World Bank Straying From Core Purpose

WASHINGTON-based World Growth (WG), a pro-development non-government

group, said the World Bank is straying from its core purpose of poverty

alleviation as it adopts narrowly-defined sustainability rules before it

lends money for oil palm planting.

This is despite the fact

that Malaysia and Indonesia are being represented in the World Bank and

that Prime Minister Datuk Seri Najib Razak heads the Southeast Asian

constituency in the bank’s governing board.

When contacted by

Business Times, WG chairman Alan Oxley noted that it would be natural

for the World Bank’s president, Robert Zoellick, to consult the

governors, which include Najib and Indonesian president Susilo Bambang

Yudhoyono, over palm oil funding given how important it is for the

countries’ drive to alleviate poverty.

Indonesia and Malaysia are the world’s top producers of palm oil.

It seemed that World Bank staff listen more to donors and environmental activists rather than developing countries.

Its private-sector lender, International Finance Corp (IFC), stopped

funding the palm oil industry in 2009 after complaints from

environmental and human rights non-governmental organisations prompted a

review of its lending practices.

IFC’s director of global

manufacturing, agribusiness and services Atul Mehta reportedly said part

of the World Bank’s new strategy involves supporting the Round-table on

Sustainable Palm Oil (RSPO), of which it is a member.


said if palm oil clients violate commitments to keep forests standing

and engage with local communities, the IFC can refuse loans.

Last month, lawmakers in the US wrote to the World Bank president

stating their concerns over the bank’s “no land conversion policy and

suspension of palm oil funding”.

Congressmen John Shadegg and

Scott Garrett said the sustainability criteria will limit farmers in

developing nations to benefit from private and public investment and

undermine the World Bank’s core mission of raising living standards.

In a document made available to Business Times the congressmen said,

“the World Bank’s reconsideration of its pro-agriculture policies is

worrisome given the proven economic success of this development model”.

When asked to comment, Oxley concurred with the congressmen that the

World Bank should not overreach its priorities to set environmental

standards, especially when it impacts its core mission, the jobs of

millions and food offerings to billions.

“Zoellick’s decision

on the freeze of palm oil funding is a gross overreaction to a minor

workplace infraction. Furthermore, this decision will lock in RSPO-style

regulations and requirements on World Bank lending,” he said.

“Why is the World Bank stepping into a role of an environmental

regulator and enforcer instead of staying committed to its primary

mission of poverty alleviation?” Oxley questioned.

Source : Business Times

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