From cei@access.digex.net Tue Jun 27 11:18:04 1995 Received: from gar.uhc.com by lochness.uhc.com (AIX 3.2/UCB 5.64/4.03) id AA99414; Tue, 27 Jun 1995 11:18:03 -0500 Received: from access2.digex.net by gar.uhc.com (AIX 3.2/UCB 5.64/4.03) id AA20762; Tue, 27 Jun 1995 11:17:53 -0500 Received: (from cei@localhost) by access2.digex.net (8.6.12/8.6.12) id LAA06297 ; for ; Tue, 27 Jun 1995 11:45:39 -0400 Date: Tue, 27 Jun 1995 11:45:38 -0400 (EDT) From: Competitive Enterprise Institute To: Recipients of the CEI List Subject: CEI List: McNamara's W.B. Fiasco Message-Id: Mime-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Status: RO "Robert McNarama's World Bank Record Rivals His Vietnam Fiasco." by Paul Georgia Appeared in +Human Events+ June 9, 1995 Robert S. McNamara may have a sequel in the works. In his newly released book, "In Retrospect: The Tragedy and Lessons of Vietnam," he apologizes for his part in executing the Vietnam War and for the tens of thousands of lives lost on both sides of the conflict. Unfortunately for Mr. McNamara his penance may be just beginning. In 1968 he was named president of the World Bank, a seemingly ideal career move for a man making restitution. After all, the World Bank has the noble charge of raising the Third World from poverty to wealth. Yet despite this mission, the World Bank is responsible for serious human rights abuses, environmental destruction and economic stagnation. The misery, destruction and death toll that resulted from McNamara's humanitarian service rivals that from his service as a warrior. Before 1968 the World Bank was relatively small and limited in focus. However, under McNamara's watch the bank changed immensely. Its growth was astounding, expanding from 1,574 to 5,201 staff members while lending increased from $953 million to $12.4 billion. Furthermore, the bank took on the aura of an important humanitarian organization that would work to eliminate "absolute poverty." This was to be achieved through an ambitious program to assist Third World governments in "draw[ing] up an overall development strategy which will include every major sector of the economy, and every relevant aspect of the nation's social framework...." The World Bank of today, which loans approximately $16 billion per year, is largely a creation of Mr. McNamara. WORLD BANK FOSTERS REPRESSIVE POLICIES Referring to the bank's stated goal, critic Bruce Rich of the Environmental Defense Fund writes, "Here, then, was a vision of global central planning, based on an extraordinary presumption: the staff of the World Bank would, through visits of a few days or weeks, combined with desk research, take the lead in gathering data to prepare a development plan for 'every relevant aspect' of a 'nation's social framework.'" Such grandiose thinking is reminiscent of communist pronouncements, and like communism, the bank's actions have had horrifying consequences for the people they were intended to help. In the early 1970s, with World Bank aid and advice, Julius Nyerere, president of Tanzania, implemented a program of collectivized agriculture, known as ujamaa villages. The military drove 13 million peasants (about 90 percent of the population) from their land, burned their homes, loaded them into trucks, and moved them to new sites where they were ordered to build new homes. The result has been declining food production and hunger in a country that was once able to feed itself. In another case the World Bank helped to initiate Indonesia's massive resettlement program to alleviate overpopulation. Between 1976 and 1986 the World Bank contributed $600 million directly to the project, which has already resulted in the forceful relocation of six million people to the tropical rain forests, creating environmental problems as well. Furthermore, the Indonesian government, aided by Bank funds, plans to relocate to new sites, all 800,000 members of the indigenous tribes' people from the island of Irian Jaya by 1998. Resistance to these plans has been met with brutal repression by the Indonesian government. Irianese villages have been bombed and in East Timor, resistance to resettlement has led to the death of an estimated 150,000 Timorese at the hands the military. Tragically those who survive the relocation are suffering from destitution and starvation because the rain forest does not support agriculture. LEAVES ENVIRONMENTAL DEGRADATION IN ITS WAKE The list of such World Bank funded atrocities is long and not limited to human rights abuses. Another casualty is the environment. Both Brazil and Indonesia are suffering serious rain forest depletion due almost entirely to the slash and burn agriculture methods of the poor who were induced to migrate by force or deception. Both countries received Bank money for resettlement programs. In Brazil, the Balbina hydroelectric dam project was floundering until the Bank provided a $500 million loan. This small 250 megawatt dam, which has flooded 4,000 square- kilometers of rain forest, has been a tragedy of epic proportions. Because the area to be flooded was not cleared of vegetation, decomposition depleted the river's oxygen, producing hydrogen sulfide gas and making the water highly acidic. Moreover, many of the decomposing plants were toxic. The result was the poisoning and complete death of the Uatuma river. Thousands of people whose livelihood depends on the river for fish, irrigation, and drinking water are destitute now. An epidemic of skin rashes, intestinal disorders, headaches, and nausea as well as malaria have broken out. After the Brazilian government relocated the Waimiri-Atroari Indians away from the reservoir sight, their population dwindled from 3,500 to 374. Those left are mostly children. Absent Bank funds, this debacle may never have happened. BANK BUREAUCRATS SEEK MORE POWER The World Bank's record has given rise to intense criticism and calls for reform. However, the Bank's previous attempts at reform have proven futile. One reason is the incentives that World Bank officials face. One Bank official has been quoted as saying: "We are like a Soviet factory. The push is to maximize lending. The...pressures to lend are enormous and a lot of people spend sleepless nights wondering how they can unload projects." An internal audit done in 1987 concluded that "the drive to reach lending targets...is a major cause of poor project performance." World Bank bureaucrats seem to have one overriding goal; to expand the size and power of the World Bank. Perhaps, in his next book, Robert McNamara will admit the folly of the World Bank's actions and admonish the United States to cease providing 20% of the bank's capital base. Maybe he will explain that our leaders have failed to learn from the socialist failures of the World Bank. Central planning, international wealth redistribution, and coercion cannot lead to economic development. When implemented on a global scale, these principles destroy freedom and economic opportunity, just as they do on the national scale. This is the unpleasant, but unavoidable lesson of the World Bank. I for one look forward to Robert McNamara's next book. ---------------- Paul Georgia is a Research Analyst at the Competitive Enterprise Institute and author of "The World Bank's Trail of Sorrows." _______ __________ ___________ / | | | |__________ | | | | \ _______ |__________ ___________ COMPETITIVE ENTERPRISE INSTITUTE 1001 Connecticut Ave. NW #1250 Washington, DC 20036 202-331-1010, fax 202-331-0640 Permission to reprint must be obtained from the publishing journal listed above. Permission to copy granted as long as these lines are left intact. To subscribe to the cei list, send a message to CEI@digex.com. "The Virtual Hand: CEI's free-market guide to the information superhighway" is available for $5. CEI's monthly newsletter, "CEI UpDate," is free to contributors of $25.