Inspecting the Inspection Panel

THE Independent Inspection Panel of the World Bank ( WB ) has inspired hope among many environmental activists and organisations. They expect it to provide the much-needed scrutiny of the Bank's activities, many of which aid and abett the wasteful exploitation of natural resources, environmental degradation and consequent human suffering. However, it is a moot point whether the present scope of the Inspection Panel will allow it to become a looking glass for the Bank.

Two provisions in its terms of reference constrict the Inspection Panel's angle of vision: first, its scope of review is restricted to examining whether the WB'S operational principles are being adhered to in any particular project; second, the panel can only make recommendations to the WB'S board of executive directors. It cannot independently change policy.

Any evaluation of a project under such provisions can actually become a self -serving exercise. The panel may endorse and substantiate the criticism levelled by environmentalists at many resource and capital intensive development projects in their respective countries. It will hardly ever examine the countries, agencies and labbies which create and promote unsustainable development strategies in the first place.

Nearly 87 per cent of the WB's financial assistance has gone to developing countries. Concerned exclusively with the bitter fruits of this capital, the panel will almost entirely concentrate on the disasters of development in the poor countries. There is hardly any chance of it focusing on the inherent and basic unsustainability of the intensively industrialised, heavy consumption-oriented ways of the North, even though the latter cast a heavier environmental burden on our common world. The Inspection Panel may end up with only a blinkered and intensely partisan search for alternative growth options, main - ly aimed at the poorer parts of the world and not its rich and gluttonous parts.

In fact, it seems that the lobbies behind the WB don't even want to do this honestly. The limitations of the panel's critique of Nepal's 402 MW Arun Phase III hydroelectric project, to be constructed at a cost of us $1.2 billion, provide evidence of vested interest at play. The panel has rightly noted several facets of environmental and technical problems of the project -2,700 families to be displaced from the catchment area, the damage to flora and fauna bya 117 km 4-lane highway in pristine jungle to provide access to the darn, and the exorbitantly high cost of power generation at us $5,000 per kilowatt. However, the panel has been restrained from examining the financial as well as the technical viability of microhydel alternatives which may use Nepal's 6,000 rivers better.

Many knowledgeable quarters of opinion have charged that this restraint has been forced upon the Inspection Panel by the bank's Board of Executive Directors. The accusation underscores the need to understand the nature of the umbilicallink between the panel and its parent body.

Since its earliest days, the WB's lending has been influenced by what is easiest to lend rather than the actual needs of the recipients among the developing countries. As a result, its loan portfolio has expanded even while ignoring the complex and diverse requirements of the developing world. The same technologies and strategies have been recommended everywhere. The results of this uniformity have been predictable: the WB-aided projects have been mostly inefficient, often so sociallyand environmentally inappropriate that many of them were prordained failures. This can be seen in several projects in Africa, Asia and Latin America.

A mega-money, giga-project approach has been at the core of such failures. It is no coincidence that largescale energy and transport projects, evident in the Arun III planning, are still the most favoured areas of WB aid. With their own experience of these sectors, the industrialised countries find it easy to prepare project appraisals and standardise technology transfers, which favour their large industries. Significantly, because repayment of capital assistance is invariably guaranteed by recipient national governments, project providers are rarely bothered about advantages of investing in schemes which may use local resources and skills more sustainably and efficiently. As presently constituted, the Inspection Panel is hardly a challenge to such counterproductive aid.

There are several problems with the panel's piecemeal opposition to the development projects aided by the WB. First, it would enable the North to claim to feel twinges of environmentalist conscience, evident also in the WB withdrawal of financial assistance for gigantic dams over the Narmada in India. Bereft of any tangible action against the energy-intensive lifestyles of the industrialised countries, this is environ - mentalism truncated and green hypocrisy at its best.

Yet, who is to dispute that this bit of "global democracy" will not impress a large section of the environmeri'talist sentiment in the South itself? Already, many NGOS and voluntary groups are seized with the idea of appealing to the Inspection Panel to oppose WB-funded projects. There is nothing wrong with this, especially given the lack of opportunities in the developing countries to protest against the adverse effects of development projects. It would be even better if the support for the panel is accompanied by a vigorous cultivation of a constituency at home and the awareness that the South's environmental interests and imperatives are radically different from the North's. Bereft of this consciousness, the Southern NGOS face the danger of being coopted into the green vision and the green vested interests of the other side.

Northern NGOS also have a key role to play. They must forcefully lobby against the imposition of narrow environmental riders. They would have to push for a more encompassing, globally-controlled Inspection Panel that can take a hard look at the environmental cost of the North's environmental acts, even as it cracks a whip on the South. Bodies such as the Inspection Panel would truly become an element of global democracy only if they could also inspect the North.