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USA: World Bank Out of Chinese Resettlement Project

by Gumisai MutumeInter Press Service
July 7th, 2000

WASHINGTON -- The World Bank has caved in to pressure from one of the biggest anti-World Bank campaigns by non-governmental organisations forcing China to use its own funds to resettle farmers on Tibetan territory.

Chinese authorities announced Friday that they intend to use their own money to resettle about 60,000 poor Chinese farmers from the hills of Qinghai province into a territory traditionally belonging to Tibet. China annexed Tibet in 1951 and rules it from Beijing.

China's decision follows a marathon two-day meeting of the Bank's Board of Executive Directors. The majority of board members did not agree with recommendations tabled by Bank management to approve the project but allow a 15-month delay for improvements.

China's executive director at the Bank, Zhu Xian, said his country would not accept any other conditions except those originally agreed to with Bank management.

"It is unacceptable to my authorities that the other Bank shareholders would insist on imposing additional conditions on management's recommendations namely coming back to the board for approval again for a project that was already approved last year," said Xian.

"China will therefore turn to its own resources to implement the Qinghai component of the project, and in its own way."

Last June, the Board of the Bank approved a 160 million dollar loan to the three-component China Western Poverty Reduction Project aimed at improving the lives of 1.7 million people.

However, due to pressure from non-governmental groups led by the International Campaign for Tibet (ICT) the Bank withheld 40 million dollars from the Qinghai component until a review by the Bank's internal watchdog, the Inspection Panel.

The report of the Inspection Panel delivered a fatal blow to the project. The report found that the Bank not only violated six of its own policies but that Bank staff held wide and divergent views of Bank policies. The report concluded that as proposed, the Qinghai project was not the best way for the Bank to meet its objectives of poverty alleviation in the area.

Despite this, Bank management went ahead to recommend to the Board that Qinghai was "a sound project, as measured against our high standards" and should go on following four proposed changes.

The first change would see the project upgraded from category B to A, therefore entailing a full environmental impact assessment which had not been done. Secondly, a group of international experts would conduct social assessments with affected people. The Inspection Panel findings had dismissed this because of a "climate of fear" present in the area.

Management also proposed the provision of adequate maps and documentation and lastly promised to ensure better disclosure of information surrounding the project.

This new process would have taken up to 15 months according to Bank president James Wolfensohn and there would be no need for the Board to vote again. This is where the management fell out with the Board.

The Board represents the 181 members of the Bank and is responsible for policy decisions affecting the World Bank's operations and loan approvals. It has 24 executive directors with France, Germany, Japan, the United Kingdom and the United States being the largest shareholders.

The Board said it could not adopt management's recommendations as formulated nor support them if there were no provisions for further review and approval after the studies were completed.

"We accept the decision by the Chinese Government," Wolfensohn told the Board. "We look forward to a continuation of our long-standing relationship with China in the context of other projects."

The Bank has supported 31 other poverty reduction projects in China during the last 10 years. China is one of the Bank's 10 largest borrowers who accounted for 62 percent of total lending last year.

ICT president John Ackerly said his movement was happy that there would be no "international stamp of approval" for China's resettlement programmes on Tibetan territory.

"We also hope this experience can be used by the Bank to strengthen its inspection panel as it is the only international financial institution with such an instrument," Ackerley said. The Washington-based ICT filed the complaint that sparked the Inspection Panel review.

"The mood here has changed from being quite pessimistic to popping champagne bottles," Ackerley said from outside the Bank headquarters in Washington DC where activists had set up a 24 hour vigil earlier this week to campaign for a no-vote.

More than 3,000 protestors marched to the Bank a week ago to protest a project that would see Tibetans' share of the local population fall from 23 percent to 14 percent and Mongolians dwindle from 14 percent of the population to seven percent.





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