[Congressional Record Volume 143, Number 160 (Thursday, November 13, 1997)]
[Senate]
[Pages S12530-S12533]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                             THE WORLD BANK

  Mr. President, the fiscal year 1998 foreign operations conference 
report contains full funding for the International Development 
Association [IDA], the concessional lending window of the World Bank. 
It also fully funds our past commitments to IDA. With this 
appropriation we will be current, for the first time in several years, 
in our payments to IDA. This is an important milestone, and I 
appreciate the support of the chairman of the Appropriations Committee, 
Senator Stevens, the chairman of the Foreign Operations Subcommittee, 
Senator McConnell, the chairman of the Budget Committee, Senator 
Domencici, and others, who also supported this funding, because it 
reaffirms U.S. leadership at the World Bank and our intention to exert 
that leadership to promote significant reforms in the institution. As 
one who played a role in obtaining this funding, I can say with 
confidence that the Congress is sending two important messages by 
approving the conference report.
  First, we recognize that in order to exert leadership in the 
multilateral development banks we need to meet our financial 
commitments. We have been in the ludicrous position of having an 
American, Jim Wolfensohn, at the helm of the World Bank, but our 
representative on the Board of Directors has been at the sidelines, 
unable to even vote on some loans. Why? The U.S. sank so far into 
arrears to IDA--nearly $1 billion at one point--that some of our voting 
privileges were revoked. Now, with the passage of this legislation we 
are paying off the last bit of arrearages, $235 million, plus our 
current obligations.
  Second, we are sending the message that we expect this investment to 
yield results. We are fortunate that World Bank President Wolfensohn is 
a dynamic and reform-minded leader who is taking steps to shake up the 
bureaucracy, get rid of dead wood and demand high standards of 
performance. His reform plan, the strategic compact, promises 
development results in 2 years. Frankly, I am concerned that despite 
his best intentions, the Bank bureaucracy continues to put up fierce 
resistance and may in the end succeed in thwarting many of his reforms. 
That is why this reaffirmation of U.S. leadership is so important.
  Reform at the World Bank is moving forward, but there is a long way 
to go. Not all member countries have the same vision for change that we 
have. I want to take this opportunity to briefly discuss what I believe 
the Congress needs to see, at a minimum, from the Bank's reform efforts 
in order to continue to support the institution. We expect the Treasury 
Department and the U.S. Executive Director to work closely with the 
Congress to achieve these reforms.
  One of the issues that has received increased attention in recent 
years is the Bank's role in fostering good governance. I think this is 
critical. While the Bank needs to avoid becoming embroiled in the 
domestic politics of borrowing countries, when systems are corrupt and 
on the take the Bank cannot look the other way. When governments are 
undemocratic, when they abuse human rights, the World Bank as a public 
institution must not collude. The Bank has made strides in attacking 
corruption, but stronger action is needed. In addition, the Bank needs 
to ensure that it is not the handmaiden of borrowing governments that 
trample on the needs and rights of people in the pursuit of economic 
prosperity.

