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ENVIRONMENT: Groups Try to Plug Peruvian Pipeline Loan

Jim Lobe

WASHINGTON, Jul 29 2004 (IPS) - Environmental and human-rights groups here and in Peru have launched a last-ditch effort to delay final approval, expected as early as this week, of a controversial pipeline project in Peru they say endangers some of the world’s most unique rainforests and Latin America’s isolated indigenous populations.

The 1.6-billion-dollar Camisea Gas Project, which will carry gas from the Peruvian Amazon some 1,100 km across the Andes Mountains to Lima and a new liquefied natural gas (LNG) terminal on Peru’s Pacific coast, is being implemented by a consortium of private and state companies led by Argentina’s Pluspetrol and Texas-based Hunt Oil.

The financing would come from the Inter-American Development Bank (IDB).

In Jul. 29 letter to the U.S. Treasury, which represents Washington on the IDB’s executive board, the groups, including Amazon Watch, Friends of the Earth (FoE), and Environmental Defence (ED), argue the project has failed to meet both the letter and spirit of several conditions attached by the bank on its agreement to provide up to 75 million dollars in direct loans to support the pipeline. The IDB is also supporting loan syndication worth 60 million dollars.

Letters have also been sent by Oxfam America, The Nature Conservancy, the World Wildlife Fund (WWF) and several Peruvian environmental and indigenous groups over the past 10 days to IDB President Enrique Iglesias specifying a list of conditions that have either not been met or, in some cases, been entirely ignored.

They range from charges that exotic and invasive plant species, such as kudzu, have been planted in ecologically sensitive parts of the project, to the failure to carry out impact assessments and consultations with local communities and civil society.

The administration of U.S. President George W Bush, according to the groups, has a special responsibility to ensure the requirements are met because it played a key role in insisting on tightening conditions on the loan when the bank’s executive board formally approved it last September.

”The Bush administration should delay financial closure on Camisea as it may violate the very environmental contractual conditions they negotiated for the project”, said Jon Sohn, FoE’s campaign director. ”If this loan goes forward, the United States will, in essence, be supporting the project despite its abstention last year”.

Under strong pressure from environmental and rights groups and lawmakers in Congress, the administration, which holds 30 percent of the voting power on the IDB board, abstained in last September’s vote.

Many groups had expected Treasury to cast a ‘no’ vote, particularly because the U.S. Export-Import Bank, citing environmental concerns, had rejected a request by the Camisea consortium for 214 million dollars in loan guarantees the week before.

A ‘no’ vote, according to Nadia Diaz of the Washington-based Institute for Policy Studies, could have swayed several other countries to oppose the loan.

Peru’s biggest development project, Camisea is designed to exploit a huge gas field in the country’s Amazonian region that could save it some four billion dollars in energy costs over the projected 30-year life of the project. It is also expected to earn Peru billions of dollars more in export earnings, particularly if another pipeline, for which planning is reportedly already far advanced, is built to yet another LNG terminal on the coast.

But the project also cuts through some of the world’s most pristine and remote jungle areas, including the Nahua-Kugapkakori Reserve, where several hundred members of indigenous tribes have avoided contact with outsiders and lack immunity to common diseases.

When Shell undertook exploratory operations in the region in the 1980s, almost one-half of the Nahua people living there died from influenza and whooping cough for which they lacked any immunities. Anthropologists and green groups have reported over the past year that contractors working for the Camisea project have actively sought out uncontacted groups, putting them at risk of infection, and some have reported sharply rising death rates among some indigenous groups over the past two years.

In addition, larger indigenous communities living just outside the reserve have reported sharp declines in fish in local streams and lakes over the past year due to severe soil erosion and landslides resulting from the pipeline’s construction along steep ridges high in the Andes. The result, the groups said, is rising malnutrition, particularly among children.

Both the Peruvian government and project officials insist they are taking measures to mitigate or eliminate these problems, and have also earmarked seven percent of the project’s revenue for local populations living along the pipeline route.

The IDB, which has made little secret of its desire to be involved in the project, has also advised the government and project officials how to mitigate environmental and social damages it says have now been integrated into the loan conditions.

”The IDB believes the necessary protocols have been established to ensure the direct, indirect and cumulative environmental, social and health and safety negative impacts and risk associated with the Camisea Project will be properly mitigated”, a 42-page staff report released earlier this month concluded, setting the stage for the closure of the loan.

An IDB spokesman told IPS on Thursday he had not seen copies of the activists’ recent letters. ”As of now, we are standing with our very detailed report (that says) the conditions have been met”, he said, adding, ” a great deal of environmental enhancements (to the project) have been made”.

But the environmental groups, which note that the World Bank, the U.S. Overseas Private Investment Corporation (OPIC), as well as the Export-Import Bank have all kept their distance from the project, insist the report is inadequate and, in some cases, suggests the IDB may even have relaxed some of the conditions in order to show compliance.

One example they cite is the language used in original conditions that required the government to ensure a ”thorough and complete review” of the fractionation plant and marine terminal, ”including, as appropriate, civil society input”.

Not only has such a review not taken place, note the groups, but the text of the staff report calls for a ”thorough and complete disclosure of the environmental studies” of the plant and the terminal. In another case, language that required the government to develop a community-monitoring programme appears to have been deleted.

”The IDB seems to be trying to pull a fast one,” said Martinez. ”It is worrisome that the pressure to lend is so strong that IDB staff would ignore clear violations of their own agreements.”

In a number of cases, the group found evidence that the authors of the IDB report simply repackaged previous documents without adding any new information that was required under the conditions.

”Camisea fails to comply with the IDB requirements, and therefore financial closure cannot occur at this time,” said ED’s Aaron Goldzimer, who added the groups stand ready to work with the bank to ensure compliance with all of the original conditions.