Multinational Monitor

APR 1997
Vol. 18 No. 4


The Campaign to Eliminate the Separation Between Banking and Commerce
by Jake Lewis

The Case for Preserving the Separation Between Banking and Commerce
by Jonathan Brown

Conquering Peru: Newmont's Yanacocha Mine
by Pratap Chatterjee

Taiwan Dumps on North Korea: State-Owned Taipower Schemes to Ship Nuclear Waste
by Jonathan Dushoff


The Political Economy of the Occupation of East Timor
an interview with
Jose Ramos-Horta



Behind the Lines

Don't Let This Merger Take Off

The Front
Slow Motion Bhopal - Indecent Proposal

Their Masters' Voice

Names In the News

Trade Watch

Book Notes


Book Notes

Silenced Rivers: The Ecology and Politics of Large Dams
By Patrick McCully
Atlantic Highlands, New Jersey
Zed Books, 1996 350 pages, $25.00

If you read this magnificent book, you will never think about dams the same way.

In Silenced Rivers, Patrick McCully pierces the myth of large dams as a "clean" and "sustainable" energy source.

The environmental damage caused by large dams is staggering. Upstream, dam reservoirs flood huge territories, burying forests and wetlands under water. Deprived of sediment, water released from dams erodes downstream riverbeds. The dam barrier interferes with the travel routes of migratory fish, often wiping out populations. Salmon fishery losses from 1960 to 1989 in the Columbia River Basin alone totaled an estimated $6.5 billion. Dams even dirty the water; because of chemical, thermal and physical changes that take place while water is stored in reservoirs, water released from dams during warm-weather periods is likely to be cold, oxygen-poor and acidic, and may contain damagingly high mineral concentrations.

Even more troubling is that dams do not provide a permanent source of energy, continually renewed by new waters flowing through the dam. Over time, sediment builds up in dam reservoirs, filling up their storage capacity. The rate varies from place to place, with large reservoirs in China -- where erosion causes high levels of sedimentation -- losing 2.3 percent of capacity per year.

Finally, McCully disputes dams' greatest selling point -- that they do not contribute to global warming -- arguing that large dams, at least in tropical areas, may contribute significantly to the greenhouse effect. Flooded plants and soils decompose and release stored carbon. Bacteria feed on the decomposing vegetation and release a steady supply of methane, another greenhouse gas.

Large dams frequently cause human tragedy, as well. Flooded areas force the displacement of huge numbers of people -- typically far more than dam builders estimate. McCully's data shows 2.2 million people displaced by 134 of the largest dams outside of India and China; conservative government estimates are 14 million displaced people in India and at least another 10.2 million in China. Especially for indigenous people, pastoralists and farmers with close ties to the land, eviction from the land can mean loss of identity and livelihood. Dams also exact a toll in disease. Dam reservoirs are breeding grounds for parasites that cause bilharzia and malaria and for the mosquitos that carry many diseases. Dam failure also poses an enormous, omnipresent risk.

Despite these harmful consequences, there are at least two reasons why dams maintain a grip on policymakers, McCully writes. First, the promise of "conquering" nature has captured the imagination of many engineers and politicians. Second, dam-building bureacracies and construction interests have joined into a powerful pro-dam lobby.

In recent decades, however, potential evictees and environmentalists have launched dozens of anti-dam movements. These movements martial well-documented arguments, but more importantly activate thousands of people to put their bodies on the line to defend their land and lives against large dam projects.

McCully, who is campaigns director for the International Rivers Network (as well as a contributing writer to Multinational Monitor), knows the story of these movements as well as anyone. He devotes only a chapter to these campaigns -- which could easily fill a book -- instead choosing to elaborate a comprehensive case against large dams. This choice deprives readers of a sense of the dynamism of the anti-dam movements; in exchange, readers receive a devastating critique of large dams -- symbols of power, domination and control in a technological age.

Who Owns the Sun? People Politics, and the Struggle for a Solar Economy
By Daniel M. Berman and John T. O'Connor
White River Junction, Vermont
Chelsea Green, 1996 331 pages, $24.95

Who Owns the Sun? tells the story of opportunity lost and opportunity waiting.

As the anti-nuclear and environmental movements crested in the 1970s, a solar economy appeared just around the corner. Today, however, the transformation seems further away than ever.

Berman and O'Connor persuasively trace the lost opportunity both to political maneuvering of the energy industry and to the misguided strategies of leading environmentalists.

In an effort to gain control over the solar technologies which most directly threaten the energy industry because of their potential to decentralize energy production and distribution, the U.S. oil companies bought up the leading solar companies in the 1970s and 1980s (and then sold many of them to German and Japense electronics firms in the 1990s). Ronald Reagan cut important subsidies for solar energy, as did California Governor George Deukmejian.

Berman and O'Connor also argue, more controversily, that environmentalists were complicit, and sometimes worse, in the sabotage of the solar movement. In the late 1970s, leading environmentalists made convincing arguments for solar, but detached themselves from the grassroots energy movement. If the professional environmentalists thought they could win over the energy industry with good arguments, they were mistaken.

