World Bank President Paul Wolfowitz was quoted on Tuesday as saying China and its banks were ignoring human rights and environmental standards when lending to developing countries in Africa.
Large Chinese banks ignored the ”Equator Principles”, a voluntary code of conduct under which projects financed by private banks meet social and environmental standards, he told Les Echos, Paris-based sister newspaper of the Financial Times.
Wolfowitz said big Chinese banks ”do not respect” the principles.
He said the World Bank had held ”very direct” talks with the Chinese about problems it had identified.
”I hope in time our viewpoints will converge,” he said in the interview.
China has become a major business presence in Africa, an important source of natural resources — including oil — which Beijing needs to fuel its booming economy.
Wolfowitz said he was also concerned about lending by China, India and Venezuela to poor countries that had benefited from debt relief.
”There is a real risk of seeing countries which have benefited from debt relief become heavily indebted once more,” he said.
The World Bank will try to control the problem by limiting the amount of long-term debt a country can take on. But he said the issue depended on how the money was used.
”If it’s a matter of buying luxury cars for ministers, it is bad borrowing,” said Wolfowitz.
”On the other hand, good borrowing delivers big benefits, lifts national income and makes it easier to repay the national debt in the future. It’s important to have all the detail on the table to know what borrowers and lenders are really doing.” – Reuters