Investments

Bank Of America Investment Every year the World Bank and its regional counterparts such as the Asian Development Bank, the Inter-American Development Bank, the African Development Bank, and the European Bank for Reconstruction and Development, collectively known as Multilateral Development Banks (MDBs), lend $45 billion to the so-called "developing" world.

These institutions', American Development Bank, World Bank, U.S. Overseas Private Investment Corporation, U.S. Import Bank, $352 million in approved financing for 18 projects; thus, fossil fuel financing in the Americas outpaces clean energy by a ratio of 63 to 1. Most of this investment in fossil fuels has come from US taxpayers, who are unwitting underwriters of loans, guarantees and subsidies to Big Oil. Although the Americas have obtained over $22 billion in public support for fossil fuels since the Rio Earth Summit in 1992, most of this oil and gas has been exported to the U.S.

Investment Opportunity This money in turn leverages support by bilateral aid agencies, private finance and other sources for projects and programs whose total cost is estimated at well over $130 billion.

The scary thing is that even if a country doesn' World Bank can potentially scare away foreign investments.

Banc Of America Investment The ostensible goal of this "development finance" is to alleviate poverty in the Third World by stimulating economic growth. Yet in many respects these loans, which have integrated vast human populations and expanses of natural resources into the world economy, deliver far greater benefit to the governing elite of stratified Southern societies, to transnational corporate contractors and investors, and to the globalization agenda of the donor governments of the industrialized North.

TierOne Corporation is the holding company for TierOne Bank (the Bank), oriented bank that operates from 58 banking offices located in Nebraska, southwest Iowa and northern Kansas and two loan production offices in Colorado. The Bank's principal business is gathering deposits from the general public in its primary market area and investing those deposits, together with funds generated from operations and borrowings, in loans and investment securities.

Banking Investment It is well documented that a broad array of MDB-financed projects and economic policy proscriptions have contributed to a deepening spiral of social and ecological poverty throughout the South. Such destruction has prompted a series of international campaigns aimed either at reforming or halting individual projects, as well as at reforming or closing down the MDBs themselves.

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MDB policies have consistently served corporate interests in five key ways:

1. Definition of a Corporation A corporation is a separate and distinct legal entity. This means that a corporation can open a bank account, own property and do business, all under its own name. A corporation is managed by a board of directors, which is responsible for making major business decisions and overseeing the general affairs of the corporation. Like representatives in Congress, directors are elected by the stockholders of the corporation. Officers, day operations of the corporation, are appointed by the directors.

Investment Banking Services 1. Corporate Contracts

Bank Investment The first and most obvious way that the transnationals benefit from MDB and bilateral aid is through contracts. In what is essentially a quid-pro-quo relationship, large corporations based in the countries that provide the MDBs with capital receive lucrative contracts for MDB financed projects.

• Overall, net disbursements by the World Bank (i.e., the balance of gross disbursements minus repayments to the Bank for previous credits) totaled just over $7 billion in 1993. But the borrowing countries paid out nearly an equivalent amount of money in contracts--$6.8 billion, to corporations from the 24 rich OECD nations--leaving only marginal positive cash flows into the coffers of recipient countries.

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• The International Development Association, an arm of the World Bank designed to lend money to the poorest of the poor countries, doled out more money to British corporations for contracts in 1993 than it committed in future loans to Bangladesh, one of the most impoverished nations on earth.

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• Switzerland, home to only six million people and some of the world's largest transnationals, got more money than Mali or the Philippines.

Accompany Essential Investment 2. Infrastructure

Investment Company The second way in which multilateral and bilateral aid has benefitted corporate interests is by building infrastructure such as roads, electrical grids, dams and power plants, that often serve to lay the groundwork for further transnational investment. Unfortunately, such infrastructure has also repeatedly led to social and environmental debacles.

Investment Management Solution For instance:

• World Bank infrastructure lending in the transportation sector has also supported corporate expansion, promoting the growth of the auto industry in the Third World rather than more accessible and ecologically sound rail transport. In 1993, for instance, 74 percent of the Bank's $3.2 billion in transportation loans went to road and highway construction.

  Investment Management Services These policies exacerbate the already significant contribution that road vehicles make to local air pollution and global climate change.

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• Lending for energy infrastructure has similarly catered to corporate interests while virtually ignoring environmental consequences and failing to promote alternatives.

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  • The World Bank spends 40 percent of all its energy loans on oil and gas development, 15 percent on coal, and most of the rest on electrical transmission and fossil fuel powered generators.

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  • MDB support for alternative energy development such as solar and wind power is virtually non-existent. Less than 3 percent of all Bank energy lending goes to renewable energy and energy efficiency projects.

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  • These policies amount to subsidies for transnational oil and coal corporations, and make a signficant contribution to greenhouse gas emissions.

Citicorp Investment Services 3. The Greenwash Route

Fool Guide Investment Motley The third way in which the World Bank and other MDBs support corporate interests is through their new found environmentalism.

