Russia urges World Bank and other foreign lenders to clean up or clear out

Jul 21, 2000 02:00 AM

Some Russian experts blame foreign aid programs for feeding corruption and urge the World Bank and other foreign lenders to clean up or clear out. These Russians say aid projects are well intentioned but dismally executed, lining the pockets of corrupt Russian bureaucrats and ignoring local needs.
Aid to Russia is under scrutiny at this summit of the world's richest nations in Okinawa. More than eight years into its clumsy economic transition, Russia is nominally part of the G8 - but owes huge debts to the club's wealthier members.
Lenders insist they are doing their best to help, but say their projects are sometimes derailed by the requirement that aid funds travel through government channels. That opens the way for corruption and delays, they admit.
The latest target of Russia's foreign aid frustration is the World Bank, already under increasing pressure from opponents in Washington. The bank is smarting from having to cancel a farming loan to China amid criticism that it would displace Tibetan herders and harm the environment.

The World Bank has launched nearly 50 projects in Russia, worth $ 11 bn, since 1992. Initial enthusiasm for the aid has turned to exasperation for many recipients, particularly on environmental projects.
After an October 1994 oil spill in the Arctic region of Komi, the bank pledged $ 99 mm in emergency cleanup loans. The Russian government had disbursed only part of the money and oil was continuing to bubble out of leaky pipelines into nearby streams, said Greenpeace Russia spokesman Ivan Blokov. "It was just one example of the problem with these aid projects. It was a very smart decision, to try to clean up that oil. But the result was catastrophic," Blokov said.
The World Bank said $ 82 mm of the money has been transferred to the Russian government - the amount necessary to take care of the spill - and that the rest is being reconsidered for other projects. The respected Initiative for Social Action and Renewal won a $ 2.5 mm grant from the bank in 1997 for conservation work at Lake Baikal, the world's largest freshwater lake - then quit the project a year later.
The group's Moscow director Mila Bogdan said the government body charged with approving and disbursing foreign environmental aid, the Centre for Project Preparation and Implementation, had refused to release the funds. "It was impossible to work with them. It was never clear where the money was," she said. "It makes more sense to work with small, private donors."
Alexander Averchenko, the government aid centre's director, said he was under constant pressure from rival Cabinet ministries trying to influence where foreign aid goes. But he faulted the World Bank for paying too little attention to where its money ends up.

The World Bank has been among Russia's most eager lenders. It granted its largest ever one-time loan, $ 1.5 bn, in August 1998 - just days before a massive government debt default and ruble crash.
This year, the World Bank was the first lender to offer money to Russia after President Vladimir Putin's election in March: a $ 60 mm loan to the forestry industry. But environmentalists say the aid would accelerate destruction of forests and do nothing to stem widespread illegal logging.
67 Russian scientists and activists called on the World Bank to suspend all lending to Russia until Putin reinstates the State Environmental Protection Committee. The activists say the government now has no way to enforce environmental regulations.
The World Bank agreed in a letter not to disburse the loan until the government clarifies its plans. But the letter's author, bank Vice President Johannes Linn, said the environmental committee had done little to solve Russia's ecological woes. "The government's decision to reorganise those services... can therefore be seen as an opportunity to improve natural resource management in Russia," he said.

Source: AP
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