World Bank’s fingers in Bangladesh’s climate fund pie

March 13, 2009

NewAge, March 13, 2009

Experts have good reason to fear that as the multi-donor trust fund manager, the World Bank will tangle projects in bureaucracy and ulterior agendas, so that the money raised by Bangladesh to combat the fallout of climate change remains beyond the control of its own government, and may be used to against its political and economic interests, 
writes Mahtab Haider*

MANY will remember the high-profile summit that the UK’s Department for International Development hosted in London in September last year, where UK secretary of state Douglas Alexander committed a £75 million grant over the next ten years in support of Bangladesh’s efforts to tackle climate change. At the time, while the UK’s initiative to draw attention to Bangladesh’s plight and make a generous pledge were being feted, there was also considerable controversy over how the ‘multi donor trust fund’ would be managed and operated. The Climate Change Strategy and Action Plan that the Bangladesh delegation presented at the summit projected the country’s adaptation financing needs at $5 billion over the next ten years, with other governments of the industrialised west also contributing to the fund instead of a series of efforts that might result in duplication and wastage.

In the week before the summit, rumours were rife that the DfID had verbally agreed to allow the World Bank to institutionally manage the fund for Bangladesh – an idea that had more or less unanimous opposition among climate change researchers, environment ministry officials and NGOs and civil society members in Bangladesh alike. In London, tensions ran high when the then finance adviser Mirza Azizul Islam twice overruled environment adviser Debashish Roy’s observation that the Bangladesh government has the capacity to manage this fund on its own, saying it would be the bank that would be tasked with the responsibility. But in the wake of the summit, it was learned that the World Bank itself was reluctant to take on this role (insiders cited the wholesale opposition at the national level and the bank’s lack of any real expertise in handling climate change projects) so the furore died down. Meanwhile, though the DfID remained silent on its preference of the bank in handling the fund, the defence it offered through backchannels was that Bangladesh did not have a representative government at the time, and it may be wiser for the bank to manage the fund in the interim period.

Nonetheless, the concerns that opponents of the bank in the role of the fund manager have raised were immensely significant. For one, they argue that the Bangladesh government would lose a great deal of control over how the funds are spent, and in what quantities, once it was in the World Bank’s control. It is not just in Bangladesh but across the world that the bank has a reputation for arm twisting destitute governments into institutionalising the neoliberal economic policies that it advocates, as a precondition to the release of sometimes desperately needed funds to build infrastructure, for example. In fact, the ideal example already exists in the form of the Global Environment Facility within the auspices of the bank, which has for much of the past decade been responsible for managing the Least Developed Country Fund created by the UNFCCC – the UN body for global climate change negotiations. Though the fund was created to help LDCs adapt to climate change, almost all of the LDCs have encountered incredible difficulty in getting the GEF to approve adaptations projects. According to one source, ‘out of 15 NAPA projects that Bangladesh designed in 2005, only a single project actually obtained the approval of the GEF council. The cost of this project was estimated as $23 million. But what was submitted to and approved by the GEF was reduced to $9.18 million’. Experts have good reason to fear that the World Bank will have a similar record as the multi-donor trust fund manager, tangling projects in bureaucracy and ulterior agendas in equal parts, so that the money raised by Bangladesh to combat the fallout of climate change will remain beyond the control of its own government, and may be used to against its political and economic interests.

It has also emerged in recent years that World Bank consultants and managers in different parts of the world have often been involved in massive corruption, cocooned in the security of opaque and unaccountable financial practices, some of which would put third world governments to shame. In most countries the bank and its employees also have immunity from legal prosecution, extending the impunity with which these crimes are committed. Also, given the fact that some 10-15 per cent of the $5 billion that the MDTF will amount to will possibly become a management fee for the bank (between $500–$750 million) and the fact that the bank will likely direct a significant portion of the fund to overpriced consultancies of its choice, Bangladesh will see few national interests served to have the World Bank as the fund manager.

Seven months since the September summit in the UK, this discussion has once again taken on an immense significance as reports start to emerge that the bank is being tasked as MDTF manager by the DfID after all. Worse still, the Economic Relations Division under the finance ministry – the gatekeeper for foreign aid, grants and loans coming into Bangladesh – is also playing a part in backing the World Bank. This is not new. The ERD has in the past repeatedly compromised Bangladesh’s interests by indicating that the country is open to the idea of multilateral loans to finance climate change adaptations – anathema to the LDC group’s negotiating position at the UNFCCC that all adaptations funding must be in the form of loans and grants. An undated internal document, created in the wake of the London summit, now indicates that the ERD envisions the World Bank as the administrator of the secretariat which will control the multi donor trust fund in question. With a government comprised of elected representatives now in place, perhaps it is time that the finance ministry takes the ERD to task over the role that it is playing, in not only compromising Bangladesh’s position at UN negotiations, but also in undermining the idea of a national representative authority to oversee the fund, rather than a multilateral lender with an abysmal record of corruption and ineptitude. Most of all, if the World Bank is indeed reluctant to manage the fund, as bank insiders are claiming, and with the DfID’s reservation of an unelected government no longer valid, there is little reason or rationale on their own parts to be continuing secret negotiations to this end.

The MDTF is only one of several funds that the Bangladesh government will have access to in the coming years, in implementing its climate change adaptations programmes. Apart from bilateral and multilateral funding, the country will also have its own budgetary provisions at its disposal as well as UNFCCC funds created for the LDC negotiating group. Under these circumstances it is of utmost importance that the government convenes a national authority — comprising people’s elected representatives, donors, NGOs and civil society — to coordinate these funds and bring some coherence in their utilisation. The idea is to avoid duplication of bureaucracy and programmes, in order for the most efficient use of the billions of dollars in question. The government of Sheikh Hasina deserves plaudits for already laying the groundwork for such a national authority through the creation of two separate cabinet committees that will not only decide on the country’s climate change policy direction, but also oversee the fund flow. This principle should now be extended to include a broader section of the stakeholders in the climate change arena, not the least of them being members of parliament from areas likely to be worst affected by climate change, but also including leading Bangladeshi academics on the issue, as well as the donors and civil society. Such a body could play a tremendous role in ensuring the appropriateness of the country’s climate change policies, and the effectiveness of the funds flowing in to help tackle rising sea levels, an increasing intensity and frequency of floods and cyclones, and a myriad of other debilitating fallouts of global warming.