NGOs: Fighting Poverty, Hurting the Poor

The war against poverty is threatened by friendly fire. A swarm of media-savvy Western activists has descended upon aid agencies, staging protests to block projects that allegedly exploit the developing world. The protests serve professional agitators by keeping their pet causes in the headlines. But they do not always serve the millions of people who live without clean water or electricity.

Last year, I visited Uganda. I wanted to understand how a showcase of African hopelessness turned around, cutting the number of people living below the national poverty line by almost 40 percent during the 1990s. But I wanted to get to the bottom of another issue, too. The World Bank was promoting a dam near the source of the river Nile, at a beautiful spot called Bujagali. Western non-governmental organizations (NGOs) were in revolt:

The International Rivers Network, based in Berkeley, California, maintained that the Ugandan environmental movement was outraged at the likely damage to waterfalls at the site, and that the poor who lived there would be uprooted from their land for the sake of electricity they couldn’t afford. It was surely a clash that went to the heart of the globalization struggle. Was the NGO movement acting as a civilized check on industrialization, standing up for millions of poor people whose views the World Bank ignored? Or was it retarding the battle against poverty by withholding electricity that would fuel economic growth, ultimately benefiting poor citizens?

I called the Berkeley activists and asked for some advice. Who ran this Ugandan environmental movement they claimed was so outraged? Where were the villagers who would be cruelly dislocated by the dam project? NGOs such as the International Rivers Network usually love helping Western journalists, and because these journalists are generally far from the scene of the disputed development project, they sometimes simply report what they are told. But now that I was in Uganda, a few hours’ drive from the proposed dam, I got a warier response. Lori Pottinger, the International Rivers activist who led the Bujagali campaign, explained that her Ugandan counterparts were preoccupied just then, and that snooping around the villages at the Bujagali site would get me into trouble with the authorities.

Not wanting to give up right away, I tracked down Pottinger’s Ugandan counterparts by other means and telephoned their office. A friendly voice invited me to come over straightaway. When I arrived, the group’s young director sat me down and plied me with leaflets and reports that gratefully acknowledged the sponsorship of a group called the Swedish Society for Nature Conservation. After half an hour of conversation, I asked the question that really concerned me: What kind of organization was this?

"This is a membership organization," I was told.

"How many members?" I asked. My host kindly stood up and rummaged about in his desk, returning with a blue notebook.

"Here is the list," he said triumphantly. Uganda’s National Association of Professional Environmentalists had all of 25 members — not exactly a broad platform from which to oppose electricity for millions.

My next move was to visit Bujagali. I met up with a Ugandan sociologist who knew the region well and promised to translate for me. She stopped at a cluster of buildings on the edge of the dam site to check in with the local government representative who, far from threatening to call the cops, greeted us cheerfully. For the next three hours, we interviewed villager after villager and found the same story: The "dam people" had come and promised generous financial terms, and the villagers were happy to accept them and relocate. My sociologist companion said we might have sample bias because we were interviewing men, who might value cash more than the land that women tended. So we interviewed some women, who offered the same pro-project line. The only people who objected to the dam were those living just outside its perimeter. They were angry because the project would not affect them, meaning no generous payout.

This story is a tragedy for Uganda. Clinics and factories are being deprived of electricity by Californians whose idea of an electricity crisis is a handful of summer blackouts. But it is also a tragedy for the fight against poverty worldwide, because projects in dozens of countries are similarly held up for fear of activist resistance. Time after time, feisty Internet-enabled groups make scary claims about the iniquities of development projects. Time after time, Western publics raised on stories of World Bank white elephants believe them. Lawmakers in European parliaments and the U.S. Congress accept NGO arguments at face value, and the government officials who sit on the World Bank’s board respond by blocking funding for deserving projects.

The consequences can be preposterously ironic. NGOs claim to campaign on behalf of poor people, yet many of their campaigns harm the poor. They claim to protect the environment, but by forcing the World Bank to pull out of sensitive projects, they cause these schemes to go ahead without the environmental safeguards that the bank would have imposed on them. Likewise, NGOs purport to hold the World Bank accountable, yet the bank is answerable to the governments who are its shareholders; it is the NGOs’ accountability that is murky. Furthermore, the offensives mounted by activist groups sometimes have no basis in fact whatsoever. If you think this an exaggeration, consider the story of an anti-poverty effort in China’s western province of Qinghai.

