[stop-imf] IMF and Forests
Robert Weissman
rob@essential.org
Tue, 28 Jun 2005 09:02:02 -0400
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WORLD RAINFOREST MOVEMENT
MOVIMIENTO MUNDIAL POR LOS BOSQUES
International Secretariat
Maldonado 1858; Montevideo, Uruguay
E-Mail: wrm@wrm.org.uy
Web page: http://www.wrm.org.uy
Editor: Ricardo Carrere
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W R M B U L L E T I N 95
June 2005 - English edition
This bulletin is also available in French, Portuguese, and Spanish.
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THE FOCUS OF THIS ISSUE: INTERNATIONAL FINANCIAL INSTITUTIONS
Forest destruction does not simply happen. A web of actors and policies
can always be identified as responsible for initiating processes leading
to deforestation and forest degradation. Prominent among those actors
are International Financial Institutions which promote and make possible
activities which result in massive forest loss and in the violation of
the rights of forest and forest-dependent peoples. However, the negative
role of these institutions is not easily perceived by the general
public, as their loans and policies are presented under the disguise of
"development assistance". For that reason, the World Rainforest Movement
and Friends of the Earth International decided to produce a joint
bulletin on this issue, aimed at shedding some light over the obscure
dealings of these institutions. We hope that the articles below will
contribute to that aim.
In this issue:
* OUR VIEWPOINT
- Another world is possible ... without International Financial Institution=
s
* SHEDDING SOME LIGHT ON IFIs
- International Financial Institutions: The "development" business
* FINANCING GLOBAL DESTRUCTION
- The IMF's role in the destruction of tropical forests
- The World Bank, Forests and Forest Peoples: Policies, Impacts and
Implications
- "Open for business": How the International Finance Corporation
subsidises the pulp and paper industry
- The destructive role of Export Credit Agencies
* THE REGIONAL ACTORS
- Secrets and lies: The Asian Development Bank's new forest policy
- The Inter-American Development Bank, Forests and Plantations
- The European Investment Bank: Surrounded by secrecy
* IMPACTS ON THE GROUND
- IMF and deforestation in Indonesia
- Laos: Did The World Bank Fudge Figures to Justify Nam Theun 2?
- Peru: IDB funds the Camisea gas project that endangers biological and
cultural forest diversity
- Uruguay: Campaign against IFC funding of pulp mill projects
* BUILDING ALTERNATIVES
- The Mumbai-Porto Alegre Forest Initiative as a real alternative for
forests and forest peoples
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* OUR VIEWPOINT
************************************************************
- Another world is possible ... without International Financial Institution=
s
Until the 1950s, countries were just that: countries. During the US
presidency of Harry Truman, countries were classified into "developed"
and "underdeveloped", depending on how close or distant they were from
the US model. Since then, the negative adjective "underdeveloped" has
been replaced by the more positive "developing". The fact that most of
the so-called "developing" countries are now in a worse social, economic
and environmental situation than they were when they were classified as
such is not even a matter of much debate.
What's important - for the "developed" countries - is to maintain the
illusion that "developing" countries CAN become similar to Western
countries. That is also one of the illusions International Financial
Institutions (IFIs) seek to maintain.
The IFIs' unstated aim, of course, is different: to ensure that
"developing" countries' resources keep flowing to the economically rich
"developed" nations, which in the process become even richer -while the
"developing" become poorer. Unfortunately, IFIs have until now been
highly successful both in achieving this aim and in maintaining the
illusion of a Western future for the South.
The two best known IFIs are the International Monetary Fund and the
World Bank. They are assisted by the regional African, Asian and
Inter-American Development Banks, as well as by the European Investment
Bank and a large number of Northern Export Credit Agencies.
Funding from all those institutions - falsely claimed to be assisting
countries to "develop" - has resulted in widespread impoverishment and
environmental destruction, while at the same time increasing foreign
debt and dependence in Southern countries. That dependency is then used
by IFIs to impose favourable conditions - which clearly affect the
countries' sovereignty - for northern investment and resource appropriation=
.
The footprint of IFIs is visible in most processes leading to
deforestation. Take the case of the Amazon. Deforestation was first made
possible through IFI lending for road-building deep into the forest.
This made industrial logging, cattle-ranching, large- scale agriculture,
mining, dams and oil exploitation possible, resulting in extensive
forest destruction and human rights violations. Most of those activities
were themselves made possible through IFI lending. In spite of the
plunder of their resources, Amazon countries became indebted and IFI
conditionalities forced them to increase resource exploitation for
export still further in order to service the external debt. At the same
time, structural adjustment programmes opened up the countries' riches
to northern corporations even further. A similar pattern can be easily
identified in tropical Africa and Asia.
Even now, when the finance ministers of the world's seven richest
nations have recently promised to cancel the debts the poorest countries
owe to the World Bank and the International Monetary Fund, they are
pursuing the same aims as before. This is made clear in paragraph 2 of
the finance ministers' statement (11 June 2005), which says that to
qualify for debt relief, developing countries must "... boost private-
sector development" and eliminate "impediments to private investment,
both domestic and foreign". This means opening up the doors even wider
to transnational corporations as well as privatizing whatever can be
privatized, including basic peoples' needs (such as water, health care,
social security, education), state-owned assets of all types and even
the atmosphere (through climate change-related carbon trading).
It is clear that what people and the environment need is exactly the
opposite: among other things, to boost community development, to
establish clear impediments to destructive private investment, to ensure
free access by people to water, health care, social security, education.
While pushing in the opposite direction, IFIs are thus clearly not part
of the solution to the world's problems but a major actor in increasing
them. They are tools used by the powerful against the disempowered.
Their funding and conditionalities result in socially and
environmentally destructive activities. Another world is possible
without these institutions.
World Rainforest Movement - Friends of the Earth International
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* SHEDDING SOME LIGHT ON IFIs
************************************************************
- International Financial Institutions: The "development" business
Development can provide --indeed, it does-- great opportunities for
corporations eager to profit from business in so-called "developing"
countries. International Financial Institutions (IFIs) have proved to be
extremely good instruments for achieving that, and extremely bad for
improving southern peoples' livelihoods or protecting the environment.
The World Bank Group -which includes the World Bank (WB) and the
International Finance Corporation (IFC)- the Inter-American Development
Bank (IDB), the Asian Development Bank (ADB), the African Development
Bank (AfDB), the European Investment Bank (EIB), the International
Monetary Fund (IMF), and Export-Credit Agencies are the major IFIs.
How do they exert their power? Inequality in the distribution of votes
in the IFIs allows for their control. Representation on the executive
board is based on the proportion of funding. The IFIs are structurally
based on voting power that does not operate on one vote one country but
is determined by the amount of money invested by each member country.
The significance of the basic vote allocated to all members has declined
in proportion to the number of votes allocated according to a country's
economic strength. The failure to maintain the value of the basic vote
has shifted the balance of power further to industrialised countries. As
this 'equity factor' has diminished in significance, the allocation of
votes has moved much closer to one- dollar-one-vote.
While more than 180 countries are members of the IMF five of them (USA,
Britain, Germany France, Japan and Saudi Arabia) control 44% of the
votes. The United States has a controlling share of over 16 per cent of
the total votes in both institutions, giving it veto power for major
decisions. In the case of the WB, the 24 OECD countries control more
than two thirds of the votes. The Board of regional multilateral banks
like the Asian Development Bank (AsDB) and the African Development Bank
(AfDB), apart from following the same structure of "one-dollar-
one-vote", are controlled mainly by non-regional countries, which
integrating the banks allows their corporations to benefit from the
concessions granted through "development" projects. In the AsDB, the
country that holds the highest voting power is the United States,
followed by Japan, Canada and Germany
(http://www.bicusa.org/bicusa/issues/ADB_Voting_power_by_country2003.pdf).
In the AfDB, Nigeria leads the list, but followed suit by USA, Japan and
Germany
(http://www.afdb.org/pls/portal/docs/PAGE/ADB_ADMIN_PG/DOCUMENTS/FINANCIALI=
NFORMATION/2005-VP-ENG-MAY.PDF).
The unequal allocation of votes is magnified by the system of allocating
seats on the IMF and World Bank boards on the basis of one per
constituency with the five largest vote holders allocated one seat each
(the US, UK, France, Germany and Japan). A further three countries are
in single-country constituencies and therefore have guaranteed seats on
the boards (China, Russia and Saudi Arabia). The remaining 176 member
countries share just 16 seats between them.
This inequality means that the IFIs are a tool whereby G7 countries
(Canada, France, Germany, Japan, Italy, UK, US) pursue their economic
and foreign policy goals. This small group of countries can agree
policies outside the IFIs and implement these policies through them.
Southern countries are continually adjusting to the latest economic
fashions of the IFIs, which in turn are influenced by the needs of
industrialised countries.
Transactions carried out by IFIs in (mis)development projects and other
business ventures have several implications. They have taken and still
take place in an uneven field: rich nations lend money to impoverished
nations, enlarging their already large foreign debt. It's worth noting
that in many countries their debt burden soared during military
dictatorships through loans granted by IFIs, who have long supported
dictatorial regimes.
Although many countries have swept away dictatorships, their governments
anyway inherited those debts. Once caught in the trap, indebted
countries have to service their financial debt at the expense of their
own economy, diverting resources from other areas, including social and
environmental programmes.
IFIs are thus related to the circle of an external debt over which
dependence is built. By means of dependence powerful nations can impose
their conditions on the policies that governments must follow in order
to receive the loans.
The policy recipe of IFIs includes structural adjustment programs (SAP)
to recover macroeconomic stability in the short-term. SAPs entail a
package of economic policies designed to fix the countries' imbalances
in trade improving their balance of payments, by increasing exports and
reducing imports. Thus, Southern countries have embarked on export-led
intensive extraction of natural resources and monoculture activities
(the so called "commodities"), also to generate foreign exchange with
which to pay the foreign debt. Further policies have forced countries to
open their national economies to transnational companies for investment
in the exploitation of the countries' natural resources.
Those policies and IFI's investments have more than often implied
negative environmental and social consequences as long as they put an
increasing and indiscriminate pressure on nature. Fossil fuel projects
(like the Bolivia-Brazil Gas Pipeline or the Camisea Gas Project in
Peru), mining projects (like the Ok Tedi mine and the Lihir Mine in
Papua New Guinea), dams (like Nam Theun 2 dam in Laos), shrimp farming
(like the WB/IFC's funded Shrimp Culture Project in Bangladesh,
Fisheries Support Services Project in Indonesia, or Shrimp and Fish
Culture Project in India), roads, and industrial plantations
(eucalyptus, oil palm, teak, rubber trees, soya) everywhere, destroy
local and regional environments and livelihoods and lead to
deforestation and destruction of other biologically rich areas.
