THE WORLD BANK'S technical people, having launched 31 "poverty reduction projects" in China, saw no problem with No. 32. That is why, incredibly, only when British Tibet advocates started spreading the word seven or eight weeks ago did the bank learn of the project's political aspect: It would resettle some 60,000 poor Chinese farmers on land Tibetans say is traditionally theirs.

The word offended the bank's biggest shareholder, the United States. Treasury Secretary Robert Rubin, expressing doubt about the staff-proposed $160 million loan, has said he is "inclined" to oppose it. Needless to say, the bank's largest borrower, China, is also among the offended. It has threatened to "reevaluate its relationship with the bank" if the project does not unfold as planned.

The World Bank's board is due to vote on the question today. From an American standpoint, any vote on the merits has to be a simple one. As the Tibet lobbyists say, the project puts the bank in the position of underwriting the resettlement of Han Chinese and Chinese Muslims into a traditionally Tibetan and Mongolian area on the Tibetan plateau. Had this factor been fed into deliberations in a more timely fashion, no doubt the project would have been handled differently. It becomes a political embarrassment to deal with the project now. But it is an unavoidable and manageable embarrassment. The World Bank cannot accidentally become the instrument of a Chinese policy that affects the survival of Tibetans as a distinct people and culture.

The bank itself has a structural problem. The line between technical and political is obviously too sharp. Or the bank has been slow to grasp that decentralization works poorly when a heavy burden of accountability is devolved upon countries such as China that do not provide adequately for a free flow of information or for a space for dissent.