DEBT, DEVELOPMENT
AND ENVIRONMENT

Witness: Dr. Vinod Raina (INDIA)

At the very outset allow me to convey Greetings to the people assembled at the International Tribunal on Debt in Porto Alegre from the people of the city of Bhopal in India, where I live.

Alas, over 20,000 people of Bhopal are no longer in a position to join me in conveying these greetings to you here today; they have died through criminal acts since that fateful night of 2/3 December 1984. But especially from over 200,000 surviving victims, who are still ill, please do accept very warm greetings, with the hope that you will ally with them in their fight for justice that has eluded them these 17 years.  

On that cold night, yes, 17 years ago, poisonous gases escaped from the pesticide plant of the transnational company Union Carbide situated in the city of Bhopal. The impact was no less than catastrophic and genocidal. Men, women and children, unaware of what was making them choke and fight for life-saving breath fled their warm beds in panic, running distraught, hopefully away from the murderous poisons that had clouded the skies. In an hour or so, over 3,000 of them could not outrun the deadly poisons, and they collapsed all over the city, in a grotesque dance of death that had no dignity. And hundreds of thousands from a city of over a million vanished from the city, retching, coughing and mortally scared. They escaped death, but the poisons have made life hell for them, and they continue to suffer, and die from the effects even now.

In wartime Europe, Hitler had to construct special concentration camps with elaborately built gas chambers to exterminate heavily guarded prisoners. But the free and democratic people of the peaceful city of Bhopal required no such expenses of coercion in order to die; the whole city was turned into a deadly gas chamber, free of cost! And the gas, methyl isocyanate, was more lethal than anything even Hitler had used. All that was required was to grant permission to the US-based transnational chemical giant - Union Carbide - to put up a plant in a city in order to earn profits by manufacturing and selling a pesticide, Sevin, used in cotton fields. As it transpires now, the company knew exactly the effects of the poisons in its plant, but when corpses were being piled up that morning, the officers of the plant were saying that the escaped gases could at best cause sore throat! What is most callous and a mockery of justice is that the then CEO of Union Carbide, Warren Anderson, against whom international arrest warrants are pending, is enjoying his retirement in Atlanta in the US, even though he is directly responsible for over 20,000 deaths; because the US refuses to hand him over. But to locate one Osama bin Laden, responsible for the heinous deaths of 5,000 people, the US can launch a war at an international level! 

The Bhopal Gas Disaster adequately highlights the environmental and human disaster that mega-business, backed by mega-bucks can cause. Nor is it isolated. The mercury poisoning of the Minamata Bay in the middle 1950s should remind us that industrial disasters are part and parcel of the prevailing paradigm that financial institutions - bilateral, multilateral or private - have been promoting the world over, particularly as part of the worldwide reconstruction program since the second world war. Leading the pack, of course, are the Bretton Woods institutions, World Bank and the International Monetary Fund, that were set up specifically for the purpose of reconstruction of war-ravaged Europe, but as we shall presently argue, they have targeted the developing (South) countries instead.

The environmental destruction of the South that we witness today is only an extension of a legacy going back over five hundred years, characterised more by ecological plunder during the period of colonisation. Such plunder, from Latin America, Africa and Asia left nothing that is of value untouched - spices, plants, animals and germplasm, humans as slave labour, land, gold and other minerals, oil and other fossil fuels. The increasing wealth of the North in these five hundred years is built on the bedrock of such plunder, that took away whatever was valuable in the colonies, and rendered the people in the colonies increasingly impoverished, so much so that these once rich and wealthy lands are today characterised as underdeveloped or developing!

First and foremost, it must be recognised that the cumulative Historical and Ecological debt that the North owes the South would far outweigh the Financial Debt that the South is supposed to owe to the North.

