Examination of Witnesses (Questions 100
- 119)
MR MYLES
WICKSTEAD, MR
BARRIE IRETON
AND MS
MARGARET CUND
THURSDAY 22 JULY 1999
100. It is actively under consideration?
(Mr Wickstead) Yes, it is, and there are various conditions
which have to be achieved but they have not yet been achieved.
One of those conditions is an extremely tight monitoring arrangement
to ensure that the funds are used for the purposes intended.
101. What I am saying is what is the human rights
monitoring because clearly if human rights is a fundamental part
of the Bank's policy surely there will be some countries that
the Bank simply will not bail out on the basis of human rights
considerations? I am trying to find where in the list of priorities
human rights comes?
(Mr Wickstead) I think the Bank's view would be that
in Indonesia at the moment there are substantial groups of people
who are being pushed into poverty by the crisis, that they have
been requested by the existing Government to help them in various
ways ensure that those people are protected from being pushed
into poverty and the Bank feels that as it has that request from
a government then it will be ready to make funds available under
its usual conditions. That is to say that the purpose for which
the funds are used is a genuine one and that they can be properly
monitored.
102. From what you have said in answer I would
say it sounds as if human rights come pretty low down on the list?
(Mr Ireton) I think as we have explained at the beginning
there are limits within the Charter that the Bank may not use
political criteria in deciding on lending. These issues have moved.
As Myles was explaining, corruption was seen as a political issue
not an economic one, but over the last few years we have encouraged
the Bank to realise—and the Fund—that these were important
economic issues as a considerable tax on poor people and in other
cases creating macro economic stability when the banking systems
were threatened and so forth. I think the debate has moved on
quite a long way on governance issues from the political end of
the spectrum to the sort of competence end of the spectrum about
the relevance of that to sustainable development. Where human
rights issues become serious and threaten that sort of stability
and, therefore, that too becomes an economic issue, then it is
easier for the international community or the Bank to start looking
at it. Many of these things, as you know, go very strongly together
and you get extreme cases like, for example, Sudan and other cases
where all these issues come together and the Bank is not engaged
in a lending programme.
Chairman
103. On the place in the hierarchy of importance
of human rights issues I think I understood Mr Wickstead is really
saying this is all tied up in the conditionality which the World
Bank places on the Government, is that right?
(Mr Ireton) We must not mislead the Committee. Nobody
is suggesting that there are such conditions attaching to the
Safety Net programme — say, you may not commit human rights
abuses, as it were, or you must let out of prison all political
prisoners or things like that.
104. No.
(Mr Ireton) The conditions relate to effectiveness—
105. To make a real judgment we would have to
know what the conditions are.
(Mr Ireton) They relate to the effectiveness of the
Safety Net programme.
106. Yes. I am not certain we are in a position
to make a judgment at the moment unless we go through the conditions
you are laying down in Indonesia which have not been met.
(Mr Wickstead) As Barrie said, they relate very much
to the transparency of the process by which the funds will be
disbursed and to the monitoring arrangements.. They do not have
to do with more general issues of human rights, that is correct.
Chairman: They are not top on the list I think
we can presume.
Ann Clwyd
107. We can be sure of that. Can I ask you about
another issue which has caused considerable interest in Britain
at the moment and that is the environmental impact and the social
impact of the planned construction of the Ilisu dam in Turkey.
(Mr Wickstead) Yes.
108. Questions have been asked in the House
about it recently. Was the World Bank formally approached for
funding or was it informally approached for funding and if the
answer to one is no and yes to the other one, what is the difference?
(Mr Ireton) My understanding is the answer to both
is no, I am afraid. Everyone we have contacted asking them if
they know anything about this has said that they know nothing
about it. My understanding is that neither formally nor informally
has the Bank been approached about this. I am afraid we could
not track down anybody who knew anything about it.
109. Can I ask about the energy policy of the
Bank. Do you think that the World Bank's new energy policy contains
sufficient pledges on renewable energy and energy efficiency?
(Mr Wickstead) I guess the specific point here is
whether a specific target of 20 per cent of the Bank's lending
in the energy sector should be for renewable energy. I think we
are sympathetic to the notion that the Bank should put resources
into renewable energy but that having a target figure may not
pay adequate attention to the particular circumstances of individual
countries. I think our own approach would be to say that within
a country assistance strategy, and within the discussion of energy
within that country assistance strategy, our own view would be
that the use of renewable energy resources should be met. We would
look at it on a country by country basis being very sympathetic
to the argument that renewable energy resources should be maximised
but that it may be difficult to extrapolate from that and come
to an overall global figure.
