LONDON -- When people hear the word "globalization" they differ in how they react. Some think about how globalization has spread around the world raising incomes and the quality of life wherever it goes. Others think about how the capitalist forces of the West extend their exploitative tentacles to grab wealth and resources from poor defenseless peoples.

The truth of course lies somewhere in between. I fall into the first group, those who think that on balance globalization is a force for good. Sometimes it is all gain, as when a multinational corporation takes its capital and knowledge into a remote area to exploit resources that would otherwise remain unused and distributes the gains equitably with the local population.

This is not to say that I deny that there are ever negative aspects of globalization. Most multinational corporations' investments, while being a positive sum game, do involve both gainers and losers. On balance the gains outweigh the losses. This does not leave the losers happy of course, unless they are adequately compensated. Multinational corporations facilitate a process of transition in which resources move to their most productive locations.

Sometimes, however, multinational corporations can form unholy alliances with corrupt and despotic governments to exploit a people. That this happens from time to time cannot be denied. I came across more than one example in my travels this summer. What was unusual about some of these cases was that a multilateral financial institution was supporting the multinational corporation.

Take, for example, the case of Nestle investment in Uzbekistan. Nestle, a Swiss multinational corporation, has invested in two projects in Uzbekistan so far: a drinking water plant that produces water for sale in plastic bottles and also for use in its other factory, a baby-food factory. Both factories are joint ventures with government bodies. Sounds good? A case where globalization is a force for good? Think again.

Uzbekistan is one of the poorest countries in the world. Not because it has no resources, on the contrary it should be a rich country. It is because the government effectively governs the country, with an iron rod, in the interests of a favored few who have immensely wealthy life styles and remove as much of their capital from the country as they can.

The only people who can afford the products that Nestle produces are the rich and their hangers on, the corrupt and their cronies. You do not see Nestle's products in the hands of the poor, i.e., the majority of the people of Uzbekistan.

So what? If Nestle wants to invest in such factories in such conditions and its shareholders are happy with it, what is it to do with us? Well, the problem is that the European Bank for Reconstruction and Development (EBRD), a public body supported by taxpayers' funds, has in its wisdom decided to support the investment.

The EBRD was set up after the collapse of the Soviet Union to support the development of the private sector in the newly independent states of Eastern Europe, the Caucasus and Central Asia (including Uzbekistan). It also has a mandate not to support states that move away from democratic principles and is concerned with the protection of human rights.

In Uzbekistan the EBRD helps finance the development of two major mineral resources, gold and oil, by supporting foreign multinational corporations that exploit those resources. How much those projects actually help the poor of Uzbekistan is open to question. But there is no question about the Nestle project -- the poor do not benefit.

So why is the EBRD supporting a company that takes Uzbekistan's resources and provides luxuries for the rich? This is a good question and one for which I do not have an answer. Contrary to the mission of the EBRD, the joint-venture partner of this project, and most of its other projects in Uzbekistan, are government bodies. Not much benefit for the private sector there then.

Why, too, is the EBRD supporting projects at all in a country that so blatantly ignores democratic principles and human rights? Again a good question, and another one I have no answer to.

Not content with supporting projects favored by the despotic regime of Uzbekistan, the EBRD also gave that regime a massive public relations boost earlier this year by holding its annual meetings in Tashkent. The government forced all shopkeepers in areas where delegates were likely to walk to reduce their prices by 95 percent for the duration of the event so as to make local salaries seem to be higher in real terms than they actually are.

The government also installed ATM machines in the hotels used by delegates to the meetings and ensured that they were filled with otherwise unobtainable 1,000 sum notes (each note worth about one dollar). After the meetings ended the machines were emptied and the 1,000 sum notes disappeared. It became difficult to find any notes at all as a matter of government policy (supported by another multilateral agency, the International Monetary Fund). Delegates were also invited to meet NGO representatives in meetings set up by the government -- something not repeated when the EBRD is out of town.

The EBRD's Tashkent meetings gave an international platform for the president of Uzbekistan to extol the quality of life in Uzbekistan, a position that he, of course, knows the 5-star hotels and restaurants that were built or renovated for their use at the taxpayers' expense.

The EBRD would say that its president did draw attention to human rights and democratic abuses in his speech at the annual meetings. True, but it was a very low-key statement and he also praised the government for its supposed but unreal political and human rights reforms.

This has to be balanced against the platform given to the Uzbekistan government at the meetings. The EBRD also continues to pour money into the country to support projects in which the government and its friends have substantial interests, not the small and badly constrained genuine private sector. Those projects do little to address poverty issues, even the small project to provide finance to small-scale enterprises.

Time for the EBRD to rethink the role it is playing in Uzbekistan? I think so.