Ecological Debt

Contrary to certain perceptions, the Ecological Debt of the North to the South is not just historical but continues to be accumulated even today. According to the'Accion Ecologica' of Ecuador, Ecological Debt is  'The Debt accumulated by the Northern industrial countries towards the Third World countries on account of resource plundering, environmental damages, and the free occupation of environmental space to deposit wastes, such as greenhouse gases. Those who abuse the biosphere, transgress ecological limits and enforce unsustainable patterns of resource extraction of a range of natural resources must begin to discharge this ecological debt. The ecological debt accumulated through such processes as the extraction of a range of natural resources, ecologically unequal terms of trade externalising ecological costs, the appropriation of traditional knowledge, for example, of seeds and plants, on which the modern agri-business and biotechnology are based, contamination of the atmosphere through the emission of various greenhouse gases, producing and testing chemical and nuclear weapons in countries of the South, and the dumping of chemicals and toxic waste in the Third World. The current system of neo-liberal globalised market economy maintains and augments the ecological debt through such mechanisms as the Structural Adjustement Programmes imposed by the international financial institutions, foreign investments, unequal terms of trade, forcing countries to produce export products in order to redress financial debts; and through the trade-related Intellectual Property Rights within the WTO (World Trade Organization) which protect the patenting of genetic material for agriculture and pharmacology by TNCs (transnational  corporations) without compensation for the original guardians of the biodiversity of the South'.

To get a feel for the historical nature of these debts, and their quantum, we use two illustrative examples. First, consider food and agriculture. Many tradable varieties of foods today have origins in Mesopotamia, India, China and Latin America. They have been appropriated by the North through a process of Ecological Imperialism based on the colonial plunder of gene pools. Through the technological perfection of such plundered gene pools, the share of neo-Europe in international trade in the World's vitally important foods is much greater than the Middle-East's share of petroleum products! For example:

• Out of a total export of food worth US$210 billion in 1982, the share of US, Canada, Australia and New Zealand was US$64bn; that is > 30%
• Out of a total of US$18bn trade in wheat, the share of neo-Europe was US$13bn
• In soybeans, the share of the US and Canada was US$6.3 billion out of a total trade of US$7 bn

AGRICULTURAL PRODUCTIVITY (WDR 2000; figures for 1996-98 in US dollars)
COUNTRY	AGR. VALUE ADDED/AGRICULTURAL WORKER
US	39,001
Australia	30,904
Japan	31,094
Germany	22,759
Argentina	9,597
Malaysia	6,061
Brazil	4,081
Philippines	1,352
Thailand	932
India	406
China	307

• Russia leads the World in the production of wheat, oats, barley, rye, potatoes, milk, mutton and sugar. China outproduces every other nation in rice and millet and has the most pigs. The productivity of these nations is great, but per hectare it is not so impressive. These regions lead the world relative to the amount locally consumed. However, in 1982 the USA produced only a miniscule percentage of the World's rice but it accounted for one fifth (20%) of that grain; more than any other nation. It therefore was a major exporter.

Even though it is the South that has historically produced most of the food and continues to be mostly agricultural, yet a look at the agricultural productivity of a select set of countries should be enough to tell us who makes most of the profits from appropriated gene pools:

The table makes it clear where most of the agricultural profits are. What is worse is that the agricultural value addition for the developing countries will be further cramped by the WTO conditions.

Having cornered most of agriculture, what is the North doing about energy, our second example. It is the cause of greenhouse gases, which is being subsidised by the South. The following table is illuminating:

Clearly, the Southern countries are acting as 'sinks' for the emissions of the North;  North pollutes - South cleans! If we apply the 'polluter pays' principle, say from 1950, then North will have to pay an enormous amount to the South for providing these ecological sinks.

Forests are sought to be designated as a global resource by the North. If present day forests are a global resource, to be shared equally by countries of the World, then the same should apply to 'geological forests', the oil pools. The Texan oilfields, produced from forests of ages ago should then also belong 'globally' rather than to a particular country. We should therefore calculate debt owed by the North for using the global commons, the forests of the world, as sinks for their emissions, and for not sharing their oil resources equally. The same criterion should be used for all other natural resources, keeping in mind that 23% of the World population consumes 80% of resources.