  A related issue, because of its importance to the quality of Bank 
lending and borrowing governments' responsibility to their people, is 
consultation with local people. The Foreign Operations Conference 
Report calls on the Bank to systematically consult with local 
communities on the potential impact of loans as part of the normal 
lending process, and to expand the participation of affected peoples 
and nongovernmental organizations in decisions on the selection, design 
and implementation of projects and economic reform programs. This is 
common sense. It is also vitally important. Private corporations do not 
launch products or services without market surveys and the knowledge 
that there is a demand for what they have to offer. Public 
institutions, like the World Bank, also need to know about the people 
they are serving. This does not mean just interacting more with 
affected communities, it means letting them wield influence and 
responding to their concerns.
  The Bank has taken steps in this direction. It is decentralizing and 
hiring staff for its Resident Missions that are concerned with the 
well-being of affected communities. We want to know whether the 
intended beneficiaries of Bank-financed projects want these projects 
and whether they have a say in designing them. Too often, local people 
are not involved in a project until the implementation stage, when it 
is too late to have a real influence. Efforts at headquarters and in 
the regions need considerably more resources to work with borrowers to 
reach out to affected communities.
  The Bank's loan portfolio has a low level of sustainable projects. 
Studies show that in recent years, only two-thirds have succeeded 
during implementation. Only 44 percent have been sustained after 
completion. Social assessments are now performed on less than ten 
percent of projects, despite the fact that every project has a social 
impact. We want the Bank to deliver on the promise of its strategic 
compact to substantially increase this percentage in 2 years. Over and 
over again, the Bank's own studies show that projects with good social 
assessment seldom fail. And we do not want social assessments limited 
to projects in the social sectors. They are just as essential for 
lending for structural adjustment, financial sector reform, energy, and 
industry as they are for education and health loans. In addition, we 
want these assessments to address the needs of the most vulnerable 
people. As we all know, powerful interest groups can represent 
themselves.
  It is not enough to do environmental impact assessments [EIA's] and 
social assessments. They need to be acted on. EIA's are often shelved 
and do not influence project design. That is a waste of money, it does 
environmental damage and betrays the people involved.

[[Page S12531]]

 We would not want the Army Corps of Engineers to ignore these kinds of 
assessments, and the World Bank should not either.
  The World Bank is a bank as well as a development institution. We 
understand the pressure to keep loan volumes at certain levels. We also 
understand that to be competitive, the Bank needs to serve its client 
governments in a timely and efficient way. However, some of the reform 
efforts are going overboard in this direction. Careful project 
preparation with quality checks should not be sacrificed on the altar 
of speed and efficiency. I know Mr. Wolfensohn shares our concerns 
about this. The Bank needs to provide management with much stronger 
incentives to maintain quality in the face of pressures for volume and 
speed.

  For participation in Bank-supported lending operations to be 
meaningful, people need information. In 1992, the Bank adopted an 
information disclosure policy, largely in response to pressure from 
Congress. It has made gradual progress in implementing that policy. 
Much more needs to be done in terms of making the information available 
in borrowing countries in local languages, and providing information in 
a timely way at early stages of lending operations. The Project 
Information Document, which describes plans for operations, is often 
provided late, incomplete, and only in English.
  We want to see progress in providing the full text of Project Concept 
Documents as well as draft copies of technical papers that assess 
feasibility, and information from Country Assistance Strategies.
  A Country Assistance Strategy is the Bank's master plan for lending 
to each borrower country, and it describes the Bank's framework for all 
operations and priority investments. More needs to be done to include 
social development analyses in the these documents. In addition, the 
bulk of their contents should be available to the public. Parliaments 
and citizens have a right to information about the Bank's lending 
plans. I recognize that some of the Country Assistance Strategy 
contents are confidential, but the essentials certainly should not be. 
Nonetheless, Bank management has opposed proposals to release these and 
other documents containing their projected lending plans. That is 
unacceptable.
  We also need to see greater openness between the World Bank 
management and the Board of Directors. During late 1996 and 1997, the 
Bank conducted a substantial review of its portfolio. It reviewed 150 
projects in 14 sectors at a cost of $800,000. For reasons that I find 
inexplicable, some Board members have been unable to obtain these 
studies.
  We do not want our dollars contributing to bloated state 
bureaucracies and systems in which the private sector is crowded out by 
state controls. On the other hand, there is obviously a role for 
governments, as the Bank's most recent World Development Report 
describes, and for public-private partnerships. The Bank is doing more 
today to promote such partnerships than it ever has. I welcome that.
  But promoting the private sector must not come at the expense of 
normal precautions about financial, technical, social and environmental 
risks. Public inducements to investment, such as guarantees against 
political risks, must not distort the feasibility analyses of project 
viability. To insure that this does not happen, Mr. Wolfensohn has said 
he wants to harmonize the World Bank Group's activities under one set 
of social and environmental policies. At the present time, there are 
different standards in the World Bank Group. For instance, the 
International Finance Corp., the Bank's affiliate that deals with the 
private sector, has lower standards with respect to information 
disclosure, protection of the environment and of the rights of 
indigenous peoples.

