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World Bank, IMF Come Under Scrutiny
Friends of the Earth, in cooperation with other groups, has assembled the below statement. If you are in agreement with it, please notify firstname.lastname@example.org so that you may be counted.
NGO PLATFORM CALLING ON THE WORLD BANK GROUP TO PHASE OUT FINANCING OIL, GAS AND MINING PROJECTSIn this era of globalization, there is a growing awareness that environmental protection and economic development must go hand in hand. Nowhere is the incompatibility of environmental destruction and poverty alleviation more evident than in the World Bank Group’s investments in the extractive industries: oil, gas and mining. As the world’s largest development institution, and one of the major vehicles for economic globalization, the World Bank now stands at a crossroads: perpetuate poverty and pollution through extractive industries, or alleviate poverty through environmentally and socially sustainable development.
The undersigned organizations and individuals call on the publicly financed World Bank Group to phase out of financing destructive oil, gas and mining projects. The Bank’s support for these extractive industries underscores its record of environmental and social destruction. Oil, gas and mining projects enable wealthy multinational corporations to extract resources and profits from poor countries, leaving poverty in their wake. They fuel global climate change, pollute the environment and lead to deforestation. Even worse, extractive industries have further entrenched corrupt and dictatorial governments, and exacerbated human rights abuses.
Oil, gas, and mining embody an unsustainable model of economic development that has failed the world’s poor in the 20th century. There is no reason for the World Bank Group to finance these sectors in the 21st. The World Bank Group devotes a significant share of its portfolio to extractive sectors (in 1999, IFC and MIGA lent 16% and the World Bank lent 3.8% of its portfolio for oil, gas and mining projects). An environmentally and socially sustainable approach would include investing in new industries, clean technologies, environmental protection, job creation and education. The World Bank Group should establish an immediate ban on new exploration in pristine, frontier ecosystems (a ban more than 200 organizations from 52 countries called for at the Kyoto climate change meeting). Finally, we call on the World Bank Group to develop a plan for a complete phase out of financing oil, gas and mining projects. The transition away from these sectors should be developed in a participatory manner, be based on renewable energy-based systems and ensure the livelihoods of local communities.
Ten Reasons the World Bank Group Should Stop Financing Oil, Gas, and Mining Projects in Poor Nations
1. The Poor Often Pay the Highest Price The environmental destruction and social upheaval that accompany oil, gas, and mining projects often harm the poor the most. The poor are the most likely to be forced off of their land and made homeless by these projects. They are the most likely to live in polluted surroundings and the least empowered to demand fair compensation or a share in the revenue from oil, gas and mining development. The poor are the most dependent upon local natural resources for their food and livelihoods, and the most likely to suffer when aid is diverted from social sectors to finance extractive industries.
2. Indigenous Communities are Jeopardized Oil, gas and mining operations have devastated dozens of indigenous groups around the world, resulting in loss of their numbers, territory, livelihoods and cultural identity. From the Amazon Basin to Asia, these indigenous peoples’ ways of life are built on age-old traditions and deep ties to and interdependence with the ecosystems where they live. As a result of these extractive industries, indigenous communities often lose their right to self-determination, their right to their land and livelihood.
3. Leads to Forest Destruction and Biodiversity Loss From Siberia’s temperate forests, to the mangroves of Central Africa, to the rainforests of the Amazon basin, oil, gas and mining projects threaten precious forests and cause irreversible damage to ecosystems and biodiversity loss. Oil and gas exploration, mining and new roads (which are often an indirect result of oil, gas and mining exploration) currently threaten more than half of both South America’s and Russia’s frontier forests, according to the World Resources Institute. Coal mining in eastern India threatens to destroy the last remaining habitat for the endangered tiger. Much of this exploration and mining is taking place in pristine, frontier forest areas.
4. Toxic Contamination of Communities Oil, gas, and mining operations are significant sources of ecological degradation even in wealthier nations with stronger environmental protections. In poorer countries with weaker environmental standards and less oversight capacity, the likelihood of oil spills, toxic emissions, and contamination is greatly increased, and governments and communities are less equipped to limit the damage. Between 1982 and 1992 Shell’s subsidiary in Nigeria spilled about 1.6 million gallons of oil in the Niger Delta, most from leaking pipelines. Spills, gas flaring, improper disposal of waste, and mining accidents result in toxic releases that can be dangerous and even deadly to humans, and can poison groundwater, farmland, livestock and marine resources, the very resources on which the poor depend.
