FINANCE: World Bank Under Fire Over Forestry Loans to Russia

By IPS Correspondents Reprint | | Print |

WASHINGTON, Jul 13 2000 (IPS) - Russian and international ecologists are calling on the World Bank to issue an immediate moratorium on all new projects in Russia and to suspend disbursement of current projects until two environmental agencies are restored.

“In the absence of the State Committee on Ecology and the Forest Service, we do not believe World Bank Group projects that impact the environment in Russia can proceed in an environmentally, financially or legally sound way,” notes a letter signed by 67 ecologists and sent to World Bank president James Wolfensohn this week.

“We believe the most prudent action the World Bank Group can take is the cessation of these projects until these agencies and their original functions return intact.”

On May 17, Russian president Vladmir Putin issued a decree liquidating the two agencies and placing their functions under the Ministry of Natural Resources which is responsible for Russia’s mining, oil and timber resources. The Natural Resources Ministry grants licenses for the development of Russia’s vast stores of petroleum and minerals.

Environmentalists are concerned that the Russian government is, as one analyst said, “putting an alcoholic in charge of a vodka shop.”

The ministry’s role is to promote the commercial exploitation of natural resources and will not play an adequate role as a regulator, the letter notes.

And even after the abolition of the Forest Service the World Bank went ahead and approved a 60 million dollar forest pilot project loan for the agency on May 22, five days later.

“The design of these projects relies on the existence of the State Committee on Ecology and the Forest Service for the specialised ecological monitoring, enforcement and protection functions that they provided,” notes the letter to Wolfensohn.

Many of Russia’s leading environmentalists, including Alexei Yablokov, an environmental advisor to former President Boris Yeltsin, and Aleksandr Nikitin, a former Navy officer who was imprisoned after speaking out about the dangers of Russia’s nuclear fleet, endorsed the letter.

Ecologists complain that Putin’s action has attracted virtually no attention from Western politicians or news media and, according to published American environmentalist Mark Hertsgaard, “environmental oversight in one of the most polluted, militarily potent nations on earth deserves more attention.”

The only official criticism of Putin’s decree was an “expression of concern” endorsed by the environmental ministers of the Nordic countries at a European environmental meeting last month.

Created in 1985, the State committee was responsible for monitoring all aspects of the environment except for nuclear safety. The work of the State Committee was supplemented by the activities of the Russian Forest Service, which has been in operation for more than 200 years.

While no explanation has been given for the decree, Putin has often expressed concern that environmental groups provide convenient cover for foreign spies. Analysts also say his other concern is that their efforts will elevate environmental purity over speedy resource development that Russia needs to compete in the global economy.

The World Bank has pumped more than 1 billion dollars into Russia for environmental projects since the break-up of the Soviet Union and is expected to announce a further 1 billion dollars in funding this year.

The Russian Federation has the largest forest resource of any country, comprising 22 percent of world forest area. The country’s forests account for 21 percent of the world’s standing timber volume and provide the largest land-based carbon storage in the world.

While the World Bank has declined to comment on the matter, it says that its projects in Russia are aimed at improving public sector management of the country’s forests through policy reform, improving land-use management and “supporting the development of a more favourable environment for private investment in the sector”.

But the abolition of the two agencies will directly result in a loss of government’s finest environmental and forest management professionals, the letter warns. Also, the system of independent environmental control in the area of natural resource use, which had been put together over decades has been destroyed by the move to abolish the agencies.

According to Greenpeace some 61 million Russians live under environmentally dangerous conditions and in 120 Russian cities air pollution levels are five times higher than acceptable under Russian standards.

Although the letter was endorsed by mainly Russian organisations it also included international groups such as Friends of the Earth and the San Francisco-based advocacy group, the Sierra Club.