The Whirled Bank Group




The International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) are the private sector afifiliates of the International Bank for Reconstruction& Development (IBRD) and the International Development Agency (IDA. Unlike the IBRD and the IDA, the IFC and MIGA do not make loans to countries. Instead the IFC makes loans to private corporations that have projects in the Third World and former Soviet bloc. This includes major multinational corporations like Shell and Coca-Cola. MIGA provides political risk insurance to companies that are worried that their assets may be seized by local governments or destroyed in war or other civil disturbances. In fiscal 1999, the IFC loaned out US$5.3 billion for 255 projects and MIGA provided insurance valued at US$1.3 billion for 72 projects. The IFC made a net profit of US$249 million while MIGA made a net profit of US$10.4 million.

Unlike the IBRD and IDA which pay lip service to poverty alleviation, the IFC and MIGA operate on the facile assumption that any economic growth, regardless of its distribution, will help the poor. They pay almost no attention to who actually benefits from the profits that they claim to generate. They support Domino's Pizza in South Africa and cable television in Brazil. They invest in breweries in Romania, Russia, Tanzania and the Czech Republic, expensive private schools in Pakistan and Uganda, and luxury hotels in Egypt, the Maldives, Vanuatu, Costa Rica and Mexico. Roughly two-thirds of the IFC's funding goes to projects in just 15 countries, most of them "middle-income" and thus presumably less in need than other potential clients, but also lower in risk for the invested dollars of the WBG and its private sector partners.

The IFC and MIGA's list of clients reads like a "who's who" of transnational corporations. In the past five years MIGA has extended more than $220 million in political risk insurance to support Citibank's global expansion. ExxonMobil, Multinational oil companies like Elf of France and British Petroleum (BP) received more than US$150 million in support from the IFC and MIGA during this period. Likewise, US$60 million went to Coca Cola and Pepsi Cola, US$8 million for Kimberly-Klark in China, and more than US$13 million to Radisson and Marriott luxury hotels in Costa Rica.

At the heart of the IFC-led "Private Sector Development Strategy" is an emphasis on support for the environmentally destructive oil, gas and mining industries. At the end of November 1999, oil and gas projects accounted for 10% of the World Bank's portfolio in both Africa and Latin America, roughly 20% in East Asia and the Pacific, and even more in Europe and Central Asia. Between 1995 and 1999, the IFC channeled about 15% of its money to oil, gas and mining, and the corresponding figure for MIGA was even higher. While these institutions claim to be concerned about global warming, they support fossil fuel projects amounting to billions of dollars. By many gauges, the World Bank Group is the leading financier of fossil fuel gasses in the world. The institutions offer only token support for the renewable energy efforts.

* In Chile, the IFC supported the Pangue hydroelectric dam on the Bio-Bio river, but it failed to assess the impact that the project would have on indigenous peoples and the environment. The foundation that was established to support local communities instead became an agent for their resettlement in order to make way for a further dam. The Committee of Human Rights of the American Anthropological Association concluded that there were "numerous violations of human rights [and] environmental values."A Bank-financed independent inspector's report was so damaging that it was censored by the IFC. A subsequent report, authorized by the IFC, was also suppressed and the author was threatened with legal action if he disclosed his findings.

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* In the Kyrgyzstan the IFC is currently supporting a Canadian mining corporation named Kumtor. Transporting chemicals to and from the mine has led to three toxic spills in the last two years, the first of which spilled about two tons of cyanide into the Barskoon River. The river is not only a source of drinking water and irrigation for local communities, but is also upstream from the country's largest lake and biggest tourist attraction. The mining company took almost four hours to notify health authorities about the spill. Approximately 2,600 people were treated and more than 1,000 of them were hospitalized. Even after the three toxic spills at the Kyrgyz mine, the IFC refuses to release the "Emergency Spill Response Plan" to the local communities. They claim it is a matter of business confidentiality!

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One of the most infamous examplesof MIGA's operations was the political risk insurance provided to Freeport McMoRan of New Orleans, USA, for the copper and gold mine on the western half of the island of New Guinea in the South Pacific, (Irian Jaya, Indonesia), that dumps 120,000 tonnes of toxic mining waste into the local rivers in New Guinea which has killed over 30 square kilometers of lowland forest.

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Another infamous MIGA project was the Omai gold mine in Guyana, located some 160 kilometers from the north-eastern Atlantic coast of South America, which had a major failure of its tailings system two years ago causing some 3.2 billion liters of cyanide-laced waste to flow into a tributary of the Essequibo River, the main water source in the country, over a period of five days.

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For more information on the IFC& MIGA see and
Friends of the Earth's publication: Risky Business (PDF)



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Toxic Waste Mining Logging Highways Fossil Fuels Dams