World Bank plan al­lows Third World to set its own rules

The Washington Times Weekly - - World - By Steve Hirsch

A World Bank pro­posal would al­low Third World coun­tries to use their own rules in­stead of the bank’s to award con­tracts for bank-funded projects.

Busi­nesses from the U.S. and else­where fear the pro­posal would lead to in­creased cor­rup­tion in such coun­tries as Nige­ria, Zim­babwe and Azer­bai­jan.

The bank pro­posal, a new ver­sion of a 2005 plan, as out­lined in a May 4 “Of­fi­cial Use Only” sta­tus re­port, would set up pilot projects in dif­fer­ent coun­tries, aiming to as­sess the fea­si­bil­ity of us­ing “coun­try sys­tems” for pro­cure­ment.

The World Bank ap­proves more than $20 bil­lion worth of projects an­nu­ally, ac­cord­ing to Diane M. Wil­lkens, pres­i­dent of De­vel­op­ment Fi­nance In­ter­na­tional, a com­pany that works on be­half of com­pa­nies bid­ding on World Bank con­tracts. Lend­ing by re­gional de­vel­op­ment banks, such as the Asian De­vel­op­ment Bank, brings lend­ing by the in­sti­tu­tions closer to $40 bil­lion, she said.

The bank says chang­ing the pro­gram would im­prove the ef­fi­ciency of gov­ern­ments’ spend­ing, in­crease coun­tries’ “own­er­ship” of de­vel­op­ment projects, im­prove im­ple­men­ta­tion of en­vi­ron­men­tal and con­tract­ing laws, en­cour­age donors to key their pro­cure­ment and other re­quire­ments to a de­vel­op­ing coun­try’s own sys­tem, and cut costs.

Busi­ness groups say the pro­posal does not in­clude an ad­e­quate method to en­sure that the coun­tries’ sys­tems are up to World Bank stan­dards.

The World Bank sanc­tioned more than 100 or­ga­ni­za­tions for fraud and cor­rup­tion in bank-fi­nanced projects dur­ing the pre­vi­ous two fis­cal years, it said in a Fe­bru­ary re­port. It in­ves­ti­gated and closed more than 400 fraud and cor­rup­tion cases dur­ing the pe­riod.

Busi­nesses also are com­plain­ing that the World Bank has not suf­fi­ciently con­sulted com­pa­nies and oth­ers in­volved in the multi­bil­lion-dol­lar busi­ness as the pro­posal de­vel­ops.

Sev­eral busi­ness lead­ers, in a June 5 let­ter to World Bank Man­ag­ing Di­rec­tor Juan Jose Daboub, said the plan re­flects lit­tle ef­fort to ad­dress con­cerns busi­ness of­fi­cials had about weak­nesses in the pro­posal from two years ago and raised ques­tions over whether the cur­rent ver­sion would help cre­ate ac­count­able con­tract­ing sys­tems in de­vel­op­ing coun­tries.

The let­ter, signed by Na­tional For­eign Trade Coun­cil Pres­i­dent William A. Rein­sch, Na­tional As­so­ci­a­tion of Man­u­fac­tur­ers Pres­i­dent John En­gler, U.S. Coun­cil for In­ter­na­tional Busi­ness Pres­i­dent Peter M. Robin­son and oth­ers, also raised con­cerns that the pro­posal does not in­clude de­tails about how coun­tries’ sys­tems would be eval­u­ated.

The let­ter says the plan calls on coun­try sys­tems to achieve “equiv­a­lence” to World Bank stan­dards, but ig­nored specifics in the ear­lier pro­posal about ad­ver­tis­ing con­tract­ing op­por­tu­ni­ties, lack of in­ter­na­tional ar­bi­tra­tion and other el­e­ments of ac­cepted in­ter­na­tional prac­tices.

“In­stead of ad­dress­ing the short­com­ing of the ear­lier approach, the May 2007 pa­per re­places de­tails with as­ser­tions of ‘equiv­a­lence,’ ” the let­ter says.

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