World Bank demands that governments change their policies in return for loans are nothing new. However, the Bank only began putting conditions like this related to forestry into its Structural Adjustment Loans (SALs) over the last five years or so.

’The Political Economy of Environmental Adjustment: The World Bank as Midwife of Forest Policy Reform’ by Navroz Dubash and Frances Seymour of the World Resources Institute looks at how this has played out in Cameroon, Indonesia, and Papua New Guinea. In all three of these major forest products exporting countries, the Bank used ’conditionality’ to promote improved logging practices, reduce opportunities for corruption, and make logging companies pay governments and communities more for their timber.

According to Dubash and Seymour, arm twisting governments into reform has proven much harder than the Bank imagined. The Bank has even had difficulty getting governments to put new forest laws and regulations on the books, much less get them implemented. The Bank used its economic leverage over borrower governments that desperately needed money to handle their economic and political crises as an opportunity to press for reform. But in each case it over-played its hand. When the economic situation improved the countries stopped paying attention and over time pressures mounted within the Bank to ease up on the conditions.

Dubash and Seymour argue that in the future the Bank should work closely with domestic groups within developing countries that might favor forest policy reforms in a long-term effort to build a constituency for such reforms. Otherwise, they say, there is no way to bring about lasting reforms that involve the type of gradual changes in institutions and thinking needed to have any chance of succeeding on the ground. The Bank’s failure to build alliances with domestic groups also leaves it open to charges of using reforms to favor foreign interests.

The authors say their proposed new approach requires major changes: First, the Bank would have to address the credibility problems it faces due to past experiences involving Bank projects that had negative environmental or social impacts. Second, to open new spaces for dialogue and agreement the Bank should abandon some of its ideological rigidity. Third, Bank staff needs to spend more time on the ground working with local groups.