  The answer is not to abolish or weaken sound policies and standards. 
It is essential that harmonization not result in a retreat from current 
policies to a lowest common denominator. I am concerned that Bank 
management is under pressure to do that. Congress helped to create some 
of these global standards. They need to be respected and built upon by 
the Bank Group, including the IFC and Multilateral Investment Guarantee 
Agency. There is language on the IFC in the Foreign Operations 
Conference Report which aims to make progress in this area.
  Currently, the World Bank stresses lending to countries which adopt 
sound macroeconomic policies. That makes sense, but the Bank should 
also give priority in lending to governments which listen to their 
people, involve them in development activities, and demonstrate a 
commitment to reducing poverty.
  The World Bank says its primary purpose is to reduce poverty, but it 
is falling short in building the political will among member 
governments to achieve this goal. The rift between rhetoric and reality 
remains wide. IDA resources must do more than reach poor countries. 
They must reach and benefit poor and marginalized people in those 
countries. In 1995, an evaluation showed that just 10 percent of World 
Bank projects launched in the mid-1980's contained poverty reduction 
components, and many of those fell short of thier goals.
  Surveys of borrower country officials reveal a high level of 
dissatisfaction with the Bank's lack of focus on poverty and equity 
issues. Some are even unaware that the Bank's purpose is poverty 
reduction. The World Bank needs a far more systematic approach to these 
issues.
  Each IDA loan or transaction should describe how it will reduce 
poverty. As I have consistently urged for years, World Bank investments 
in nutrition, health, education, and family planning should increase, 
as should programs which increase poor people's access to productive 
assets, such as land, water and credit. But according to information I 
have received, World Bank figures for fiscal year 1997 show that 
lending for education and health, including nutrition, and AIDS 
prevention has fallen from roughly $4 billion in 1996 to $2.25 billion 
in 1997.
  The Inspection Panel, which was established in part in response to 
pressure from Congress, must be maintained and supported. The Panel 
investigates whether the Bank has violated its own policies. Its 
investigations have helped the Bank restructure or halt projects, such 
as dam construction, when they were poorly conceived or implemented. It 
is one of the few mechanisms that allows local people affected by Bank-
supported projects to identify problems and seek redress. I am 
concerned that there are people among the Bank's management and its 
borrower governments who resent the Panel looking over their shoulders. 
Those individuals need to recognize that they are entrusted with public 
funds, and are responsible for adhering to their own policies and 
guidelines. The World Bank needs to be a broker of many interests. Some 
borrower governments lack the mechanisms to insure that the interests 
of indigenous people affected by the construction of infrastructure, 
such as large dams, are represented.

  Mr. President, there is one other issue I want to mention. It is the 
mistreatment of women employees at the Bank. Women have been subjected 
to gender discrimination, retaliation, abuse of power, and sexual 
harassment. It is a systemic problem. It has been virtually ignored. In 
fact, complaints brought by women who allege mistreatment by their 
managers have been aggressively fought by the Bank's lawyers. That is 
bad enough. Even worse is that the Bank, because it is an international 
organization, is immune from lawsuit in U.S. courts. The only recourse 
for a person who alleges abuse is the Bank's internal grievance 
process, which, to put it bluntly, is a sham. The deck is stacked 
against the claimant. Investigations are cursory, at best. Requests to 
call witnesses are denied. Rulings are based on hearsay, double 
hearsay, and innuendo. Even if a claimant who has left her job because 
of the abuse files a grievance and prevails, the remedy is limited to 
monetary compensation. The process is patently unfair and the people 
who investigate and adjudicate these cases have failed in their 
responsibility. There is a culture at the Bank that discourages 
witnesses to come forward for fear of retribution. It is nothing 
unusual. We have seen the same thing in the Armed Forces, in private 
industry, in any bureaucracy, but that is no excuse.
  I have tried to get Bank management to deal aggressively with this 
problem. I get assurances that they are aware of the inadequacies in 
the grievance process and are taking steps to remedy the

