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No More Than a Bank

Guest Column Payal Parekh

It is undeniable that the World Bank has funded many initiatives attempting to alleviate poverty, but the question is whether the funding has been effective.

Before evaluating the effectiveness of the World Bank, it is necessary to correct a basic fact that Mr. Tortorice told us about it [“Defending the World Bank,” Mar. 22]. Mr. Tortorice states that “a board of 24 executive directors -- five from the United States, United Kingdom, France, Germany and Japan and the remaining 19 from the other member nations -- make all but a few loan decisions.” This is correct, but each executive director does not have equal voting power. Mr. Tortorice neglects to tell the reader that each director is entitled to 250 votes plus 1 additional vote for each share of stock held. This means that the five executive directors from the developed world have more control over loan decisions.

Next Mr. Tortorice comments on the Sardar Sarovar Dam Project in India. He states that “according to the Indian government the dam would have irrigated 1.8 million hectares of farmland in drought-prone areas.” Mr. Tortorice forgets to tell you that in 1992, the Central Water Commission, an office in the Indian Ministry of Water Resources, admitted this estimate was based on an over-estimate of river flow by 17 percent! Furthermore, as students of science and engineering, we should also analyze whether year-round irrigation by canal of an area that is meant to be only seasonally irrigated is sound. Evidence shows that such areas are fertile in the short term, but end up becoming water-logged and saline. By the mid-1980s, 25 million of the 37 million hectares under irrigation in Pakistan were estimated to be salinized, water-logged, or both. According to Indian government studies, over half of the Sardar Sarovar command area is prone to water-logging and salinization. Given these problems, funding the Sardar Sarovar dam does not seem like it was a very good investment by the World Bank.

Mr. Tortorice is also incorrect in writing that “the people who had to move didn’t want it [the dam].” During the monsoon of 2000 and 2001 thousands of Indians, many of whom do not live in the valley, came out to support the Satyagraha (non-violent civil disobedience actions) against further construction of the dam and ousting of people. Is it just to ask those with the least political power in society to always sacrifice for the good of the nation, even though none of the benefits make it to them?

Next Mr. Tortorice tells us that “the Bank supports exemptions of user fees for those who cannot afford them,” with regards to health care services. He forgets to tell you that in a letter to a member of the U.S. Congress in the fall of 1999, then-World Bank Vice President Eduardo Doryan stated that “experience in and since the 1980s has shown that the poor have not been effectively protected in many cases [from user fees].” A study by the Bank’s Operation Evaluation Department reported in 1998 that in Zimbabwe, fewer than 20 percent of those eligible received individual waivers for health user fees. A UNICEF study has shown that user fees are not effective because of administrative barriers to obtaining an exemption; many people do not know about the exemptions, and the decision to give exemptions is at the discretion of local service providers whose performance evaluations are often linked to successfully collecting fees. It is useless for the World Bank to to have an exemption program if it is does not help those it was intended for.

He also states that “it’s only through user fees that the [health] system can be sustained and the Bank can expect to have its loan repaid.” Yet the World Health Organization has reported that user fees rarely provide more than 5 percent of health budgets, but disproportionately reduce poor peoples’ access to necessary health services. Another strike against the effectiveness of a World Bank initiative.

I agree with Mr. Tortorice when he writes that the World Bank is “simply that, a bank, not a foreign aid organization.” The goal of a bank is to get a good return on its investment. The World Bank has done that well. According to the non-governmental organization 50 Years Is Enough, two thirds of the funding provided by the Bank’s International Development Association (a program that provides long-term loans at zero interest to the poorest of the developing countries) was spent on repaying past World Bank loans, not on poverty alleviation -- a mission that the World Bank has not been very effective in fulfilling the past 58 years.

Payal Parekh is a graduate student in the Department of Earth, Atmospheric, and Planetary Sciences.