The World Bank Can’t Sacrifice the Poor to Stay in the Game


Every year around the world some 15 million
people are uprooted from their land and homes to make way for
“development.” This slow tsunami of human misery does not attract
much media attention, but forced displacement for development projects — such
as mines, oil and gas pipelines, hydropower dams, and urban renewal schemes —
has become a full-blown crisis in the developing world.

Working with displaced communities in Asia and
Africa over the last ten years, I have seen the destructive effects of these
land grabs up close. The impact on poor families — and let’s be clear, it is
never the well-to-do who are forced to move for development — is well
documented: loss of income, homelessness, psychological harm, and many other
damaging effects. The trauma unleashed on these families is difficult to
overstate, and it nearly always intensifies the cycle of poverty.

That is why watchdogs were so alarmed when the
World Bank released a draft of its new social and
environmental safeguards
 last week. These policies are supposed
to ensure that the development the bank funds with our public purse does not
harm people or the environment, inadvertently or otherwise. But to the outrage of
land rights groups around the world
, including my own, the new draft
doesn’t strengthen the bank’s commitment to “do no harm” principles.
Rather, it does just the opposite. It guts necessary protections that have been
in place for over 30 years, opening the door to all kinds of future abuses.

Shamefully, the people who stand to be most hurt
by these abuses are the tens of millions of poor people in developing countries
that the World Bank is ostensibly supposed to help.

Of particular concern are the draft guidelines on
involuntary resettlement. As the planet’s largest development organization,
lending more than $50 billion per year, the World Bank is responsible for a
significant amount of displacement — how much, we don’t know because the bank
does not bother to track and disclose this information. But when people are
forced to relocate to make way for a bank-funded project, the current policy
requires the living standards of the displaced to be improved, or at least not
made worse than before the move.

While this objective is preserved in the new
draft rules, there’s little chance it will ever be achieved. The draft
exonerates the bank from its obligations to the displaced, while giving
borrowers considerable discretion to resettle the poor as they fit. Given the
bank’s track record of lending to some of the most abusive
 and reckless
financial institutions
 in the world, the results are likely to
be catastrophic.

When Jim Yong Kim became the bank’s president two
years ago, his appointment was greeted with optimism. He was an unconventional
pick for a position normally awarded to Washington and Wall Street insiders.
Trained as both a physician and an anthropologist, many were hopeful that he
would bring a people-centered approach to a development agency that has long
promoted the interests of large corporations over those of the poor.

The early signs were good. Kim set two ambitious
goals for the bank: the elimination of extreme poverty by 2030 and the
promotion of shared prosperity to boost the incomes of the poorest 40 percent.

Yet there is a dark undercurrent of realpolitik
pulling against these goals. The World Bank desperately fears losing its market
share to the new kids on the development-finance block, including the New Development
Bank launched by the BRICS nations
 this month.

In order to compete, Kim wants the bank to
be less risk
averse, expand its lending to the private sector, and get back into the
business of financing “transformational” mega-projects
. It
has become clear that gutting social and environmental safeguards is part of
that effort.

But the World Bank is playing with fire, as its
own history shows. In 1980, the bank became the first
international agency to create a resettlement policy
. Then President
Robert McNamara instituted the new rules in response to the violent forced
eviction of some 70,000 people to make way for a bank-financed hydropower dam
in Brazil. The evictions embarrassed McNamara and illuminated the inherent
contradiction of destroying entire communities in the name of reducing poverty.

Despite the promise of a new era ushered in by
the appointment of President Kim, the bank risks returning to its bad old days.
Because make no mistake, the world’s poorest and most vulnerable people — the
very people the bank has pledged to work for — are the ones who will suffer if
these draft safeguards are adopted.

Is this the legacy that the World Bank’s first
anthropologist president wants to leave behind?