The World Bank at 60: A Case of Institutional Amnesia?

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NGO Report on the Implementation of the Infrastructure Action Plan

Dear Executive Director,

In July 2003, the Board of Directors adopted a new Infrastructure Action Plan (IAP), a Plan that is based on the World Bank’s new ‘high risk/high reward’ strategy. A progress report on the IAP was discussed by the Board of Directors on April 8, and will be discussed as part of the Global Monitoring Report by the Development Committee on April 25.It makes sense to take stock of how the IAP is being implemented nine months after its adoption. International Rivers will release a report that analyses this issue from an NGO perspective on April 22. An advance copy of the International Rivers report is available at China: Not the Rogue Dam Builder We Feared It Would Be? for your information. This letter summarizes the main findings and recommendations.

Basic conditions of sound infrastructure development

Let me first clarify that NGOs, including International Rivers, are certainly not opposed to the financing of infrastructure development in principle. Many countries have a great potential of socially and environmentally sustainable infrastructure development, including a better management of existing infrastructure and decentralized, community–based infrastructure services.

At the same time, it is important that the political economy of infrastructure development is recognized, and that the social and environmental costs of infrastructure projects are not externalised. While many options of infrastructure development are usually available, governments and financiers often neglect alternatives to large–scale, politically well–connected, centrally planned projects. This is particularly true for efficiency improvements, and for community–driven efforts for example in the water sector. The bias that is caused by the political economy of infrastructure development has been well documented in various reports, including by OED and the World Commission on Dams.

The bias in infrastructure development can only be overcome through transparent, participatory, balanced and comprehensive options assessments early in the planning process. The World Bank has repeatedly committed to such options assessment processes – for example by endorsing the strategic priorities of the WCD, in its recent sourcebook for the assessment of options in the water and energy sectors, and in various meetings with NGOs. The REDI studies that are supposed to be carried out as part of the IAP are also meant to contribute to a balanced assessment of options.

The World Bank’s lack of transparency

Taking stock of the implementation of the IAP independently has been difficult because of the World Bank’s persistent lack of transparency. Preparing for the new report, International Rivers has asked the World Bank a series of questions about the implementation of the IAP. International Rivers asked for which countries the Bank was currently carrying out REDIs, if any such documents had already been completed, if the Bank could share these documents (which are supposed to be in the public domain), and whether the Bank had completed its process of simplifying the safeguard policies for infrastructure projects. The Bank repeatedly refused to respond to these questions. International Rivers has attempted to find positive examples of water sector projects since December 2003, but the Bank has not provided any answer to these inquiries. So far, the Bank has not responded to repeated requests for a meeting with NGOs on the IAP at the Spring Meetings either.

Given the lacking access to basic information, the new International Rivers report primarily focuses on the implementation of the IAP in India. I had the chance to visit this country, and meet with officials of the Bank’s Delhi office, in January/February 2004. The main authors of the Bank’s ‘high risk/high reward’ strategy and the new Water Resources Sector Strategy are now directly responsible (as the regional Vice President and senior water advisor, respectively) for implementing the IAP in this country. India can thus be considered a good case study for the implementation of the Infrastructure Action Plan.

The implementation of the IAP in India

In December 2003, the World Bank announced that it would double its lending for India within two years, and that most of the additional lending would go into infrastructure. This will include support for large dams. World Bank officials have visited several dam projects in India in recent weeks, and MIGA is currently considering support for the Omkareshwar dam on the Narmada river. If built, the Omkarehswar project will displace an estimated 50,000 people. Dam construction has started, but so far, neither an environmental impact assessment nor a resettlement action plan have been prepared.

With very high losses in the delivery of water and electricity, the water and power sectors are managed very inefficiently in India. As a consequence, a recent OED evaluation of the country’s power sector recommended that “the Bank should not support power generation projects that supply power to inefficient, loss–making distribution entities”. Similarly, an OED evaluation of the Indian water sector found that “in the long run, the gap between growing demand and inelastic supplies must be closed by increasing managerial efficiency, rather than developing new supplies”. The World Bank’s new infrastructure strategy for India contradicts these essential findings of its own evaluations. In a meeting in early February, the staff of the Bank’s Delhi office responsible for the IAP admitted that they were not aware of the evaluation reports. This indicates that institutionally, the World Bank is not incorporating the lessons of past experience in implementing the IAP.

The IAP strongly stresses the importance of country ownership. Bank management appears to equate this concept with government ownership alone, and government ownership with ownership by the infrastructure ministries. Decades of experience show that such a narrow perspective will in many cases favour vested interests rather than the interests of society at large, or the poor.

The Bank’s current best practice guidelines call for a participatory, comprehensive assessment of all options in the development of new water sector projects. In our meeting of early February, the Bank’s senior water advisor labelled these recommendations ‘Washington speak’ and made it clear that they would not be implemented in India. The Bank’s Delhi office has so far not carried out the REDI that is supposed to be the first step of implementing the IAP. Instead, it simply delegates the assessment of options to the government in this country. This delegation is all the more questionable since OED reports criticized the planning process in India’s water sector as “top–down, bureaucratic and fragmentary, rather than participatory, client–oriented and integrated”, and resulting in a “vicious circle of poor service, reluctance to pay, and insufficient income for operation and maintenance”.

The lessons from relevant OED evaluations, the current best practice recommendations and the effective implementation of the IAP in India are presented in detail in the new International Rivers report. The wide gap between rhetoric and reality creates the impression that evaluation reports and best practice recommendations are primarily meant to satisfy critical observers – including Executive Directors and international NGOs – while at the same time, the Bank’s management pursues an operational strategy that only responds to the vested interests and ideology of dam–building bureaucracies. The IAP as it is currently being implemented in India will result in further conflict and deadlock, and will not contribute to achieving the Millennium Development Goals.


Member governments and Executive Directors are the guardians of the lessons from past experience. They have supported the Bank’s best practice guidelines, and need to ensure that these guidelines are effectively put into practice. We recommend that Executive Directors support the following measures to address the problems identified in the implementation of the IAP:

  • Infrastructure development should start with the needs and initiatives of the poor, and not the interests of politically well–connected groups. All needs and options need to be assessed in a participatory, transparent and balanced way before new projects are identified.
  • Within the water and power sectors, the World Bank should follow the recommendations of the World Commission on Dams, and the principles of the Bank’s recent options assessment sourcebook for the water and energy sectors.
  • The Extractive Industry Review has proposed a series of measures that are relevant for all sectors of World Bank lending. The Bank should recognize the principle of free, prior informed consent for communities affected by Bank projects, adopt a comprehensive human rights policy, and shift its energy lending from fossil fuel technologies to the support of renewable energy sources.
  • The World Bank has so far not learned the lessons of past experience, has not strengthened its capacity to deal with risk, and should therefore not engage in new high risk projects as it implements the IAP.

Thank you for your attention to these concerns.


Peter Bosshard
Policy Director
International Rivers
1847 Berkeley Way
Berkeley, CA 94703, USA