July 02, 1999
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| July 02, 1999 | atimes.com | |
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| China No longer poor, Beijing barred from low-cost loan window By Antoaneta Bezlova BEIJING - A controversial poverty reduction program in China. approved by the World Bank last week amid serious internal debate, highlights the changing relationship between the bank and its biggest client. From July 1, China, which has borrowed from the World Bank more than $25 billion in the past 20 years, will no longer be eligible to tap the bank's low-cost loans under the concessional lending facility. Under pressure from the United States, its major shareholder, the World Bank will cease to treat China as one of the world's poorest countries. The decision is to some extent an offshoot of Beijing's own propaganda claims that the Communist government has reduced the number of absolute poor from 250 million to just 50 million in 20 years. The state propaganda machine says that at the beginning of next century, China will have only 22 million living in dire poverty. Beijing, which has received full support from the World Bank for poverty reduction and development projects, will now have to rely more on private foreign investors for its funding requirements. Although the controversial $160 million loan to China's Western Poverty Reduction Project was approved despite opposition from the U.S. and Germany, the bank temporarily froze a part of the loan - involving $40 million - because critics say it will harm the Tibetan minority. This part of the project is on hold until the inspection panel of the World Bank is satisfied that the bank had not violated its own rules in processing the loan application. Yet Beijing managed to secure voting on the loan before the June 30 deadline, after which the bank would have had to reclassify the funds. Western diplomats here say that in the run up to the bank's Board of Executive Directors meeting in Washington on June 24, Beijing had threatened to ''re-evaluate its relationship with the World Bank'' and had warned that China would suspend bilateral co- operation on financial matters with any country that failed to approve the loan. The three-part Western Poverty Reduction Project is to benefit 674,000 people in Inner Mongolia Autonomous Region, 930,000 in Gansu province and 58,000 in Qinghai province. The program offers comprehensive health, education and employment benefits to people in remote villages who now earn between $25 and $60 a year. It also calls for building a dam and an irrigation project. The suspended part of the plan, involving the resettlement of Chinese farmers from the crowded, barren hills in Qinghai to an area thinly populated by Tibetans and Mongol herders 450 kilometers to the west, has caused an outcry among Tibetan groups and environmentalists. The Tibet lobby denounced the project on the grounds that it will dilute the Tibetan minority in the area and weaken its national identity. Dulan county in western Qinghai, where Chinese farmers are to be re-settled, was traditionally part of Tibet; China formally endorsed it as an area of ''Tibetan autonomy'' within Qinghai. According to World Bank figures, the transplant of Chinese settlers would reduce the percentage of Tibetans in the area from 22.7 per cent to 14 per cent. Environmental groups charged the Bank had incorrectly labeled the loan as a category B loan and withheld information in order to avoid an intense environmental assessment. Category A loans are for resettlement, building dams and irrigation projects, among other things, while category B loans are for projects with no irreversible environmental impact. Two weeks ago, 11 of the World bank's executive directors sent a letter to bank president James Wolfensohn protesting against the project. Some 60 U.S. congressmen and 17,000 petitioners joined the chorus of protesters. Board members complained that the loan violated the bank's policies on resettlement and its indigenous people's policy, and that the bank had failed to disclose information in a timely fashion. The loan was endorsed but it set a precedent. For the first time the bank approved a project with objections from its largest shareholder, the United States. Germany voted against it too, while four countries - including France and Italy - abstained. Beijing agreed to the compromise decision voted by the bank and promised it would allow diplomats, politicians and journalists to visit the site of the project ''any time at their convenience.'' A statement issued by the Chinese government said Beijing was ''in favor of transparency." (Inter Press Service) | |||||||||
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