wolfensohn, the president of the World Bank, raised the flag of truce.
"Outside these walls, young people are demonstrating against globalization," he said. "I believe deeply that many of them are asking legitimate questions, and I embrace the commitment of a new generation to fight poverty."
One of those legitimate questions was why the bank -- set up under United Nations auspices, and authorized to borrow against the faith and credit of leading nations, to help the poor -- would ever subsidize oil companies.
Or gas companies, or gold mines, or coal mines, or any of the other "extractive industries." After all, whether it's oil drilling or gold mining, these are highly profitable, lucrative activities -- so why use public money to pad the petro profits of Azerbaijan's Aliyev dynasty?
Extractive industries are also environmentally destructive and, dollar for invested dollar, lousy at producing jobs.
Perhaps worst of all, the extractive industries are proven engines of political corruption. Each basically represents a geographically specific spigot that pours out a nation's God-given wealth (as opposed to wealth its people have created themselves) for a finite period of time; so the emphasis is on seizing the right geography and holding on to it long enough to milk out all the wealth; and such a rush to seize and spend a nation's wealth is so inherently political that either politicians will be behind the seizure, or those behind the seizure will be behind the politicians. (Put another way: Other than Norway, how many oil-subsidized free and democratic societies do you know of?)
"War, poverty, climate change, greed, corruption, and ongoing violations of human rights -- all of these scourges are all too often linked to the oil and mining industries," sums up a letter to Wolfensohn sent last month by Archbishop Desmond Tutu and four other Nobel Peace Prize winners.
They are calling upon Wolfensohn to remember Prague, where he agreed to review the advisability of subsidizing extractive industries.
Now the bank's own review has come in with a verdict: Don't. Invest instead in renewable energy systems like solar and wind power. Start now, and be completely switched over in four short years.
It's a staggeringly bold finding, and were Wolfensohn to embrace it, he could go down in history. He would also be joining with the American arm of Mikhail Gorbachev's environmental group Green Cross International, which has proposed a $50 billion fund to invest in solar power and renewables. (Solar and wind power have been skyrocketing in efficiency and plummeting in cost, so the argument is that a pump-priming investment now, by encouraging economies of scale, should crown those clean energies the market winners.)
Wolfensohn so far has been hemming and hawing, while bank apparatchiki, horrified at their own review's findings, have argued that to stop subsidizing the Aliyevs and Gazproms of this world would hurt the poor.
Stay tuned, because this arcane and obscure battle could dictate much of the future.
Matt Bivens is a former editor of The Moscow Times.