Quite away from any idea of "aid", Northern countries seek their best
opportunity everywhere, including the "development" field. Experiences
over the past years further show - as in Cambodia, East Timor,
Afghanistan and Iraq- that post-conflict, post-war and disaster
reconstruction have been another operation field for IFIs, whose
reconstruction programmes do not contribute in any meaningful manner to
the rebuilding and rehabilitation of the lives of affected peoples and
communities. Governments which do not comply with their recipes and
conditions are black-listed, which means that investment and technology
transfers are frozen and export and import credits are often blocked.
In order to expose how investment in IFIs is profitable for
industrialized countries, let the government of the United States speak
for itself (it has spared us the task of trying to decode its message!):
"US participation in the development banks provides essential financial
support for the work of US export promotion agencies. (...) The
development bank's structural adjustment and sectoral lending programs
have been extremely important in promoting more open trading systems. In
Latin America and the Caribbean, this type of lending, in conjunction
with the adjustment programs of the International Monetary Fund, has led
to fundamental economic policy reform in some of the larger countries.
(...) As a consequence, they are becoming larger and more important
export markets for the United States and other industrial countries.
(...) The important role of the MDBs in the international economy and
the economic benefits they provide to the US are not well known. (...)
Since the founding of the World Bank in 1945, we have been their largest
and most influential contributing member. We have also been their
largest beneficiary in terms of contracts awarded to U.S. firms to help
borrowing countries carry out projects financed through the banks. The
U.S. procurement record in the development banks reflects the enormous
economic stake we as a nation have in promoting continued growth in the
international economy. More and more this is where the economic action
is. To do well at home, we must be engaged abroad." ("The Multilateral
Development Banks: Increasing U.S. Exports and Creating U.S. Jobs",
report of the U.S. Department of the Treasury, May 1994.)
Flowing of resources from the South to the North, which can be traced
back to colonial times when the powers took over the wealth of their
colonies to build Northern "development", is today sustained by IFIs. A
massive loss of capital from the poor countries to the rich countries in
the North was estimated in $50 billion in 1985 alone. In 1990 there was
a net transfer of $156 billion from the "third world" to the North. From
Africa alone, the flow to the IMF and WB from 1986 to 1990 was 4.7
billion dollars, while in the case of Latin America alone over 700
billion dollars were transferred as payments to Europe and U.S. banks
and multinationals from 1990-98. In other words, as a result of the
lending, and the requirement to repay with interest, there is a reverse
flow from the South to the North, on an unprecedented scale.
This takes place within a framework of an unfair system of trade
controlled by the major countries through the World Trade Organization,
bilateral "free trade" agreements, a whole array of commercial devices,
and Foreign Direct Investment channeled through the IFIs.
At the root of all this lies the overproduction, overconsumption, and
overwaste pattern of Northern industrialized societies, the target of
most of Southern production. Their way of living is made possible
through the appropriation of resources and cheap labour from Southern
countries, and their environmental destruction, including deforestation.
However, resistance expresses in many ways, from local struggles to
global campaigns and new insights that add to the construction of other
possible worlds that challenge the predominant globalizing model.
The concept of the Ecological Debt, being one of those expressions, is
rooted in the historical, social, environmental and cultural debt of the
North with the South, the colonialist plunder left in impunity that cut
down forests to extract minerals and grow cash crops, appropriated
ancestral knowledge, enslaved Southern peoples and brought about
irreparable environmental and social harm.
The Ecological Debt builds not only on the underpaid export prices of
Southern products that failed to include the several local and global
social and environmental costs, but also on the environmental services
of their natural wealth that are not paid at all, like their forests,
rivers, and biodiversity.
Shifting the position from where to face the debt that has enslaved
Southern countries, the Ecological Debt makes Northern countries debtors
to Southern countries since it is so huge and historical that the
financial debts owed by Southern countries to IFIs have rendered
insignificant. The South has already largely paid its debt.
However, incommensurability demolishes the concept of compensation.
What's the price of cases of harm to health or death, destruction of
cultures or the environment? Can they be compensated with cash? Several
indigenous communities, like the U'Wa in Colombia, have rejected money
compensation from Occidental Petroleum company to leave their land
because for them it has no price, it is their mother earth.
The Ecological Debt is not about turning nature into merchandise but
opposing the Ecological Debt to the external debt, which is now being
challenged as illegitimate, inhuman and immoral.
Awareness of IFI's role in maintaining an unfair international order
that impacts on the environment and on people is increasing. With this
bulletin, we join to the several organizations from North and South that
are monitoring and disclosing IFI's activities in the search of social
and environmental justice.
Article based on information from: "IMF and World Bank: Instruments of
Globalisation", Alternative Information & Development Centre (AIDC),
http://www.aidc.org.za/?q=3Dbook/view/119; "Deuda ecol=F3gica y derechos
econ=F3micos, sociales y culturales", Joan Mart=EDnez-Alier,
http://www.deudaecologica.org/a_alier02es.html ; Ecological debt: the
desecration of life, Aurora Donoso, Acci=F3n Ecol=F3gica,
http://www.accionecologica.org/descargas/alertas/deuda/pasivos%20en%20la%20=
mineria.doc;
"Options for democratising the World Bank and the IMF", Paul Ladd,
http://www.sarpn.org.za/documents/d0000527/page3.php#footnote;
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* FINANCING GLOBAL DESTRUCTION
************************************************************
- The IMF's role in the destruction of tropical forests
Let us make no mistake. When the IMF talks about a "favourable
environment," it is referring to business, to a favourable environment
for direct foreign investment through operations on the stock exchange,
or indirect foreign investment through the operation of transnational
companies. The sporadic references made to the environment in their
loans, grants, documents and strategies are functional to their
classical recipes based on adjustment and stabilization programmes,
which if properly applied, should lead us to sustained development,
understood of course in terms of the continuous growth of the GDP. The
IMF continues to believe, or to insist on making us believe that there
is a magic or "virtuous" circle in which "sustained" economic growth
reduces poverty and increases available resources to improve the
environment. Furthermore, this circle has its own feedback (1).
Something similar to the invisible hand of Adam Smith.
The IMF itself confesses that it does not take environmental problems
into account as it is limited by its mandate and by the scant
preparation of its staff in such matters. This institution declares
itself to specialize "only in issues referring to macro- economic,
monetary, trade and tax policies on a national and international level"
and that it is other organizations such as the World Bank, the United
Nations or the regional development banks that are "better equipped" to
address environmental problems." (2). In this way, the IMF eludes all
responsibility for the environmental impacts generated by its
stabilization and structural adjustment programmes.
Three decades have gone by since the first structural adjustment
experiments were implemented by the bloody dictatorships of Uruguay,
Chile and Argentina in the mid- seventies. Since then and with no
distinction of a historical, geographical, cultural or social nature,
the IMF has been imposing a single recipe for any country attempting to
access its funds, which supposedly aims at achieving economic growth.
The IMF takes advantage of the opportunity to impose structural
adjustment and stabilization programmes as a conditionality to obtain
its loans. These include the implementation of measures aimed at
overcoming the budgetary deficit through cuts in public expenditure, the
implementation of privatization processes, deregulation of the economy
including trade and financial liberalization and economic growth based
on an increase in exports. These adjustments involve a structural reform
of the State, making it possible to eliminate barriers preventing access
to resources and the creation of an environment favourable to foreign
investment. Such "barriers" include any type of social regulation
(including measures for labour and environmental protection). Summing
up, when a country has difficulties with its balance of payments and is
on the verge of bankruptcy it finds itself forced to accept the IMF's
financial "assistance," but in fact it really starts to sink in a
process whereby it looses control of its resources (understood in the
WIDE sense) and of its sovereignty.
The protests and demonstrations of the affected communities, civil
society organizations and studies by environmental organizations have
proved over and over again, that in most of the IMF client countries, in
addition to the development objectives not being attained, the general
results of these policies have been devastating on the environment"
(3). And forest ecosystems do not escape this rule. In the year 2002, a
study by the American Lands Alliance concluded that the International
Monetary Fund (IMF) credits and policies caused a notorious increase in
deforestation in Latin American, Asian and African countries possessing
great biological wealth. The study points out that the IMF strategy of
promoting growth based on exports and foreign investment, while putting
pressure on the countries to cut back on their expenditure on
environmental programmes, has also accelerated deforestation." The IMF
seems to have promoted the logging of endangered forests in Brazil,
Cameroon, Chile, Ecuador, Ghana, Honduras, Indonesia, C=F4te d'Ivoire,
Madagascar, Nicaragua, Papua New Guinea, the Central African Republic,
Russia and Tanzania.
The response to this report by the IMF was that it would seem to have
been based on "old or incorrect" information. The Fund argues that it
has incorporated conditions requiring the reform of forestry policies -
aimed at reducing illegal logging and at strengthening forest protection
- and that it has even suspended loans to various countries in an
attempt to halt illegal logging and deforestation (4). However, the
truth is that so far, the Fund refuses to acknowledge the environmental
impacts of its structural adjustment programmes.
For example, the study points out that in Brazil, where the tropical
forests represent one third of all the rainforests left on the planet,
the Government reduced its environmental expenses by almost two thirds,
as a condition for an agreement on an emergency package of 41,500
million dollars signed with the IMF in 1998. This implied a budgetary
reduction in which 10 of the 16 environmental programmes in Brazil -
several of them aimed at enforcing forest exploitation standards and
forest protection - ceased to be applied.
In Cameroon, one of the countries with the greatest biological diversity
in Africa, the IMF managed to get it to devalue its currency and reduce
taxes on exports of forest products. "This made forest exploitation more
profitable, and increased the number of commercially viable species,
thus increasing the volume logged per hectare." As a result, the number
of logging companies operating in Cameroon increased from 177 to 479
between 1990 and 1998, compared to the scant 106 operating in 1980, with
the result that over 75 per cent of the country's forests have been
logged or will have been logged in the near future.
In Papua New Guinea, which hosts 1,500 species of trees, 200 species of
mammals and 750 species of birds, half of which are endemic, cuts in
public expenditure resulted in the dismantling of the Environmental and
Conservation Department. To encourage the timber industry, the IMF
managed to have taxes on forest exports cut from 33 per cent to between
zero and five per cent in 1998. The result did not take long to appear:
various large Malaysian logging companies immediately established
themselves in Papua New Guinea, seriously affecting the forests of that
country.
The IMF -which mainly reports to the United States Treasury- has not
made any substantial changes to improve the situation. It has merely
recognized that its policies have some impact on poverty, which has
implied a cosmetic change in its structural adjustment programmes. No
mention of policies favouring the environment. On June 11, the Ministers
of Finance of the G8 made a public declaration on "Development and Debt"
including a proposal to cancel the multilateral debt to be submitted to
the Annual Meetings of the IMF, the World Bank and the African
Development Bank in September 2005. This cancelling of the multilateral
debt is still linked to observation of conditions exacerbating poverty,
over-exploitation and plundering of natural resources and the
perpetuation of domination over the South. In cancelling the debt, no
restitution or reparation is commuted for slavery and colonization, for
the looting of wealth and natural resources, the exploitation of labour,
for human, social and ecological destruction in the South caused by
economic activities, military operations and wars protecting the
interests of international cleptocracy (5).
