Bangladesh is a low lying country with a history of devastating floods. It lies on a river delta, and is particularly vulnerable to rising sea levels. It is also is one of the world’s most densely populated countries, with some experts suggesting that as many as 40 million people could be displaced by flooding. Bangladesh is one of the front line casualties of climate change, so why did it turn down £60 million of UK aid for climate change adaptation this week?
It’s not that Bangladesh doesn’t need the money, it’s more to do with the way it is being delivered. The aid is being given by the UK’s Department for International Development, which wants to distribute the aid through the World Bank. The Bangladeshi government says it won’t accept it from the World Bank, and would rather it came through the UN. “If this money is channelled through the World Bank and the IMF it will attract strings and conditions which are not favourable to Bangladesh,” said a spokesman yesterday.
One of those conditions is a deduction of £4.9 million for World Bank administration purposes. That’s the start, and the bank averages a 13% cut for administering funds. Beyond that, we don’t know what conditions the World Bank might attach, but some classic strategies include cutting public spending, closing domestic subsidy schemes, dropping import tariffs, or easing restrictions on foreign ownership of resources.
With a legacy of similar demands, the World Bank is viewed with suspicion across the developing world. Many see it as little more than an arm of US foreign policy, since every president of the bank has been American and appointed by the US government. Current president Robert Zoellick was a George W Bush appointee and a former US deputy Secretary of State. His background is in business, and as a US trade representative he was a key player in the Central American Free Trade Agreement, and lobbied the EU to drop its objections to GM crops. Not the CV you might expect for an organisation whose stated aim is to fight poverty.
Worst of all, the World Bank is the world’s biggest funder of fossil fuels infrastructure in developing countries. Between 1992 and 2002, it dispursed some $24 billion towards the extraction and export of oil, coal and gas. In 2008 they spent five times as much on fossil fuels as they did financing renewable energy. Channeled through their private sector arm, the bank raised its funding of fossil fuels by 165% in 2008, the same year it announced its big climate flagship projects, the Clean Technology Fund and the Strategic Climate Fund. If I were an at-risk government being offered climate adaptation funds through the World Bank, I’d throw it back in their faces too.
Why does Britain want to give its aid through the World Bank? I’m not entirely sure, except that the World Bank is unlikely to compromise any of our business interests in the region. The UN would almost certainly be a fairer way of distributing the funds, or there is an alternative distribution proposal supported by NGOs. Unfortunately, the UK’s halo is slipping on climate adaptation funding – this particular donation comes out of existing aid budgets, something the government had forsworn, and much of our donations are actually loans anyway.
Although is is tragic that important adaptation funding is not reaching the people of Bangladesh, let’s hope their refusal kicks up enough dust in diplomatic circles to embarrass the British government into a fairer aid mechanism than the World Bank.