INDEPENDENT PEOPLES TRIBUNAL ON THE WORLD BANK

World Bank officials shy away from participation ’TRIBUNAL FINDS UNDUE INFLUENCE OF BANK ON INDIA’S NATIONAL POLICIES’

25 September 2007


http://www.worldbanktribunal.org


PRESS RELEASE 24 September 2007, New Delhi

New Delhi: The four day Independent Peoples Tribunal (IPT) on the World Bank World Bank
WB
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.

in India concluded here today hearing numerous depositions indicting the Bank’s policy and project interventions in India.

While the World Bank India office did engage with the IPT and claimed they
would make a deposition to respond to some of the evidence against the Bank, they failed to show up despite provision of adequate space and time by the organisers.

In its preliminary findings, the IPT observed the Bank had an undue and
disturbingly negative influence in shaping India’s national policies
disproportionate to its contribution, financial or otherwise.

While India is the world’s largest single cumulative recipient of World Bank
assistance, with lending totaling about $60 billion (Rs. 2,40,000 crores)
since 1944, current annual borrowing amounts to less than 1% of the
country’s GDP GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
( In 2005, India’s annual borrowing from the World Bank for
new projects was 0.45% of GDP).

The loans however has been used as leverage Leverage This is the ratio between funds borrowed for investment and the personal funds or equity that backs them up. A company may have borrowed much more than its capitalized value, in which case it is said to be ’highly leveraged’. The more highly a company is leveraged, the higher the risk associated with lending to the company; but higher also are the possible profits that it may realise as compared with its own value. to bring about important policy changes and impose conditionalities in areas such as governance reform, health, education, electricity, water and environment- many of these with obvious political and social consequences. The loans also legitimize
substantial additional funding from a diversity of bilateral and
multilateral donors such as the Asian Development Bank and Department for
International Development (DFID-UK). The Bank’s loans have caused extensive social and environmental harm from mass displacement in the Narmada valley to loss of livelihoods of traditional fishworkers in places such as Barwani.

It was noted that such overbearing influence on India’s policy making was in
violation of the World Bank’s own Rules of Association, which mandate it to
be an apolitical institution that should not interfere in political
processes of any member country. Further, the IPT depositions stated that
the presence of former Bank officials in senior government positions was
unacceptable and involved conflicts of interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. .

UNDERMINING DEMOCRACY:

Vice Chairman of the Kerala State Planning Board Professor Prabhat Patnaik
in his deposition cited the example of the Jawaharlal Nehru National Urban
Renewal Mission (NURM), which was a World Bank designed project. In the
Kerala NURM project, the state government he said was being forced to accept a conditionality to reduce stamp duties to 5% from the earlier 15-17%. To avail a loan of about 1000 crores, Kerala would lose upto Rs.7000 crores of government revenue.

Vinay Baindur of the Bangalore based Collaborative for the Advancement of
Studies in Urbanism (CASUMM) showed evidence of how the Karnataka Economic Restructuring Loan (KERL) resulted in the conversion of a state government and its economy into a corporatised entity meant to generate funds for “private sector and enterprise development”. ’The $ 250 million loan resulted in far reaching changes; the closure/privatisation of the public
sector, a little short of two lakh permanent employees were forced to take
Voluntary Retirement Scheme (VRS) payments.

Further, the restructuring process led to a steep rise in farmer suicides;
many of those who committed suicide did so because they were unable to pay the arrears in power costs that were suddenly slapped on them on account of power tariff hikes. “The withdrawal of subsidies for agriculture led to a sharp rise in the costs of cultivation”, argued Baindur in his deposition.

Jury member and scientist Meher Engineer said that he found the depositions on how the Bank forced inappropriate technology on India such as incinerators especially damning. ’Given the well researched evidence that I have heard it is hard to imagine any role for the World Bank in the
environment sector, he said. ’The Bank is pro-rich, pro urban and anti
environment’, he concluded.

The IPT was organized by an inclusive platform consisting of over 60
national and local groups such as the National Alliance of Peoples Movements (NAPM), Indian Social Action Forum (INSAF) and Human Rights Law Network (HRLN) in collaboration with the JNU Students Union and Teachers Association. Activists, academicians, policy analysts and project affected communities presented evidence against the World Bank in over 26 sectors from 21-24 September. Jury members included historian Romila Thapar, Writer Arundhati Roy, Activist Aruna Roy, Former Supreme Court Justice P B Sawant, Former Finance Secretary S P Shukla, Former Water Secretary Ramaswamy Iyer, Scientist Meher Engineer, Economist Amit Bhaduri, Thai spiritual leader Sulak Sivaraksa and Mexican economist Alejandro Nadal amongst others.

WORLD BANK AND GOVERNMENT OF INDIA MISSING IN ACTION:

But in response to the depositions the Bank posted a Q&A document on its
India home page. In the document, the Bank makes the outrageous claim that, ’The World Bank definitely has not recommended the privatization of water supply services in India’. The IPT is expected to issue a detailed rejoinder to the Bank.

In yet another sign of convergence with the Bank, the Government of India
also failed to send even a single representative to the event. This is
despite emails and faxes being sent 2 weeks in advance to several Government officials at all ministries that borrow money from the World Bank.

PUSHING FOR ELECTRICITY PRIVATISATION:

In the 1990s, 20-30% of World Bank loans in India went to the energy sector. Orissa had the dubious distinction of being the first state to receive World Bank loans for restructuring the sector. Sreekumar N, from the Pune based Prayas Energy Group argued that based on World Bank advice, Orissa spent upto Rs.306 crores for foreign consultants, ignoring local expertise. The consultants recommended the privatisation of distribution and the American firm AES that took over distribution in the central zone behaved in a high handed manner and ultimately exited the state in 2001.

BANKS TOXIC COLONIALISM:

Nityanand Jayaraman of the Chennai based Corporate Accountability Desk in
his desposition before the jury said, ’The Bank is perpetrating toxic
colonialism by funding discredited and polluting technology interventions’.
As evidence he presented cases where the Bank has promoted the setting up of more than 88 Common Effluent Treatment Plants, more than 90 percent of which were shown to have failed to meet environmental norms by the Central Pollution Control Board.

JUST THE BEGINNING:

Wilfred D’ Costa, General Secretary of the Indian Social Action Forum (INSAF) one of the convening groups of the IPT said, ’The tribunal has been useful since it has seen a convergence of social movements, unions, academicians, researchers and struggle groups from across the country. Our next steps would be to use this platform to create a broad based political struggle against neo liberalism and work towards an India without institutions such as the World Bank and the Asian Development Bank’.

The IPT will hold a press conference at the Foreign Correspondents Club,
Mathura Road on 25 September 2007 at 3 pm where jury members will present their findings. Writer Arundhati Roy, Director of the Environment Defense Fund Bruce Rich and Economist Alejandro Nadal will share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. their findings with the press.




For more information contact the IPT secretariat at
secretariat at worldbanktribunal.org and +91-11-26517814

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