Chuck Grassley

United States Senator from Iowa

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Grassley on the World Bank Funding China Despite Human Rights Abuses

Dec 05, 2019
Prepared Floor Remarks by U.S. Senator Chuck Grassley of Iowa
On the World Bank Funding China Despite Human Rights Abuses
Thursday, December 5, 2019
 
Today, the World Bank is releasing its Country Partnership Framework with China.
 
This reportedly includes 1 to 1.5 billion dollars in loans to China per year and 800 million to 1 billion dollars in private sector investment.
 
Keep in mind that the World Bank was created to help economic development in the world’s poorest countries.
 
China is now the world’s second largest economy after the United States.
 
Also, the United States is the World Bank’s largest contributor.
 
I think many Americans would question why so many American tax dollars are going to support low-interest loans to China.
 
In China there is a large and growing body of evidence of human rights abuses in Xinjiang, including mass internment camps.
 
Reports indicate that these camps are centers for social control and political indoctrination.
 
Chinese authorities reportedly mistreat or even torture detainees while requiring them to engage in forced labor, and to renounce their religion and culture.
 
And yet, the World Bank has supported a Technical and Vocational Education and Training Project in Xinjiang.
 
This is wording very close to what the Chinese Communist Party euphemistically calls its internment camps. Plus, one reporter has uncovered documents that these schools purchased barbed wire, tear gas, and body armor using other funds, and of course funds are fungible.
 
Institutions like the World Bank have a responsibility to fully assess critical human rights risks and religious freedoms, such as those exhibited in Xinjiang, in any region where it lends money.
 
The World Bank's own social framework standards state that, when assessing social risks and impacts, the Bank must assess threats to human security and impacts on the health, safety and well-being of workers and project-affected communities.
 
The Bank and other such institutions cannot adequately assess a project's full impact without monitoring and examining reports of widespread human rights abuses in the local area.
 
On November 16th, the New York Times published leaked Chinese records indicating a coordinated effort going back years, directed by General Secretary Xi, to detain hundreds of thousands of Uighurs, Kazakhs and other Muslims in internment camps, and to unleash the tools of dictatorship on the Xinjiang Muslim population.
 
Given the repeated reports about repression in Xinjiang that date back years, it is hard to see how any project in that region could meet the Bank's social framework standards.
 
There needs to be a periodic internal review of risk assessment mechanisms to ensure they are appropriately calibrated to capture changing risk profiles.
 
I question whether the Bank’s oversight processes are adequate given that its own assessments saw no issue with its Technical and Vocational Education and Training Project in Xinjiang.
 
In a statement on August 29th, the World Bank stated that it had conducted supervision missions twice a year since the project started, and that these missions included a review of social safeguards and a monitoring and evaluation review.
 
The World Bank found “no evidence from subsequent reviews that funds were diverted, misused, or used for activities not in line with project objectives or World Bank policies and procedures.” 
 
However, just last month, the Bank raised the environmental and social risk rating from moderate, the second lowest level, to substantial then to high, the highest level.
 
It is disappointing that very little happened in upgrading the risk assessment on this project until after the congressional attention, even with an internal whistleblower raising the matter.
 
This to me seems like a failed process, when routine audits and a whistleblower complaint do not catch anything despite increasingly concerning reports in the media about mistreatment and abuse.
 
I’ve written a letter to Bank President Malpass asking questions about these systemic concerns.
 
Moreover, I question why a country like China, whose economy has far surpassed the threshold at which it is supposed to graduate from World Bank funding, is still taking loans.
 
The World Bank was created to help poor countries that cannot access capital markets.
 
Both China and Russia today have well surpassed the World Bank’s graduation threshold and have access to capital markets.
 
Yet China continues to borrow an average of $2 billion a year from the World Bank, making it one of the Bank’s top borrowers.
 
Countries like China or Russia that have seen the most economic progress should not seek to maintain access to the Bank's preferential lending rates and technical support. Moreover, these are our two major geopolitical foes.
 
I have previously highlighted China’s intellectual property theft and foreign influence activities at American universities for example.
 
Russia’s illegal occupation of territory in Georgia and Ukraine and its “active measures” against democracies, including ours, makes it effectively an outlaw state.
 
Meanwhile, China does substantial foreign lending of its own, which it uses as a tool of geopolitical influence over other countries.
 
Its lending does not follow international development finance standards nor does China disclose the amounts or terms for loans it offers.
 
Through the Belt and Road Initiative (BRI), China has raised concerns about debt sustainability in recipient countries.
 
A March 2018 report from the Center for Global Development assessed the current debt vulnerabilities of countries identified as potential BRI borrowers.
 
Out of 23 countries determined to be vulnerable to debt distress, the Center identified eight countries “where BRI appears to create the potential for debt sustainability problems, and where China is a dominant creditor in the key position to address those problems.” 
 
The World Bank, using American tax dollars, should not be lending to wealthy countries that violate the human rights of their citizens and attempt to dominate weaker countries either militarily or economically.
 
The State-Foreign Operations Appropriations Bill contains funding and authorization for a large capital increase for the World Bank.
 
I have developed an amendment to this bill that would insert language requiring the United States representation to the World Bank to work to defeat any project in a country that has reached the World Bank’s own “graduation threshold” and that is designed by the State Department as a “country of particular concern for religious freedom” or is on the watch list for such designation. This means China and Russia.
 
Countries with broadly documented violations of international norms, human rights, and religious freedoms should not be given the privilege of accessing preferential loans that then limit access to other countries in need.
 
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