Mortgaging the Earth: The World Bank, Environmental Impoverishment, and the Crisis of Development

Mortgaging the Earth: The World Bank, Environmental Impoverishment, and the Crisis of Development

by Bruce Rich

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The 1992 Rio Earth Summit was supposed to be a turning point for the World Bank. Environmental concerns would now play a major role in its lending—programs and projects would go beyond economic development to “sustainable development.” More than two decades later, efforts to green the bank seem pallid.

 Bruce Rich argues that the Bank’s current institutional problems are extensions of flaws that had been present since its founding. His new book, Foreclosing the Future, tells the story of the Bank from the Rio Earth Summit to today. For readers who want the full history of the Bank’s environmental record, Rich’s acclaimed 1994 critique, Mortgaging the Earth, is an essential companion.

Called a “detailed and thought-provoking look at an important subject” by The New York Times, Mortgaging the Earth analyzes the twenty year period leading up the Rio Summit. Rich offers not only an important history but critical insights about economic development that are ever-more relevant today.

Product Details

ISBN-13: 9781610915175
Publisher: Island Press
Publication date: 09/30/2013
Edition description: Second Edition
Pages: 392
Product dimensions: 6.00(w) x 8.90(h) x 0.90(d)

About the Author

Bruce Rich is lawyer who has worked for three decades with national environmental organizations. He is an expert on public international finance and the environment. He received the United Nations Global 500 Award for environmental achievement for his research and advocacy concerning multilateral development banks. He is the author of Mortgaging the Earth and To Uphold the World, as well as articles in publications including The Financial Times, The Ecologist, and Environmental Forum, the policy journal of the Environmental Law Institute.

Read an Excerpt

Mortgaging the Earth

The World Bank, Environmental Impoverishment, and the Crisis of Development

By Bruce Rich


Copyright © 2013 Bruce Rich
All rights reserved.
ISBN: 978-1-61091-517-5


The Dwelling Place of the Angels

It was Bangkok, the humid summer rainy season of 1991. Thousands of workers toiled day and night on the most expensive public building ever constructed in Thailand, a country of 54 million people. The finance minister was anxious. The government had spent $100 million, and after nineteen months of around-the-clock work, the gleaming, modernistic palace of concrete and glass still was unfinished. Only a few weeks remained until "the meeting," and national face was at stake.

The minister had other reasons to be worried; despite a special government allocation of an additional $17 million for meeting-related expenses, there was one problem that no amount of money could cure in a few weeks. The Queen Sirikit Conference Center had to be built in the Sukumvit Road area, a new, rapidly growing part of town; no other place so central could be found to build such a large building, covering well over half a million square feet. But in a city with some of the worst traffic jams on earth, Sukumvit was one of the most congested areas of all. It could take two hours during morning rush hour to get there by taxi from one of the luxurious downtown hotels, and another two hours to return in the evening. Bangkok had quadrupled its population to more than 10 million in less than a generation, and the number of automobiles had increased over tenfold; the city was asphyxiating on its own growth. The traffic would be made worse during the three days of the meeting by the traditional insistence of many of the thousands of delegates on being chauffeured around town in private limousines. The vision of delegates from all over the world choking on smog in stalled limousines evoked consternation. What to do?

The government, installed by a February 1991 army coup, appreciated the virtues of military-like decisiveness: it would stop traffic and smog by shutting down most of the city. The prime minister announced that October 14 and 15, 1991, would be special national holidays in Bangkok, where more than 50 percent of the country's economic activity takes place. All banks, government offices, schools, and state enterprises would be closed.

This was just the beginning. The government set up a special medical system comprising a helicopter, two ambulances, and 830 doctors, nurses, and technicians, on call day and night, to provide free medical care to the delegates and their families. Bangkok's eight leading hospitals would be placed on emergency alert, and each of the seventeen luxury hotels lodging the delegates was matched with one of them. The director of the Bangkok General Hospital soberly assessed the health risks such a giant meeting would pose: "Our preparations have emphasized heavily ... treatment of heart diseases, as they must be attended to urgently. All these meetings about money may create anxiety among delegates, many of whom are quite old."

Solving these problems only seemed to uncover more, many of them linked to Thailand's remarkable success in the past twenty years as a model of dynamic, export-oriented economic growth. The country's economic transformation had uprooted millions upon millions of people from the Thai countryside. Many of them had come to Bangkok. The city has an estimated half-million prostitutes—women, men, and children—of whom a third may be already HIV positive.

Bangkok's thousands of nightclubs and massage parlors offer one of the most lurid spectacles on the planet. International sex tourism is big business in Thailand, and an important source of foreign exchange. Two-thirds of the country's five million visitors per year are men, and great numbers of them come for sex, many from Germany, Japan, and Australia. In the brave new era of the global—the global economy, the global environment, and global competitive advantage—Bangkok has become the global brothel.

