Crime and Reward:
To The World Bank
By Anu Muhammad
government of Bangladesh has submitted a bill seeking legal immunity
for multilateral lending agencies, especially the World Bank on 31st
October 2004 in the national parliament. Finance Minister M Saifur Rahman
introduced the bill titled The International Financial Organisations
Order (Amendment) Act 2004.
According to the
press report (New Age, 1 November 2004) the said minister although admitted
that there was no precedence of such immunity nevertheless insisted
for it. The above bill described that, The Bank shall enjoy immunity
from every form of legal process...no action shall be brought against
the Bank, by any agency, or by any entity or person, and there shall
be recourse to such special procedures for the settlement of controversies
between the Bank and the government or the agency or entity or person
as the case may be....Property and assets of the Bank shall wheresoever
located and by whomsoever held be immune from all forms of seizure,
attachment or execution, before the delivery of final judgement against
the Bank. No legal action is allowed against the activities of
employees as long as they act in an official capacity at the directive
of the lending agency.
The International Monetary Fund (IMF) and the Asian development Bank
(ADB) were given immunity earlier in 1972 and 1973; the World Bank was
then given the partial. Now the government of Bangladesh has taken an
initiative not to correct the wrong but to complete the wrong, to give
full immunity to the World Bank.
The World Bank formally
asked the government for the legal immunity about three years ago. It
was reported that the World Bank (WB) became impatient to get a complete
immunity in Bangladesh. Why? What it has done for which it needs immunity
to save its skin? Why the government is moving fast to give complete
immunity to the World Bank? Why the government needs to protect the
Bank? What makes the champion of transparency and development nervous
of the court and public scrutiny? Is it only to keep reported internal
irregularities under carpet or more? We are concerned for reasons I
would like to explain.
The Projects of
Development or Destruction?
Since 1972 the World
Bank along with IMF, ADB and other international agencies has been playing
a leading role in formulating policies and monitoring implementation
of its agenda. In different ways it has been working to influence the
direction of the economy of countries like Bangladesh according to the
needs and ideology of global power.
We have thousands
of projects conceived and monitored by the World Bank and/or its allies
in different fields. The projects for energy development, poverty reduction,
forestation, flood control and irrigation, education, health, industry,
financial sector and what not? We are made overburdened by loans and
our hard earned currencies go to pay the interest every year. But what
brings the projects? What results came from these projects? We have
plenty of projects and we have increased number of people living under
poverty line, we have permanent water logging and more frequent floods
after implementing several flood control projects, we have arsenic in
the water around the country after successful and failed implementation
of projects of ground water, we get monocrop after losing diverse agriculture
and poisonous production boom through implementing projects in agriculture,
we lost our authority over our natural gas resources and we now pay
more for gas and electricity after implementation of energy projects,
we find huge coastal area permanently damaged after implementing shrimp
projects, we find loss of natural forests because of implementing foreign
currency earning projects, we have vulnerable public sector education
and health to see growth of handicapped but expensive private sector,
we find basic industry like steel mills and large jute mills closed
after implementing projects concerning growth and industry! People have
been suffering, material and human loss is unaccountable. People of
Bangladesh are made more indebted for these projects and made more vulnerable.
But, we know, there are beneficiaries of these projects. The rich and
powerful, local and foreign, have gained a lot from these. The vulgar
growth of super rich in a poor country has direct links
with these projects.
Then who will be
accountable for these projects? What about the evaluation of the past
not to repeat disasters? No money, no initiative from the powerful for
that. Projects, bigger is better, bring money, bring beautiful cars,
and give fatty lives to consultants, commission agents-ministers-bureaucrats
and business elites. Projects like the above ensure market for big corporate
bodies, projects helps to expand space for them, it gives life time
heavenly life for international consultants and bureaucrats of the agencies
like the World Bank. In the latest move by the agency, PRSP (read: poverty
re(pro)duction strategy paper), a new comprehensive assault on the people
is on the making in a similar line of the development efforts
so far. The local beneficiaries are also excited about that.
