ENVIRONMENT-ECUADOR: Bank Expert Says Pipeline Violates Polices

By Jim Lobe Reprint | | Print |

Jim Lobe

WASHINGTON, Sep 13 2002 (IPS) - In a major blow against a controversial oil pipeline project in Ecuador, the former head of the World Bank’s environment department has found that the project fails to comply with the Bank’s social and environmental policies.

In a 27-page report released by environmental groups in Germany and the United States on Friday, Robert Goodland, who during his Bank tenure authored most of what are now called the Bank’s “social and environmental safeguard policies”, concluded the environmental impact assessment (EIA) submitted by the Oleoducto de Crudos Pesados (OCP), or Crude Oil Pipeline, project violated all four applicable policies.

Those include the Bank’s policies on environmental assessment, natural habitats, involuntary resettlement, and indigenous peoples.

The report is likely to greatly embarrass the German bank WestLB, which leads a consortium of banks that arranged 900 million dollars in loans for the project, as well as top officials of the Ecuadorean government, who have insisted that the project complies with Bank policies.

The World Bank itself declined to invest in the pipeline because of environmental and social concerns.

WestLB has repeatedly insisted to the government of North Rhine Westphalia (NRW), which owns a 43 percent share in the bank, that the OCP will meet all relevant World Bank guidelines. The state government itself has also stated repeatedly that WestLB’s backing for the project is contingent on compliance with those policies.

The environmental groups that commissioned Goodland’s report, including Amazon Watch, Environmental Defence, Greenpeace, and Urgewald, said Goodland’s findings should force WestLB to suspend its participation in the project.

“The report’s findings raise serious questions whether project finance can continue since WestLB’s loan contract with OCP is conditioned on adherence to World Bank standards,” said Bruce Rich of Environmental Defense.

“The financing must immediately be halted, and the project construction needs to be halted,” said Kevin Koenig of Amazon Watch. “It’s clear that the project is so far out of compliance that there’s probably no way to even revise it at this point.”

“It’s clear that the OCP tried to mislead the banks, and then the banks tried to mislead the public and the NRW state government, and through that were able to get enough of a green light to advance the project,” he added. “This report makes abundantly clear that the project should never have gotten off the ground. It’s been a fraud through and through.”

The proposed pipeline – which on completion would stretch some 500 kilometres from the Ecuadorean Amazon to the Pacific Ocean, and pass through several indigenous territories and ecologically fragile protected areas – has provoked controversy virtually from its conception.

The government of President Gustavo Noboa has defended it as vital for Ecuador’s troubled economy. The scheme would double the country’s exports of oil, Ecuador’s biggest foreign-exchanger earner by far.

But local and international environmental groups and indigenous communities have argued that construction of the pipeline likely would draw settlers, who might clash with indigenous groups and exert unsustainable pressure on fragile rainforest ecologies. Pipeline spills threaten farming and eco-tourism, which has grown quickly in Ecuador in recent years, say the critics.

Construction of the pipeline, which is about 50 percent complete according to latest estimates, has provoked stand-offs with local residents and environmentalists, who have resorted to civil disobedience and blockades to slow progress on the project.

Dozens of people have been arrested around the Mindo Namibillo Cloudforest Reserve, one of the world’s most pristine bird sanctuaries, for trying to block construction and road-building there.

Demonstrations and protests against the project have also been held at the headquarters of WestLB in Duesseldorf.

The World Bank, including its private-sector affiliate, the International Finance Corporation (IFC), declined any role in the project because of environmental and social concerns. Some of its officials have become increasingly angry as OCP and its financial backers claimed repeatedly that the project was being implemented in compliance with the Bank’s policies.

That anger boiled over last December when the Bank’s top environmental official, Ian Johnson, addressed a blistering letter to the head of the OCP in which he noted the pipeline may “pose serious environmental risks” to areas already managed by a World Bank-supported biodiversity conservation project, a reference to the Choco-Andean Corridor Project.

Johnson also explicitly objected to statements by the OCP and WestLB that the effort complies with Bank policies. “While we welcome such widespread acceptance and use of our standards,” he wrote, “we do not, as a matter of institutional policy, certify compliance or non-compliance in projects that we do not finance or otherwise assist.”

“We would like to recommend that OCP provide specific independent verification of compliance with World Bank standards, or, alternatively, refrain from claiming any such compliance.”

Johnson sent the letter just five days after WestLB made a public assurance that all contracts signed by OCP to build the pipeline included commitments “to the effect that strict environmental standards – also of the World Bank – would be observed.”

Earlier this year, WestLB commissioned a Texas-based consulting firm, Stone and Webster, to produce a report on the question of compliance. That report, released in May, concluded that the project and its implementation were consistent with the Bank’s policies, conclusions that were immediately attacked by the environmental groups that noted that the consultants in many cases had misrepresented or misidentified the Bank’s policies.

In preparing his report, Goodland, a 25-year Bank veteran, travelled to Ecuador to investigate various parts of the pipeline and construction route and reviewed the documentary history of the project.

Among his main findings, Goodland discovered that the pipeline route was determined even before the terms of reference of the EIA were established and without any adequate public consultation, especially with those most affected by the project, a violation of Bank policies. He noted also that the EIA failed to address the impact of a doubling of oil production in the Amazon.

The OCP was further found to violate the Bank’s natural habitats policy because it will intrude on seven protected areas, without any plans for mitigating the potential damage and degradation.

Bank policies would also require resettlement and compensation plans for people affected by the project, none of which was included in the EIA, which also failed to analyse the impact of the project on indigenous people and Afro-Ecuadoreans, who would also be affected.