High Level World Bank Review calls for the phase out of World Bank involvement in oil exploitation and coal mining

Bank Management to ignore recommendations says leaked report

(Ottawa) February 9th, 2004 -- Conforming to industry’s desires, the World Bank management is pushing to have its Board of Directors reject the recommendations of an independent review of its performance in the oil, coal, and mining sectors, according to a leaked report. The World Bank’s Management Response to the Extractive Industries Review (EIR) was leaked last week.

“Bank Management’s Response to the EIR is an extended defense of business as usual,” said David Brooks of Friends of the Earth Canada. “They evade their responsibility to deal effectively with many basic, well-known problems associated with violations of human rights, good governance, environmental sustainability. Why do a review, if you’re just going to ignore its conclusions?”

The EIR was initiated at the World Bank Annual Meetings in Prague in 2000 by Bank President James Wolfensohn, who pledged to evaluate how or if extractive industries contribute to poverty alleviation. The Bank appointed Dr. Emil Salim, the former Indonesian Environment Minister, to direct the review. In January 2004, Dr. Salim presented President Wolfensohn with the Extractive Industries Review Final Report: Striking a Better Balance.

The EIR found that support for coal and oil projects, as well as projects in critical natural habitats and areas of conflict does not contribute to the Bank's key mandate of poverty alleviation, and therefore recommended the that the World Bank Group phase out financing these types of projects and reallocate funds towards renewable energy.

CoDevelopment Canada did research for the EIR, and found little evidence to indicate that poverty alleviation is achieved at a local or regional level through investments or guarantees in the extractive industries. "While we find some improvements in infrastructure near mining and oil and gas projects, these investments rarely benefit the poorest people. Their standard of life typically goes down, not up," remarks Ginger Gibson of CoDevelopment Canada.

Bank management is currently attempting to fast track rejection of the EIR by bringing it to the Board by the end of February. The Canadian government has made no comments on the Extractive Industries Review to date. Industry and industry organizations object to EIR prescriptions as evident from recent comments by the International Council on Mining and Metals.

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For more information contact: David Brooks, Friends of the Earth Canada at 613-241-0085 ext. 27; Ginger Gibson, Co-Development Canada at 604-872-8430; Pam Foster, Halifax Initiative Coalition at 613-266-8100

Background:
The recommendations Bank Management will not commit itself to include:

• obtaining prior informed consent of local communities affected by extractive projects as a precondition for financing;
• phase out lending in support of oil and coal and to focus its scarce development resources for renewable energy;
• set lending targets of increasing renewable energy lending by 20% a year;
• ensuring the establishment of indigenous peoples’ land rights as a condition for project finance;
• ensuring that revenues of Bank-financed projects benefit all affected local groups;
• requiring that freedom of association be present in Bank financed projects as a basic human/labor rights requirement;
• ensuring that good governance structures are in place before project finance and implementation occurs;
• protecting biodiversity through establishing “no go” areas for internationally recognized critical habitats;
• requiring that submarine tailings disposal not be used in World Bank Group supported mining projects;
• ensuring use of safe, modern vessels for oil transport in World Bank Group financed off-shore oil development;
• and promoting overdue key institutional reforms to deal with the long documented “pressure to lend” in the World Bank that has resulted in weakening of implementation of key environmental and social protection policies.

The full Extractive Industries Review Report is available at: http://www.eireview.org

The leaked draft World Bank Management response is available at: http://www.bankwatch.org/index.html