In his prologue to 'Ecological Imperialiasm'  the Biological Expansion of Europe, 900 -1900, Alfred W. Crosby asks "Perhaps European humans have triumphed because of their superiority in arms, organisation and fanaticism, but what in heaven's name is the reason that the Sun never sets on the empire of the dandelion?" He also provides an answer, "Perhaps the success of European imperialism has a biological, an ecological component". The rest of the book substantiates the answer, and provides one of the best evidence for Ecological Debt.

We therefore propose a doctrine of 'Equitable Environmental Space', which recognises that the external financial debt of the South has already been paid, as it is minimal in comparison with the accelerated ecological debt of the North, which should be measured not only in financial terms, but also in terms of its devastating social, cultural and human impacts.

The Human and Ecological Cost of Development

The end of World War Two saw the beginning of the end of colonisation; exemplified by the independence of two of the biggest nations, India in 1947 and China in 1949. It also saw the emergence of the US as a formidable military and economic power. The US wanted to put its stamp on the world, and chose January 20, 1949 for that purpose. It was the day President Truman took office, and a new era was opened for the world - the era of development. Said President Truman - "We must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas." And so, the word underdeveloped was imprinted on the economic and political firmament for the first time (it was somewhat casually used earlier in 1942 by Wilfred Benson, a former member of the Secretariat of the International Labour Organisation). Underdevelopment thus really and truly began on January 20, 1949. On that day, irrespective of their histories, lifestyles, production skills, philosophies, and knowledge systems, over two billion people became underdeveloped. As Gustavo Esteva has eloquently said, "In a real sense, from that time on, they ceased being what they were, in all their diversity, and were transmogrified into an inverted mirror of others' reality: a mirror that defines their identity, which is really that of a heterogeneous and diverse majority, simply in terms of a homogenizing and narrow minority". Since then, development has meant just one thing, to escape the undignified condition called underdevelopment. And at the pinnacle of development is the American Dream; their culture, lifestyles, consumption rates; and their economic and military might. Consequently, every nation and every person must aspire to achieve the Americam Dream, and have no other dream.

Debt is the fuel that propels the underdeveloped to such an unrealistic and questionable dream. But its consequences are real, as the hapless people of Argentina are suffering from today, in 2002. And institutions of Debt have been carefully crafted to entice the underdeveloped countries to remain on course for the Dream, even if it means loss of sovereignty, and further impoverishment of the already marginalised. The impacts on environment cannot be better illustrated than by the Bhopal Gas Disaster. But the workings of the Debt institutions is best illustrated by the way it has operated in one of the biggest controversial areas dealing with environmental and human impact impacts – the building of big dams. Arguably the most important developmental effort that has devastated environments and habitats and forcibly displaced millions of people the world over, dam building is inextricably linked to processes of loans and debt accumulation by the borrower countries. The following extract from the Report of  The World Commission of Dams (WCD) adequately illustrates it:  

Both the multilateral and bilateral development banks have played a significant facilitating role in getting countries in Asia, Africa and Latin America to demonstrate national capacity to build major projects and to restore international confidence in the country's development and investment potential. It was the US that started the dam business. The World Bank began financing large dams in the1950s, committing an average of over $1 billion per year to this purpose. For the period from 1970 to 1985 this amount had risen to $2 billion per year. Adding in finance by the Asian, Inter-American, and African Development Banks, as well as bilateral funding for hydropower, suggests total financing for large dams from these sources of more than US$4 billion annually at the peak of lending during 1975-84.

Bilateral and multilateral development financing agencies helped finance studies needed for dam construction, and lent money for the construction of the dams themselves. They identified development goals through strategic sectoral planning documents, provided resources and technological capacity to conduct feasibility studies, and created basin-wide institutional frameworks to plan and implement dams. Although the proportion of investment in dams directly financed by bilaterals and multilaterals was perhaps less than 15 percent, these institutions played a key strategic role globally in spreading the technology, lending legitimacy to emerging dam projects, training future engineers and government agencies, and leading financing arrangements. The extent and nature of this influence varied from country to country and from region to region.

