NCPA - National Center for Policy Analysis


June 24, 2004

Environmental activists could be hurting Third World countries by pressuring banks not to loan money to development projects that will benefit the world's poor, says Neil Hrab of the Competitive Enterprise Institute.

Banks caving in to the demands of environmental groups are doing little to improve the lives of the poor, says Hrab. Consequently, many foreign governments are perturbed over what they view as "foreign meddling" by activist groups:

  • In 2002, non-governmental organizations (NGOs) such as Friends of the Earth Network criticized Uganda's government for proceeding with a dam project -- President Museveni insisted it would be built, with or without private companies.
  • In 2001, Ecuador was targeted by NGOs to drop its plans for an oil and gas development, prompting Ecuador's president to accuse NGOs of placing more importance on critters and trees than on jobs and food for his country's citizens.

Indeed, Third World governments are becoming more outspoken in defending their projects, and some are looking at self-financing when banks refuse loans.

Hrab questions the effect that turning down such loans will have on banks, especially if developing countries view them as siding with anti-growth NGOs. Banks may wish to help preserve the environment, but should not do so at the risk of hurting the poor or jeopardizing their own reputations, he says.

Source: Neil Hrab, "No-Growthers' 'Green Line' Shouldn't Deter Bank Loans," Investor's Business Daily, June 17, 2004.


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