We have plenty of
records to show the real direction of the projects and the face of the
development agencies. I discussed earlier on manufacturing sector (Closure
of manufacturing units and the victory of Anti-Industrial Development
Projects), water and flood control projects (Projects of
Mass Destruction) and on Foreign Direct Investment (Global coalition
and FDI) where I found the World Bank as a key player. Here let me shed
some light on a specific area: energy sector the area of power and natural
gas to understand the steps of the agency.
discourse by the World Bank on Energy sector of Bangladesh was made
in 1982. It was a report of the Joint World Bank/UNDP Energy Sector
Assessment Program. The report was kept secret in the same line with
most of other reports of these agencies. This report was based on the
findings of the Energy Assessment Mission undertaken during October
1981. The report seemed certain about the size of the gas reserves,
even though no scientific analysis was cited. Even 10tcf gas was considered
as substantial economically recoverable natural gas reserves
and according to their estimate at present consumption levels
would last for several decades. The report also suggested creating
atmosphere to entry of multinational oil companies. Moreover, it continued,
since the supply of gas is likely to remain well in excess of
Bangladeshs expected internal needs for a substantial period of
time they offered different export options including export
gas through a pipeline to India. So, the issue of disastrous production
sharing contracts and exporting gas is not a recent phenomenon, the
option was prescribed two decades ago by the World Bank et al.
A similar scenario
can be seen in power generation and distribution. How the Government,
Rural Electrification Board (REB) and Palli Bidyut Samity (PBS), have
been coming into terms and where the World Bank and its window International
Development Association (IDA) stand in the process are the matters of
importance to understand the development in Power sector.
Both REB and PBS were born through earlier projects. Agreements with
IDA and undertakings obtained from the government might help in this
regard. According to the agreements, the report of the World Bank of
1982 says, (1) GOB will lend Credit proceeds to REB, and REB will
transfer assets to PBSs, on terms satisfactory to IDA, and the local
component of project cost will be provided by GOB to REB as a grant....
(2) GOB will cover any deficit from REBs operation in future.
(3) GOB will initially subsidize the difference between an agreed bulk
tariff for BPDB supply to PBSs, and PBS payments based on their ability
to recover costs, according to a formula satisfactory to IDA. (4) GOB
will submit to IDA, by December 31, 1982, a satisfactory formula to
calculate and adjust the BPDB bulk tariff to PBSs, and BPDB to implement
it thereafter. The agreement confirmed all conditionality of the
World Bank to begin a power transmission network with the
Government and the BPDB as the bearer of all excess costs satisfactory
to IDA. Huge subsidy from the people to the corporate bodies!
In October 1996,
as a follow-up of similar other projects, the Government of Bangladesh
approved a private sector power generation policy (PPGP). Its essence
was that new power generation capacity would be created through multinational
corporations in power sector usually called as Independent Power Producer
(IPP). And the new power generators would be constructed on a Build-
Own- Operate (BOO) basis. Although there was absence of prior
experience by the Power Cell (a newly set window under energy ministry,
GOB) in dealing with IPP projects projects have been taken temporarily
by the Bangladesh Power Development Board (BPDB) in inviting and
finalizing bids from IPPs. Finally, the World Bank made its expectation
clear that in the future only the Power Cell would be processing Independent
Power Producer projects.
To make investment
in Bangladeshs power sector an attractive opportunity for multinational
corporations, the World Bank offered a number of prescriptions in 1997.