The silence of the IMF technocrats, produced by universities such as
Harvard and its peers, is not a mere coincidence. They have been
trained in function of a single objective: that of removing the
obstacles hindering access and control of the planet's natural resources
by the major corporations. Or perhaps the perpetuation of the United
States trade deficit aimed at financing the business of world
cleptocracy. Once more, the end justifies the means: letters of intent
are signed, workshops are organized to build up technical capacity,
extortion is exerted with threats of closing access to the markets of
international capital and those who have the courage to oppose this
neo-liberal development model are repressed. The actors are powerful and
well-known: the governments of the rich countries in the North, the
multinational corporations, and the corrupt elites and oligarchies of
the South. The result can in no way be called development, not if it is
done at the expense of destroying healthy ecosystems, the impoverishment
and social exclusion of the communities that inhabit them or that depend
on them for survival, and the perpetuation at all costs of the present
system of global production.
By Marta Zogbi, Friends of the Earth International, e-mail: marta@foei.org
Sources consulted:
1. Ficha t=E9cnica - Abril de 2004 "El FMI y el medio ambiente",
http://www.imf.org/external/np/exr/facts/spa/enviros.htm
2. "The IMF and the Environment", Ved P. Gandhi, July 28, 1998
http://www.imf.org/external/pubs/ft/exrp/environ/
3. "The IMF: Funding Deforestation" by Jason Tockman, American Lands
Alliance. The complete report may be read (in English) at
http://www.wrm.org.uy/actores/FMI/Jason.doc
4. AMBIENTE: FMI bajo fuego por promover desforestaci=F3n by Danielle
Knight www.tierramerica.net/2002/0203/noticias1.shtml
5. ADITAL 22.06.05 - ARGENTINA "Respuesta de Jubileo Sur a la propuesta
sobre Deuda del G8"
http://www.adital.org.br/site/noticias/17311.asp?lang=3DES&cod=3D17311
************************************************************
- The World Bank, Forests and Forest Peoples: Policies, Impacts and
Implications
New policies, old problems. Ever since the 1970s, the World Bank has
struggled to define an approach to forests, which reconciles its
expressed commitment to poverty alleviation with its model of promoting
'development' through top-down growth and commercialisation. Free market
models of development based on private property rights do not fit well
with conventional forestry approaches. Since the 1700s, the dominant
model of 'scientific forestry', developed in Europe, has opposed the
free play of market forces by reserving forests for State-chosen
strategic interests. This has entailed State control of forest reserves,
as 'public goods', to the exclusion of both local communities and (at
least in theory) destructive industries. Forestry ministries, which
favour State control and public ownership, and agricultural ministries,
which favour private property and free markets, have long been
suspicious of each other.
This model of 'scientific forestry' was first imposed on developing
countries by the British in Burma in the 1840s. Ever since, the
political economy in tropical forests has been dominated by unhealthily
close relations between those in State agencies, who control forests,
and large-scale loggers, prepared to pay them back-handers to get access
to the timber. 'Scientific forestry' has thus not only favoured
collusive corruption but has led to the development of institutionalised
graft, whereby substantial proportions of timber profits bank-roll
politicians, their patrimonial networks and - in today's so-called
democracies - political parties. Corruption and social exclusion have
penetrated the forestry sector so seriously that the goals of
'scientific forestry' - which aimed to reserve forests for producing
timber for strategic industries and ensure environmental services - have
been wholly defeated. Forests have been mined for the economic and
political gains of business elites, with severe social and environmental
consequences.
This kind of forestry has not only been riven with economic
'inefficiencies' - so distasteful to World Bank economists - but has
imposed huge costs on local communities and indigenous peoples, whose
rights were denied in setting up State forest reserves, to such an
extent that the contradiction between forestry and the poor has been too
harsh for even the World Bank to ignore. Since the 1980s, the World
Bank's favoured solution to these problems has thus been to promote
market- based approaches to the concession system - through measures
like competitive bidding, market transparency, undoing log export bans
- on the one hand, while promoting 'social forestry', usually outside
forest reserves, on the other. 'Social forestry', based on the Chinese
model of mass plantings by State-directed peasantries, was meant to
provide rural people with at least some forest products. However, in
more capitalist countries it was quickly found that these plantations
could be designed to benefit pulp mills and paper industries more than
local farmers, whose labour was co-opted for planting and looking after
seedlings and saplings but who got scant access to the trees once they
matured.
It was only in the mid-1980s, that the World Bank's approach to forests
was seriously challenged by social justice and environment movements.
Once it became clear that the World Bank was funding the mass
destruction of tropical forests and indigenous peoples - through
colonisation schemes, plantations, dams, mines, road building and
agribusiness - the World Bank promised reforms. It set up a new
environment department, adopted what came to be called 'safeguard
policies' - required procedures designed to protect vulnerable social
groups and environments from the worst impacts - and announced that its
goal was to promote 'sustainable development', an oxymoron made popular
by the Brundtland Commission.
NGO focus on the World Bank's forestry policy, however, only really
started in earnest with the unveiling in 1986 of the Tropical Forestry
Action Plan (TFAP), a proposal from the World Bank, FAO, UNDP and World
Resources Institute to slosh US$ 7 billion of aid money into tropical
forestry. This was to be more of the same - more commercial logging,
more plantations modelled on the Aracruz example in Brazil and more
top-down social forestry of the kind that was dispossessing peasants and
covering ill-named 'wastelands' in India with a sea of Eucalyptus. One
response from NGOs was to set up the World Rainforest Movement, which
was founded at an international conference in Malaysia in 1986 as a
riposte to TFAP.
The outcry was so loud and the evidence uncovered by the NGOs so
compelling that, in 1990, the G-7 summit called for the TFAP to be
revamped - it soon fell apart. For a short period, the critical voice of
NGOs was so strong that, when it became clear that there was barely a
single example worldwide of sustainable forest management in the
tropics, the Bank felt obliged , in 1991, to adopt a forest policy based
on a precautionary approach to natural resource exploitation. In the
absence of any good evidence that tropical forest logging could be
sustainable, the new 'Forestry policy' proscribed World Bank funding of
projects that would damage primary moist tropical forests.
The Return of the Market: divide and rule. Unfortunately, NGOs did not
hold firm in their rejection of market models for forestry reform. True,
some such as WRM did prioritise alternative approaches to forests, based
on the restitution of the rights of indigenous peoples, land reform to
bring justice for peasants and the landless rural poor, the promotion of
local livelihoods, gender justice and self-governance. However, many
others, including major conservation bodies like the WWF, were attracted
by the potential of harnessing market forces to provide the private
sector with incentives to manage forests 'sustainably', which they hoped
would in turn drive forestry reforms. The immediate result was the
Forest Stewardship Council, set up in 1993, which while its principles
and criteria included strong protections of the rights of local
communities, indigenous peoples and workers, led to the rehabilitation
of the suspect concept of Sustainable Forest Management. In 1998, the
WWF and the World Bank announced a new joint 'Forest Alliance' dedicated
to promoting the certification of 200 million hectares of forests in
World Bank target countries by 2005. The World Bank was back in the
forestry game.
The problem remained for the World Bank, that its 1991 forest strategy
was not really compatible with a market approach to forests. However,
with the NGOs divided, the Bank embarked on a complex manoeuvre designed
to legitimise its return to the promotion of tropical forest logging and
market based reforms. It carried out a lengthy Forest Policy
Implementation Review and Strategy Development, undertook extensive
regional consultations, commissioned a series of papers examining worthy
matters like poverty alleviation, indigenous peoples and community
forestry and, then came to the unsurprising, though contested,
conclusion that it was time to do forestry again just as it had in the
1970s and 1980s - promoting market-based reforms of forest industry,
while doing 'community forestry' to show it still cared about poverty.
The proscription on funding logging in primary moist tropical forests
was lifted, the precautionary approach dropped.
The new Strategy and associated policy, adopted in 2002, however, has
even more of a market emphasis than before. New markets in environmental
services are to be promoted, alongside markets in 'green' timber, which
the policy aims to achieve through voluntary certification. Carbon
trading is also being promoted through the Bank's new Biocarbon Fund.
As detailed in the April issue of the WRM Bulletin (No. 93), unleashed
by the new policy, recent World Bank investments are causing serious
problems - expansion of socially and environmentally harmful investments
in plantations, agribusiness and phoney carbon sinks; top-down community
forestry schemes which trample the rights of indigenous peoples, while
best practice examples of Bank-funded certified sustainable forestry
operations are nowhere to be seen.
Markets without rights. No one should be surprised that the World Bank
favours a market approach to dealing with forests, but what is
tragically inconsistent about the World Bank's approach is its treatment
of the property rights of the poor. Of course, NGOs tend to argue for
the recognition of the land rights of indigenous peoples and local
communities on the grounds of human rights and natural justice, but
capitalist economists, such as De Soto, have also stressed that
development cannot work in favour of the poor without a strong framework
to protect property rights.
As the eighteenth century free market philosopher Adam Smith noted, for
'free markets' to work, the State must protect 'as far as possible,
every member of the society from the injustice or oppression of every
other member of it...' through the 'establishment of an exact
administration of justice'. The rule of law, Smith concluded, is
required for the protection of private property, and this must be done
fairly if it is not to 'excite the indignation of the poor', leading to
the great risk that 'civil government, so far as it is instituted for
the security of property, is in reality instituted for the defence of
the rich against the poor' (Adam Smith, The Wealth of Nations).
Yet, the new market-based 'Forests Policy' of the World Bank falls into
exactly this trap. The World Bank notes that some 1.2 billion poor
people worldwide depend on forests for fuel-wood, water and other basic
elements in their livelihoods. Of these, 350 million people are
forest-dependent people, while only 60 million of these are classified
by the Bank as 'Indigenous Peoples'. Although, the new forests policy
does require that Bank-funded logging projects ensure 'recognition and
respect for legally documented or customary land tenure and use rights',
no such protections are extended to peoples impacted by other
Bank-funded projects that affect forests, like dams, mines, roads,
colonisation schemes, agribusiness and plantations. Instead of
addressing these concerns head on, the World Bank said it would deal
with these broader concerns about tenure in its revised Indigenous
Peoples policy, even though this policy is only aimed at some 5% of the
1.2 billion people that the World Bank estimates depend on forests. In
effect, the World Bank is prepared to impose its market-based policy for
the 'development' of forests and plantations without dealing with the
tenure rights of some 1.1 billion people who depend on these forests for
their well-being.
Moreover, even the Indigenous Peoples policy, which was finally adopted
by the World Bank in May 2005, offers very uncertain protections.
Although the policy is a slight improvement on discussion drafts issued
over the previous four years, the new policy does not call for full
recognition of land rights. It only requires borrower governments to set
out an 'action plan' for either full legal recognition of existing
customary land tenure systems, or a process for converting customary
rights into ownership rights, or measures for legal recognition of long
term use rights.