Out, Dam Spot
There was nothing apparently controversial when, in April 1999, the World Bank concluded negotiations on a project in Qinghai. China was the bank’s star client at the time, having lifted around 200 million people out of poverty during the previous decade. The Qinghai project was designed to move 58,000 farmers from a hopelessly parched hillside to another part of the province irrigated by a small dam. Farmers’ incomes would rise from around 20 cents a day to a level at which they could actually subsist. China had carried out some 30 such relocation projects in the past. All had reduced poverty.

The day the Qinghai loan negotiations concluded, the bank’s project manager, Petros Aklilu, got a call from the Tibet Information Network in London. Qinghai borders on the Chinese administrative division known as the Tibet Autonomous Region. Because the region covers part of historical Tibet and 1 million of Qinghai’s 5 million inhabitants are Tibetan, the interest of Tibet-watchers was not surprising. Aklilu explained that the scheme would benefit the 3,500 Tibetans who would move to newly irrigated land, and that Tibetans who stayed behind would benefit from reduced population pressure in their area. In sum, although China’s Tibet policy was abominable, the bank’s project would actually help Tibetans. Aklilu put down the phone and forgot about the conversation.

He soon had cause to remember it. Within a few days, the Tibet Information Network published a story in its newsletter about a "controversial" World Bank project that would "dramatically affect the demography" of Qinghai by moving ethnic Chinese into a culturally Tibetan area. This was a strange claim. First, no Tibetans lived in the immediate settlement area: The nearest were 276 nomadic herders (the bank had counted them carefully) who wintered 37 miles south of the project. Second, Qinghai had been part of China for as long as the United States had been independent. It was no more Tibetan than Texas is Mexican. But the Tibet Information Network was not deterred. "Population transfer of Chinese into traditional Tibetan areas has become a major concern for Tibetans," the group’s newsletter said ominously.

Within a few weeks, the London activists had forged an international coalition. It drew from the various legions of the anti-World Bank army: environmental groups opposed to dams; human rights groups opposed to relocation; other groups opposing cooperation with China. Representatives of 59 organizations — an astonishing worldwide network stretching from Mexico to Thailand — dispatched a long letter to World Bank President Jim Wolfensohn protesting the transfer of "Chinese farmers into a traditionally Tibetan area."

Campaigners deluged the bank with e-mails and faxes, anti-bank posters appeared around Washington, and Tibet activists set up camp outside the bank’s headquarters. A rap star from the Beastie Boys declared that the bank’s loan would lead to the "destruction of the Tibetan peoples."

Despite the inaccuracy of this claim, the activists quickly won allies in Hollywood and the U.S. Congress, most notably the actor Richard Gere, who had recently narrated a documentary film about Tibet, and Democratic Rep. Nancy Pelosi of California. On June 15, 1999, a press release announcing a joint appearance by Pelosi and a pro-Tibet musician stated that the bank planned to move "60,000 ethnic Chinese" into Qinghai, even though Han Chinese constituted only 40 percent of the 58,000 settlers, and even though these Han Chinese were not moving into Qinghai, just relocating within the province. Sixty members of congress fired off a complaint to Wolfensohn, and Sen. Jesse Helms, a far-right Republican politician from North Carolina, leapt at the chance to condemn China and the World Bank in a single breath. When a World Bank delegation went to Capitol Hill to mollify the lawmakers, it was confronted with a map that did not even show Qinghai. The entire province had been labeled Tibet, never mind that Tibetans accounted for only one in five people there.

The bank was totally encircled. It was simultaneously up against student protestors and the right wing of the Republican Party, and although the bank’s assailants were flat wrong on the facts, nobody was willing to stick up for the institution. In June 1999, the Clinton administration announced that it would vote against the Qinghai project when it came before the World Bank’s board. The Lilliputian activists had taken on the bank, and they had won the first round.

