- The Washington Times - Wednesday, June 28, 2000

Critics yesterday seized on a damning internal World Bank report to argue that a planned $40 million loan to help resettle Chinese farmers into a remote region once claimed by Tibet should be permanently scuttled.

The World Bank review, leaked to several news organizations Monday, is the latest blow in a mounting public relations nightmare for the bank, which tentatively approved China's application a year ago over the objections of the United States, Germany and a number of pro-Tibet human rights organizations.

"If the World Bank had followed its own policies, the report shows, this loan never would have and never should have come to the board," said Kay Treakle, managing director of the Bank Information Center, a longtime opponent of the Tibet loan.

"What the report shows is that there are deeper problems about the World Bank's commitment to the social and environmental policies it says it wants to follow," she said.

"There are some projects that just can't be fixed, and this is one of them," said John Ackerly, president of the Washington-based International Campaign for Tibet.

According to the report, an internal audit concluded that the bank's loan officers seriously underestimated the disruption the program would bring to the environment and to the 4,000 Tibetan and Mongol herdsmen already living in the region.

In addition, project managers used inaccurate maps that omitted whole villages in evaluating what China calls the Western Poverty Reduction Project.

The $40 million loan is part of a larger $160 million bank-financed anti-poverty project undertaken by the Chinese government. Under the program, nearly 58,000 low-income ethnic Chinese farmers would be relocated to land in Qinghai province traditionally occupied by Tibetans, Mongolian herdsman and other ethnic minorities.

In addition to the resettlement program, the project would improve irrigation, roads, schools and dams in the resettled areas.

In approving the loan, the bank said it would boost the incomes of the relocated farmers, attract social services to the region and cause minimal disruption to the local inhabitants.

The controversy over the project has been so great that World Bank President James Wolfensohn has delayed disbursing any funds while a new series of impact studies are conducted. The new studies will keep the World Bank money in limbo for at least a year.

But the World Bank's executive board meets next month to consider the internal report and vote on whether to kill the loan altogether.

In Beijing yesterday, government officials showed no signs of backing down, saying critics of the loan were more interested in embarrassing China than they were in helping a few thousand herdsmen.

"Some people, out of ulterior motives, have created something from thin air, distorted facts and used this project to produce a work of fiction," Foreign Ministry spokesman Zhu Bangzao told reporters yesterday.

"Preparatory work for this project was conducted strictly according to the various rules of China and the World Bank, including those on resettlement, environmental protection and social security," the Chinese official contended.

But the internal World Bank report directly challenged that assertion, saying loan officers had bent or broken internal policies in seven of the 10 criteria under review.

In particular, the review concluded, the bank did not consider other, less sensitive areas in China for the resettlement program.

Three outside specialists say they found many of the people now living in the region were afraid to express their concerns about the resettlement idea, which would rewrite the region's ethnic makeup.

"Those who opposed the project clearly felt threatened and asked that their identity be kept secret," according to a draft of the report obtained by Bloomberg News.

The question of China's control of Tibet is one of the most sensitive facing the Beijing government. The exiled Dalai Lama, the spiritual leader of Tibet, was born in the very land in Qinghai province targeted by the resettlement program.

The province, formerly known as Amdo, was annexed by China in the 18th century and renamed Qinghai. The territory lies just to the northeast of present-day Tibet, which China annexed in 1951.

Mr. Wolfensohn, who was in Paris when the first press reports of the internal review appeared, said Monday that the China loan was destined to be controversial, no matter what the World Bank did.

"Even an immaculate presentation, including details and commentary on the procedures, would never meet the requirements of those who oppose China's current stance on Tibet," he said at a Paris press conference.

• This article was based in part on wire service reports.

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