End of the road for nasty, dirty rich environmental bullies
- Mike Muller
- 27 Mar 2014 01:20 (South Africa)
From his CV, US Senator Patrick Leahy looks like a nice progressive guy, for an American career politician. He supports organic farmers and renewable energy and has campaigned against landmines and cluster weapons. So why did this man from Vermont, a small, pretty state with a population considerably smaller than Limpopo’s Vhembe district, decide to tell Africans to stay poor; aggravate Southern Africa’s power shortage; and incidentally trash his own President’s plan to “Power Africa”?
The answer helps to illustrate the how American and European NGO politics impacts on poor people without effective voice. It also shows just how vulnerable Africa has been to foreign bullies. Fortunately, that era is coming to an end. And not a moment too soon.
A decade ago, Uganda was running out of electricity as the population and economy grew. Power cuts were becoming increasingly frequent and factories were finding it difficult to cope. The state power company and individual companies turned to dirty and very expensive diesel generators. The transport of diesel by tanker on the notorious Mombasa - Nairobi – Kampala road was profitable for some but many industrial users could not afford the high prices and simply shut up shop. Unemployment and poverty grew.
Uganda had an alternative. At Jinja, where the Nile river flows from Lake Victoria, the Owen Falls hydroelectric dam had been built in colonial times to capture the river’s power. The Ugandan government planned to build a further power station a few kilometres downstream, to double the power generated by the controlled flow. But environmentalists, mainly from the USA and Europe, objected and started lobbying the development banks to stop the project. They alleged that the dam required would displace large numbers of people, destroy local cultures and damage the environment. They had little local support; their Ugandan associate, the “National Association of Professional Environmentalists” was famously documented by Washington Post reporter Sebastian Mallaby to have just 25 members. Mallaby commented that:-
“Time after time, Western publics raised on stories of World Bank white elephants believe them. Lawmakers in European parliaments and the U.S. Congress accept NGO arguments at face value, and the government officials who sit on the World Bank's board respond by blocking funding for deserving projects.”
There was a bitter exchange between Mallaby, the journalist who told the story and the California based International Rivers Network over the details. But a few years ago, when I visited the site where the Bujagali dam was finally being built, it was evident that just a handful of people had been affected. The reservoir is small, covering less than 400 hectares (including the original course of the river) since water is stored in the vast Lake Victoria. Aside from the foreign-owned white water rafting company which had to relocate, the main complaints were the inconvenience caused by the construction and the fact that not enough locals were being employed.
But the cost of delay can be documented. Electricity shortages and high energy prices were identified by the International Monetary Fund as a major drain on the economy. The resulting increase in unemployment and poverty has been measured; the increase in infant mortality caused by increased poverty is well documented. The available data suggests that perhaps 10,000 children died as a result of the delayed electricity project.
But Uganda is by no means the only place in Africa where countries have been prevented from using cheap, reliable and renewable hydroelectricity. Closer to home, the Zambezi River could be producing 10,000Megawatts more than is already generated at Cabora Bassa and Kariba. That could be supplying the regional power pool from which South Africa would also have benefited. But that capacity was not developed when it was needed.
The donors, on whom countries like Mozambique and Zambia depend, would simply not allow aid money to be spent on planning and developing water infrastructure projects. In the early 2000s, I sat through one particularly ill-tempered meeting in Europe where African water Ministers said that they needed funding to prepare infrastructure projects and their European counterparts simply refused to put that on the agenda for discussion. They wanted to talk conservation.
At the root of this conflict is a family of environmental NGOs that has been remarkably effective at stifling Africa’s hydropower development proposals even as they fail abjectly to influence their home countries’ environmental and climate change policies. The Germans, amongst the most vocal opponents of dam development, have increased their use of coal for electricity generation over the past few years even as they lecture Africans about the need to reduce CO2 emissions and prepare for climate change.
But the NGOs have targeted the World Bank and the wider family of regional development banks because they are gatekeepers for funds to poor countries. Even if they don’t lend all the money needed for projects, their involvement gives comfort to other financiers who don’t have the capacity to evaluate projects.