Indigenous peoples have not been happy with the new policy. A signed
statement by many of the main indigenous peoples' organisations
attending the UN Permanent Forum on Indigenous Issues in May 2005 noted
of the new World Bank policy that:
"The newly revised policy has made important improvements in several
areas, such as requiring that the commercial development of affected
indigenous peoples' cultural resources and knowledge be conditioned upon
their prior agreement to such development. Nevertheless, we continue to
be extremely concerned about these Multilateral Development Banks lack
of recognition of indigenous peoples' customary rights to their lands,
territories and natural resources and to their related right of free
prior informed consent, and their derogation of international standards
to national law."
Indigenous peoples have in particular been concerned by the way their
demand for recognition of the right of impacted communities to free,
prior and informed consent to projects proposed on their customary
lands, has been turned into a requirement for 'free, prior and informed
consultation' leading to 'broad community support'. According to the
Bank's new policy, such consultation and the assessment of 'broad
community support' is to be carried out by the borrower government, does
not entail the right of the community to veto the project, and is only
verified by World Bank staff through their review of documents provided
by the government.
All this allows far too much room for projects to be imposed without
adequate respect for indigenous peoples' rights to their lands and to
self-determination. As Canadian indigenous rights activist Arthur Manuel
noted:
"Consultation sounds good, but does nothing. It's a mechanism to allow
for the ultimate theft of our indigenous propriety interests free of
charge. Prior informed consent is recognition of our land, culture, and
way of life."
By Marcus Colchester, Forest Peoples Programme, e-mail:
marcus@forestpeoples.org. Further details on the implications of the
World Bank's Forests Policy can be found on
http://www.wrm.org.uy/actors/WB/brokenpromises.html. For additional
background information see: www.forestpeoples.org
************************************************************
- "Open for business": How the International Finance Corporation
subsidises the pulp and paper industry
Since it was founded in 1956, the International Finance Corporation
(IFC) has committed more than US$44 billion of its own funds and
arranged a further US$23 billion in loans for 3,143 companies in 140
countries. According to its mission statement, IFC exists to "promote
sustainable private sector investment in developing countries, helping
to reduce poverty and improve people's lives."
But when talking to industry, IFC staff occasionally let slip the real
purpose of IFC. "We are open for business," announced Tatiana
Bogatyreva, a senior investment officer with IFC, at a packaging
industry conference in Moscow earlier this month. The conference was
organised by the Adam Smith Institute, a far right-wing pro-
privatisation lobby group, and included sessions such as "Packaging as a
marketing tool" and a "Champagne roundtable" with packaging industry
executives. Bogatyreva told the conference that IFC is ready to finance
more packaging sector projects.
Unlike the rest of the World Bank Group, IFC provides loans directly to
companies, rather than to governments. The benefits to companies are
clear. As well as providing long-term, cheap financing, IFC provides
advice on emerging markets, industry sectors and financial structuring.
And IFC can help arrange project funding from commercial banks, as well
as providing equity finance for companies.
For several decades, IFC has been a major sponsor of pulp and paper
projects around the world. In recent months IFC has approved loans for
pulp and paper projects in Pakistan, China, Brazil, Jordan and Kyrgyz
Republic. In China, IFC is playing an important role in financing the
expansion of the industrial forestry sector.
In September 2001, IFC loaned a total of US$25 million to two
subsidiaries of Sino- Forest Corporation for the construction of
wood-related manufacturing plants and the purchase of plantations in
China. Sino-Forest, a Canadian company, has a plantation area of about
240,000 hectares of plantations in southern China. The company is
currently expanding its plantation area by 200,000 hectares in Guangdong
Province.
In December 2004, IFC announced a financing package to Jiangxi Chenming
Paper Company for a 350,000 tons a year paper mill and an associated
pulp mill. Jiangxi Chenming is a joint venture between Sappi (South
Africa), Shinmoorim (South Korea), Chenming Group (China) and Jiangxi
Paper Industry Company Limited (China). IFC will provide US$72.9 million
in equity and loans and will arrange a further US$205 million project
financing.
In June 2005, Stora Enso signed a loan agreement with IFC for US$75
million to finance Stora Enso's activities in China. The money will go
towards Stora Enso's eucalyptus plantations in Guangxi province in
southern China and a planned expansion of the company's Suzhou Mill.
Companies which receive IFC loans often claim that the loan is some sort
of independent approval of the firm's activities. After his company
received an IFC loan, Allen Chan, Sino-Forest's Chairman and CEO, said,
"IFC's contribution is an endorsement of Sino-Forest as one of the
leaders in sustainable forestry management in China."
When IFC agreed a loan to Stora Enso, Markku Pentik=E4inen, head of Stora
Enso Asia Pacific, said, "We are pleased to note that investors such as
IFC appreciate our sustainability approach in both forestry operations
and paper production. IFC sets a good example for other investors in the
region through its emphasis on socially responsible investment."
Although the IFC has a series of policies which should mean that
projects are screened against environmental and social standards, the
reality is that the IFC prefers doing business to upholding standards.
In November 2004, IFC approved a US$50 million loan to Brazilian pulp
giant Aracruz, to finance the expansion of the company's pulp and
plantation operations. IFC gave the loan in spite of ongoing land
disputes against the company.
In April 2005, representatives from 64 NGOs wrote to then-World Bank
president James Wolfensohn to demand that the IFC cancel its loan to
Aracruz. In his reply, Atul Mehta, Director of IFC's Latin America and
Caribbean Department, dismissed the ongoing land claims against the
company and stated that "land dispute issues were fully reviewed during
IFC's appraisal."
One week after Mehta sent his letter, 500 Indigenous Tupinikim and
Guarani people cut thousands of eucalyptus trees to demarcate 11,008
hectares of their land, land that Aracruz had planted with eucalyptus
plantations. "With this act," the Tupinikim and Guarani wrote to
Brazil's Minister of Justice, "we want to express to you and to the
entire Brazilian nation that the land belongs to the Tupinikim and
Guarani nations, and should be returned so that we may construct our own
future, guaranteeing our liberty and autonomy, and the future of our
children and grandchildren."
In its support of Aracruz and the pulp and paper sector generally, IFC
makes clear what its business is: to provide public money for private
profit.
By Chris Lang, e-mail; chrislang@t-online.de
************************************************************
- The destructive role of Export Credit Agencies
Globalisation, a corporate-led process across the world, has had immense
negative social and environmental impacts, particularly in the Third
World. Though the huge commercial forces behind globalization have tried
to make people think that it is some kind of an uncontrollable force of
nature, and that the famous free market rules the world by its own
right, there is increasing awareness that a large part of such
devastation is financed and backed by tax-payers' money using national
export credit agencies, commonly known as ECAs.
ECAs are Northern-based public agencies that provide the largest source
of government --i.e, taxpayer's-- financing to projects in the South and
the East. Through the provision of loans, guarantees, credits and
insurance, ECAs allow private corporations from their home country to do
business abroad.
During the 1990s, ECAs financing averaged US$80-$100 billion or more per
annum, roughly twice the level of the world's total official development
assistance. Worldwide, ECAs currently support an estimated US$ 432
billion in trade and investment - nearly 10 percent of world exports.
The system is based on an agreement by the Organisation for Economic
Cooperation and Development (OECD) member countries which all have at
least one ECA, usually an official or quasi-official branch of the
government.
Today, ECAs are collectively among the largest sources of public
financial support for foreign corporate involvement in industrial
projects in Southern countries. In recent years ECAs are estimated to
have supported between US $50 - $70 billion annually in what are called
"medium and long-term transactions," a great portion of which are large
industrial and infrastructure projects in those countries.
If a deal turns sour, the ECA guarantee covers the losses of the private
company, but then adds the sum to the bilateral debt of the home and
host countries. As a result, ECAs now account for up to 25 percent of
total outstanding Southern debt.
The kind of projects most ECAs often back are projects that even the
World Bank Group and other multilateral banks find potentially harmful
to support. Hence, ECAs play a major role in the expansion of profitable
(mis)development projects of corporate globalization. ECAs are racing to
offer credit with the least-binding environmental restrictions and as a
result of that race to the bottom, ECA-backed projects often despoil the
environment and disrupt the lives of local communities with their
environmental, political, social and cultural impacts. For example, ECAs
finance greenhouse gas-emitting power plants, large scale dams, mining
projects, road development in pristine tropical forests, oil pipelines,
forestry and plantation schemes, to name a few.
Most ECAs only recently adopted environmental policies that benchmark
against those of the World Bank Group and regional development banks
(like the European Bank for Reconstruction and Development, African
Development Bank, Asian Development Bank, Inter-American Development
Bank). These policies resulted from an agreed set of recommendations,
dubbed the "Common Approaches," which was brokered in December, 2003 at
the Export Credit Group of the Organization for Economic Cooperation and
Development in Paris, France.
The environmental policies of the regional development banks have been
criticized for their weaknesses, and the World Bank Group seems poised
to weaken its own policies, too. Hence, weak ECA standards are
benchmarked against weak regional development bank or World Bank
standards, with precious little global leadership to point to.
Meanwhile, the Common Approaches agreement is rife with loopholes. For
example, it states that ECA-backed projects should "in all cases" comply
with World Bank, regional development bank and host country standards,
unless an ECA "finds it necessary" to apply lower standards (!).
Another characteristic of ECAs is a wholesale lack of public disclosure
of the impacts of their projects. The Common Approaches do not require
ECAs to consult with affected communities and civil society in the
development of the projects they finance. According to Transparency
International, "Bribing foreign officials in order to secure overseas
contracts for their exports has become a widespread practice in
industrial countries, particularly in certain sectors such as exports of
military equipment and public works. Normally these contracts are
guaranteed by government-owned or supported Export Credit Insurance
(ECI) schemes (HERMES in Germany, COFACE in France, DUCROIRE in Belgium,
ECGD in the UK)."
Thanks to ECA support, private commercial banks can shirk much of their
responsibilities as well. As a Midland Bank executive in charge of arms
deals once described, "You see, before we advance monies to a company,
we always insist on any funds being covered by the [UK] Export Credit
Guarantee Department...We can't lose. After 90 days, if the Iraqis
haven't coughed up, the company gets paid instead by the British
Government. Either way, we recover our loan, plus interest of course.
It's beautiful." (Killing Secrets: ECGD, The Export Credit Guarantee
Department, 1998.)
One example of ECAs-backed harmful projects is the investment in the
Indonesian Pulp and Paper Industry, which is ranked amongst the top ten
in the world. This has been made possible by international investment of
more than US$15 billion during the 1990s.
Indonesia's two largest pulp producers --Asia Pulp and Paper (APP) and
Asia Pacific Resources International, Ltd (APRIL)-- had a nine-fold
increase in output between 1988 and 1999, which in turn entailed an
increase in annual pulpwood consumption from 1.8 million m3 to 16.7
million m3.