These included: (1) the commercialization of BPDBs generation
assets and establishment of profit centers; (2) the commercialization
and corporatization of the distribution units; (3) private sector participation
by way of rehabilitation, operation and maintenance (ROM) contracts
in selected profit centers; and (4) BPDBs proposed direct investment
in four public sector power generation projects (Barapukuria coal based,
Shahjibazar, Baghabari, Sylhet gas turbines) to be postponed and these
to be carried out through IPPs. These asked, in clear terms, to dismantle
another public sector institution and to clear path for the multinational
companies in power sector, i.e., IPPs and to subsidize these efforts
by public money.
accordingly. After IPPs were given contracts the cost of electricity
to the citizens of Bangladesh, as happened with the gas, also increased
by more than 200 percent. And similar to the experience of the state
agency for gas exploration and distribution (Petrobangla), which was
given responsibility to purchase gas from multinational oil companies
at a higher price with foreign exchange, BPDB, the state agency for
power production and distribution, was also given the same task. As
a consequence, Bangladesh Power Development Board joined Petrobangla
in incurring losses. This pattern was already evident by 1998. Since
then, the World Bank and the Asian Development Bank have applied pressure
to ensure payments occurred to the multinational corporations. This
is usual lobbying. It should not be taken as surprising that the Bank,
kept mum on the compensation payment from UNOCAL to Bangladesh due for
many years which is more than tk 60 billion. On the contrary, it put
all strength to close down Adamjee jute mills and through away about
100 thousand people under poverty line accusing it for making loss of
tk 12 billion in 30 years!
Since mid 90s,
foreign direct investment increased dramatically. Presence of Multinational
Corporations (MNCs) in gas, electricity, hybrid and telecommunication
became visible, and new contracts were being signed in gas, telecommunication
and power sectors. After working long to pave the way for this anti-development
foreign direct investment, the World Bank shifted its emphasis for gas
sector. In 1999, the World Bank stated that the nature of foreign direct
investment has implied little augmentation of foreign exchange
reserves, because, the bulk of FDI in the power sector so
far is made up of imports (e.g. pre-fabricated barge mounted power plants);
so are capital costs of IOCs engaged in the gas sector, and much of
the foreign investment and lending in the telecom sector finance imports
of telecommunications equipment.
The World Bank,
therefore, made it clear that, the import intensity of FDI inflows
and subsequent profit repatriation and interest payments imply a worsening
current account deficit associated with FDI. In order to understand
reasons behind World Banks unusual recognition of adverse effects
of foreign direct investment in Bangladesh one has to go further to
read their suggestion: there is no discernible accumulation of
foreign exchange reserves in the absence of gas exports. The prescription
offered in 1982, i.e., export of gas, appeared as a compulsion in 1999.
Therefore, if we
sketch the steps taken by the World Bank and its allies in the energy
sector we find the following:
Step 1: Study on
Energy to provide a policy prescription to restructure and downsize
public institutions in order to create space for others.
Step 2: Argument
followed that the foreign private investment would provide an inflow
of foreign currency, would ensure remarkable development of the energy
sector and would contribute to develop other sectors as well. Precondition
of this was to downsize or dismantling public institutions.
Step 3: Constant
advocacy for raising price of gas and electricity.
Step 4: Gas blocks
awarded to the Multinational Corporations. According to the contract,
Bangladesh is bound to purchase its own gas with more than double of
present price and with foreign currency. National exploration agency
has been kept idle. Budget deficit and negative effect on foreign exchange
reserve increased. Similar things happened in power sector.
Step 5: Further
increase of the price of gas and power, export of gas are prescribed
to avert further crisis and to ensure further development.
The results of these
steps have been disastrous for the economy and the people. Because,
(1) price of gas and power on a continuous increase, as a result of
that (2) cost of production in every level increased which resulted
fall in competitiveness of Bangladeshi goods; (3) hard earned currency
are being used to purchase gas and electricity which could be bought
with local currency at a much cheaper rate (4) dismantling of local
production skill and exploration establishment; (5) losses of BPDB and
Petrobangla becoming huge; (6) common property becomes private property
being used to maximize profit and (7) public resource like natural gas
becomes huge liability.