South African born John Briscoe, former Chief Water Advisor to the World Bank has documented the consequences of the attack on the Bank for investment in water:
“… poor developing countries without choices had to deal with the enormous transaction costs and processes which piled up in the Bank. ‘I am ashamed to even come here’ said President Museveni of Uganda, when he thought he was inaugurating the Bujagali dam in 2002. ‘I am not happy because a project that should have taken two years has taken seven years to start. All this hullabaloo has been a waste of time and a lack of seriousness... this was a circus’ (Reuters, 2002) (little knowing that the process would take another six years before the project was to be actually approved!).
In short, there was an impasse between the urgent needs for financing of infrastructure in poor countries, on the one hand, and an ever-more skittish set of institutions (with the World Bank, the iconic institution) unable and unwilling to make capital available for reasonable projects which should be built. Bank lending for hydropower fell by 90% in the 1990s.
Briscoe documented how the US government worked, back then, to ensure that its positions were adopted by an institution where decision-making is, nominally, the responsibility of its 180 country members. In the formal meetings of the Bank’s directors,
“… the rich countries did not contradict the views of the developing countries but did their talking in other ways. Immediately after one of these sessions the phone rang in the office of my Vice President. It was the US Executive Director who, uncharacteristically, had not said a word during the discussion. ‘If this is the position taken by the Bank, then you should know that it will be very difficult for the US to support the next round of IDA’. IDA is the concessionary tail which wags the hard-lending dog in the World Bank.“
More recently, it appeared that this approach was history. The World Bank reviewed its water policies and recognized that if they did not invest in water infrastructure, they would be failing in their job as a development bank. They recognized that hydropower, which uses the solar energy that drives the hydrological cycle, is an excellent way of producing cheap, reliable low-carbon energy. They also acknowledged that storing water in infrastructure like dams was important to allow poor countries to ensure reliable supplies of the water that they need for their development despite their unpredictable and variable climates.
The example of South Africa is frequently cited. Were it not for the dams that augment the Vaal’s flow during dry seasons, Gauteng and its surrounds would have just one tenth of the current water supply reliably available. The economy would close down and the majority of Gauteng’s people – who consume most of the stored water – would have to move elsewhere. But while South Africa has dams in which it can store approximately 600 tonnes of water per person, the figure in many sub-Saharan African countries is closer to 60 tonnes. Meanwhile, the USA stores over 6000 tonnes of water per person.
But Patrick Leahy, the Democrat from Vermont, first elected in 1974 and now his country’s longest-serving senator, has decided that he does not want to allow African countries to enjoy the benefits that he already has. He introduced a clause into the 2014 US budget, now passed into law, that instructs the World Bank (and the wider family of regional development banks in Africa, Asia and Latin America) not to allow Africans to build dams. He can do this because he is chairman of the foreign affairs sub committee of the Appropriation Committee, which draws up the US budget and sets conditions for its use. Although in June last year, President Obama had promised to help bring Power to Africa, his Vermont Senator had other ideas. The clause he introduced into the law stated clearly that:
“The Secretary of the Treasury shall instruct the United States executive director of each international financial institution that it is the policy of the United States to oppose any loan, grant, strategy or policy of such institution to support the construction of any large hydroelectric dam.” (Section 7060(c)(7)(D).)
So why should a good guy like this introduce into US budget legislation a provision that will keep poor people in poverty and stall African development? The answer, it would appear, is that he has to keep his environmental constituency sweet. And he doesn’t have to worry about offending black voters, who might raise African concerns. The 2010 census found only 6277 African-Americans in Vermont, just 1% of the population. This is presumably why he was also able to help pass an agriculture Bill that made significant cuts to the food stamp programmes on which many poor - disproportionately black - Americans, depend. And Senator Leahy clearly worries even less about the feelings of the millions of people in Africa and Asia on whom he imposes his views. He certainly does not account to them.
The fact that most of Vermont’s electricity comes from the kind of large dams he opposes elsewhere just passes him by. He is comfortable to abuse the US Treasury to carry instructions into the World Bank that override any internal analysis. His instructions will overrule the Treasury’s own staff let alone the World Bank and its members, simply to please his lobby group.