In order to meet the demand of fiber for the pulp industry, the
Indonesian government promotes the establishment of tree plantations,
despite the social and environmental problems these create. Still, the
development of plantations has lagged far behind the increase in
processing capacity of the industry, rendering pulp producers dependent
on a mix of tropical hardwoods. A World Bank study estimates that
deforestation in Indonesia is equivalent to 2 million ha/year, or
roughly the size of Belgium.
Another example of ECAs involvement in environmentally destructive
projects is the Bolivia-Brazil natural gas pipeline, with a total cost
of US$ 2 billion. The construction of the pipeline required the clearing
of the forest, and stretches over approximately 3150 kilometers, from
Santa Cruz, Bolivia to Brazil's Mato Grosso do Sul. It cuts across
several important ecosystems: the Gran Chaco, a protected area of
primary dry tropical forest in Bolivia; the Pantanal, the world's
largest wetland; and the remaining Mata Atlantica Rainforest of
Southeastern Brazil.
The project, with its attendant social problems, also has significant
impacts on local communities in Brazil and Bolivia. In Bolivia the
pipeline traversed a number of indigenous communities and a protected
area managed by an indigenous organization. In Brazil, Transportadora
Brasileira Gasoduto Bolivia- Brasil (TBG), whose investors include
Pertobras, Transredes, Enron and Shell, owns the pipeline; Gas
Transboliviano S.A., a consortium comprising Transredes, Enron, Shell
and Petrobras, owns the Bolivian portion of the pipeline.
In 1997, the World Bank became the first multilateral agency to fund the
pipeline. Other multilateral banks involved include the Inter-American
Development Bank and the European Investment Bank (EIB). Export Credit
Agencies involved include the Japan Bank for International Cooperation
(JBIC), and the Italian Export Credit Agency, SACE, who jointly provided
US$ 346 million.
A second pipeline of 630 kilometers starts in Ipi=E1s, Bolivia, where it
branches from the main Bolivia-Brazil pipeline and runs northeast to San
Matias and on to Cuiaba, Brazil. This pipeline cuts through 200
kilometers of primary Chiquitano tropical forest, 100 kilometers of
pristine Pantanal wetlands and bisects Bolivia's San Matias Integrated
Management Area, the only protected area for the world's largest intact
dry tropical forest and the headwaters of the Pantanal. This project is
financed by Gas Oriente Boliviano (GOB), a consortium made up of Enron,
Shell and Transredes. In 1999, Enron obtained a US$ 200 million
financing from the US government via one of its Export Credit Agencies:
the overseas Private Investment Corporation (OPIC).
Financing was approved despite the prohibition in the Foreign Assistance
Act on funding projects in "primary tropical forests". The Project's
Environmental Impact Assessment (EIA) and independent scientists
classify this region as "primary tropical forest". Using previous
degradation to justify further degradation, Enron, the main project
sponsor, contended that the forest is "secondary" due to sporadic
logging activities in some parts.
To cut its losses in Enron's bankruptcy, OPIC pulled out in February
2002. The local impacts on the Chiquitano forest region and the local
populations have been significant nonetheless: pollution of local water
resources, degradation of local roads, soil and air pollution, an
increase in crime, prostitution, and the disruption of local towns by
workers camps.
While ECAs play their role, there is increasing awareness that they are
very far from being potential vehicles for development and instead
embody a form of corrupt, non- transparent, environmentally and socially
destructive globalization. Social processes in several southern
countries spread against them in search of other possible worlds free
from dependency and commercial alienation.
Article based on information from: "The Shadowy World of Export
Credits", Tove Selin, Aaron Goldzimer, and Roy Jones, Asian Labour
Update, http://www.amrc.org.hk/4301.htm; "Financial power + ECAs:
themes and alternatives", James Goodman, AID/WATCH and the Minerals
Policy Institute, http://www.amrc.org.hk/4302.htm; "What are ECAs?",
ECAWatch, http://www.eca- watch.org/eca/ecas_explained.html; "Export
credits: Fuelling illegal logging", Chantal Marijnissen, FERN,
http://www.illegal-logging.info/papers/illegal.pdf
************************************************************
* THE REGIONAL ACTORS
************************************************************
- Secrets and lies: The Asian Development Bank's new forest policy
Founded in 1966, the Asian Development Bank (ADB) claims to be
"dedicated to reducing poverty in Asia and the Pacific". The Bank's
lending to the forestry sector indicates that in fact the Bank's focus
is on promoting industry and corporations rather than addressing the
needs of the region's poor.
The ADB's first loan to the forestry sector was in 1977, since when the
Bank has lent over US$1 billion for forestry projects. More than 80 per
cent of this total was spent on establishing more than one million
hectares of tree plantations, three-quarters of which are commercial
plantations. These plantations provide few, if any, benefits to the poor.
For the last two years, the Asian Development Bank has been conducting
discussions in secret about its proposed new forest policy. No details
about the Bank's discussions are available to the public. The most
recent draft of the proposed forest policy which is available to the
public is dated June 2003. The ADB's Board rejected this version in July
2003.
In November 2004, 24 NGOs from 16 countries wrote to then-ADB President
Tadao Chino pointing out the flaws in the Bank's forest policy review
process. In response, Robert Dobias, director of the Agriculture,
Natural Resources, and Social Sectors Division at the ADB, explained
that the Bank had revised the June 2003 draft policy to "incorporate
comments received from internal and external reviewers". At some point
after this, he added, "fundamental issues were raised related to ADB's
support to the forest sector."
Dobias avoided saying what the "fundamental issues" were, or who raised
them. "We currently are in the process of an internal discussion of
these concerns," he wrote. "Please be assured," Dobias added at the end
of his letter, "that we will make public the conclusions of our internal
deliberations and invite comment on them."
In January 2004, in response to my questions, Grant Curtis, an "NGO
specialist" in the ADB's Regional and Sustainable Development Department
told me that "ADB plans to make the final version of the policy paper
available to the public prior to the Board's consideration."
Details of forthcoming ADB Board meetings are secret. However, a leaked
internal Bank Memorandum dated 7 April 2005 lists a Forest Policy
R-paper (the "R" stands for restricted) for discussion and possible
approval by the ADB's Board on 5 July 2005.
The date of the Board meeting may change. Nevertheless, the leaked
Memorandum confirms that the ADB has produced another version of its
forest policy. Contrary to Dobias' and Curtis' assurances, it is not
publicly available.
The ADB started a review of its 1995 Forest Policy in June 2000. The new
forest policy was planned to be completed by the end of 2002. By this
time, according to Jan van Heeswijk, then-Director General of the ADB's
Regional and Sustainable Development Department, "the studies and
drafting of a policy document were completed". After six months of
"internal review and refinement of the document" the ADB produced the
June 2003 draft of its proposed forest policy.
For a while, via its web-site, the Bank asked for comments on this
draft, without mentioning that the Bank's Board had rejected it in July
2003. Then the ADB stopped asking for comments and promised that it
would release a revised draft in July 2004.
In September 2004, when the revised draft had still not appeared (and
the Bank's web-site was still promising that the draft would be released
two months previously, in July 2004) I wrote to Javed Mir, ADB's Senior
Natural Resources Specialist (Forestry) and the Mission Leader for the
new forest policy, to ask him, among other things, when we might expect
the next draft to be released. Mir declined to reply.
Then, on 27 October 2004, the Bank posted the following explanation on
its web-site: "Following internal and external consultations, a draft
working paper (W-paper) was prepared and discussed during the second
half of 2003. A revised draft of the paper was expected to be posted
here for public comment. However, recent (August 2004) internal
discussions have raised fundamental issues related to ADB's support to
the forest sector. Further progress on the draft policy will depend on
the results of these discussions, which are ongoing."
I wrote to Javed Mir again in March 2005. I asked him why the Bank did
not release the working paper from the second half of 2003 and who,
exactly, discussed the draft. I asked whether notes of these discussions
were available. I asked what happened between the second half of 2003
and August 2004. I asked what "fundamental issues" were raised, and by
whom. I asked when the Bank anticipated releasing the next draft of its
proposed forest policy. Once again Mir declined to answer my questions.
After receiving the leaked ADB Memorandum which states that the Board
will discuss the forest policy in July, I wrote to Rolf Eckermann, the
Executive Director for Germany at the ADB. I asked him about the current
status of the Bank's proposed new forest policy and when the Bank
anticipates producing the new policy. I asked what documents the Bank
had produced since July 2003. And I asked Eckermann to ensure that Javed
Mir, or someone else at the Bank, answers my letters from September 2004
and March 2005. Eckermann declined to reply.
The Bank's claim that its proposed forest policy is based on a
"participatory review process" is nonsense. The Bank's process exposes
the ADB for the secretive, dishonest, undemocratic institution that it is.
By Chris Lang, e-mail: chrislang@t-online.de
************************************************************
- The Inter-American Development Bank, Forests and Plantations
The Inter-American Development Bank (IDB) does not have a specific
forest policy or sector strategy, as they claim they have covered
forests in other policy and strategy documents, including those on rural
poverty reduction, rural finance, agriculture, water resources, coastal
resources and energy. The IDB's current draft of its Environment and
Safeguards Compliance Policy also touches on protection of natural
habitats.
In June 2005, the IDB put out a Forest Investment Attractiveness Index
(IAIF) that rates countries on how fit they are for investments in the
forest sector. The index rates Latin American and Caribbean countries
based on 80 indicators, including national economic measures, political
risk, national regulations, and rule of law. Using 2002 data, the index
identified Brazil, Chile, Argentina, Uruguay and Costa Rica as offering
the best "business investment climate" for forestry. The index
identified Haiti, Ecuador, Guatemala, Belize, and Paraguay as the most
challenging countries for forestry business.
Prior to developing the index, the IDB commissioned three studies on IDB
actions in forestry and the forest sector between 1999 and 2002. The
most recent report, "Forest Financing in Latin America: The Role of the
Inter-American Development Bank" presents recommendations for the IDB's
forest-related lending and support to institutional and policy development.
The report states that the financing potential for the forestry sector
in Latin America and the Caribbean is estimated at US$6.8 billion per
year over the next 10 years, with more than two-thirds of the potential
finance in industrial plantations. This obviously means that the
countries identified as offering the best "business investment climate"
for forestry will be further impacted by IDB-funded industrial
monoculture tree plantations, which have already proven to have negative
social and environmental effects in the five countries mentioned above.
The IDB's investment in the forestry sector dropped through the 1990's
from US$100 million to between US$20 and US$40 million. However, the
report encourages the IDB to increase financing in the forestry sector
to take advantage of "investment opportunities" in what it calls
"sustainable forest management."
The report explores a wide variety of financing sources and instruments
that could make private forest management investments more feasible. It
goes on to say that IDB's public sector loans will continue to be
important to promote environmental and social forestry, and that they
can also be used to create enabling conditions for industrial forestry.
The IDB will also promote the use of "market development instruments
such as carbon offsets, water use charges, and venture funds" to promote
"sustainable forest management activities." Sustainable forest
management would include a shift to "sustainable" plantation forestry,
which, according to the report, means that "strict adherence to
environmental precautions should be required and due consideration
should be given to the protection of indigenous peoples' rights and
other social issues." Brazil, Chile and Uruguay are presented as
important success stories in plantation forestry in Latin America.