5. Negatively Impacts Women Women often bear a disproportionate amount of the costs of extractive projects in their communities. Women are often not included in the Bank’s consultation process for projects, even though they are responsible for the welfare of their family. Often men are hired to work in the extractive industries, leaving women behind with an increased workload. Their customary responsibilities are made even more difficult as the natural resources upon which they and their families depend, including clean drinking water and fuelwood for cooking, are polluted or degraded by these extractive industries.
6. Extractive Industries Often Tied to Human Rights Abuses From forced relocation, to the brutal, and sometimes deadly, suppression of those who dare to demand fair compensation or clean-up, the drive for profit from fossil fuels and minerals has all too often led to human rights violations by governments and corporations. Witness the struggle in Nigeria by the Ogoni people to demand the clean-up of the pollution on their land by the oil industry, or the demand of the Amungme in Irian Jaya, Indonesia, calling for fair treatment and compensation from the largest gold and copper mine in the world. The rights of individuals and communities are often sacrificed in the search for profit by these industries.
7. Ties with dictators and corrupt governments Many of the countries with oil, gas and mining projects suffer from corruption and authoritarian regimes. Whether it is Russia, Colombia, Indonesia or Nigeria, repressive countries often form alliances with multinational corporations involved in extractive industries. For the last two years, Transparency International, a non-profit corruption watchdog, has identified Chad as the most corrupt nation in the world. In spite of this situation, the World Bank still claims oil development will benefit the poor in these countries, and is ready to finance a multi-million dollar oil development scheme.
8. Supports Corporate Welfare The multinational corporations involved in extractive industries often have profits that dwarf the size of many of the Bank’s borrowing countries. In the Chad-Cameroon Pipeline Project, which the Bank is poised to finance, the lead company - Exxon - has annual profits that are four times the budget of Cameroon and 40 times the budget of Chad. Although earmarked for sustainable development and poverty relief, nine out of ten World Bank fossil fuel projects benefit transnational corporations based in wealthy countries. These multinationals are wealthy and do not need to tap into preciously limited foreign aid. Furthermore, when the Bank subsidizes these corporate giants, it diverts much needed aid from programs that truly benefit the poor.
9. Extractive Industries Fuel Global Climate Change Fossil fuels are the major cause of global climate change and must be phased out. Climate change is already wreaking havoc on the poorest in developing countries, and threatens to only worsen their situation. The World Bank Group should be leading the way to assist countries in a transition towards a more renewable energy economy and maximizing energy efficiencies, not tapping into the last remaining resources for the dirtiest, most climate-destabilizing fuels. Today the World Bank spends 25 times more on fossil fuel projects than on renewables. Rather than taking substantive action on climate change, and drastically reducing their fossil fuel lending, the World Bank is now launching a carbon trading scheme, which threatens to provide even more subsidies to the already heavily subsidized fossil fuel industry.
10 Increases Debt and Dependency of Poor Countries Oil, gas and mining development commit countries to a path of indebtedness and dependency on external aid. Desperate for hard currency to service debts, poor countries exploit their natural resources at unsustainable rates, such as petroleum reserves or minerals, to export for foreign exchange. This costly development path fuels growing indebtedness, and the World Bank’s policy-based lending encourages an unsustainable export-led growth strategy.
Ten Better Examples of Good DevelopmentThere is no shortage of alternatives to oil, gas and mining. Opportunities will vary between countries, but this is not an obstacle ensuring that foreign assistance directly responds to the needs of the poor and offer sustainable solutions to pressing environmental problems. The starting point is for the World Bank Group to work with governments to establish a participatory process and consult with citizens and stakeholders in the borrowing countries to identify national development priorities for investment and financial support. It may not be appropriate for the World Bank Group to invest in each of these areas. But the bottom line is that where the World Bank Group is providing financial assistance to developing countries, it must limit its support to projects and policy lending that directly alleviates poverty and promotes environmentally and socially sustainable development. Some better development examples than what the World Bank is currently doing with the majority of its lending, include:
1. Support education and technical training. Investing in human capital is the most important investment of all. A quality education empowers a person to defend their rights and to creatively employ their own resources. Basic education is a fundamental right and the foundation upon which an informed and dynamic citizenry is based, yet it is denied to hundreds of millions of children around the world. Primary education is key, especially for girls.
