Bulletin Issue 93 - April 2005
THE FOCUS OF THIS ISSUE: THE WORLD BANK
This bulletin is the result of a joint effort carried out by a number of organizations concerned about the role that the World Bank Group plays in forest destruction and the violation of forest peoples’ rights. Participating organizations include the Forest Peoples Programme, Rainforest Foundation UK, Environmental Defense, Global Witness, SinksWatch, CDM Watch, Samata, Down to Earth and World Rainforest Movement. This bulletin is available in printed format as “Broken Promises: How World Bank Group policies fail to protect forests and forest peoples’ rights". The printed version is illustrated with photos and contains a number of footnotes and references that have not been included in this electronic bulletin. Printed copies can be requested to either from the Forest Peoples Programme (e-mail: julia@forestpeoples.org) or from the World Rainforest Movement (wrm@wrm.org.uy). Additionally, it can be accessed at the WRM web page at the following address: http://www.wrm.org.uy/actors/WB/brokenpromises.html
OUR VIEWPOINT
-
21 April 2005In October 2002, the World Bank adopted a new policy on forests. Reversing the previous policy which had prohibited the Bank from funding projects that would destroy primary moist tropical forests, the new policy, adopted with the encouragement of the WWF, was aimed at encouraging greater involvement in forestry. The aim was to help the World Bank achieve the targets set by the World Bank-WWF Alliance for securing 200 million hectares of forests under responsible logging (‘independently certified sustainable forest management’).
THE WORLD BANK IN THE SOUTH
-
21 April 2005In 2004, the task manager for the World Bank’s Forest Concession Management and Control Pilot Project (FCMCPP) described Cambodia’s forest concession system as "inadequate on paper, dysfunctional in reality". He might have added that all the concessionaires had committed legal or contractual breaches and extensively looted what the World Bank termed "Cambodia’s most developmentally important natural resource". Such considerations have not, however, prevented the World Bank from investing five years in supporting this same flawed management system and its piratical operators.
-
20 April 2005Despite years of controversy surrounding World Bank forestry projects in India, the Bank is pressing ahead with major plans to make the way for large loans for further forestry projects in several States. In 2005, the Bank has pilot “community forest management” (CFM) and participatory forest management (PFM) projects beginning in Madhya Pradesh and Jharkhand states. These pilot projects are intended to precede major loans for full-scale State-wide forestry projects. The World Bank claims that it has learned from past mistakes in stemming from its loans for social forestry and Joint Forest Management (JFM) in India.
-
20 April 2005Indonesia has the third most extensive area of tropical forest on earth and is one of its richest centres of biodiversity. It is also the world's second largest palm oil producer with an output of over 11 million tonnes of Crude Palm Oil (CPO) in 2004. With Indonesia’s forests disappearing at 3.8 million hectares per year, the land area converted to oil palm plantations has doubled during the past decade to nearly 5 million ha - an area roughly the size of Costa Rica. Most oil palm plantations in Indonesia are established on land which was, until very recently, mature rainforest.
-
20 April 2005Back in 1989, when Australian company Snowy Mountains Engineering Corporation was hired to produce a World Bank-funded feasibility study of Nam Theun 2 hydropower dam, the project under study was a dam to generate electricity for export to Thailand. Sixteen years later, generating electricity appears to be a side-product of a project aimed at alleviating poverty. On 31 March 2005, the World Bank's board of directors approved US$270 million in guarantees and loans for the dam. "We are only interested in doing what we can to help some of the poorest people in Asia get more money so they can have a better life -and that's the purpose of the Nam Theun 2 hydro-electric project," Peter Stephens, a World Bank spokesperson in Singapore, told Voice of America.
-
20 April 2005Letter to the President of the World Bank: Mr. James D. Wolfensohn cc’d to: - Executive Directors and Alternates - Bank Group Senior Management - Vice Presidents, Bank, IFC and MIGA 4 April 2005 President Mr. Wolfensohn, In November 2004, the World Bank through the International Finance Corporation (IFC), granted a loan of 50 Million USD to the company Aracruz Celulose S.A. in Brazil. It is inadmissible that the World Bank, after a full environmental and social analysis of the company, concluded that Aracruz Celulose S.A. is dealing correctly with social and environmental issues, and fulfilling the Bank’s Operational Directive (OD) 4.20 Indigenous Peoples.
-
20 April 2005In Brazil, in the past 60 years, soya agriculture has expanded from nought to over 21 million hectares of cultivated land. Soya cultivation was initiated in the more arid Southern states of Brazil, but has now extended to the central and western areas, encroaching principally upon the cerrado (the Latin American savannah woodland) and to a lesser extent the Amazon Rainforest. Driving the expansion of soya agriculture, amongst others, has been the huge expansion of cattle ranching in Brazil, primarily in the states of Mato Grosso, Pará and Rondônia. The number of head of cattle has increased from 26 million in 1990 to 164 million in 2004.The International Finance Corporation (IFC) has been very recently involved directly both in the expansion of soya and cattle ranching in Brazil.
