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Wow. This move to #StopFundingFossils by @POTUS is just stellar. Public finance for international fossil fuel projects first became a priority for US policy in 1981, as the Reagan Admin sought ways to encourage non-OPEC developing countries to open to Northern oil companies 
From 77 – 81 the Bank first made loans for oil and gas. A July 1981 report from US Treasury, entitled “An Examination of the World Bank Energy Lending Program” was particularly concerned that the Bank was not doing enough to leverage private investment and stated that:
“A major purpose of Bank oil and gas lending...is to catalyze private investment flows. However, an examination of the Bank’s oil and gas loans to
date shows little catalytic effect. Of these first 27 loans…NONE involved private oil company financial participation.”
date shows little catalytic effect. Of these first 27 loans…NONE involved private oil company financial participation.”
World Bank President Robert McNamara saw his moment. Developing countries needed more money (to service Northern debt), and the US and its allies needed more non-OPEC oil. The perfect solution, it seemed, was to massively increase development “aid” for oil and gas projects.
The US Treasury however, insisted: “[t]he need for...Bank-proposed expansion…[be] examined against the background of the following U.S. objectives”: 1. Removal of barriers to development of / investment in local energy resources by the (Northern) private sector.
2. Where public finance was needed, structuring such assistance in such a way as to catalyze and complement
private investment.
3. Expansion and diversification of global energy supplies to enhance security of supplies and reduce OPEC market power over oil prices. And...
private investment.
3. Expansion and diversification of global energy supplies to enhance security of supplies and reduce OPEC market power over oil prices. And...
4. Structural adjustment in key countries with balance of payments disequilibria due to oil costs that threaten their participation in the international economy, including their ability to service debts to the private commercial banking network.
The World Bank apparently listened to the message from its largest and most important stakeholder, the United States. As a result, many new areas of the world opened up their oil supplies to the North.
The legislative and regulatory reforms encouraged by the Bank’s legal staff set the stage, in turn, for billions more dollars in investment from export-credit agencies, other international financial institutions, as well as
from private capital.
from private capital.
Public finance for fossil fuels is not just energy policy, it in fact is base code for corporate globalization. Now that this code is being rewritten it is worth thinking about needed transitions in development and trade policies, not just energy. As many are.
Huge thanks to the many many #StopFundingFossils warriors over the last 25 years. You made a difference.
For the curious, all of this and more is written up and cited here, which was actually the very first report to have an @priceofoil logo. http://priceofoil.org/2005/07/01/drilling-into-debt-an-investigation-into-the-relationship-between-debt-and-oil/ ENDS
