[PEN-L:8329] WB loan for China Despite US Opposition

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

This loan is a drop in the bucket, but it has taken on symbolic
importance.  Summers, following the lead of his predecessor, opposed that
loan on political grounds.
This is an example of bogus issues, but even if one grant Summers and
company the benefit of th doubt on the sincerity of their opposition, a
question of the correct priority of development can be of interest to
listers.

Henry C.K. Liu

China Hails World Bank Loan, Welcomes Scrutiny

                      BEIJING, Jun 25, 1999 -- (Reuters) China
                      praised the World Bank on Friday for
                      approving a controversial $160 million loan
                      to resettle poor Chinese farmers despite
                      opposition from the institution's biggest
                      shareholders and angry Tibetan activists.

                      The Foreign Ministry said in a statement it
                      welcomed scrutiny of the resettlement
                      program in traditional Tibetan lands by
                      World Bank officials, foreign governments
                      and journalists. The statement made no
                      mention of the United States, which a
                      ministry spokeswoman denounced on
                      Thursday for opposing the loan.

                      The spokeswoman had demanded the
                      United States drop its opposition to the
                      loan and "stop using the Tibetan issue to
                      interfere in China's internal affairs".

                      The loan would be used in part to resettle
                      58,000 Chinese farmers from fallow hills in
                      Qinghai province to sparsely populated
                      fertile lands in the province, which
                      Tibetans regard as part of their historic
                      territory.

                      Exiled Tibetan activists, human rights groups and
some U.S. officials said the program would dilute Tibetan culture and
                      influence in the area and open the door to future
exploitation of resources by ethnic Chinese.

                      World Bank officials and China say people of all
ethnic backgrounds would benefit from new schools, medical facilities
                      and irrigation systems made possible by the loans.

                      The ministry statement thanked World Bank
shareholders and officials for "upholding justice and safeguarding the
bank's principles" against politicizing loans.

                      It welcomed World Bank officials and foreign
governments and journalists to travel to Qinghai province -- birthplace of
Tibet's exiled spiritual leader, the Dalai Lama -- to conduct
"investigations" into the program.

                      The World Bank had postponed debate on the loan for
two days until Thursday so bank president James Wolfensohn could return
from a conference in Paris to personally chair the meeting. Wolfensohn
secured a compromise which would delay the contentious resettlement
portion of the loan until after an inspection panel reviewed whether the
bank violated its own rules on the environment, resettlement and
disclosure.

                      The panel's findings would be presented to the
board, which would vote within two months on whether a full-blown
investigation was warranted.

                      The loan was approved on Thursday even though the
bank's largest and third-largest shareholders -- the United States and
Germany -- voted against it. The bank rarely approves loans against a U.S.
vote and never on such a high-profile project.

                      China lobbied hard to push the loan through despite
opposition from U.S. Treasury Secretary-designate Lawrence Summers, 60
members of Congress, Tibetan interest groups and almost half of the bank's
24-member board.

                      The U.S. vote against the loan could worsen the
diplomatic chill between the two powers following NATO's bombing of the
Chinese embassy in Belgrade on May 7, which killed three Chinese
journalists.

                      Critics complained the loan violated the bank's
policies on resettlement and its indigenous peoples policy and that the
bank failed to publicly disclose information about the project in a timely
fashion. ((c) 1999 Reuters)