February 12, 2004

Mr. James Wolfensohn

President

World Bank Group

1818 H Street NW

Washington, DC 20433

HAND – DELIVERY / MELBOURNE

Dear Mr. Wolfensohn:

We write to you today in good faith and with genuine hopes for meaningful action towards our mutual goals of poverty alleviation and sustainable development.  As you know, Dr. Emil Salim has just completed the Final Report of the Extractive Industries Review (EIR).  We want to thank you for initiating this historic process in Prague more than three years ago, and for devoting significant World Bank Group (WBG) staff time and financial resources to the review over the last several years. 

We also want to thank Dr. Salim for his adherence to the principle that “genuine development requires partnership not only with governments and companies, but with civil society as well.”  Dr. Salim’s commitment in this regard allows us to endorse his recommendations to you, and to encourage you to adopt all of them without exception or reservation. 

The EIR correctly concluded that if the WBG intends to pursue its mandate of poverty alleviation, then it should not support extractive industries unless the broad set of enabling conditions outlined in the Report's recommendations are in place.  Furthermore, the EIR found that support for certain types of extractive activities does not represent the best use of the WBG's money to promote and support sustainable development, and thus that the WBG should phase-out its financing for these types of projects and reallocate its funds to other activities.

We will not view as sufficient the adoption of only a certain percentage of the EIR’s recommendations. The failure to meet any one of them can lead and has indeed led to a failure to contribute to poverty alleviation or sustainable development.

At your insistence, the EIR integrated World Bank Group staff at nearly every level, and the process and the Final Report were clearly richer for it. We certainly hope and expect that this integration of Bank staff and perspectives now translates smoothly into implementation of all the Report’s recommendations.  This was, after all, the premise upon which it was argued that Bank staff should be deeply involved in the EIR.

Those of us who have previously engaged in the Structural Adjustment Participatory Review Initiative and the World Commission on Dams review already have great reason to be skeptical – and that skepticism would only harden if the World Bank Group were to pick and choose only those recommendations from the EIR Report that are least challenging.  In the intervening time that it may take to fully adopt the EIR recommendations, we feel that a good faith gesture would be for you to instruct staff and management to immediately freeze any further action on policies or projects that are potentially affected by EIR recommendations.

We congratulate the EIR for recognizing climate change to be a profound threat to sustainable development and poverty alleviation and we strongly endorse the recommendation for the World Bank to immediately end its support for coal mining and to phase-out financing for oil projects by 2008.  By shifting financial support from fossil fuels to new renewable energy, the Bank could play an important catalytic role toward new renewable energy development in the South, in turn leveraging significant global benefits.

We would like to also highlight the EIR’s endorsement of the right of free, prior and informed consent for indigenous peoples and the importance of securing a “social license” from affected communities to operate before projects proceed.  While this right is already recognized for indigenous people under international law, other communities often have very little influence over project decisions despite the significant impacts that extractive industry operations have on their livelihoods and on the environments on which they depend.  Empowering communities is not only the right thing to do, it will also spare the Bank and project sponsors considerable reputational risk and added cost.

Recognition of and respect for human rights is one of the core elements of sustainable development.  Despite your best efforts to date, which we recognize and applaud, the World Bank is far behind many other intergovernmental organizations in accepting its human rights responsibilities, including the rights of workers, and in integrating these and other human rights- related issues into its operations and programs. As the EIR correctly concludes, this is not a matter of discretion but rather it is a matter of compliance with international law that is binding on the Bank; it is also sound development practice.  We are aware that you have expressed an interest in human rights and have promoted rights-related issues within the Bank.  We hope that now you will use all of your influence to demonstrate that commitment by adopting all of the EIR’s recommendations.

We are confident the EIR will be remembered as one of the most important initiatives of your tenure, and one of the cornerstones of your legacy as World Bank President.   We would submit to you that the true test of the World Bank Group’s willingness to place poverty alleviation and sustainable development above bureaucracy, corporate interests, corruption, and institutional barriers to change will be in your willingness to push to redefine the Bank and the way in which it approaches development.  The upcoming formulation and adoption of a concrete and specific EIR action plan will prove to what extent the World Bank is serious about ensuring that the twin goals of poverty alleviation and sustainable development are strongly upheld. 

Sincerely,