Appeasement denied
The most common reaction to this sort of story is that the bank must communicate better with its critics and learn how to compromise with them. Unfortunately, this prescription is naive. It presumes the critics are open to compromise. But campaigning NGOs, as distinct from those with real development programs in the field, almost have to be radical. If they stop denouncing big organizations, nobody will send them cash or quote them in the newspapers. Partly for this reason, and partly out of a likeable conviction that the status quo is never good enough, most NGOs do not have an off switch. You can do everything possible to meet them halfway, but they will still demonstrate outside your building. Of course, there will be grown-up groups like Oxfam, World Vision, or the World Wildlife Fund that may accept your olive branch. But they will be the exceptions, and they may cooperate only cautiously. They don’t want to be the next target for the radicals.

The second round of the Qinghai battle illustrated this problem. Confronted with the news that the Clinton administration would block the project, Wolfensohn flew into a rage. He worried about threats by the U.S. Congress to cut contributions to the bank’s subsidized lending program if the project went ahead, undermining the bank’s ability to help its poorest clients. He fretted that the adverse publicity might cost him a chance at winning a Nobel Peace Prize and that his Hollywood connections would turn on him. And he feared that one of his central achievements would be jeopardized: Since taking the helm of the bank in 1995, Wolfensohn had done more than any of his predecessors to reach out to NGOs. He welcomed the bank’s most ardent critics to private dinners at his home, made a point of meeting with them wherever he traveled, and even created commissions to solicit their advice on World Bank policy.

When the Qinghai battle came to a head, Wolfensohn did everything possible to defuse it. He went out of his way to hear the arguments of the NGOs, treating his own staff with much less deference. He summoned the project team to his office and demanded to know whose arse he should kick first. After much raging and fuming, he hit upon a scheme that would meet the NGOs part way. The project would be referred to the bank’s Inspection Panel, a tribunal staffed by eminent persons who investigate projects’ compliance with the bank’s environmental and social safeguards.

The activists alleged several instances of non-compliance. They claimed, for example, that one guideline requiring "special action" to protect ethnic minorities was breached, along with another requiring that resettlement be voluntary. The critics focused particularly on the bank’s environmental safeguards. The bank had classified Qinghai as a "Category B" project (posing medium risk to the environment), rather than a high-risk "Category A," and therefore commissioned an arguably skimpy environmental impact study. By referring these claims to the Inspection Panel, Wolfensohn calculated that a political fight over Tibet would now become a technical inquiry into the bank’s operational guidelines.

In a sane world, this strategy would have bought some peace with the activists. But the day after the bank decided to convene an Inspection Panel, a pair of students climbed up the face of the bank’s headquarters and unfurled a banner proclaiming, "World Bank Approves China’s Genocide in Tibet." Privately, other Tibet groups disapproved of these tactics — after all, there was no evidence of genocide — but they were unwilling to speak out publicly against their fellow activists. Meanwhile, members of congress continued to toe the NGO line. Republican Sens. Connie Mack of Florida and Benjamin Gilman of New York accused the bank of "cultural genocide." A House of Representatives subcommittee voted in 1999 to cut contributions to the bank’s soft-loan window by $220 million.

When the Inspection Panel inquiry got under way, it only succeeded in bringing the activist attack inside the World Bank’s building. The head of the Inspection Panel, Canadian environmentalist Jim MacNeill, clearly favored activists over bank staff, whom he treated with prosecutorial vigor. He seemed more interested in finding technical infringements of the bank’s safeguard policies than in asking the big questions: Would the Qinghai project reduce poverty? The answer was yes, but the panel seemed indifferent. Would it cause environmental damage? The bottom line was no, and yet the panel insisted on poking holes in the bank’s procedures.

The panel’s final report, delivered in April 2000, was a 160-page indictment of the Qinghai project. It insisted that the scheme should have been rated Category A for environmental riskiness, that insufficient attention had been paid to the impact on Mongolian and Tibetan nomads, and that the recruitment of volunteers for resettlement was compromised because interviews were not confidential. The panel’s report did not worry too much about whether a Category A environmental assessment would have found reasons to oppose the project or whether nomads might actually benefit from clinics or other facilities created by the project. It did not dwell on the fact that, whatever the circumstances of the interviews, the farmers’ desire to relocate was beyond doubt. Indeed, many more people wanted to move than the project could accommodate.