He can do this because the Banks work on a “one dollar, one vote” system that allows richer shareholder countries to veto policy and projects that they don’t like, regardless of the quality of the proposals. Yet Leahy knows that his own country’s aid programmes are seriously flawed. In 2012, he told the heads of his government’s USAID programme that,
“I have long voiced my concerns with the way a few large U.S. contractors and NGOs obtain the vast majority of USAID funding. Years ago I created the Development Grants Program, a small fund to support innovative proposals of small, mostly local NGOs. But USAID has done what it does too often – take a good idea and either fail to implement it or redesign it in such a way as to thwart the original intent.
“I hope you can tell us what you expect from the changes to USAID’s procurement process, because they need to fundamentally reform the way USAID does business. If these changes just end up shifting resources to big contractors in developing countries that is not the reform we seek.”
In 2007 I met a group of US Congressmen, the HELP commission, who were on a round-Africa junket to find ways to make their foreign assistance more effective. I asked whether they could they pool their resources with other donors - “SWAPs” – sector wide approaches are widely used to help both donors and recipients use external assistance more effectively. That would be a step too far they said, their big contractor lobbies were simply too powerful to fight.
The consequence was seen in another attempt to make US aid work more effectively. The Millennium Challenge Programme tried to go beyond normal USAID pork barrel process of appointing an American main contractor, who would then often appoint an American sub-contractor and then a local contractor (who would do all the work). But in Mozambique, they could only fund just over half of their intended projects, because their bureaucratic procedures added so much to the costs.
Yet the Help Commission report highlighted that a Principle underlying American aid should be that it “Supports the promotion of democratic principles and recognize that good governance and accountable leaders advance development.”
Accountability, like charity, it seems, should start at home but doesn’t go much further.
So, one reason that Leahy’s intervention was approved may lie in the fine print of the Power Africa proposals. The problem with the World Bank is that it insists on (relatively) objective tender procedures, under which companies from countries like China, Korea and India regularly wipe the floor with American competition. Power Africa will not allow such indignities. It will rather use traditional US institutions to extract as much business for themselves as they give help to poor countries.
This is where the BRICS and their bank comes in. A decade ago, the World Bank and its regional family were the only game in town. If poor countries could not get their support, they could not build dams. So many countries, faced like Uganda with power shortages, ended up burning dirty coal or expensive diesel to try and keep up with growing demand for electricity. Hydropower was simply off the agenda.
Then China got in on the act. As their trade with Africa and other developing regions has expanded, they have offered attractive deals to pay for the minerals and other goods that they are exporting. And, while this has been viewed with suspicion by many – particularly western – commentators, the basic rule is that China is willing to provide what it is asked for.
Help with dams is one area where they can offer obvious value. Over the past couple of decades, China has built hundreds of large dams to provide water for its cities and agriculture, for flood protection and to generate clean electricity – a high priority as the ongoing Beijing smog crisis is showing us. So, in their discussions with African and Asian countries, they offered to support dam building projects for hydropower as well as water supply and irrigation.
The response has been remarkable. According to the International Rivers Network, the leading anti-dam NGO (located, bizarrely, in California, whose economy would collapse without water from large dams) China is now financing and building over large 15 dams in 8 African countries and there are more to come. Chinese companies are also building projects financed by other parties as in Lesotho, where Sino Hydro, China’s leading dam construction company, won the billion rand contract to build the Metolong dam to supply Maseru, with finance from Middle East Development Funds. Brazil and India, also capable dam builders, are following suit. Because alternative sources of funding are now available, the World Bank’s effective ban on water infrastructure has just opened up the market to other players.
So this is another piece in the puzzle about Senator Leahy. People who think he is a nice guy will say that he is just starting a conversation about social and environmental protection in developing countries. But that is not how it will be seen in Africa and Asia. Says John Briscoe:
“it reinforces a prevalent view that US policy towards the developing world is driven by politicians who are driven by extreme single-issue groups at home, and give little attention to the proven instruments – including infrastructure – which lead to growth and poverty reduction.”
The outcome is already clear:
“Africans and others are turning and will turn, with great appreciation, to the governments and companies of China and Brazil and potentially to a BRICs Bank, who understand that electricity is one of the keys to a better life, and who will help Africans build the infrastructure they need for economic growth and poverty reduction.” DM
Mike Muller is a former Director General of Water Affairs who advises a range of national and international organisations on water and development issues. He is also currently researching the contribution of water to regional development and integration in Southern Africa for the Water Research Commission.