110. Has the Fuel for Thought Energy Policy
paper actually been released this week?
(Mr Wickstead) It was discussed in the board on Tuesday
and agreed, yes.
111. Did the UK make a significant and energetic
input into all of that?
(Mr Wickstead) The UK did make a significant and energetic
input but I am afraid I did not, one of my colleagues was at that
discussion on Tuesday and I am afraid I have not had a detailed
report out yet. I know that it was broadly agreed.
Chairman
112. On energy, could I just ask on the Chad-Cameroon
oil pipeline project, are you satisfied that this project represents
a wise investment?
(Mr Wickstead) We have not yet seen a final project
document yet, of course, because it has not been considered by
the board yet. We are due to look at that project plus a Country
Assistance Strategy paper for Chad soon after the recess, September
or October. I cannot say yet what our final view of the project
will be but what I am convinced about is that the involvement
of the Bank has meant that this is almost certain to be a better
project than it would have been had the Bank not been involved.
We have had several informal briefings on this, one or two of
which I have been to. I do think that the environmental considerations
and others which may not have been taken into account had this
been left entirely with commercial ventures are likely to be much
strengthened by the Bank's involvement. I think it is one of those
areas where the Bank could very easily have avoided controversy
by simply not getting involved in this project and I think by
getting involved it has taken a very responsible position by becoming
involved and turning this into what I think is going to be a good
project and one which could really turn around Chad's development
prospects.
113. Really? Chad is one of our poorer countries,
is it not?
(Mr Wickstead) It is an extremely poor country and
I think that the benefits of this project could be absolutely
enormous. If it comes on-stream quite quickly it could actually
mean that Chad achieves the overarching international development
target which at the moment it is a very long way away from doing.
Chairman: That is interesting.
Dr Tonge
114. I wanted to ask you on a similar vein about
the safeguards that have been put into place in the China/Western
Poverty Reduction Project that I have had quite a few representations
about, particularly the Shanghai provinces. Can you comment on
that? Are you satisfied that people are not going to be displaced
and there are not going to be more threats to Tibetan ethnic minorities
in particular?
(Mr Wickstead) Yes, I am. We had an extremely long
discussion over this in the board which was the culmination of
several weeks of fairly intense activity and briefing and lobbying.
Yes, I do think we are convinced that the safeguard mechanisms
which have been put in place will ensure that everybody's concerns
are heard. In particular, the Government of China has offered
basically open access to journalists, to Members of Parliament,
to anybody who wishes to visit that area of the country together.
115. I heard that the BBC have been refused
permission recently.
(Mr Wickstead) I am afraid in that case you are one
step ahead of me; I had not heard that.
116. I am very dubious of the Chinese Government's
promises to have free access for journalists and media people.
(Mr Wickstead) That is certainly a point that would
be of serious concern if I thought that was the case and I will
follow that up, if I may. The other thing that gave us a good
deal of comfort was the involvement of the inspection panel in
this process.
117. What is that? Who are they?
(Mr Wickstead) The inspection panel is a group of
three people reporting to the board independently of the Bank
who were put in place to take up complaints from people who feel
they have been harmfully affected by World Bank financed projects.
118. Would they be academics or financiers?
They are chosen by the World Bank, are they not?
(Mr Wickstead) Broadly speaking they have a legal
background, they are senior lawyers etcetera and a mixture of
people from Part 1 and Part 2 countries, extremely well-respected
people coming towards the end of their careers on the whole who
have established international reputations. We feel extremely
comfortable with the group of people that we have on the inspection
panel at the moment and entirely convinced of their objectivity
and good sense.
(Mr Ireton) I believe I am right in saying they may
not take up employment with the Bank ever again.
Chairman
119. Could we look at another matter we wanted
to raise with you which was the World Bank projections for economic
growth for various regions. What is the basis of these projections
because they are very important in that a lot of arguments are
based upon them? In light of the economic performance over the
past decade are you satisfied that these projections are sufficiently
robust to be relied upon?
(Mr Ireton) To say that they are robust may be going
too far in the sense that these are projections based on economic
modelling. We certainly accept them for our own working within
the office as the best that are available in terms of the long-term
forecasts. They are similar to the sorts of rates of growth which
were achieved in the early to mid-1990s but not what would have
been achieved over a much longer period of time, which was lower
and there is bound to be downsides to this. A lot depends on the
industrial economies and what happens in Europe and just how South
East Asia comes out of the crisis. It is still somewhat early
to predict, but we are seeing positive change in Thailand and
South Korea and so forth. There are assumptions built in here.
Our own economists would not want to second-guess those. They
are conscious of the fact that these are central estimates which
may be missed in either direction.
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