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We Cannot Allow Institutions Like the World Bank to Impose Ill-Conceived Carbon-Based Energy Reforms on Developing Nations
Nicaragua is one of the poorest countries in the western hemisphere. Less than half of the population has access to electricity. Many of those who do have electricity rely on makeshift connections that are both extremely dangerous and unreliable. Nicaraguan newspapers regularly report cases of people being badly burned by live power cables.
The World Bank identified a scheme to change all this. Privatization of the state-run company was the answer, it said, promising greater access to electricity and lower bills. Christian Aid was skeptical. And when we evaluated Nicaragua's electricity privatization program seven years after the reform was rushed through, what we found appalled us.
Over the past year, Nicaraguans have endured an electricity crisis with people plunged into darkness for more than five hours a day during scheduled blackouts. Julio Alberto lives in Ciudad Sandino, a barrio in Nicaragua's capital, Managua. He set up a corner shop just before the blackouts began. Then his refrigeration unit was destroyed by a surge, ruining his meat stock and requiring a costly repair.
"They told us we would have a cheaper service, which was more reliable and with more people connected to the grid. None of this has happened," says Mr Alberto. "We are paying higher bills for much less electricity and hardly any new connections have been made."
Aida Torres is a community leader in another Managua barrio called Enrique Lorente, which is located at the top of a hill. This means that running water has to be pumped, which requires electricity.
Aida not only has to contend with blackouts and power surges that destroy household appliances, she also has very limited access to running water. Because of the daily blackouts, the water authorities have rationed the pumping to two hours a day between 3am and 5am. This means that Aida has to get up in the middle of the night every night to fill up buckets and bowls of water for her family's use during the day. (Watch Julio Alberto and Aida Torres's story here.)
As the debate rages over how we need to change to save the world from environmental catastrophe, the energy policies of the poorest developing countries have been largely ignored. In fact, it is in the least developed countries, which have the smallest carbon footprint, that some of the most appalling carbon-spewing projects are being initiated. Not by their governments themselves, but under policies which international organizations like the World Bank oblige them to adopt.
It was in exchange for World Bank and International Monetary Fund (IMF) loans and debt relief that Nicaragua was obliged to privative its electricity sector. Worst of all, the new system is reliant on oil-based electricity generation. This is not only absurdly environmentally unfriendly - when many alternatives exist - it is also exorbitantly expensive. Rising oil prices are a major factor in the spiraling bills for Nicaraguan consumers.
This type of energy reform not only denies the poorest countries a viable source of electricity. But it is also the poorest who already suffer most from an unstable global climate, as they are most dependent on the natural environment and have less protection is disaster situations.
It doesn't have to be this way. Neighboring Costa Rica has become a world leader in renewable energy. In 2004, the country was generating 98.6% of its electricity from renewable sources. At the same time, Costa Ricans enjoy the lowest prices and highest electricity coverage in Central America.
Around the world, some 1.6 billion people like Julio and Aida have no access to electricity. A further 800m lack any sort of modern fuel for cooking and heating. They might have some electricity, but only enough to power light bulbs and small domestic appliances.
It is part of the World Bank's remit to address this problem, and to ensure that new energy sources do not exacerbate climate change. At the IMF and World Bank annual meetings in Washington last weekend, the joint development committee urged the Bank to work toward "access to modern, cost-effective clean energy, especially among the poorest."
However, Nigeria is about to embark on an electricity privatization process bearing a worrying resemblance to the Nicaraguan model. The key problem is that building infrastructure to connect poor people living in remote areas to a national grid is rarely cost-effective for private investors, who require a return on their capital. The initial infrastructure required to set up hydroelectric or wind-based power systems is often greater, too, even though the running cost may be less.
Having created global warming with our own development, we are now allowing institutions like the World Bank to promote ill-conceived, carbon-based energy strategies in countries that cannot afford to make costly mistakes.