In spite of what the report says, the fact is that plantations in none
of those countries can be defined as "success stories" for people or the
environment. Unless of course loss of livelihoods, human rights abuses,
dispossession of indigenous peoples and forest communities, land
concentration in corporate hands, water and soil depletion and
biodiversity loss are considered as "successful" achievements. IDB
lending to the plantation sector would only exacerbate those impacts.
A number of IDB strategy and policy documents deal with forests in a
variety of ways, but they do not seem to add up to a comprehensive
forest strategy. The Environment Strategy acknowledges that forests are
"fragile and in most cases are in a state of deterioration," but fails
to outline any specific steps to stop deforestation. The Rural Poverty
Reduction strategy says that one of the key factors in new rural
strategies is "breaking the vicious circle of deforestation, the
degradation of water and soil resources and growth in rural poverty."
The implementation of this strategy should lead the bank to stop funding
industrial plantations -because these result in the mentioned impacts-
but this is obviously not the case.
The Strategy for Agricultural Development includes forestry production
in the agricultural sector, and says that new trade agreements are
presenting new opportunities to increase trade in forestry products.
The strategy again calls for sustainable management of forest products,
sustainable use of natural resources, and reforestation practices in
high watershed areas. This raises the question: what are "reforestation
practices"? Are they industrial plantations or the replanting of diverse
native species?
The IDB has had the same one and a half page Environment Policy since
1979, and is finally revising the policy this year. The revision
process came about following the IDB's decision to fund the highly
controversial Camisea natural gas pipeline project in Peru, which
extracts gas deposits from one of the most culturally and biologically
diverse areas of the Amazon rainforest, transports it across the Andes
mountains to the coast, and processes and exports the gas from a
facility in Paracas Bay, in an area adjacent to a UN Ramsar Site.
Camisea's concession area in the Amazon and the gas fractionation plant
on the coast were among the most controversial parts of the project.
Seventy-four percent of the concession area is in the Nahua -Kugapakori
Territorial Reserve for isolated indigenous peoples, some of whom
actively avoid contact with outsiders. The Paracas Bay fractionation
facility poses a direct threat to Peru's only marine protected area. The
debates that emerged over construction in these areas seemed to have
served as an impetus for the IDB to revise both its Environment Policy
and to create an Indigenous Peoples' Policy -but not to revise its
lending to Camisea. The consultation processes for both policies have
ended, but neither policy has yet been approved.
The consultation draft of the new Environment and Safeguards Compliance
Policy has a directive protecting "critical conservation areas" that is
roughly parallel to the World Bank's policy protecting critical natural
habitats. The IDB draft version of the natural habitats policy, however,
is significantly weaker than the World Bank's policy and would protect
fewer areas. During the consultations on the policy, NGOs urged the IDB
to strengthen the wording of this directive, but it remains unclear how
the IDB will incorporate this input in the final draft.
In general, the IDB seems to view the promotion of "forest-based
business" as a prerequisite for the sustainable management of forestry
resources, and is therefore promoting plantations and other investments
in the forest sector as a way of promoting "sustainability".
Unfortunately, what the IDB understands by sustainability does not
necessarily mean what we understand it means.
By Elizabeth Bast, Friends of the Earth-U.S., email: ebast@foe.org,
www.foe.org
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- The European Investment Bank: Surrounded by secrecy
Financial deliberations generally take place between dubious actors in
obscure corners of the political arena. This is definitely the case with
the European Investment Bank, which has only recently been put in the
public spotlight. It is now time to uncover the dirty secrets of the
European Union's house bank.
Established in 1958 to support integration within Europe, the EIB has
never been subject to public scrutiny. This is quite unbelievable if you
look at the figures. The EIB currently has an annual budget that is
bigger than the World Bank's: around 4 billion Euro. It has a history of
financing large scale infrastructure within the European Union,
including many controversial airports and the package of destructive
highways known as the Trans European Networks. Its gigantic lending
portfolio gives it great influence over the development of recipient
nations. Many of its loans go to risky infrastructure projects as well
as oil, gas and mining operations and large hydro dams. Contrary to
other financial institutions, the EIB never bothered to adopt safeguards
to ensure that its projects would protect people and the environment.
While the World Bank and other banks are acknowledging the need for the
establishment of social and environmental standards, the EIB remains
silent. Although the EIB is required to follow European Union
legislation in its activities, there is little evidence that it does.
The EIB's legal status and its obligations with respect to the EU have
never been properly clarified. There is confusion over how exactly it
can be held responsible to EU laws, and made accountable for failures to
abide by relevant environmental and social laws, policies and
regulations. The Gothenburg European Council (2001) and the European
Parliament (2002) have both underlined the need for the EIB to integrate
the general priorities of the Union in its activities.
The reality in practice is that the EIB's project appraisal is done on
economic, financial and technical terms rather than by placing
sustainable development at the core. While the EIB says it supports the
EU climate change policy, it still engages in the financing of
large-scale fossil fuel projects. It has begun making controversial
loans for the sequestration of greenhouse gases through so called
'sustainable forest development', and participates in the implementation
of disputed mechanisms of the Kyoto Protocol. "The EIB believes that
flexible market-based mechanisms are the key to cost-effective and
timely climate change mitigation efforts," said EIB Vice President Peter
Sedgwick in December 2004.
The European Investment Bank is now increasingly looking towards
investing in the global South. Yet, its mandate for doing so is very
unclear.
The majority of EIB lending outside the EU is directed towards African,
Caribbean and Pacific (ACP) countries. On 2 June 2003, the EIB started
the Cotonou Agreement Investment Facility for ACP countries, which
channels money to the private sector. From 2003 to 2008, about 2.2
billion Euros will be disbursed to the ACP region by this investment
facility, as well as 1.7 billion Euros from the EIB's own resources. But
there is no evidence that the EIB gives any substantive consideration to
the key Cotonou objective of eradicating poverty in ACP countries. At
the same time, the EIB does not have its own development strategy.
The EIB is more explicit about its reasons for financing in Latin
America. A December 2004 memorandum with the Inter American Development
Bank states that "Lending activity in Latin America has a clear
operational focus mainly in support of European Foreign Direct
Investment". The EIB is clear about its ambitions and states that the
"political reach" of the Inter American Development Bank makes the
cooperation very attractive. The EIB currently has committed to invest
2,480 million Euro to the Asia and Latin America region. The banks look
forward to working together to implement IIRSA, South America's
megalomanic scheme for infrastructure integration. IIRSA's projects are
likely to put some of the region's most delicate cultures and ecosystems
at great risk. There is no assurance that any of these projects will be
appropriate or sustainable. Worse still, the EIB/IDB memorandum goes on
to say that project preparation will generally be delegated to the
sponsors. This means that both financial institutions absolve themselves
of any environmental and social responsibility.
Just a few of EIB projects that have caused grave impacts on the world's
communities and forests in the past decade include Shell's
Brazil-Bolivia Gas Pipeline (55 million in 1998), Exxon's Chad-Cameroon
Pipeline (134 million to in 2001), Veracel's Brazilian Eucalyptus
Plantation and Pulp Mill (98 million in 2003) and the Nam Theun II Dam
in Laos (40 million in 2004.
The main problems identified in European Investment Bank activities include=
:
- Confusing status as both an EU institution and an independent entity;
- Unclear mandate for operations in the global south;
- Continued secrecy around its operations;
- Lack of clear environmental and social guidelines;
- Lack of consultation with affected communities;
- Small number of and inadequately directed staff;
- No proactive environmental protection lending;
- No implementation of environmental objectives.
As the European Investment Bank starts to move around the world, so will
we. Civil society recently launched a web site where all projects
financed by the EIB in the past ten years can be traced. With the 'no'
to the European constitution, there is now renewed space for civil
protest in the European political area. And we can use it by exposing
the secrets of the European finance activities around the world.
Organise, mobilise, protest and propose in the name of our forests, our
dignity and our lives. Visit www.eibprojects.org and inform yourself.
By Janneke Bruil, FoE International, e-mail: janneke@foei.org
Read more at: www.foei.org/ifi/eib.html, www.eibprojects.org, www.eib.org
************************************************************
* IMPACTS ON THE GROUND
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- IMF and deforestation in Indonesia
Due to a prolonged economic crisis and the devaluation of the Indonesian
Rupiah in early 1997, Indonesia was forced to seek aid from the IMF, and
by the end of October a first assistance package was agreed upon. The
US$43 billion financial rescue package included some structural
adjustments or reforms stipulated in the Letter of Intent (LOI) that the
government of Indonesia should follow. The then President Suharto
signed the first LOI with the IMF in October1997, focussed on banking
sector reform, but without including any reference to the forest sector
or the environment.
By early January 1998, the government of Indonesia had failed to
implement the commitments of the first LOI and the country plunged into
a deeper economic crisis. Despite the failures, a second LOI was
negotiated and signed on January 15, 1998. The IMF announced that the
second LOI would accelerate and broaden the earlier commitments to reform.
The first major set of reforms affecting forests were contained in the
IMF's January 1998 LOI with the Indonesian Government -the documents
which spelled out the loan conditions Indonesia had to agree to secure a
US$1 billion loan as part of a US$43 billion bail-out package. A
striking addition to the first LOI was a series of forest- related (6
points) and other environmental measures (4 points). These included
major commitments to "reduce export taxes on logs, sawn timber, rattan,
and to impose appropriate resources rent taxes" (point 37) and to
"remove restrictions on foreign investment in palm oil plantations"
(point 39).
Ironically, while the LOIs called for greater transparency and
consultation with civil society, the process of drafting the agreements
themselves was anything but transparent. The contents of the LOIs are
still not made available for public scrutiny before signing. There is no
wide participation by NGOs and especially by those most affected by the
LOIs conditions.
Through IMF's LOIs packages, the World Bank steered the Indonesian
government to implement the IMF recipes of its structural adjustment
loans. LOIs became the 'holy bible' directing the country's economy and
its natural resource management policies.
In 2002, WALHI/FOE Indonesia commissioned an independent study to
evaluate the impact of the implementation of the LOIs on forests and the
environment. The study was conducted by a team lead by a prominent
forest economics expert of the Agriculture Institute of Bogor. The study
concluded that the state budget for public expenditures in environmental
management had decreased and that economic and trade liberalization had
increased the exploitation of natural resources. Some findings of the
study are summarised below.
The log export liberalisation (point 37, LOI 1998) provided financial
incentives for log export. Although reducing the export taxes on timber
may have improved the price of the undervalued timber in Indonesia,
which could lead to the improvement of the efficiency in the extraction
of raw material and serve as an incentive to conservation efforts, this
policy has in fact been catastrophic.
