A Wink's as Good as a Nod

Last week, the world press reported a new $1.3 billion loan by the World Bank, its largest ever to Brazil, supposedly for "the environment". But before the loan was approved, a group of Brazilian NGOs, including environmental groups and social movements sent a letter to the Bank urging them to reject the loan proposal. What's going on here? Doesn't Brazil need more money to protect the Amazon and to fight climate change?

In fact, most news reports, blindly culled from World Bank press releases, couldn't have been farther from the truth. In light of the international financial crisis, most of the money will be used as an enormous capital transfusion for Brazil's National Economic and Social Development Bank (BNDES)  to finance large-scale infrastructure projects -- including the damming, not the preservation of the Amazon. BNDES recently approved more than $6 billion for the Madeira River dams alone.

How's this possible? According to the World Bank, the funds will be used for fighting deforestation and water pollution, improving sewage and waste handling, clean energy, saving the Atlantic Coast forest? NOT!

As the environmentalists and social movements signing the letter point out, the World Bank has disbursed about a billion dollars to Brazil over the last decade in similar "policy reform" loans and even the mushy conditions attached to the loans have been violated by the Mines and Energy Ministry and BNDES, who promised reforms that were not delivered.

An example is the condition that the energy sector carry out Strategic Environmental Assessments in river basins where multiple dams are being planned (which include most major rivers of the Amazon). The studies, to have been jointly undertaken by the Mines and Energy and Environment Ministries were later rejected by the electric sector because they could have resulted in recommending "no-go areas" for dams. Instead, the Environment Ministry has been reduced to merely a symbolic role in energy planning, and the Mines and Energy Ministry has concocted what it terms "Integrated Environmental Analyses" of river basins (only the Tocantins and Teles Pires basins have been carried out to-date) which essentially involve data collection, and producing a bunch of thematic maps. The studies, by design, come to no conclusions about the cumulative impacts of dams and about which rivers should be left dam-free. The World Bank in its evaluation of the loan termed results in this area as "satisfactory".

BNDES now publishes a list of its loans on its site. There is no evidence it has ever rejected a large dam projects for social and environmental concerns, despite its adherence to the so-called "Green Protocol", which the World Bank heralds as proof of success of its policy reform loans.

The World Bank will not know, nor will it care, where the money from its latest $1.3 billion loan goes, and it says it's planning an additional $700 million loan to Brazil for the same purpose later in the year.  It's a new phase of World Bank lending where the bank winks, smiles, and nods.