ENVIRONMENT: World Bank Review Assailed

By Emad Mekay Reprint | | Print |

Emad Mekay

WASHINGTON, Jan 24 2002 (IPS) - A World Bank effort to assess its support for mining and energy projects vilified by environmentalists and community activists is failing to prove independent, transparent and consultative, say the lender’s critics.

The Bank’s Extractive Industries Review (EIR) is in need of “major reform and restructuring,” according to Environmental Defence (ED), a Washington-based advocacy group.

ED, in a letter endorsed by dozens of activists and sent to Emil Salim, a former Indonesian environment minister who heads the EIR exercise, said the review, in its current form, fails to meet minimal requirements of independence and lacks adequate budgetary resources.

“The attempt to create a process that is independent of the World Bank and yet has Bank ‘buy in’ appears to have failed,” according to the letter.

Bernard Salome, head of the EIR secretariat in Washington, said he and Salim share the NGOs’ concerns and had written to the Bank saying so. “We now have the Bank’s backing to address all of these demands,” he told IPS.

Bruce Rich, international programme director at ED, greeted the news cautiously.

“This signals a change of tone on the part of the Bank,” said Rich, “but there are several instances when the Bank’s complicated bureaucracy would say things and then backtrack on them.” For example, he added, the lender had promised to respect the EIR’s independence yet subsequently inserted itself into the process.

Although Salim was not available for comment, he had told several NGOs late last year that the Bank’s “withdrawal from oil, gas and mining is not excluded.”

Salim also has welcomed greater civil society participation in the process.

World Bank President James Wolfensohn proposed the EIR in 2000, responding to environmental and development groups that for years had made a clamour for a comprehensive assessment of the World Bank Group’s support for extractive industries, including oil, gas, coal, and lumber.

The Bank group is made up of the International Bank for Reconstruction and Development, usually referred to as the World Bank; its soft-loan window, the International Development Association; its private-sector affiliate, the International Finance Corporation; and the Multilateral Investment Guarantee Agency, which provides political risk insurance.

As part of the review, the bank is launching a series of regional consultation workshops aimed at helping shape its future policies toward the mineral and oil industries.

The consultations are scheduled for Eastern Europe, Africa, Latin America and the Caribbean, and Asia between now and April.

In October, the non-governmental organisation (NGO) Oxfam America said developing countries whose economies depend on oil and mining have some of the worst records on reducing poverty and urged the World Bank to back away from financing these sectors.

ED, in its letter, found fault with decision-making within the EIR. Salim should take decisions with input from his advisers rather than the current scenario of constant exchanges of letters with the Bank.

ED also recommended setting up an ‘Expert Group’ composed of individuals selected by affected communities, indigenous peoples, and NGOs.

The letter said the time frame for the review should be extended to allow sufficient time to ensure genuinely participatory workshops.

“Given the continuing confusion about the secretariat, TOR (terms of reference), budget, and advisory bodies, the current proposal to hold the four regional workshops over the next four months is neither realistic nor likely to be very productive,” the letter said.

“Without these reforms, we believe that the EIR process is fundamentally flawed,” the letter added. “We thus call for an immediate suspension of the process while a reformed process is negotiated and agreed.”

Activists in borrowing and wealthy countries alike have become increasingly vocal in demanding restrictions on multilateral financing for extractive industries because of their negative impact on the poor and the environment.

The Bank classifies twelve of the world’s 25 most mineral- dependent states and six of the world’s 25 most oil-dependent states as highly indebted poor countries, or HIPCs.

Last June, Friends of the Earth International called on international financial institutions to phase out their credits for oil and mining projects “within a period of five years” because lending practices in these sectors failed to end impoverishment and “often entrenched corrupt and dictatorial governments.”

The Bank, which has invested some two billion dollars annually in oil, gas and mining and other non-renewable energy projects in developing countries over the past decade, has said it, too, is increasingly concerned about the public-relations and environmental risks created by these projects.

The Bank has defended support for small-scale mining, however, saying this provides employment for some 13 million workers and their families worldwide, mostly in Brazil, Burkina Faso, China, Ghana, India, Indonesia, and Tanzania.

Most scientists believe that global warming is caused primarily by the increased presence of greenhouse gases, especially carbon dioxide, in the Earth’s atmosphere. These gases are produced when oil, gas, and coal are burned. Unless abated, atmospheric warming could result in large-scale heat waves, desertification, floods, and the spread of tropical diseases to temperate zones.