The log export activity was encouraged but at the same time it increased
the deficit of timber supply for the domestic wood processing
industries. Ironically, despite the shortage of wood supply, the
forest-based industry was even increased, especially production in the
pulp and paper mills. As a result, the timber for the industry was
supplied from illegal and unrecorded sources. Furthermore, since the
timber supply from logging concessions decreased, the demand of the
timber from conversion forests increased.
The same trend basically happened with the policy of liberalisation of
investment in the oil palm plantation sector (point 39). This policy
has been matter of controversy since it was launched, because it was
totally contradictory with the Bank's and IMF's commitment to reduce
forest conversion in Indonesia. Removing restrictions on foreign
investment in palm oil promoted a greater expansion of oil palm
plantations at the expense of forests. Together with previous
Indonesian government's policy, this condition opened up the country for
further forest conversion. According to the study, 80% of oil palm
plantations was established by converting natural forests.
Although improvements in some aspects of governance and transparency
(for example calls for reform of concession regulations, introduction of
performance standards and the dismantling of cartels) could clearly
benefit both forests and government revenues, other objectives such as
reducing export taxes on timber were just as likely to offset those
gains. A commitment to halt forest land conversion was inconsistent with
the removal of restrictions on the export of palm oil and on foreign
investment in the sector -a move that was likely to accelerate the rate
of forest conversion to plantations. The measures did nothing to address
the underlying structural causes of deforestation and degradation.
Since the 1997 economic collapse, the World Bank and IMF have played a
direct role in decision-making affecting forests and forest peoples, as
they press Indonesia to keep up with debt repayments. These institutions
must accept joint responsibility for forest destruction and the
resulting marginalisation of communities and start prioritising the
needs of the poor over the interests of international finance.
By Longgena Ginting, WALHI /Friends of the Earth Indonesia, E-mail:
ginting@foei.org
************************************************************
- Laos: Did The World Bank Fudge Figures to Justify Nam Theun 2?
When the World Bank approved US$270 million in grants and guarantees for
the controversial one thousand megawatt Nam Theun 2 (NT2) hydroelectric
dam in Laos on 31 March of this year, most of its Directors were
convinced that the project's economic benefits outweighed its
environmental and social downsides.
The reservoir behind the Nam Theun 2 dam would flood an area of 450
square kilometres, home to 5,700 Indigenous People and habitat to
endangered species such as the Asian elephant and white-winged duck.
Water would be transferred from the Theun River to the Xe Bang Fai,
severely changing water flow regimes in the Xe Bang Fai upon which over
120,000 depend for their livelihoods.
But there is evidence that Bank staff fudged its economic appraisal of
the dam, and that erroneous assumptions account for more than the
alleged net economic benefit of the project. A team comprising Thai
university economists and a public interest energy analyst became aware
of the Bank's erroneous assumptions and their impact in the course of a
lengthy correspondence with the Bank.
The World Bank appraisal concludes that "the decision to purchase NT2
power offers significant savings to the regional power system", and that
building NT2 will produce net savings of $188 million over the lifetime
of NT2 compared with using natural gas- fired generation to produce the
same amount of electricity. About 95% of NT2's electricity will be sold
to Thailand.
The public interest researchers investigated the assumptions upon which
the Bank's $188 million savings claim was calculated, and how these
assumptions changed between a widely circulated draft version of the
appraisal and a final version released just a week before the Board
met. One striking finding was that in the final version of the
appraisal, Bank staff had jacked up the "variable operations and
maintenance (VOM)" cost estimates for the gas-fired alternative by 1240
per cent compared to draft version assumptions. The change (from
$0.564/MWh to $7.000/MWh) is only discernable by comparing draft and
final versions of two tables, one printed in 6-point font and another in
5.5-point font, in the middle of the study.
The doctored figure is 1310 per cent higher than the Thai electricity
authority's estimate of $0.5358/MWh. It pushes the estimate for
operations and maintenance cost of the gas-fired alternative to the dam
to more than triple Thai benchmarks, and more than double the highest
international benchmarks that the public interest researchers could find.
By making electricity from natural gas appear more expensive,
alterations to the natural gas VOM assumptions account for US$156
million of NT2's claimed $188 million savings. Revealingly, this amount
is more or less what was needed to offset rising costs and declining
benefits that the final draft had to accommodate, including a US$101
million increase in NT2 project development costs and removal of an
unwarranted $20 million NT2 greenhouse gas credit.
The researchers found that the Bank's economic analysis of NT2 was also
riddled with many other incorrect assumptions that helped make the dam
look good.
First, the analysis covered up the extent to which NT2 would actually
reduce the economic benefits from electricity production of another dam,
Theun Hinboun, from which it will divert water. The Bank inexplicably
valued each unit of electricity produced by Theun Hinboun at only 1/3
that of each unit produced by NT2. That makes NT2 look $51 to $63
million more attractive than it would have otherwise.
Second, the Bank's analysis neglected to take into account four power
plants totaling 2800 megawatts to be built by Thailand's electricity
authority. In the event that future demand for electricity in Thailand
is low, constructing NT2 would mean that these power plants lie idle,
accruing costs but not providing benefits. The Bank's economic appraisal
of NT2 considers a scenario in which electricity demand is low, but it
fails to include these power plants. Including just one of these
"omitted but committed" power plants would reduce overall NT2 savings by
another US$20 million.
Third, the Bank failed to incorporate the results of a study it itself
had commissioned that found that it would be cheaper to invest in 1225
megawatts of energy conservation and 216 megawatts of renewable energy
than to build NT2. It is hard to know exactly how much this inflates the
"savings" attached to NT2, since the calculation would require
re-running the entire economic model, and the Bank has not made the
spreadsheets and relevant economic data publicly available.
Adding the impact of the errors discussed above, the total is at least
US$227 million, far exceeding the project's US$188 million alleged savings.
In addition, the Bank makes repeated false claims that its economic
modeling considered "only downside risks" that "could be expected to
pose the greatest test to project viability, i.e., conditions of lower
than expected demand, lower than expected fuel prices, and higher than
anticipated NT2 capital costs." In fact, the Bank based its risk
assessment on the assumption that construction costs could be "low",
yielding an economic windfall for the with-NT2 scenario. If the Bank's
analysis actually employed its purported scenario selection then NT2
would look an additional $51 million more costly.
An independent investigation must be conducted into the irregularities
in the NT2 economic appraisal and the World Bank must reconsider its
role in the NT2 project. It is not too late to correct the errors and
evaluate the project on its true merits. Canceling the project is still
likely to be better than committing Thai ratepayers to an economically
inferior choice. Investors are affected as well, as many of the World
Bank's bogus figures strongly inflate the commercial appraisal of the
project.
The economic appraisal discussed above is Robert Vernstrom, Nam Theun 2
Hydro Power Project Regional Economic Least-Cost Analysis: Final Report
March, 2005 at
http://siteresources.worldbank.org/INTLAOPRD/Resources/RELC-2005-final.pdf.
The draft version of the economic appraisal report is available at:
http://siteresources.worldbank.org/INTLAOPRD/491761-
1094074854903/20251513/Economic.pdf.
A fully referenced version of this article is available at
www.palangthai.org/docs/NT2EconMalfeasRefs.pdf .
The researcher's calculations of the impact of the Bank's erroneous
assumptions are available at www.palangthai.org/docs/NT2EconMalfeas.xls
An archive of correspondence with the World Bank Country Director for
Lao PDR and Thailand (cc'd to Bank Board) concerning these issues is
available at www.palangthai.org/docs/RemarkableAssumptions.pdf.
By Christopher E. Greacen, Ph.D., Director, Palang Thai, E-mail:
chris@palangthai.org ; and Decharut Sukkamnoed, Lecturer of Economics,
Kasetsart University, E-mail: tonklagroup@yahoo.com
************************************************************
- Peru: IDB funds the Camisea gas project that endangers biological and
cultural forest diversity
Camisea is the greatest energy project in the history of Peru. This
project involves the extraction of natural gas in an area known as Lot
88, located on both sides of the Camisea River, one of the richest
biodiversity areas in the world. The cost of building the whole project
amounts to 1,600 million dollars, including the exploitation and
processing of gas and the construction of gas pipelines that will pass
by the Andes Cordillera before reaching the coast for distribution.
The deposit contains an estimated 11 trillion cubic feet of gas and 600
million barrels of the condensed substance. Half the production will be
exported to the United States to supply the energy market on the West
Coast. The cost of these exports is already being paid by the indigenous
peoples, given that close on 75 per cent of the deposits are located
within the indigenous peoples' reserve and they have been forced to come
into contact with the Camisea consortium, thus violating their
internationally recognized rights.
Furthermore, Camisea is home to the Machiguengas and to the native
communities in voluntary isolation such as the Nahua, the Yora or
Kugapakori and possibly to the Kirineri. The Camisea Shivankoreni,
Segakiato and Cashiari communities have settlements close to the wells,
with a population of approximately one thousand inhabitants. In order to
survive, these communities depend on farming, gathering, hunting,
fishing and the extraction of forest products. These activities are now
endangered by the expansion of gas extraction projects.
The Camisea project's plant for the extraction of natural gas is located
in a region with abundant biodiversity. According to the Smithsonian
Institution, 747 species of trees, 150 species of mammals, 75 species of
amphibians, 83 species of reptiles, 156 species of fish, 420 species of
birds and hundreds of species of invertebrates are to be found in this
area.
A major victory in the campaign against the Camisea project was in
August 2003 when the Export-Import Bank (the United States official
agency funding exports) refused to give loans in relation with the
Camisea project (Lot 88). The Board of Directors of this Bank took into
account the social and environmental risks of the project that the
project proponents were unable to minimize.
However, the Inter-American Development Bank (IDB) still decided to
grant a loan for 135 million dollars to the project. Little did it
matter to them that the company does not abide by international
standards such as avoiding contact with indigenous peoples in voluntary
isolation. Nor did it seem important to them that the zone for breaking
bulk is located in the buffer zone of the Paracas National Reserve, the
only protected marine-coastal area in the country.
In this way, IDB ignored its own mandate, which states that "The two
main objectives of the Bank are to reduce poverty and promote social
equity and achieve sustainable economic growth." In fact the project is
already incrementing poverty, increasing social inequity and making
sustainable development impossible.
An agreement between civil society and the IDB has promoted the
implementation of an 'independent monitoring' of the Camisea Gas
Project, which still does not guarantee that the impacts of the project
will be reverted but there will be more information on them.
Among the social impacts already suffered by the population in the
project's area of influence are the following: a decrease of fishery
resources affecting the families' food input due to contamination of the
water with oils, grease, detergents and inadequately managed waste. The
health of the indigenous peoples has deteriorated, the communities
affected by the passage of the gas pipeline stated that the companies
have not paid administrative rights, nor have they given employment to
the inhabitants. They have destroyed highways, bridges and irrigation
channels and dwellings have been damaged.
