International Rivers Response to Sebastian Mallaby's Attacks on NGOs

Peter Bosshard
Friday, November 5, 2004

Sebastian Mallaby, a columnist with the Washington Post, recently published a new book on the World Bank (The World’s Banker, Penguin Press, September 2004). In his book and in separate articles that appeared in Foreign Policy, the Washington Post, and the Los Angeles Times, Mallaby disparages non–governmental organizations such as International Rivers, and independent bodies such as the World Commission on Dams. Below is a preliminary response from International Rivers:

NGOs such as Uganda’s National Association of Professional Environmentalists and International Rivers have a lot in common with journals like Foreign Policy. Like the media, NGOs can influence the policies and projects of governments, corporations, and international financial institutions. Yet, like journalists, NGO campaigners are not democratically elected. And as with the media, the influence and reputation of NGOs depends more on the quality of their work than the number of their members (or subscribers).

Non–governmental organizations have risen to prominence in the era of globalization. This raises important issues. Like any other actor in public affairs, NGOs need to be monitored, and we welcome the debate about their accountability. Unfortunately, Sebastian Mallaby’s tirade in Foreign Policy does not meet the standards he has set for NGOs. His argument seems to be based on resentment rather than research, and is riddled with errors and mischaracterizations.

Mallaby claims that due to the work of NGOs, "World Bank environmental and social safeguards inflate total project preparation costs by somewhere between $200 million and $300 million annually". Wrong. According to the study that Mallaby quotes (‘The Cost of Doing Business’, 2001), all Bank guidelines combined increase project costs by $142–212 million. Fiduciary and procurement guidelines account for the bulk of this amount. The environmental and social safeguards take up a mere $34–50 million in additional costs per year. This is less than 0.3% of the Bank’s loan volume – very little for an organization that prides itself on being a development institution. The World Bank study finds that the policies’ "effect on project quality has been positive", but Mallaby does not seem to agree.

Mallaby creates the impression that two small NGOs in Uganda and the U.S. are holding the Bujagali hydropower project – and thus Uganda’s larger national interest – hostage over a waterfall and a small number of uprooted villagers. This is a gross mischaracterization. True, Bujagali Falls is Uganda’s most revered spiritual site, and the villagers deserve to benefit from a project to which they have contributed. But Uganda’s NGO networks and parliamentarians opposed the project primarily because of the high cost, corruption, political arm–twisting, and secrecy that are associated with it. In this context, the membership base of the NGO that coordinates this effort is irrelevant.

The World Bank and the government refused to properly consider low–impact alternatives to Bujagali such as the Karuma dam and geothermal power plants. Uganda’s parliament only agreed to the project after the US embassy threatened to cut off further aid to the country. The project was held up by anti–corruption investigations by the World Bank and four different governments, and the US Department of Justice refused to clear it. An analysis commissioned by International Rivers Network found that compared with standard industry practice, the project’s power purchase agreement overcharged Uganda by $260 million, and so the government demanded a better deal. Eventually the private developer pulled out of the project.

Rather than addressing the energy needs of the poor, the Bujagali dam would saddle Uganda with an unaffordable debt burden. The issues of the Bujagali debate – corruption, affordable infrastructure services and debt – are not imposed by Northern NGOs; they are at the core of the Uganda’s development debate. It is ridiculous to assume that two NGOs could have stopped the project if it had not been beset by serious problems and internal contradictions from the outset.

NGOs are not fundamentally opposed to developing dams, other large infrastructure and mining projects. Given the well–documented problems of corruption, impoverishment and environmental destruction in such projects, governments and financial institutions should however follow the best–practice guidelines that have been proposed by the World Commission on Dams (WCD), the Extractive Industries Review (EIR) and other bodies.

Mr. Mallaby has repeatedly expressed particular contempt for the World Commission on Dams. The WCD consisted of leading representatives of the dam industry, governments, academia, and civil society, and carried out the most thorough evaluation of the impacts of large dams that was ever prepared. The World Bank was instrumental in setting up the Commission, and had unparalleled input into its work. Mr. Mallaby dismisses the WCD recommendations out of hand – a bold position for a journalist who seems to take a rather casual approach to the empirical evidence on this issue.

In the case of Bujagali and other projects, the World Bank decided not to follow the recommendations of the WCD. Its business–as–usual approach has done no favors to borrowing governments. As a consequence, many projects did not go ahead, and the electricity sector of many countries ended up in a deadlock.

In the old days, Bank officials argued that a few eggs needed to be broken to make an omelet. Invariably this meant breaking the eggs of the poor for the omelets of the rich. Such practices are no longer acceptable in today’s world. The strong public support for NGOs is a symptom for this shift in public opinion. Governments and financiers need to strengthen their social and environmental safeguards, and the standards of accountability and participation, if they are to avoid further experiences like the Bujagali project. In this sense the clash over Bujagali indeed goes "to the heart of the globalization struggle", as Mallaby notes.

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