Things took a turn for the worse, the authors argue, in the 1980s. Leading environmental organizations, most notably the Natural Resources Defense Council, focused their energy on an embrace of "demand-side management" (DSM) -- an effort to create incentives for utilities to support energy conservation. DSM allows utilities to collect from consumers for introducing energy efficiency savings just as they would if they sold more electricity.

The DSM strategy is doubly flawed, Berman and O'Connor show. It demobilizes grassroots activists, who are not given a role in the expert negotiations around rate setting. And -- in the minds of the utility executives, if not environmentalists -- it is a strategy for slowing the growth of energy consumption, but not reversing it.

Despite two decades of setbacks for the solar cause, Berman and O'Connor are optimistic. Technological evolution has made many solar technologies competitive today, even against super-subsidized fossil fuels. The pending restructuring of the utility industry offers the possibility of forcing utilities to buy back excess solar energy from home and other small producers at a fair rate (so-called net metering). And the experience of the Sacramento public utility shows that public ownership of utilities can translate into strong support for energy efficiency and renewables.

The key to realizing solar's potential, the authors contend, is to tie the case for solar power to a strong grassroots movement advocating a decentralized energy economy. "Local ownership and democratic control of energy are the necessary, if not sufficient, conditions for a solar economy," they write.

No single technology holds as much promise for preserving the global ecology and democratizing the global economy as does solar energy. Who Owns the Sun? is a well-written, forcefully argued clarion call for citizen activists to organize and mobilize to turn that promise into reality.

Masters of Illusion: The World Bank and the Poverty of Nations
By Catherine Caufield
New York: Henry Holt and Company
432 pages, $27.50

On of the dilemmas f acing activists seeking to pressure the World Bank and other multilateral and bilateral development banks and programs is that the people who know the harm perpetrated by these institutions -- people in the world's poor countries -- have little ability to affect them, while those with some ability to affect them -- citizens in the rich, lending and aid-providing countries -- do not know about the harms.

Catherine Caufield's Masters of Illusion is one of the trickle of books in recent years which aims to correct this imbalance by exposing the World Bank, the world's leading development institution, to a Northern audience. The elegantly written book is a useful contribution to this effort.

Caufield offers what might be called an "institutionalist" critique of the Bank. Like others, such as Bruce Rich in Mortgaging the Earth, she emphasizes the Bank's internal culture and dynamics as the primary explanation for why it operates the way it does.

Among the key, interrelated elements highlighted by this critique are the Bank's:

  • Belief that experts hold the solutions to intractable problems, and an accompanying disdain for local understandings and democratic decision-making;
  • Technophilia -- the Bank's belief that virtually all economic, social and environmental woes can be cured with a technological fix;
  • Lending culture -- a system, now ostensibly under reform, that rewards staff who meet lending targets, irrespective of the merits of the loans.

Organized chronologically around the changes associated with each of the Bank's handful of presidents, Masters of Illusion shows first the Bank's attachment to major infrastructure development projects. In one of the most compelling sections of the book, Caufield reviews the 21 largest loans made by the Bank from 1949 to 1963 under the tenure of its first long-term president, Eugene Black. It is a devastating survey of environmental degradation, social dislocation, poorly conceived projects, cost-overruns, shunted aside internal warnings not to loan and unfulfilled development promises.

As damning as the survey itself is Caufield's observation that "despite their size and importance, the Bank did not study any of [the 21 projects] once they were completed. Thus it did not see -- or learn from -- many of its own mistakes. Instead, it financed their replication around the world."

Under subsequent presidents, the Bank branched out from loans to finance infrastructure development projects to take an increasingly intrusive role in Third World countries' internal economic policymaking.

At the same time, it has refused to support land reform, despite occasional acknowledgements that land reform "may well be a necessary condition" for development. Land reform remains off-limits, in the words of Robert McNamara, Bank president from 1969 to 1981, because it would "affect the power base of the traditional elite groups in the developing society." These groups, he said, could subvert Bank policies if alienated.

Toward the end of McNamara's tenure, the Bank expanded its economic policymaking loans dramatically, institutionalizing them as structural adjustment loans -- loans intended to assist economic restructuring. Structural adjustment forced upon debtor countries a set of free-market, export-oriented, trickle-down economic policy provisions -- reduction of tariffs, currency devaluation, shrinking the national government budget, removal of price controls -- that have inflicted enormous suffering on the people of the Third World.

Structural adjustment, Caufield suggests, is just another manifestation of the World Bank's expert-oriented, technical-fix, heavy-lending approach to problem-solving.

Caufield's Bank-centered, institutionalist analysis offers plenty of insights into what drives the Bank to commit the same errors again and again. But it has the disadvantage of describing every failed attempt to achieve development goals as an "error." If the Bank is considered, at least in part, as a servant to the interests of multinational corporations and big commercial banks, some of those "errors" can convincingly be characterized as successful efforts to achieve unstated goals of, for example, opening up Third World resources to foreign investment. That Bank policies impoverish millions of people in the process may be not so much a failure as just an unintended consequence, of little import to the policies' intended beneficiaries.



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