Sarah Wilson leads Christian Aid's media work on Latin America and the Caribbean. She regularly travels to the region to investigate how ordinary people are affected by global inequality.
She joined Christian Aid from Channel 4 News. She has also written for the Independent, Guardian and Mirror. She reported from Rwanda, Angola and Sudan for the Scotsman.
© Guardian News and Media Limited 2007
13 Comments so far
Show AllThe World Bank and the IMF must be ABOLISHED ABOLISHED ABOLISHED ! I cannot believe that the Left won't fight to ABOLISH these TOTALLY CORRUPT FROM INCEPTION "INSTITUTIONS".
The WB and IMF and the UN are all tools of the United States of Everything. They are used to legalize the genocide that our empire is facilitating around the world. Abolish the empire and these tools will break on their own.
Hoa binh
I was in Nicaragua about a decade ago, and even in the more "affluent" area where I stayed, the electricity was not very reliable. The fact is, quite simply, that the IMF and the World Bank, since the end of Bretton-Woods, have worked very well- only, not as advertised. The best explanation for why these international lending institutions do what they do, can be found in Naomi Klein's "The Shock Doctrine." This article, of course, adds yet another layer of meaning- the electrical shocks, surges and power outages created by the ideological privatization of the commons.
It doesn't matter the problem, the World Bank has the only possible solution - privatization.
Long before the Bush Administration, the WB and the IMF were operating in an ideologically-defined reality. Their god was the private market and the proof of their purity was their abiding faith in the absence of confirming evidence -- even in the abundance of contradicting evidence.
Countries which have spurned loans from the IMF and WB have generally done better than those which have accepted such loans and the conditions they impose. The only players who have benefited from these loans are US/Intl corporations who got monopoly contracts and the corrupt rulers who skimmed the proceeds.
The WB and IMF are Western economic imperialism in its purest form. They are evil incarnate. If OBL were as evil as Cheney says he is, he wouldn't be fomenting suicide attacks, he'd be fomenting international loans.
There's a common and deadly myth that capitalism and democracy are, if not the same thing, mutual forces. Global capitalism, legitimized through the World Bank, IMF, and WTO, is the antithesis of democracy. Megacorporations are accountable to no national government under "free trade" agreements. Who among Democrats are the courageous ones to oppose this horrid world order? Kucinich, I suppose. If/when he loses the nomination, I hope he runs as an independent or Green.
"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs."
- Thomas Jefferson
"I sincerely believe... that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale."
- Thomas Jefferson
How appropriate, and pathetic, that the Observer would print such ridiculous propaganda and reference the other mole papers where the author published as somehow conferring legitimacy. All through Latin America the people know who is helping them and trying to make their lives better so the only people those camoflaged capitalist organs are fooling are the people who comprise their dwindling, english speaking audience. And it begs the question, What's the point?
Venezuela is currently engaged in upgrading Nicaragua's power production, including building a refinery in the country, and you can be sure that Hugo wouldn't be doing anything to enhance the position of the transnationals. And Cuba is currently building hospitals in Nicaragua, which the Cubans will staff with their own doctors and technicians, and you can be sure that Cuba isn't helping the transnationals either. So, why don't the phony progressive news organizations report on the reality of the situation that is transforming Latin America?
The WB and IMF are definitely rotten and misguided; however, I find this article completely useless drivel since it employs weak-minded emotional anecdotes rather than data to make it's point. I doubt the privatization effort depended on "oil-based" production meaning liquid oil---Natural gas is the more likely source and definitely the best economic and environmental option. Did the privatized utilities increase supply--did growth in demand exceed the new supply? In DEVELOPING countries, this could be very likely and not indicative that privatization is a problem unless YOUR BIAS IS "PRIVATIZATION IS BAD."
Uh, jmacneil--Hugo is all about maximizing his state power--and when he builds anything I guarantee it will never match the efficency, environmental, and safety requirements of the "transnationals". You don't have to look far to see news of his own engineers leaving Venezuala for better working conditions. High oil prices might save Hugo for a while but reality eventually comes home to roost in corrupt countries.