The India Case Study locates the orientation of Indian planners and engineers towards dams as the principal response to water resource development in the 1950s and 1960s when large numbers of dams were first built. This predated the World Bank's major involvement in India. The Bank began lending in earnest to India in the 1970s at a time when policy reforms removed restrictions on the ability of individual states to directly access foreign assistance and provided incentives for doing so. Since then World Bank loans to India have doubled or tripled each decade. By one estimate loans for irrigation, drainage and flood control are 14 percent of World Bank loans to India. The India Case Study reports that, in total, foreign assistance provides about 13% of public sector outlays in the irrigation sector, with the World Bank Group accounting for almost 80% of this assistance. Thus, in India the World Bank did not provide the initial impetus behind the tendency to choose dams as the response to water and energy needs, but rather provided continued and increasing external backing to the large number of dams which were built from the 1970s onwards.

As in the case of India, the WCD China Case Study shows that dam building was well advanced prior to the entry of foreign donors. Brazil also follows this pattern. Comparison of statistics on large hydropower dams commissioned in Brazil between 1950 and 1970 and the finance provided by the World Bank and the Inter-American Development Bank (IDB) show that just over 10% of the 79 large dams listed in the International Commission On Large Dams (ICOLD) database received financial assistance from these donors. However, the figure rises to over 30% of the 47 dams for the 1970-1990 period. Foreign assistance, thus, did not drive the selection of dams as an option but did provide significant finance during peak dam-building periods.

The picture differs for smaller countries. In Colombia, multilaterals helped fund the first large dam and 40% of the subsequent 50 large dams appearing in the ICOLD data-base. Multilaterals have played a particularly strong role in countries that have not built many dams and do not have local planning and construction expertise and capacity. In Costa Rica, which relies on hydropower for roughly 90% of its power generation, the World Bank and IDB had directly supported over half of the installed hydropower capacity by the mid-1990s. In Tanzania, bilateral agencies and the World Bank have supported essentially all the large hydropower dams. In these smaller countries the role of financing agencies and the firms they employ to undertake preparatory studies, design projects and build dams can be significant.

Only in the late 1980s and early 1990s has this lending activity tailed off in the face of increasing public scrutiny and criticism by civil society. The decline followed unfavourable independent reviews of two high profile projects that were supported or considered by the World Bank - Sardar Sarovar in India and Arun III in Nepal. A number of other factors contributed to the shift away from large dam projects. They include: continued criticism of the pervasive 'approval culture' of the World Bank and its willingness to promote large infra-structure projects;  internal evaluations of the Bank that documented ever-increasing 'appraisal optimism' despite evidence of poor economic and financial performance by projects in the water supply and irrigation sectors; failure to meet the Bank's poverty alleviation goals; and growing recognition of the severity of the social and environmental impacts of dams.

More recently, a gradual shift towards an increased role for private sector finance in hydropower and, to a lesser extent, water supply, have also led the banks to move into a facilitation role with the emphasis on public-private partnerships and risk guarantees. Part of the financing has now been taken over by export credit guarantee agencies in donor countries that finance and underwrite risks taken by home-country engineering firms and equipment suppliers participating in projects abroad.

Ultimately it is the country government that is responsible for making the decision to build a dam. However, governments are naturally influenced by international expertise and financing opportunities. Once a government is politically committed and construction has begun, the nature of large construction projects makes it extremely hard to change course, even if there are cost overruns, unforeseen negative impacts, or benefits are less than predicted. The public purse generally carries the risk of poor economic performance, and there has historically been no consequence or liability for building under-performing dam projects. For industrialised countries with a history of dam-building and expertise in related equipment, bilateral overseas aid has often become a vehicle for supporting local industry by exporting this expertise through aid programs tied to the purchase of services or equipment from the donor country. Conflicts of interest have inevitably resulted between the financing agency's interest to provide contracts for home-country compa-nies and the borrower or grant recipient's interest in providing appropriate and affordable development. In the case of bilateral agencies these conflicts of interest may be exacerbated in smaller, poorer countries where the donor plays a more central role in financial matters . Professional associations such as ICOLD, the International Hydropower Association (IHA) and the International Commission on Irrigation and Drainage (ICID) have also played an important role in setting standards within their technical disciplines and promoting professional capacity related to the building of large dams and their associated infrastructure. These are international associations made up of members from government and industry from industrialised and developing countries alike. The associations play an important role in building capacity of member countries by collecting and disseminating technical and other information and holding annual meetings to promote formal and informal professional exchange.

