World Bank kowtows to China over tollroads report

The World Bank is kowtowing to the Chinese government over a report critical of its handling of its massive toll expressway program. China has dozens of Robert Moseses pushing through great highway projects against all kinds of opposition and with rather little regard for the environment, equity, and planning.

China is probably building about as many tollroads as the rest of the world put together. There is lots of central planning at the national level, but mostly lines on maps. The real action is in the provinces and cities where deals are done, land is acquired, concessions cobbled together, and the roads designed, financed and built. Most are toll financed in true public private partnerships - with government entities actually holding stock in the concessionaires (unlike the name-only PPPs of the west where the concessionaires tend to be contractors to the state).

In European and American terms the World Bank is exquisitely politically correct so its reporting takes a dim view of the wilful ways of many of China's present roadbuilders. The Bank wants the new Chinese roads to be subject to far more study, consultation, and consideration for equity and environmental effects.

Back on February 12 the Bank announced a study called "China's expressways: Connecting people and markets for equitable development" in a lengthy press release. Many journalists just wrote up the press release.

The press release said China had "made great achievements in the development of its expressway network in the last fifteen years, with a large stock of highway assets created." Then the 'buts' began.

There was a need to address maintenance, safety and a "financing mechanism to realize a balanced development."

At a presentation to the Chinese Ministry of Communications the same day, the press release said, the Bank had put the case for "enhanced planning, financing, and management approaches to ensure the sustainable upkeep and effective management of expressway assets and facilitate the distribution of opportunities across Chinese regions."

In short the Chinese are being assailed by the World Bank for being overcrassly capitalist and laisser-faire in their tollroad program. The many Robert Moseses of China have to be curbed.

Normally when a study is announced it's available. Otherwise what's the point of announcing it? We asked the press office contact for a copy of "China's Expressways". She said that the report needed some editing and would be available in a few days. We asked again, and again.

A few days has turned into three months. Still not out.

Word is the Chinese didn't like being lectured by the Bank on their expressway program and have succeeded in suppressing the report.

The Bank has made loans of $8b for Chinese toll expressways.

COMMENT:

The World Bank is premised on a delusion - namely that poverty and underdevelopment are the product of inadequate capital, and that aid and loans from rich countries can provide the capital and generate the economic growth to get them out of poverty. It's nonsense. Poverty and underdevelopment are the result of institutional problems - lack of property rights and rapacious government, neither of which the World Bank can remedy.

Where the culture and institutions are right for development, where the rule of law encourages enterprise, then private capital will do the job of mobilizing capital, and World Bank money isn't needed. Where the culture and institutions aren't right World Bank money will just be wasted.

Corruption is rampant at the World Bank itself, where success is measured by how much money is shoveled out the door, and to heck with whether it does any good. It is a thoroughly self-serving institution with some 1,400 of its staff paid more than the $186k/yr salary of the US Secretary of State. And they don't pay any income taxes so that's really 1,400 staff with effective salaries of about $300k+.

Paul Wolfowitz, the executive director of the World Bank is a great guy. I got to know him quite well in the 1980s when I was a foreign affairs and defense reporter and he was a middle level official in the Reagan administration. We were both part of the 'neocon' circle that revolved around Commentary, AEI, CSIS, Heritage, CPD etc.

But appointing Wolfowitz to run an honest World Bank was an act of naivety by the Bush Administration. It is like installing Mother Theresa to run an honest Gambino crime syndicate (or a Pennsylvania Turnpike without patronage).

It's an absurd exercise in futility.

Besides, Wolfowitz - despite the pathetic efforts of the Wall Street Journal editorialists to defend him - has himself been corrupted at the Bank. Ordering staff to give his girlfriend at the Bank a pay raise of $61k - a raise greater than the average percapita income of Americans and putting her beyond the paygrade of Condoleeza Rice - was totally indefensible.

Unfortunately the Bank's staff, hypocrites though they are, happen to be correct that Wolfowitz has to go over this.

The whole rotten craven "Bank" should go too.

TOLLROADSnews 2007-05-07