[[Page S12532]]

situation. So far, I am not impressed. They are not treating this 
situation with the seriousness it demands. They are too quick to shift 
the blame to the victim for being ``too aggressive,'' ``not a good 
listener,'' or ``in over her head,'' even when their own performarnce 
review process is badly flawed. I intend to monitor this closely 
because radical change is urgently needed.
  Mr. President, I have faith in Jim Wolfensohn to promote these 
reforms. I know he agrees that they are fundamental to the Bank's 
future, and of great importance to the Congress. They are especially 
important because the Bank is a pace setter for other international 
institutions. Ultimately, the success or failure of this effort will 
determine whether or not these institutions play the key role we need 
them to play in advancing political, economic and social stability 
around the world. Real stability depends on development that gives 
everyone a chance for prosperity. That is the central purpose of these 
reforms, and I hope the Bank's management understands how serious this 
is to the Congress, especially to those in Congress who have fought the 
hardest to support these institutions.
  Mr. President, I often say Senators are merely constitutional 
impediments to their staffs. But we wouldn't be here if it were not for 
the staff who worked so very hard. We are privileged by the quality of 
the men and women who work with and for the U.S. Senate, on both sides 
of the aisle, and in so many of the other support positions that 
reflect neither party. So many times we debate these issues until late 
in the evening, agree on something, Members go home--staff stay until 
3, 4, 5 o'clock, or all night long, to get it done.
  Robin Cleveland, Senator McConnell's chief of staff for foreign 
policy, has done a superb job. I am delighted to see her on the floor 
today. I appreciate the way she has worked so cooperatively with my own 
staff on this committee, and Will Smith and Billy Piper who have so 
ably assisted her.
  On this side, I have Tim Rieser, who is my chief of staff for foreign 
policy matters. He has done an extraordinary job on the subcommittee 
and in working with Members on both sides of the aisle to try to 
achieve the compromises necessary. He has been ably assisted by Cara 
Thanassi, who is also a Vermonter, as is Tim. She, too, even though new 
to the subcommittee, has already shown an excellent grasp of the issues 
here and has proven very valuable. I also want to recognize Dick 
D'Amato, of the committee staff, and Jay Kimmitt, whom the chairman has 
already mentioned. Both gave invaluable advice and support.


fiscal year 1998 department of defense appropriations--federally funded 
                    research and development centers

