World Bank discharging its mandate as directed by Bretton Woods charter

Implications: Christopher Swann (Bloomberg) in Washington reported in the August 12 issue of the International Herald Tribune that the World Bank has provided funding for the Tata Ultra Mega power plant in western India. This comes one year after Robert Zoellick, president of the bank, pledged to assist in fighting climate change. But the bank is not slowing its investments in fossil-fuel projects that emit greenhouse gases. Concerns about social deprivation outweigh environmental worries. Critics of the bank say that financing energy projects sacrifice air and water quality for revenue. Last year 10 percent of the bank’s financing went for power generation. In response to criticism, the bank said it was investing in energy conservation projects as well as renewable energy. A shortage of electricity is a major constraint to growth in developing countries. About 400 million people live without electricity in India and the situation is worse in Africa. 

Analysis:  The World Bank Group includes the International Bank for Reconstruction and Development (IBRD). This organization provides loans and technical assistance for projects in member countries. Further, it encourages and helps to arrange co-financing. The International Finance Corporation (IFC) has several functions with regard to improving the local economy of member countries and it attempts to bring private financing when possible. The International Development Association (IDA) provides funds for projects in the poorer of the member countries. The Multilateral Investment Guarantee Agency (MIGA), among other things, guarantees investments to protect investors from risks such as nationalization. It has the further function of advising governments. The International Center for Settlement of Investment Disputes (ICSID) provides arbitration services with regard to disputes between private investors and host governments. While it has suffered many scars and stings since it was formed in 1944 as a consequence of the Bretton Woods (New Hampshire) Conference, countless energy projects in remote corners of Asia and Africa were possible only through its good offices. It is fair to say that, in general, it has alleviated poverty many times over. Like all companies and institutions engaged in energy projects, it is mindful of air quality. Climate change is not one of its prerogatives. Indeed, the arguments about climate change are manifold. Some scientists say it is not happening. Some say it is happening as a consequence of the whims of Mother Nature. Geologists know that it has existed repeatedly in the several eras of the stratigraphic column from the Cenozoic to the Pre-Cambrian. Ice ages have come and gone. Continents have collided and then drifted apart. The seas rise when the polar ice caps melt during periods of warming. The seas fall when ice accumulates at the poles during ice age conditions. None of this is covered in the mandate of the World Bank. As long as projects are carefully managed to maximize utility, bring prosperity to poorer regions of the world and control unwanted plant discharges with modern technology, the World Bank is on course.