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Jim Vallette discusses research in his report on World Bank Group Fossil fuel projects.

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VIVIAN SCHENKER: Overseas, they are talking war but they are also talking economy. The world economic chiefs met in Washington on the weekend to discuss ways of stimulating a global recovery. The International Monetary Fund and the World Bank have urged Europe and Japan to speed up economic reforms to bolster their long-term growth prospects. Perhaps more significantly, it also outlined plans for a new bankruptcy style system to deal with countries in debt crises, like Argentina. They also called on rich nations to rebuild confidence shaken by a series of corporate scandals in the US. But the World Bank itself has been the subject of widespread criticism for pumping billions into those American companies accused of alleged accounting irregularities, energy market manipulation and fraud.


Jim Vallette is a Research Director for the Sustainable Energy and Economy Network, and he joins us from Washington. Jim, welcome to Radio National.


JIM VALLETTE: Good morning, Vivian.


VIVIAN SCHENKER: Now, you recently completed a report on the World Bank’s Group fossil fuel projects. What are they, exactly?


JIM VALLETTE: The World Bank is really the world’s key financier of fossil fuel proliferation, particularly in Asia, Africa and Latin America. We have been studying the World Bank’s practices regarding the exploitation of fossil fuels since the 1992 Earth Summit when the world’s governments pledged to reduce carbon dioxide emissions—emissions of that very potent greenhouse gas—and they said that the multilateral institutions like the World Bank would be a key player in such a reduction. But what we found is that the World Bank has not reduced its support for fossil fuel financing but has really ratcheted it up tremendously over the last 10 years.


VIVIAN SCHENKER: What are the criteria for those loans to energy companies?


JIM VALLETTE: The primary criteria that the IMF and the World Bank require is the privatisation of a country’s energy sector, and that was really a criteria developed by the Reagan administration—a strategy to leverage the World Bank and the IMF financing into lucrative contracts for, primarily, US corporations overseas. What we have seen is that the World Bank has gone in and privatised developing countries’ energy sectors and incomed the likes of Enron, El Paso Energy, ChevronTexaco, General Electric—companies that have rather shoddy records here in the United States that have become known over the last year.


VIVIAN SCHENKER: How much money are we talking about? How much money has the World Bank been channelling into these companies?


JIM VALLETTE: What we have found is that since that Earth Summit in Rio in 1992, the World Bank Group has approved over $24 billion in financing for the extraction of oil and gas, mining of coal, and the setting up of fossil fuel power plants, and the lion’s share of this is going to a handful of many of the world’s largest corporations.


VIVIAN SCHENKER: And not just the largest but some of the ones that have, in recent times, proved to be the dodgiest?


JIM VALLETTE: Absolutely, and there has been very little scrutiny put into the role played by the World Bank in exploding these companies’ bottom lines over the last ten years. I mean Enron came out of nowhere, in the 1990s, and became one of the world’s largest energy companies, and it wouldn’t have done so without the financing of the World Bank and similar institutions that have domestically ... in the United States we have export credit agencies—government agencies that finance US corporations’ activities overseas. Enron really expanded tremendously with the assistance of the US government and the World Bank Group.


VIVIAN SCHENKER: Apart from Enron, who else appeared in that list of people that were getting fair amounts of money from the World Bank? Can you tell us some of the other companies there?


JIM VALLETTE: Sure. A lot of the world’s largest oil corporations—ExxonMobil, ChevronTexaco, Unocal, Shell—all received the benefits of $1 billion to $2 billion of World Bank Group financing. One company that has become pretty familiar to folks in the United States, this year, is Halliburton. What our researchers found is that Halliburton was the No.2 recipient of fossil fuel financing by the World Bank Group.


VIVIAN SCHENKER: Halliburton is the company that was linked to Dick Cheney, isn’t it?


JIM VALLETTE: Exactly. In fact Dick Cheney was hired by Halliburton primarily to expand their company’s overseas operations and it became, primarily ... its revenues shifted from primarily domestic to overseas while Dick Cheney was in office because of his ties to world leaders; his close relationships with world leaders really put Halliburton into new markets, like in the Caspian. That model that he set of expanding US energy profits from developing countries is coming to fruition in his own energy policy today.


VIVIAN SCHENKER: Jim, I know this might sound hopelessly naïve, but isn’t the whole point about the World Bank, that they ought to be concerned or they are supposed to be concerned with poverty alleviation? It appears from all of this that they might be more concerned about corporate welfare?


JIM VALLETTE: Well, that’s exactly it. The World Bank is at a crossroads. Its stated mission is the end of poverty, and oil and gas extraction, goldmining, these projects have actually the opposite effect. Many studies have shown that these types of projects do more to enhance inequities in economies and hence political tensions and equities increase as the spoils fall in the hands of the autocratic that often are rulers in charge of these countries. It enhances stability, domestically and internationally, where these projects occur. That is why a lot of folks have been in Washington DC this weekend, protesting and continuing this anti-globalisation movement that is really taking root.


VIVIAN SCHENKER: Is there any sign at all that the World Bank is taking any steps at all in terms of reforming its policy in the foreseeable future?


JIM VALLETTE: So far it has been largely window-dressing. We have seen some increase in its financing toward renewable energy projects—solar, wind power, energy efficiency projects in developing countries. Over the last ten years the ratio of fossil fuels to renewables has been 16:1. We need to put that ratio around because to date these projects of 1992, their lifetime emissions of greenhouse gases are equivalent of twice one year’s emissions in the year 2000—the global emission of carbon dioxide.


VIVIAN SCHENKER: It doesn’t sound like we can look for real change any time soon. Jim, thanks for your time this morning.


JIM VALLETTE: My pleasure, Vivian. Thank you.


VIVIAN SCHENKER: Jim Vallette, Research Director for the Sustainable Energy and Economy Network, and he was speaking with us from Washington.