  Mr. SPECTER. Mr. President I would like to enter into a colloquy with 
Senate Appropriations Committee Chairman Ted Stevens concerning 
Federally Funded Research and Development Centers.
  Is it the chairman's understanding that it was the intent of Congress 
to exempt Federally Funded Research and Development Centers [FFRDC's] 
from the provisions of section 8041 of the fiscal year 1998 Department 
of Defense Appropriations Act which reduce funding for advisory and 
assistant services by $300,000,000? This exemption is necessary because 
FFRDC funding is specifically reduced by $71,800,000 in section 8035 of 
the same act.
  Mr. STEVENS. The Senator from Pennsylvania is correct. While the 
Department of Defense chooses to group selected FFRDC's in the category 
of advisory and assistance services, the Congress has for several years 
dealt with these issues separately. FFRDC's should be exempt from the 
reduction in contractor advisory and assistance services.
  Mr. JEFFORDS. Mr. President, I compliment the Senior Senator from 
Vermont, Mr. Leahy, and the Senator from Kentucky, Mr. McConnell for 
the excellent job they have done in shepherding the Foreign Operations 
appropriations bill along it's difficult journey. While I would have 
written some sections differently, I believe that on balance this is a 
reasonable product of compromise that advances the primary goals of 
U.S. foreign policy.
  I am, however, very disturbed to see that the compromise on U.N. 
funding that was contained in the State Department authorization bill 
has now been dropped. While I was not pleased with some aspects of the 
Helms-Biden compromise, at least it provided a way to start meeting our 
obligations to the United Nations.
  I am disturbed, Mr. President, that greater thought has not been 
given by those who oppose this provision to the timing of this move. We 
are teetering on the brink of hostilities with Iraq over Saddam 
Hussein's refusal to allow entry to American members of the U.N. 
weapons inspection team. The United Nations has insisted that the 
integrity of its teams be respected and Saddam Hussein must not be 
allowed to pick and choose who he lets in. Last week, Secretary General 
Kofi Annan sent a three-member delegation to Iraq to impress upon 
Saddam Hussein the necessity of complying with United Nations 
requirements on access for inspectors. Unfortunately, they came away 
empty handed. But the United Nations Security Council continues to meet 
daily in an effort to counteract Iraq's intransigence.
  I think most of my colleagues realize that this would be a very 
inappropriate time to suddenly be forced to go it on our own. We may 
decide at some point that unilateral action against Iraq is the most 
appropriate, but that should only come after careful consideration of 
all policy options available to us. And quite frankly, Mr. President, I 
believe that some of our best options involve working closely with our 
allies and our friends in the Arab world to present a united front to 
Saddam Hussein. With all its warts, the United Nations is still the 
best mechanism for consulting quickly with all the parties involved and 
negotiating possible courses of action. This is always a difficult 
task, but it would be made many times more difficult if we were not 
able to work through the United Nations. While nothing in the 
legislation before us today says we must pull out of the United 
Nations, the refusal of a small number of members to let a broadly 
agreed-upon package of reforms and arrearage payments move forward is a 
de-facto renunciation of the United Nations just as we are again 
turning to that body for assistance in keeping one of the world's worst 
scofflaws in line.
  Getting other nations to join us in these efforts takes carrots and 
not just sticks. Our diplomats need to bring more to the table than the 
threat of military retaliation. That should be our last resort, and not 
before. If we are not willing to put our money where our mouth is at 
the United Nations, how can we expect Saddam to take our threats 
seriously?
  I know that efforts are underway at this very moment to reverse this 
unfortunate decision by the House of Representatives. And I hope they 
succeed. Not just today, but increasingly in the future, we are going 
to need more tools of diplomacy at our disposal, not fewer. I urge my 
colleagues in the House to take this into account before it is too 
late.
  The PRESIDING OFFICER. The Senator from Kentucky.
  Mr. McCONNELL. Mr. President, I want to make a couple final 
observations. Seeing the occupant of the chair, the distinguished 
Senator from Wyoming, I thought I would mention his imprint on this 
bill. Senator Enzi had an important provision requiring a report from 
the administration on funding by all Federal agencies on the climate 
change program. He required its submission by October 31, which is 
obviously past. The conference included the provision requiring a 
report by November 15. I would say, for cold State Members, this is 
very important so we can begin to understand how extensive these 
programs are and what they are costing the taxpayers.
  My thanks to the distinguished Senator from Wyoming, the occupant of 
the Chair, Senator Enzi, for his support and contribution to this bill 
as well.
  Finally, let me say I understand Christian, the son of our staff 
director, Robin Cleveland, may be watching because he is sick today. 
Christian, I hope you get to feeling better. We are all sorry that you 
were inconvenienced by your mother's long hours during the course of 
the last few weeks.
  Mr. President, I believe we are at a point now where this bill should 
move forward.
  The PRESIDING OFFICER. Do the managers yield back the remaining time 
on the conference report?

[[Page S12533]]

  Mr. LEAHY. Mr. President, is the Senator from Vermont correct in 
understanding when all time is yielded back it is, indeed, passed?
  The PRESIDING OFFICER. That is correct.
  Mr. LEAHY. I yield back time on this side.
  Mr. McCONNELL. Mr. President, I yield whatever remaining time I may 
have.
  The PRESIDING OFFICER. In light of yielding back the remaining time, 
under the previous order the conference report is agreed to and the 
motion to reconsider that vote is laid upon the table.
  The conference report was agreed to.

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