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World Bank Rejects Loan to China |
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July 8, 2000
WASHINGTON (AP) -- World Bank directors bowed to opposition from the United States, other governments and human rights groups Friday and rejected a $40 million loan to China to resettle 58,000 farmers in traditionally Tibetan lands. China's representative, Zhu Xian, said his government would pay for the initiative on its own as it objected to conditions the bank's directors wanted to impose on the anti-poverty project. "It is unacceptable to my authorities that other bank shareholders would insist on imposing additional conditions on (bank) management's recommendations,'' Zhu said in a statement released by the bank. World Bank President James Wolfensohn said the bank accepted China's decision to proceed and looked forward "to a continuation of our long-standing relationship in the context of other projects.'' China is the bank's largest borrower. Pro-Tibet and environmental groups, which have opposed the project for more than a year, contend China wants to dilute the minority Tibetan population in western Qinghai province. The loan, part of a larger $160 million proposal, would have been used to resettle impoverished Chinese and Hui Muslim farmers to more fertile lands that are the homeland of 4,000 Tibetan and Mongol herders. But the controversy the project touched off could go beyond Tibet and lead to closer examination of the political and social implications of World Bank projects elsewhere. It also could encourage the United States, the bank's biggest shareholder, members of Congress and other critics to press for more reforms at the 181-nation institution. After meeting Thursday and Friday, the bank's 24 executive directors voted 14-10 against Wolfensohn's recommendations to conduct further studies on the project over the next 15-18 months and let him then decide whether to go ahead without another vote, two meeting participants said. "The board could not agree to support these recommendations without further board review and approval after the studies were completed,'' the bank said in a statement. Wolfensohn is starting a second five-year term as head of the bank, which he has pledged to reform. A U.S. Treasury Department official, who spoke on condition of anonymity, said the United States and "numerous other World Bank shareholders were not prepared to support the project because we do not believe it is compliance with the bank's own policies.'' The official called attention to a recent report by the bank's own independent inspection panel that found the institution repeatedly violated its own rules in planning the project. Several pro-Tibetan activists who had camped outside the bank headquarters for days greeted the board's decision with cries of delight. "This is good news for us,'' said John Ackerly of the International Campaign for Tibet. "It looks like the tide turned during the night.'' The board met for 6 ½ hours Thursday and adjourned without a decision to resume talks Friday. Pieter Stek, the Dutch representative, said he had mixed feelings about the decision. "A huge amount of effort was invested and it's a pity we could not reach
agreement,'' Stek said. "But management and China did not want the project
to be subject to continuing review.''
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