World Bank Case Study (Graded)

World Bank Case Study (Graded) - Will Roper POLS 255 Global...

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Unformatted text preview: Will Roper POLS 255 Global Political Ecology Abstract: This essay explores the methods of the World Bank when dealing with projects in third world countries and how they can manipulate the carrying out of the project through their own research despite how detrimental the project might be to the people and the environment of the country. This essay uses the case example of the paper mill being installed on the Uruguay River which lies between Argentina and Uruguay. Problems for both countries have arisen from the project and yet the World Bank continues to support the project despite evidence that it negatively affects both the population and the environment . Power of Persuasion: Money Talks In 1991, Argentina, Brazil, Uruguay, and Paraguay, met in Asuncion, Paraguay to sign the Treaty of Asuncion and establish the South American common market that is Mercosur. The treaty defined the program that would strive to gradually eliminate import and export fees between the participating countries. Combined, the economic might of Mercosur is the fifth largest in the world with a combined GDP of 2.42 trillion dollars a year1. However, this promising organization has been compromised in recent years by a paper mill being erected near the Uruguay River which separates Argentina and Uruguay. The controversial project has caused quite an uproar in both countries, one hoping for economic salvation, the other is certain of resulting environmental degradation. In 2006, the Finland-based company, Botnia, received $520 million for financing the project from the World Bank Group2. The development for the plant has been met with hostility from the Argentine citizens who fear that their natural environment and health are at stake if the plant is completed. The response from the people of Argentina has been setting up road blocks on many points of access across the river. These roadblocks have resulted in a loss of millions of dollars for Uruguay as well as put potentially fatal strains on the relationship between Uruguay and Argentina that was established by the free trade agreement. Could the World Bank's monetary support for the project not only create more strain on the environment but also lead to the severing of friendly political relations between two countries that have historically been very amicable to each other? While the project's completion will create many thousands of jobs for some while potentially harming the health and environment of others, the long term effects of the controversial issue will result in a situation just as damaging to important diplomatic ties as the environment. If there is evidence to support these problems, then how can the World Bank continue to support the project, and how can the other support from the government continue? I believe this support for a project that is detrimental in so many aspects can only come from the World Bank's manipulated research and facts and from the many millions of dollars they are willing to loan in order to get the project up and running . In the beginning, and on paper, Uruguay had everything to gain by accepting the funds given to build the cellulose plant. The investment made by the World Bank was the largest foreign investment in Uruguay's history and will, upon its completion, result in the creation of 2,500 jobs for the developing region3. While tourism and fishing have been a part of Uruguay's economy they could be severely crippled when the dust settles, but the risk is an acceptable one for the Uruguayan government, which considers the project in the best interest of the citizens. Argentina will come out with nothing from the development of the plant other than more polluted water and air. Surprisingly, the issue has been addressed much more directly by the citizens than the government, which seems hesitant to take direct action against the roadblocks. The roadblocks have been organized and maintained by the citizens of the region and the surrounding areas, while the government has had little to no interventions with the issue. While the Uruguayan government claims that Argentina is violating the free trade bloc agreements established through Mercosur, Argentina counters by claiming that the construction of the plant violates the treaty between the two countries which states that both parties must inform the other of projects that will directly affect the border river. This useless treaty has provided no conclusions since Uruguay points out that the treaty merely requires that the other party be informed of the project and does not require permission to be granted. A rarely acknowledged player who has had a tremendous influence in the project is, of course, the financial supplier of the project, the World Bank Group. The Bank has funded hundreds of projects around the globe with the goal of assisting developing countries by funding developmental projects. With the organization's huge funds and tremendous potential to change the world, social pressure has been put on the World Bank to "go green" with the projects they fund. The World Bank defends itself against critics with evaluations carried out themselves which claim that little to no harmful long-term effects to the environment will come from the