In June 2000, the bank’s management made a last-ditch attempt to placate the NGOs by proposing another year’s worth of studies and project preparation the bank estimated would cost $2 million. Yet the NGOs continued their calls for canceling the project. In July, the bank board rejected the managers’ proposal, and the second round of the Qinghai battle came to a close: China informed the bank that it would withdraw its request for financing.

Not long after the World Bank pulled out of Qinghai, a delegation of Tibet activists went to visit Wolfensohn. They had heard that the Chinese government was pressing ahead with the resettlement project by itself. It later became apparent that China planned to ignore the bank’s environmental conditions and move more people to the new area. The NGOs were having a hard time discovering the details of the Chinese plans, so they asked Wolfensohn what was going on.

"How the fuck do I know what they’re doing?" Wolfensohn shot back. "You just got us out of there!"

The Sleeping Bank Awakens
Versions of this story play out all over the world. The bank designs a reasonable project, which inevitably has flaws. NGOs seize on these flaws and add a large sprinkling of inflammatory rhetoric. The World Bank pulls out, but the project goes ahead anyway, minus the bank’s social and environmental safeguards. Because of the fear of NGO assault, the bank is obliged to follow its precautionary guidelines to the letter, adding many months and dollars to project preparation. According to a bank study carried out in 2001, safeguard policies of one kind or another inflate total project preparation costs by somewhere between $200 million and $300 million annually. This money comes out of the hides of the world’s poor, and the associated delays mean further months without the electricity or clean water that a bank project might bring — harming the poor a second time over.

The bank’s expense and delays do not even benefit the environmental and human rights agendas that NGOs hold so dear. Because of the high cost of doing business with the bank, countries with the option of borrowing on private capital markets increasingly do so. For example, China, which borrowed $1.7 billion from the World Bank in 2000, accepted only half as much in 2001 and 2002 — and the infrastructure that China built without the bank’s financing was subjected to less scrutiny. Some level of conditionality is essential, but after waves of punishing assault by NGOs, the World Bank has come to reflect the agenda of activists who insist upon perfectionist safeguards. In sum, the world’s premier development institution has come perilously close to losing touch with the needs and realities of developing countries.

The good news is that many within the bank have come to understand this dilemma. After experiences like Qinghai and a decade of Wolfensohn’s efforts to woo the NGOs, they have rightly realized that you can’t win over every critic. For example, the bank invited several NGOs to participate in a commission tasked with setting standards for future dams; the commission responded with a list of standards so onerous as to make most dams unviable. In late 2001, a group within the bank pushed back, persuading the bank’s board that the institution should not feel bound by the commission’s excessive recommendations. This year, a bank-appointed commission on extractive industries followed the NGOs’ lead, calling on the World Bank to pull out of all oil and coal projects because of the pollution they create. But this demand overlooks the developing world’s need for energy, which has to be satisfied somehow. And it fails to acknowledge that 2.3 billion people currently depend on wood and other biomass fuels that cause even more deforestation and air pollution. Thankfully, the bank’s management rejected the commission’s recommendation.

This nascent counterattack must go broader than one institution, however. The lesson of the Qinghai battle is that the bank cannot fight the NGOs alone. Commentators, politicians, and Hollywood celebrities must resist the temptation to side uncritically with feisty activists.

The World Bank’s predicament is part of a larger conundrum that bedevils globalization. In many of the world’s rich capitals, and especially in Washington, public policy is decided by a bewildering array of interest groups campaigning single-mindedly for narrow goals. A similar army of advocates pounds upon big international institutions like the bank, demanding they bend to particular concerns: no damage to indigenous peoples, no harm to rain forests, nothing that might threaten human rights, or Tibet, or democratic values. However noble many of the activists’ motives, and however flawed the big institutions’ record, this constant campaigning threatens to disable not just the World Bank but regional development banks and governmental aid organizations such as the U.S. Agency for International Development. If this takes place, the world may lose the potential for good that big organizations offer: to rise above the single-issue advocacy that small groups tend to pursue and to square off against humanity’s grandest problems in all their hideous complexity.

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