Less than five months after the project's operations were initiated, on
22 December 2004 at Km. 8.8 the gas pipeline of the Camisea Project was
ruptured, causing a hydrocarbon spill that went into the Kemariato
watercourse and from there to the Urubamba River. "Our communities have
been seriously affected and on 20 January when I was in the zone, dead
animals were still being found on the banks of the Urubamba" stated
Roger Rivas of the R=EDo Urubamba Machiguenga Council.
Furthermore, among the environmental impacts, mention may be made of
deforestation for right of way, contamination of rivers, acoustic
pollution, soil erosion and the consequent alteration of the flora and
fauna in the project's area of influence.
Regarding impacts on the global environment, the reserves of the Camisea
deposits will release an estimated 687.2 million tons of carbon dioxide
into the atmosphere. This project will be the sixth largest in the
Americas to be financed by an international funding agency, on having
the greatest potential for carbon dioxide emissions. Camisea will
generate, following its life span, over 23 times the total fossil
combustion in relation to CO2 presently released by Peru per year
(Caffrey, 2002, report by an independent consultant for COMARU and
AIDESEP). All this taking place in a world that has its future
compromised by carbon dioxide emissions. Therefore the IDB is
contributing to climate change.
In the Urubamba, the environmental and social impacts continue and the
capacity of the population to defend their territory is limited. To
worsen the ecosystems' situation, a new project for exploitation will
further increase the impacts on forests, natural water reserves and the
flora and fauna of a region possessing natural values of national and
international scope.
In fact, in September 2004, Perupetro signed a contract for the
concession of Lot 56 with the Pluspetrol Consortium for Camisea I. Lot
56 is also located in the lower Urubamba, with an area of 58,500
hectares to the north-west of the present Lot 88. Within Lot 56 an area
classified as primary forest is located, home to the Kirineri, a highly
vulnerable population in voluntary isolation. Five hundred million
dollars will be invested in the extraction of liquid gas; additionally
1,100 million dollars will be allocated to increasing the capacity of
the Camisea gas pipeline to transport the gas to the coast. The
exploitation of Lot 56 (Camisea II) will be the first component of a
project to export liquid gas.
The second component consists of a liquefaction plant (Liquid Natural
Gas) that will convert the gas into liquid for export. This plant will
be built in the Pampa Melchorita to the south of Lima.
The remoteness of the project makes it impossible to carry out the
relevant dissemination of the impacts that it causes. Only the
populations that are located in its area of influence see how, day by
day, their natural environment providing them with food and social
security is transformed into a crossing of enormous pipes, transporting
an element that perhaps for them will never mean an improvement in their
quality of life.
This project will lead to the disappearance of native populations in
voluntary isolation, such as the Kirineri and will devastate a territory
of unequalled importance. Worse still, the Government is now promoting
the exploration of other lots (57 and 58) in the same Camisea zone,
adding further impacts to the already existing ones.
Will IDB also fund these new destructive projects?
By Patricia Patr=F3n, Friends of the Earth Peru, e-mail: ppatron@labor.org.=
pe
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- Uruguay: Campaign against IFC funding of pulp mill projects
Uruguay is in the sights of the pulp industry. The Finnish multinational
company, Metsa Botnia and the Spanish company Ence are proposing to
install two pulp mills to produce bleached eucalyptus pulp (using ECF
process with chlorine dioxide) for export, with Botnia producing a
maximum volume of 1 million tons per year and Ence 500,000 tons. The
pulp mills would be installed on the banks of the Uruguay River, which
Uruguay shares with Argentina, in the locality of Fray Bentos.
The projects have given rise to increasing citizen opposition both in
Uruguay and Argentina, with a multitudinous meeting of both peoples on
the General San Martin Bridge that joins the two territories (see WRM
Bulletin No. 94) as the high point of the campaign.
These much questioned pulp mills - their very scale constitutes a high
risk of river and atmospheric pollution - will also be linked to the
large scale monoculture tree plantation model that will supply them,
with impacts that have also led to strong complaints (see WRM Bulletin
No. 68).
FAO, the World Bank and JICA (the Japanese International Cooperation
Agency) have been instrumental in the creation of the mass of trees for
pulp (see WRM Bulletin No. 83), in this country where trees grow
quickly, labour is cheap and environmental control is very weak, as is
the power of a State conditioned by the foreign debt generated over
various decades, especially during the military dictatorship in power
between 1973 and 1984.
Now the IFIs have entered into action. To carry out their business, the
Metsa Botnia company has requested a loan of 100 million dollars from
the International Finance Corporation (IFC, a member of the World Bank
Group that provides loans to the private sector). At the same time the
IFC will also facilitate a loan of another 100 million dollars through
private banking for this project. Ence has also just requested a loan
from IFC for the installation of the pulp mill that it hopes to start
building in October 2005.
Hundreds of organizations in Uruguay, Argentina and around the world
sent a letter to IFC, asking it not to grant either the loan already
requested by Metsa Botnia, or the one we know will be requested by Ence,
due to the serious impacts that the installation of pulp mills will
generate in Uruguay. In the letter, the signatory organizations set out
the following concerns:
In the first place it is important to highlight the scale of these
undertakings and their possible accumulated impacts in the event that
they are effectively implemented.
Secondly, the Metsa Botnia environmental report has been criticised in
detail by a group of technicians linked to the Uruguayan environmental
group, Guayubira.
Thirdly, neither Metsa Botnia nor Ence carried out any serious study on
the possible negative social impacts of their projects, either in the
matter of foreseeable loss of jobs related to the liquid effluents and
to gaseous emissions (with a strong and disagreeable smell) of the pulp
mills, or of the possible impacts on the health of the local
population. Furthermore, both companies have exaggerated the number of
"indirect" jobs that they will generate, handling figures with no basis
whatsoever.
In the fourth place, the installation of one or both pulp mills will
imply an increase in the area presently devoted to monoculture tree
plantations. It should be noted that serious environmental and social
impacts are already to be observed in the existing eucalyptus
plantations, which would become even more serious in the event that the
area under plantation were to be increased.
It is also important to point out the impacts that one or both plants
will have on the use of the country's highway facilities due to the
traffic of hundreds of trucks with 40 ton loads or more.
There are other, unresolved problems regarding the installation of both
plants:
1) An international conflict that has not yet been formalized with
Argentina linked to the possible contamination of the Uruguay River,
shared by both countries.
2) Questions on the legality of granting a free trade zone to each of
the two companies that intend to install pulp mills.
3) Questions regarding the legality of using enormous volumes of water
and their possible contamination following the adoption of a
constitutional reform on water at the last elections.
Finally, the growing social opposition to these projects should be
noted, both regarding the eucalyptus plantations and the pulp mills.
For the above reasons, the signatory organizations requested the
International Finance Corporation not to become involved in the Metsa
Botnia project nor grant it any loans, given the fact that the
installation of one or two pulp mills will result in serious
environmental and social impacts that will do nothing to solve the
problems of the country and its people, but only contribute to make them
more serious.
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* BUILDING ALTERNATIVES
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- The Mumbai-Porto Alegre Forest Initiative as a real alternative for
forests and forest peoples
"The worst immorality is a studied ignorance, a purposeful refusal to
see or know" (Andrea Dworkin)
'Development' and International Financial Institutions (IFIs) together
with the main decision makers within them, often attempt to justify
destructive projects and policies on the proposition that neo-liberal
economic policy incarnates the one-way high street to poverty
alleviation and environmental protection. As the collection of articles
presented here demonstrates, continuing to uphold this proposition
amounts to "a purposeful refusal to see or know".
Looking at the history of IFIs as regards forests, manifests -more than
studied ignorance- a perpetual, systematic and institutionalized success
in withholding access to the decision making processes from indigenous
peoples and other forest dependent communities. Communities and peoples,
who are the rightful owners of these forests, constitute the most
directly affected by these decisions and who, as a group, represent a
great mass of impoverished populations.
The Mumbai-Porto Alegre Forest Initiative comprises the uniting
principles of a global movement to ensure peoples' rights over forests
and forest conservation. It first surfaced from within the aspiration
for 'another possible world', during the 2004 World Social Forum and was
reiterated and revised during the 2005 Forum in Porto Alegre. It is a
concrete statement of principles solidifying the voices of a diverse
coalition of organizations and individuals working towards social and
environmental justice in forests.
Its point of departure is that, "Indigenous peoples and other forest
dependent communities living in and using forests for their survival
needs are the true protectors and governors of these forests and enjoy
inalienable rights over forests." [Principle #1)
It continues attesting that, "The protection and conservation of forests
demand that their rights be ensured." (Principle #2)
The first two principles, first in essence as well as spatially, arise
from the firm understanding that forest issues are quintessentially
social and political, therefore requiring social and political, rather
than technical, solutions to confront them.
This broad-based Initiative builds on the long standing demands of
indigenous peoples for self-determination and their rights over their
ancestral territories, as it does on the long experience with
'development' projects, structural adjustments and aid conditionalities
imposed by IFIs. These bitter experiences bare witness to consistent
calls for transparency being met with increasing secretism (see article
on AsDB) and cries for greater access to the minimum survival resources
met with more pervasive exclusion from them (see article on WB). This
movement for social and environmental justice can, and will, not ignore
these experiences as it will not disregard the rights of indigenous
peoples. It therefore opposes "...any involvement of the World Bank,
IMF, WTO and other International Financial Institutions in policies and
projects than can affect forests and forest peoples." (Principle # 11)
Expressing the increasingly conscious desire to challenge the 'global
monoculture of the mind' and the one size fits all paradigms it
professes, the peoples' integrating the Mumbai-Porto Alegre Forest
Initiative found the future on diversity, mutual acceptance and respect
and the right to choose the speed and means of ones 'development':
"The institutional mechanisms for the social control by forest peoples
-including indigenous peoples and other forest dependent communities -
over forests will evolve according to the socio-ecological and economic
needs of the communities and will take separate shapes according to the
varied cultural profiles of the communities in various parts of the
world." (Principle #3)
To the greatest extent the root causes of poverty throughout most the
tropical world are a direct consequence of the social, cultural,
political and economic transformations imposed by invaders from the 'old
world' during colonization. The policies of International Financial
Institutions have perpetuated and continue to impose the socio-cultural
ideological constructs of the West on the pretext of the universality of
these values. In tropical forests, this process has translated in a
prioritization of the needs of western consumers and companies over
local inhabitants and needs leading to increasing social conflicts and a
desperate race to deplete tropical forest ecosystems. If there could be
said that some good can always be seen in the bad, it is that this long
history of ostentatious disrespect towards peoples and ecosystems has
been instrumental in creating a solid and united counter current with
concrete principles and focused determination.
We appeal to all of you join this process.
The full text of the Mumbai-Porto Alegre Forest Initiative can be
accessed at: http://www.wrm.org.uy/statements/Mumbai/index.html
A brief commentary on the each principle is available through:
http://www.wrm.org.uy/bulletin/91/MumbaiPA.htm
If you want to show your solidarity with the principles of this movement
or require further information please contact: antonis@wrm.org.uy
By: Antonis Diamantidis, e-mail: antonis@wrm.org.uy
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