Sarah Wilson says: And when we evaluated Nicaragua's electricity privatization program seven years after the reform was rushed through,
Of course they are rushed through - no one wants the public to have a chance to look at the deal too closely or they would be in an uproar. It is mute to be in an uproar after the deal is done.
Sarah Wilson says: The World Bank identified a scheme to change all this. Privatization of the state-run company was the answer, it said, promising greater access to electricity and lower bills.
Hey, privatization of Crown Corporations (term used to denote state-run companies) is always the answer - and not just in Nicaragua - it is the right-wing answer to everything. The Manitoba Government owns Manitoba Hydro and profits from selling hydro electricity to California helps fund our social programs. Ontario used to own theirs, but now they don't.
The same with automobile insurance. Manitoba Public Insurance (MPI) is not just government owned but it is the only game in town. Ontario doesn't have its own automobile insurance, instead, they have a whole bunch of privately own companies selling automobile insurance. The problem is that these privately run companies cannot provide their "services" in Manitoba - which they really really want to do.
If you listened to the throne speech, you will even see hints that the Prime Minister wants to "free trade" by opening up "markets" to various services.
THRONE SPEECH: Despite the "globalization of markets", Canada still has a long way to go to establish "free trade" among our provinces. It is often harder to move goods "and services" across provincial boundaries than across our international borders. This hurts our competitive position but, more importantly, it is just not the way a country should work. Our government will consider how to use the "federal trade and commerce power" to make our economic union work better for Canadians.
http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20071016/thronespeech_SIDEBARS_071016/20071016/
rjmart01 says: It doesn't matter the problem, the World Bank has the only possible solution - privatization.
It's the only possible solution Bush and Harper recognise as well.
jmacneil: Venezuela is currently engaged in upgrading Nicaragua's power production, including building a refinery in the country, and you can be sure that Hugo wouldn't be doing anything to enhance the position of the transnationals. And Cuba is currently building hospitals in Nicaragua, which the Cubans will staff with their own doctors and technicians, and you can be sure that Cuba isn't helping the transnationals either.
Cuba and Venezuela don't have a lot of private corporation operating their electricity plants. In fact, I would guess that they are state run.
What is wrong with crown corporations in Cuba and Venezuela using their resources to wrestle electricity production away from the private for profit companies? The less private for profit ownership in the area the better for all of them.
Crown corporations are inherently non-profit in that profits which are not invest back into production go to increase the health of the society.
Of course the whole article was diversionist propaganda, but that doesn't mean we can't use it's premise as a means of highlighting another subject that is worthy of reflection. It's easy to distinguish the feeble efforts of the CIA and other such supposedly covert and classless outfits because those morons can't use the truth and, now that information and communication travel so freely, that means their goofy propaganda will only ever be truly effective among their own kind for deluding themselves into believing that there is a future for their worthless system.
As for the slander against Hugo and the honor of Venezuela, you only have to familiarize yourself with the truth of what is being accomplished in Latin America to shield yourself permanently from the childish and ineffective nonsense that the detractors of socialism continuously spout. An excellent site from Venezuela is:
http://www.abn.info.ve/index.php
Of course, the spanish version is best but the english version is also comprehensive and will give you a good idea of what they are all about so that the next time you have recourse to read some article or comment about that honorable nation which is Venezuela you will be able to discern for yourself where the truth lies.
By the way, the largest topic of discussion in the closed door session of the recent IMF conference was how to disengage that fund and the WB from the world scene without having them seem too much like the abject failures which they have proven to be.
It's time to close the book on these International Loan Sharks.
The pain and suffering they inflict on humanity is too great.
jmacneil, I'm part of the "choir," but it's still a blessing to hear the good word from other angles. My Spanish is terrible, but I appreciate the link. We need more Hugos and less Georges in this world.