This is a pattern
of doings of the World Bank and its allies, a road map to
ensure businesses to big corporate bodies by creating a myth that they
are working for the people and development of the poor countries.
on the US body
Nobody would deny,
considering facts, that the World Bank, despite its rhetoric, is effectively
an extension of US administration. It was born in the US, it is compulsorily
headed by a US citizen and all of its decision is influenced or monitored
by the US administration, the US treasury in particular. This assertion
is documented by a report prepared by United States General Accountant
Office (USGAO) that investigated the World Banks operations and
policy implementation performance. The report says that the World Bank
operations support the US economic and foreign policy. It shows the
link between the Bank and the US government clear, "through the
Secretary of the Treasury and the US Executive Director, the United
States influences the Bank to take actions consistent with the US post-Cold
War foreign policy agenda.... The Bank promotes economic development
consistent with the US interests. According to the report published
in the US media for every $1 contributed to the World Bank and
IDA over the years, the country (US) got roughly $2 back in business
for American firms that bid on contracts involved in providing this
aid. This is much more in many cases in Bangladesh. The World
Bank, therefore, can be viewed as the US institution, that takes care
of the US corporate investment, and works as an instrument to bargain
with different countries to protect the US imperial interest. So, the
Bank, in other words, is obligated not to promote any kind of development,
which is inconsistent with the US and other corporate interests.
The World Banks
project performance reviews often present devastating pictures. Such
a conclusion was also noted by the USGAO. After investigating many projects
around the world the organization also observed that, in terms
of achieving project objectives, the Banks rate of success is
much higher in meeting physical objectives (e.g., completing buildings
and administering social services) than in improving market and policy
conditions for economic growth. In fact, the discussions on success
or failure of projects sometime ignore the World Banks agenda.
The agenda is acknowledged in World Banks own documents that indicate
that the Bank was structured to promote private foreign investment.
The documents continued by stating that the Bank has many of the
characteristics of a private sector institution. It is organized as
a stock corporation, with voting rights proportional to equity investment.
It finances itself in private capital markets, through medium-and long
term bond issues on commercial terms, applying conservative financial
policies that have earned and preserved a triple-A bond rating...It
has consistently earned a profit over $1billion
Immunity to the Coalition
The World Bank always
tries to make point against corruption, tries to show that they are
pursuing programmes to curb corruption in Bangladesh and elsewhere.
Wrong! History and geography show that never nowhere the World Bank
feels happy with the governments who really want to end corruption.
Corruption is huge in Bangladesh, but that is why the Bank find here
very strong support base. How can institutions like this survive without
the life support of corrupts? How can otherwise the projects World Bank
pursues be endorsed?
In fact the World
Bank does enjoy the status of sovereign body, entering everywhere
but no accountability. It appears that the agency needs now to have
that status as legally valid. The present governments move to
give immunity to the World Bank is not inconsistent. It is also consistent
with its recent agreement with the US government to give immunity to
the US nationals (especially US Army) from any trial for their crime
(planning to commit?) in Bangladesh. Government spokesmen, ministers
Saifur Rahman and Moudud Ahmed in particular, recently defended strongly
the immunity move by saying that responsibility of all the projects
lie with the government. Very much true, indeed! The governments, present
and past, are primarily responsible for all disasters made through development
projects and otherwise. They must explain and should stand before trial.
Then why the immunity law? Why legal procedure is being restricted?
Let the court identify responsible parties and the degree of their crime.
We understand their
problem. A coalition is there which smells trouble in the air. World
Bank along with other agencies, local policymakers i.e., ministers,
bureaucrats, consultants, commission agents are the honourable members
of the coalition. It seems that all of those need to keep all things
away from any public scrutiny; they need to seal for ever the possibility
of opening the Pandoras Box to show the ugly faces!
But even if government
gives immunity people will not. There are number of public trials already
held in different parts of the world. The number will increase at a
faster rate. The global institutions like the World Bank, by their worldwide
similar operations, invite affected billions of people to raise voice
against them, to create global resistance. Immunity will not be able
to save them from that people power nor will the local goons, the beneficiary
groups, be spared for ever.
The author can be
reached at firstname.lastname@example.org