But would the delegates appreciate—or want to be seen appreciating—all this? Rumors abounded that the glossy German weekly Stern was sending its own delegation of photojournalists to stalk the city's most notorious clubs and whorehouses in the hope of catching delegates cavorting at German taxpayers' expense. NBC sent a team to film the meeting. Not just the image of the delegates, but that of the country was at stake. The government sent discreet orders to precinct police to ensure that dancing girls and boys were clothed during the meeting. The minister of health, an avuncular man popularly known as "Mr. Condom," would circulate at the conference center, handing out souvenir key chains with prophylactics encased in transparent plastic as a warning that the nation faced an AIDS holocaust. And then there were Bangkok's tens of thousands of sidewalk vendors and hawkers, a clamorous, enterprising bunch. Some in the military and the government felt uneasy with the superficial aura of anarchic unruliness that teeming hordes of street vendors presented—it seemed somehow underdeveloped, at least in comparison with the crystal palace of the new conference center. So the government forbade street vendors from selling their wares around the conference center and the delegates' hotels for the duration of the meeting.

As the countdown to the great meeting continued, there remained the most intractable, embarrassing problem of all. On three sides of the conference center sprawled clusters, indeed whole neighborhoods, of wood and cardboard shacks with corrugated metal roofs—slums—really not so bad compared with those of many other developing countries (the Philippines and India, for example), but squalid and unsightly nevertheless. One could see thousands of the unseemly poor camped on the very ramparts of the new conference center. Like the hapless armies of prostitutes and street vendors, they were rural refugees, many from Thailand's poorest region, the northeast. Fifteen thousand influential people were to fly to Bangkok for a three-day meeting to discuss money and growth—and every time they looked out a window they would see poor people going about their daily life in makeshift shacks of broken wood and corroding zinc.

This was a job for the army, the finance ministry decided. There were over one million slum dwellers in the capital, many of whom had been relocated repeatedly for new construction. The fate of another two or three thousand should pose no new problems. Finance ministry officials proposed to the Thai cabinet in late June that the communities in sight of the conference center be removed by August; the Thai National Housing Authority would provide new housing, eventually, in another neighborhood miles away. The people would be better off—and out of sight.

But the slum dwellers didn't agree; those who could find work were street vendors and day laborers in markets near the conference center; relocating them miles away would destroy the little access they had to a precarious livelihood. They appealed to the prime minister, who arranged a compromise. A total of 647 families in two slums, Duang Pitak and Klong Paisingto, would have to relocate ("voluntarily," the prime minister insisted), but hundreds of others would be allowed to remain in three other slum neighborhoods. Those who remained would be enlisted along with army brigades in a "beautification" program to plant trees and grass and otherwise improve the appearance of their dwellings for the aesthetic gratification of the foreign dignitaries.

In early August, the prime minister toured the conference building for the first time. He was very proud; no one could deny that it was attractive and well designed, and it had been conceived and built entirely by Thais. Outside the entrance, a quarter-of-a-million-dollar gold statue, an abstract sculpture vaguely resembling a giant burning bush, would greet the delegates. According to official accounts, it symbolized prayer. But the prime minister's fancy was particularly captivated by the lavish bar, where so much important business would be conducted. He told reporters how much he appreciated the view from the corners of the barroom and the cafeteria—most of the slums adjacent to the conference center were still visible, thanks to his intervention. Thailand was still a poor country—why should it be ashamed of its own people? The areas to be bulldozed were across the street, not visible from the inside of the building; the delegates could reflect tranquilly on poverty, economics, and money while they munched hors d'oeuvres and sipped Singapore Slings—or could they? The prime minister announced to the Thai press that "the [bar] stools are too small. Foreigners who have big frames may find it uncomfortable to sit on them. I myself had difficulty sitting on them."

Days later, the army moved in to evict hundreds of families from Duang Pitak; most had no more than a week's notice. Much of the vacant land would be used to build a special access road to the conference center to improve traffic circulation. As September approached, electricity and water were cut off to pressure those who still refused to move. Forty-three families huddled in the community school after their homes had been bulldozed away. By October most of Duang Pitak had been razed, and the stragglers were relocated.

The foreigners began to arrive, at first by the scores and then by the thousands and thousands, in the second week of October. The government assigned 6,365 police to ensure security and to guard against terrorism, and a special security budget of nearly $3 million was allotted to cover the extra cost. Bangkok cops called it "the mother of all meetings." By Sunday, October 13, nearly 15,000 officials, dignitaries, and bankers from 156 different countries would convene in Bangkok.

Meanwhile, a few hundred yards from the convention center, seventy families huddled in army tents underneath an elevated expressway. In one of the tents Kusuma Wongsrisuk tended her two-month-old daughter, Ploy, who coughed and cried incessantly. Ploy had fallen ill after Kusuma and her family were relocated from the Duang Pitak slum. Ploy's older brother, Tha, had also fallen ill with respiratory problems. Kusuma told a reporter that their illness was no surprise—the area under the expressway was dark and damp, and the air was noxious, filled with dust and exhaust. The army tents had no insulation from the humid ground. The families were cut off from electricity and water, and lived by candlelight. Each family received $240 as compensation, not enough to cover the cost of the new houses they were helping one another build. Many of the men would lose their jobs as day laborers and vendors when they moved to the new houses, and some families could not borrow enough to move; the leaky Thai army tents would be their homes for the foreseeable future. Kusuma was bitter about the money the government had spent for the three-day meeting of well-heeled foreigners. She told a reporter that the compensation the displaced families received was "too small to even pay for their hotel room for a single night."