completion of the plant. I question the thoroughness of the evaluations as I found research that showed a growing threat of drought in the area caused by the 232 square miles of eucalyptus tree plantations planted by the Botnia corporation4. These water-hungry plants have already dried up many wells in the area and caused difficulties for ranchers trying to feed and raise livestock. It even resulted in the evacuation of a small town formally known as Las Flores (The Flowers), which has since been renamed Pueblo Seco (Dry Town). These water shortage problems have been conveniently left out of the World Bank's evaluation of the region's sustainable future . It was especially optimistic that these facts were left out when the problem will only grow exponentially upon the plant's completion as pulp mills require vast amounts of water to maintain production. This is evidence of not only environmental degradation, but also potentially increasing poverty in the region. To date, it seems that neither country has gained much from the plant being built. Argentina has lost face with Uruguay over the issue. Uruguay has lost an estimated $400 million due to the roadblocks across the river5 . Mercosur, as a whole, has received a tremendous amount of strain from the issue as two of its four founding members threaten to destabilize the entire agreement over the construction of the mill. Ultimately, who is to blame for the conflict? The Argentine government's lack of intervention with the economic-crippling roadblocks despite the free trade agreement has led many people to point the finger at them. However, many Uruguayans are also not pleased with the plant's construction and its potential environmental consequences. In the past few years I have come to find the majority of big businesses to be morally inept and profit driven, and therefore I do not consider the Botnia corporation responsible as their pushing for the construction of the plant despite negative environmental repercussions to be only natural. While the World Bank is also a business like any other bank, I consider their position of power and influence to come with moral responsibility. Their role as the instigator with the project has been detrimental to all involved. In April 2006, the Dutch bank ING opted out of considering funding the Botnia plant due to its environmental consequences. Why then did the World Bank Group, who claims to strive for decreasing poverty and environmental degradation, go on to loan a collective amount of over half a billion dollars to a project that is resulting in the violations of multiple treaties, forced population migration, and harmful environmental effects ? This double-edged sword of profit/development and environmental preservation is a tough one to balance. If the plant is constructed as scheduled, people living on the river, in both countries, will be forced to deal with the environmental hazards that will develop in the regions. If the plant is relocated to another region, the river might be saved, but the citizens of Uruguay will be left with the large unfinished relic of the plant to serve as a constant reminder of an opportunity lost. Only time will tell what the outcome of this issue will be, but time has already shown the economic approach the World Bank takes with developing countries, and it seems to follow today's "golden rule" of economics: "Those who have the gold make the rules ." Works "Common Market of the South." BBC News. 24 May 2007. 1 Nov. 2007 <http://news.bbc.co.uk/1/hi/world/americas/514.stm>. 2 . "World Bank Approves Loans for Uruguay Paper Mill." Forbes. 22 Nov. 2006. 1 Nov. 2007 <http://www.forbes.com/markets/feeds/afx/2006/11/22/afx3196883.html>. 3 1 Donovan, Kate. "A Beneficial Uruguayan Paper Mill: Pulp Fiction?" Council on Hemispheric Affairs. 30 Jan. 2007. 8 Nov. 2007 <http://www.coha.org/2007/01/30/a-beneficial-uruguayan-paper-millpulp-fiction/>. 4 "Bank Stumped on Uruguayan Paper Mills." Bretton Woods Project. 30 June 2006. 8 Nov. 2007 <http://www.brettonwoodsproject.org/art-538502>. 5 Taillant, Jorge D. "Using Human Rights Tribunal to Force Bank Compliance: Uruguayan Paper Mill." Bretton Woods Project. 23 Jan. 2006. 8 Nov. 2007 <http://www.brettonwoodsproject.org/art-507742>. Will, this is a great case study. You frame the topic very well in your introduction. However, the structure of the paper is a bit disorganized. You have a tendency to bring together many important points in a specific paragraph. You briefly bring up these points but do not develop them (see my comments on the margins). You need to be less ambitious. Focus on three or four points and develop each point in a separate page. That's enough! To strengthen your analysis you also need to explain more clearly what were the goals of each actor in this conflict. Devote at least a paragraph to explaining each actor's goals. What did the WB want out of this project and how was this project consistent with its goals? What did the government of Uruguay want? The government of Argentina? How did the three parties negotiated an end to the conflict? How important was the environment in the raking of priorities of these actors? 82 ...
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This essay was uploaded on 04/20/2008 for the course POLS 100 taught by Professor Toral during the Fall '05 term at Beloit.

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