World Bank and Environment

The role of World Bank in dam building needs to be particularly highlighted. As stated at the beginning, the World Bank was originally charged with reconstructing Western Europe after World War II. While the Bank's contribution to European reconstruction was a mere 1 percent, it soon became the most dominant financial institution for lending to developing countries, lending a total of US$21.7 billion in the year 1992. The bulk of World Bank's funding has been used to develop large infrastructure projects such as giant hydroelectric dams, transportation systems, power stations, oil, gas and mining projects - each one with a very high potential of environmental destruction. These projects have displaced millions of people, most of them from the socially disadvantaged sections, like indigenous people.

Bank sponsored displacement and consequent loss of livelihoods has invariably led to loss of cultural roots, mental and physical trauma and economic impoverishment. In most of its projects the Bank has not even bothered to ascertain the exact number of people displaced, leave alone proper resettlement and rehabilitation (R&R). When asked to name one project in India where R&R for all those displaced had been provided, the only project the Bank could come up with was the Bombay High Oil Rig, which being in the middle of the sea, involved no displacement! This is why when confronted for the first time by the oustees of the Sardar Sarovar dam through their heroic struggle, the Bank simply walked away from the project on the question of R&R.

The environmental impacts of the Bank's projects have been disastrous. They have opened up areas rich in natural resources for exploitation by private capital leading to large scale deforestation and devastated several river valley systems. In most developing countries, where people are dependent on the local ecology for sustenance, this has added to people's misery by causing floods, increasing the severity of droughts and causing the loss of biodiversity. The Bank has responded through a spate of Social Forestry and Joint Forest Management programmes, which have effectively put the onus of protecting forests on the local people, leaving private capital and state agencies to milk the benefits. In the process, these projects have caused havoc to ecological systems sustained over centuries by the stupid promotion and introduction of exotic varieties, mostly for the benefit of outside agro-industry. For all these destructions vast loans are distributed, increasing the debt burden of the concerned people and countries.

Combined with the crippling impact of the SAP-regulated loan mechanisms of the IMF, the Fund-Bank combine have become the terrible twins in the debt-dependent development paradigm of today. They are now ably supported by the trade mechanisms as enforced by the WTO and a host of regional bodies like NAFTA, ASEAN etc, which completely delegetimise environmental concerns in favour of trade. This includes the exclusion of Multilateral Environmental Agreements (MEAs) from trade considerations, designating water in its natural state as a tradable commodity and including it in the General Agreement on Trades in Services (GATS) list, thereby opening it for privatisation, attempts to designate forests as a global resource in order to weaken the rights of forest dwellers and national governments so that they can be opened up for world markets more easily and a host of such acts. The refusal of a country like the US to accept the Kyoto protocol for the reduction of greenhouse gases, and in effect put the burden on the sinks of the South countries to maintain clear air, with no compensation, is evident of the disdain with which the agreements flowing out of the Earth Summit of 1992 are being looked at.

The deaths of thousands in Bhopal, and of others taking place all the time all over the World, the marginalisation of vast populations from their life-sustaining ecologies and the intertwined processes of increased indebtedness and ecological destruction demand that this Tribunal:

1. firmly calls for a stop to further environmental destruction and degradation in the name of trade and development, by bringing trade and development under the ambit of national and international laws and treaties;
2. recognizes that the North owes a huge Ecological Debt to the South, historical for the plunder during colonization, as well as current, from green house gas emissions, ozone depletion, wars, toxic dumping, nuclear testing and due to bio-piracy in the name of patents; and,
3. designates illegal all those debts from all financial institutions, bilateral, multilateral or private, that have been the cause of environmental destruction and human misery and cancels their payments, with reparations to the affected populations