Fidelity Investment Services As they have come under increasing fire for their socially and environmentally destructive behavior, these institutions have moved to address their critics. Parallel to the corporate response to environmentalism, the MDBs have taken a series of steps to absorb the ecological question into their agenda.

• In the early 1990s, the Bank had initiated a "forest management and protection" project in the West African country of Guinea; the effort turned out to be an initiative to deforest two- thirds of the remaining pristine rainforest in the country.

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• A 1990 World Bank forestry conservation project in the Cote d'Ivoire put a half-million-hectare rainforest under the management of the same corporations that had pillaged the country's timber resources during two previous decades. This logging project, which was approved in 1990 under the Bank's supposedly "environmental" forestry policy, also set the stage for the potential displacement of over 200,000 people who depended on the forest.

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• A similar dynamic has taken place with the advent of the Global Environment Facility (GEF), a multi-billion dollar joint project between the World Bank, the UN Development Programme and the UN Environment Programme. For instance, a "model" GEF Natural Resources Management Project in the Congo, which was designed to integrate isolated rainforests into the global economy by opening them up to corporate logging under the pretense of protecting them.

Mellon Investment Services 4. Structural Adjustment

Finance Investment The fourth way in which MDB policies serve corporate interests is through so-called "policy based lending" or structural adjustment.

Investment Manual Science From the 1980s onward, the World Bank/IMF attained a position from which it could dictate macroeconomic policies and effectively wrest sovereign control of entire economic sectors from Southern governments. By 1996 about one-quarter of all World Bank lending was in the form of structural adjustment programs.

Investment Advisory Services These lending policies effectively deconstructed much of the Third World nation state. They did so by conditioning loans designed to resolve balance of payments crises on the privatization of national industries, the removal of barriers to foreign investment in key sectors, the "reform" of financial systems, the gutting and privatization of social and environmental services, and the redirection of economies toward an increasing export-orientation.

Advice Investment Together, all of these components of adjustment effectively pried open previously protected markets to escalating transnational corporate investment.

• Structural adjustment also increased poverty and inequality, while heightening environmental degradation by intensifying the exploitation and export of natural resources.

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• Transnational corporations also assumed responsibility for a number of environmental problems as they bought up what had been state-owned power plants, chemical factories, mines and forests.

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• The World Bank's adjustment policies exacerbated the South's environmental crisis in no small part, as Philippine scholar Walden Bello writes, through an "ideological bias...against any disincentives that might stand in the way of the operation of market forces...This translated into opposition on the part of the economic authorities to effective environmental regulation by the state."

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Financial Investment Services 5. Underwriting Private Capital Flows

Investment Securities The fifth and newest way in which the MDBs serve corporate interests is by either directly lending to or investing in transnational corporate projects, and providing risk insurance for their endeavors in the Third World.

Property Investment Services By dismantling key sectors of the nation-states that the World Bank and its sister institutions are chartered to lend to, the MDBs have, in a sense, been working themselves out of a job. Undaunted however, they are remaking themselves as privatized public investors and bankers for the transnationals.

Calculator Investment This shift has also allowed the MDBs to sidestep some of the environmental and social controls that more than a decade of activists' campaigns had forced upon them.

• In 1995 the International Finance Corporation (IFC) an arm of the World Bank, was making nearly $3 billion in loans and equity investments for 213 corporate projects in 67 countries.

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• The IFC's support for and participation in these investments leveraged another $15 billion in financing for these corporate ventures.

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• The World Bank has also created a new entity, the Multilateral Investment Guarantee Agency (MIGA) to provide risk insurance for corporate investment in Southern nations.

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• And, with the new slogan "catalyst for private capital flows" the Bank itself has jumped into the private investment business.

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• Overall, the World Bank Group, as it is known, takes credit for supporting "about $25 billion of private-sector finance a year, or 10 percent of all investment by private enterprise in developing countries."

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• A quick glance at IFC lending also shows that many of the investments and loans it makes are in the most environmentally hazardous economic activities such as power plants, mining, chemical, petrochemical and oil refining, timber, pulp and paper, food and agribusiness, and the automotive industry.

Advisor Investment The Future of the World Bank

America Bank Bank Investment Promoting private investment in the Third World is not necessarily a bad thing. But when it comes at the cost of social equity and ecological sustainability it is a questionable endeavor at best.

Club Investment The World Bank Group and its regional cousins would best serve their mandate of eradicating poverty and promoting sustainable development by subsidizing, guaranteeing, financing and investing in ventures that foster organic agriculture, solar and wind power, public transportation, chlorine-free, tree free paper made from agricultural byproducts, and the like.

Global Services Investment If these global economic institutions are not able to promote such transformations, it may be high time to close them down.

Investment Online Source: All information from Joshua Karliner, The Corporate Planet: Ecology and Politics in the Age of Globalization (Sierra Club Books, 1997) now available in bookstores or from CorpWatch.

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