Press Release - Tuesday, August 3, 2004

Business as usual in more ways than one: NGOs say World Bank looks set to miss an historic moment to show that it can learn from its mistakes

Ottawa -  As World Bank staff return to work for the second day under the chilling new terrorist alert in the U.S., all efforts are being made to ensure that their work carries forward as it normally would. But NGOs are concerned that the World Bank will today decide to carry on with “business as usual” in its oil, gas and mining operations even though a World Bank commissioned report called for significant changes to how the Bank invests in mining and oil projects.

“The Bank looks set to miss an historic opportunity to demonstrate that it can learn from its mistakes and follow through on the recommendations of its own analysis of investments in mining and oil,” said Michael Bassett, Coordinator of the Halifax Initiative. “Everything so far gives us the impression that the Bank will not take the steps needed to make sure that their investments are making a difference for the poor.”

The Review, called the Extractive Industries Review (EIR), called on the World Bank to fundamentally overhaul its oil and mining investments and made specific recommendations to change the way the World Bank operates. The World Bank’s Board of Directors is scheduled to meet today to approve a plan that has been roundly criticised by civil society organizations as failing to adequately respond to the Review’s core recommendations.The Government of Canada has not yet made public its reaction to the Review or to the Bank’s thus far lackluster plan in response to it.

"We need strong international standards that respect the rights of affected people and hold corporations accountable for the damage that they all too often cause,” said Graham Saul, International Program Coordinator of Friends of the Earth. “The Review called for an ‘extreme makeover’ and the Bank has proposed a pedicure. The silence and lack of leadership from the Canadian Government is deeply disappointing.”

Canadian civil society organizations are calling on the Government of Canada to push the World Bank to take a strong stand and show that they can learn from the mistakes of the past. “Sometimes it’s good to carry on business as usual, and sometimes it isn’t,” said Bassett.


Contact Information:

Michael Bassett   
Halifax Initiative Coalition

Graham Saul
International Programme Coordinator
Friends of the Earth Canada

The EIR report made many recommendations to the World Bank which had the broad support of civil society organizations groups as well as many in industry. These recommendations included making sure that governance problems are addressed upfront prior to investing in extractive projects to reduce corruption and avoid human rights problems.

The report also called on the World Bank to lend for extractive projects only if it could demonstrate specific poverty reduction benefits aside from contribution to national income, and guarantee that local communities would benefit from these projects.

While the World Bank looks set to take some small steps, such as requiring revenue transparency and disclosure of information, it has so far failed to address the most fundamental question posed by the EIR: how will World Bank investments in extractive projects reduce poverty and help the poor?

Two current extractive projects financed by the World Bank demonstrate the importance of these recommendations.

The Chad-Cameroon Oil and Pipeline Project:
The Chad-Cameroon Oil and Pipeline Project, operated by Exxon-Mobil, has become a huge institutional investment for the World Bank Group and shows why the EIR recommendation to address governance issues first is so fundamental. The Bank Group continuously sends its managers, including top level senior staff, to address problems with the project.

These include the Chadian Government spending a portion of the first proceeds in 2000 on military expenditures, as well as appointing the President's brother-in-law to the revenue oversight committee.

Meanwhile, the communities that live in the oil field area lack access to electricity and all the oil is exported overseas.

Baku-Tblisi-Ceyhan Pipeline project
The construction of the Baku-Tblisi-Ceyhan Pipeline project, which was approved by the IFC less than a year ago, has been halted by the Georgian Government for problems with due diligence, and the World Bank has been inundated with complaints from local communities affected by this pipeline.