Across town, another meeting had begun, much different from the one that would take place in the Queen Sirikit Conference Center. At Chulalongkorn University, more than a thousand people, mostly Thais but also sympathetic foreigners, were gathered in a "People's Forum." It was October 8, the first day of a series of alternative meetings that would take place over the next ten days. The People's Forum had been organized by a coordinating committee of more than 200 Thai nongovernmental organizations (NGOs) concerned with the environment, social equity, and alternative economic development.

In the 1980s, NGOs had burgeoned in Thailand, responding to growing social and ecological problems accompanying the country's export-oriented economic growth. The groups were typically small, focusing on specific problems such as health care, village development, and human rights, with staffs of fewer than ten persons, many of whom were volunteers or students. Their annual budgets of a few thousand dollars a year would hardly cover the expense of a couple of short trips to Thailand by one of the development bureaucrats employed by international agencies. Some groups were national in focus, like the Project for Ecological Recovery, which has played a lead role in documenting the ecological cost of government-sponsored development.

Three hundred and fifty villagers from all over Thailand had come to Bangkok for the People's Forum, and they were joined by representatives of Bangkok's street vendors, slum dwellers, numerous students and academics, and spokeswomen for the country's prostitutes. One of the first speakers was a feisty middle-aged woman named Roy Srihaphong, well known as a vocal community organizer and affectionately called "Auntie Roy." Auntie Roy explained that she lived in Klong Toey, one of the slum neighborhoods adjacent to the Queen Sirikit Conference Center.

Before the packed conference room, Auntie Roy described how she had come from the poor northeast twenty-eight years earlier in search of a better life. After all these years she was no better off, and her makeshift shelter was threatened with demolition. Auntie Roy's voice rose as she described her feelings over the past months as the conference center was built:

I pass it every day, I can see it from my window. It looks like the dwelling place of the angels. We have tried to imagine these thousands of angels arriving in their flying boats—that's what we call airplanes—and we ordinary people wonder if we will ever be able to sit in that meeting room.

The World Bank and the International Monetary Fund were coming to town.

Rich Nomads and Poor

Jacques Attali, longtime advisor to François Mitterrand and president of the newly formed European Bank for Reconstruction and Development (EBRD), had just arrived in Bangkok. Attali had recently published Millennium: Winners and Losers in the Coming World Order, in which he portrayed the triumph of the global free market economy in terms both enthralling and distressing. With the demise of the Soviet Empire, the whole world was united by now irresistible multinational economic forces. The market-oriented production of commodities and the forces of consumption reigned over the entire planet more totally than any previous political order or religious movement in history. The new world order described by Attali would be based in the political sphere on pluralism and democracy, a fitting culmination of the past two or three hundred years of Western history.

But the French economist saw a dark side to the glorious commodification of the globe, one that threatened the prosperous beneficiaries of the global consumer economy:

From their privileged technological perches, they will preside over a world that has embraced a common ideology of consumerism but is bitterly divided between rich and poor, threatened by a warming and polluted atmosphere, girdled by a dense network of airport metropolises for travel, and wired for instant worldwide communication. Money, information, goods, and people will move around the world at dizzying speeds.... Severed from any national allegiance or family ties by micro-chip based gadgets ... the consumer-citizens of the world's privileged regions will become "rich nomads".... These wealthy wanderers will everywhere be confronted by roving masses of "poor nomads"—boat people on a planetary scale—seeking to escape from the destitute periphery, where most of the earth's population will continue to live....

And they will know that the prosperity that is not theirs partly comes at the price of their well-being and at the price of the environment's degradation.

At the apex of this economic world order are situated a number of unique public international financial institutions, of which the most important are the World Bank and the International Monetary Fund (IMF). The Bank and the Fund were established at an international monetary conference of the incipient United Nations, held in 1944 at the New Hampshire resort town of Bretton Woods. Linchpins of the post–World War II international economic order that produced unprecedented global growth, the Bank and the Fund have become the most important public institutions affecting economic development in the world. The IMF mainly lends to countries over the short term to remedy balance of payments deficits, and requires in exchange rigorous macroeconomic policy measures from the borrowing nations to cut internal expenditures and increase exports. In the 1980s, the Fund took on a related but new role in managing and partly financing international debt reschedulings between Third World countries and private international banks.


Excerpted from Mortgaging the Earth by Bruce Rich. Copyright © 2013 Bruce Rich. Excerpted by permission of ISLAND PRESS.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Table of Contents

The Dwelling Place of the Angels
Decade of Debacles
Brave New World at Bretton Woods
The Faustian Paradox of Robert McNamara
Greens Lay Siege to the Crystal Palace
The Emperor's New Clothes
The Castle of Contradictions
From Descartes to Chico Mendes: A Brief History of Modernity as Development
Who Shall Rule the World--and How?
What on Earth Is to Be Done?

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