The winner and loser of WB fossil fuel finance

The Enregy Tug of War

28 May 2004 by Seen

SEEN Press Release, 22 April 2004

World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

funnels taxpayer funds for poverty reduction to Halliburton, Big Oil

WASHINGTON - The Institute for Policy Studies released a report that shows that most oil projects supported by the World Bank supply industrialized country consumption - not developing countries’ energy needs - and almost all benefit large corporations based in those countries. Halliburton leads the pack of companies benefiting from World Bank energy lending.

“The Energy Tug-of-War: Winners and Losers in World Bank Fossil Fuel Finance” [PDF] exposes the leading beneficiaries of 133 financial packages, worth over $10.7 billion, approved by the World Bank Group since 1992. The report was written by the Sustainable Energy and Economy Network (SEEN), a project of the Institute for Policy Studies.

The World Bank-commissioned Extractive Industries Review (EIR) recently recommended that “The World Bank Group should phase out investments in oil production by 2008.” This week, at the World Bank Spring Meetings, civil society representatives will meet with World Bank President James Wolfensohn and others to urge them to adopt the Review’s recommendations. Although the Bank is reportedly considering many of the recommendations, the oil phase-out, in particular, has been met with stiff resistance from Bank management and Northern governments.

“World Bank staff contend that they must keep supporting Big Oil to provide energy for the poor and alleviate poverty” said Steve Kretzmann of the Institute for Policy Studies and a co-author of the report. “This new study shows that Halliburton, not the poor, stands to lose the most if World Bank support for oil is eliminated.”

Among the study’s key findings regarding World Bank fossil fuel finance since 1992:

No company has benefited more than Halliburton. IPS research identified thirteen projects, supported by over $2.5 billion of World Bank finance, in which Halliburton is involved, as a contractor, developer or investor.
Six of the top 12 beneficiaries are U.S. corporations: Halliburton, ChevronTexaco, ExxonMobil, Bechtel, Unocal, and Enron. The United States government is the largest World Bank shareholder.

Most of the oil feeds the global North’s growing demand, and does nothing to provide energy for poor nations. The IPS examination of the Bank’s portfolio finds that 82 percent of these projects are export-oriented.
“World Bank oil finance is consistent with long established Washington-driven goals for energy lending: to diversify oil supplies for Northern consumption, and to open developing country oil fields to Northern companies. In this regard, the World Bank has carried out its mission with precision and success,” said Jim Vallette of the Institute for Policy Studies and the report’s co-author.

SEEN is a joint project of Transnational Institute and the Institute for Policy Studies in Washington.



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