WORLD BANK: POLICIES AND REALITIES
-
20 April 2005In 1998, the World Bank and WWF announced a new ‘Forest Alliance’ with the target of securing 200 million hectares of certified forests in World Bank client countries by 2005. The Alliance has faced a serious challenge in reaching this goal. As most logging operations are in fact carried out by private logging companies, the main part of the World Bank lacks leverage to persuade companies to upgrade their logging to certification standards, but the IFC, which does invest in the private sector, has yet to change its policy in line with the rest of the World Bank and is anyway not part of the Alliance.
-
20 April 2005In order to facilitate transparency and be guided during the implementation of its new Forests policy, the Bank announced that it would set up an External Advisory Group (EAG) to interact with the Bank. The group would ‘have the task of providing independent advice’ on forests to the Bank, ‘and have the right to disclose those recommendations’. This group would include people from client governments, indigenous peoples, local communities, civil society, the private sector, the ‘international forest community’, and multilateral and bilateral agencies.
-
20 April 2005The International Finance Corporation is the member of the World Bank Group which lends directly to the private sector or purchases equity stakes in private sector companies that do business in developing countries. But the IFC’s stated role goes beyond helping to generate profits for the private sector companies and their shareholders. According to its mission statement, the IFC exists to reduce poverty and improve people’s lives through sustainable private sector development. Working in tandem with the IFC is MIGA (Multilateral Investment Guarantee Agency) which provides insurance against political and commercial risks to corporations operating in developing countries, economies in transition or emerging markets – whichever euphemism we may choose.
-
20 April 2005A superficial reading of the World Bank’s Forests Policy suggests that it implies a proscription prohibiting World Bank funding of projects that it determines may damage ‘critical forests’. However, a closer reading of the policy suggests otherwise. This is because, in the first place, it is Bank operational staff and not others, who will decide what areas of forests are ‘critical’ and what are not. Secondly, the Forests Policy relies on the procedures of the current Natural Habitats policy (revised in June 2001), which allows derogations from the overall proscription where there are no feasible alternatives. The quotes below compare the language in OP 4.04 on Natural Habitats and OP 4.36 on Forests. OP 4.04 ‘Natural Habitats’:
-
20 April 2005The World Bank held nine regional consultations with governments, industry and civil society organizations all over the world during 2000 and 2001. The stated purpose of this far-flung effort was to receive input into the development of the Bank’s new Operational Policy on Forests. In addition, the Bank set up a Technical Advisory Group (TAG) to advise it on the writing of the new policy.At the end there was one resoundingly clear and unanimous message to the Bank from both the regional consultations and the TAG: The Bank’s new Operational Policy on Forests must apply to the Bank’s lending for structural adjustment to prevent further loss and degradation of the world’s forests.
-
20 April 2005A virtue of the 1991 Forests Policy was its simplicity. Following the shattering revelations in the 1980s about the huge areas of rainforest being destroyed in World Bank-funded projects – building dams, roads, oil wells, plantations and in colonisation and logging -the 1991 policy instructed Bank staff to stay clear of any projects that could damage primary moist tropical forests.
-
20 April 2005The concept of carbon trading as an instrument to ‘avert dangerous climate change’ first surfaced in the negotiations that resulted in the UN Framework Convention on Climate Change (UNFCCC) of 1992. Under the UNFCCC, projects claiming to reduce greenhouse gas emissions could sell the ‘saved’ emissions to a company that finds it more lucrative to pay someone else to reduce emissions rather than to reduce them themselves. Although the concept faced some opposition, the first Conference of Parties (COP) to the UNFCCC in 1995 established a pilot phase of Activities Implemented Jointly (AIJ), a mechanism that would allow for such projects. In response, a large number of countries, including Costa Rica, Vietnam, Zimbabwe, Russia and the USA set up AIJ funds and initiated projects.
-
20 April 2005The Global Environment Facility (GEF) is the main intergovernmental mechanism for addressing “global” environmental problems, including the loss of biodiversity. It is the main vehicle for funding the United Nations Convention on Biological Diversity (CBD). Since its formation in 1991, forest-related projects have accounted for between 30 and 50% of the GEF’s annual spending on conservation. By June 2003, the GEF had allocated $778 million USD in grants for 150 forest conservation projects. Most of these projects have been implemented by the World Bank and most have supported the establishment or expansion of protected areas, which remain the “cornerstone” of GEF support to biodiversity conservation.