2. Promote healthy societies. Easily preventable diseases continue to kill millions of people each year. In many countries of Sub-Saharan Africa, roughly one in four children will die before the age of five and diarrhea is a leading cause of death among toddlers. Responding to this scandal and waste of human and economic potential is a moral imperative that the world must face.
3. Support micro and small enterprise. Supporting small and medium enterprises, as well as micro-enterprise initiatives, has obvious social advantages over the mega-projects that characterize World Bank Group lending. Smaller enterprises result in more employment per dollar invested, are more likely to reinvest earnings in the local economy and can be more easily targeted to benefit women and marginalized communities. From producing carbon filters out of coconut husks, to exporting organic foods to other markets, opportunities for promoting small and medium sized initiatives are endless.
4. Build strong agricultural sectors that respond to peoples’ needs. Agriculture is the lifeblood of many of the world’s poorest countries. World Bank projects and policy lending have often been associated with accumulation of land in the hands of the few and the promotion of export driven agriculture that can ultimately undermine food security. What is needed is a more positive role in development in the agriculture sector that deals with land redistribution and land rights, sustainable agricultural practices and more appropriate technology development.
5. Deliver energy to the rural poor. Roughly two billion people in rural areas lack access to electricity and other forms of energy. While the World Bank has a strategy to address these needs, it has never properly implemented it. Instead, financing is oriented toward industrial development and urban areas, thereby further impoverishing the rural poor. Drawing on advances in renewable energy, and existing production, the Bank Group could bring energy to millions of people in rural areas. In most cases, cost-benefit analysis shows that renewable forms of energy are the most viable way to reach remote, rural areas.
6. Improve the quality of life in urban areas. Gridlock, pollution, crime and a declining quality of life are the products of overcrowded cities flourishing in the developing world. The World Bank Group could help counter-act this trend by directing more of its resources towards land-use planning, improved efficiency in building practices and pollution control. Better-organized transit corridors, especially public transit such as low cost ultralight rail vehicles, would reduce pollution-related illnesses. The World Bank Group could work to support innovative building practices and work with city planners to improve the design of urban areas. The Bank could also invest in more urban area pollution programs, the cause of so many health related problems.
7. Develop productive alternatives to deforestation. Even by its own analysis, World Bank Group projects are often associated with accelerating rates of deforestation. More emphasis should be placed on developing alternatives to deforestation and promoting the sustainable use of certain forest resources. Innovative alternatives exist, such as emerging substitutes for wood products and non-wood paper production, or supporting eco-tourism and the sustainable harvesting of forest products such as rubber. Governments should be enabled to expand protected areas for conservation and sustainable use because forests are critical for the global environment and for generations to come.
8. Encourage the efficient use of water. Water scarcity is a growing global concern, as well as an increasingly obvious potential source of conflict. Despite the shortages and its fundamental importance to life on earth, huge volumes of water are unnecessarily wasted each day. Bombay loses up to one-third of its water, and losses are as high as 50 percent in Manila. Similarly, irrigation systems that account for more than half of the water drawn for human use, can also be sources of great waste. The World Bank Group could improve quality of life by directing more of its resources to reducing leakage, improving water conservation and developing mechanisms to more efficiently employ existing irrigation systems.
9. Promote energy efficiency and renewable energy development. Rather than promoting the exploration and production of fossil fuels, the World Bank Group should be concentrating its energy on capturing the hundreds of millions of dollars in revenues that are annually lost through energy inefficiency. Investments in preventing heat loss and in co-generation processes that simultaneously produce both hot water and electricity, could save World Bank Group clients billions of dollars in the coming decades. Combined with energy efficient lighting and building techniques, this would reduce energy imports and possibly free up energy for export. Similarly, by supporting emerging markets in solar, wind and fuel cell technology, the Bank will be promoting energy that will not exacerbate pollution problems or global climate change.
10. Immediate Debt Cancellation and Recognition of Ecological Debt. The dire problem of debt must be addressed. The World Bank Group should move forward this year on granting immediate debt cancellation to the highly indebted poor countries and develop a program for debt relief for middle income countries. These programs should include innovative approaches to protect and conserve more pristine, frontier ecosystems around the world. It should also be recognized that there is an ecological debt that must be reckoned with since Northern consumers have benefitted from cheap natural resources, including oil, gas and minerals, from the South. These resources have been extracted at a high cost to the environment and communities.
As you probably know, on April 16-17, officials at the World Bank and IMF meet in Washington, DC for their spring meetings. Many organizations and grassroots groups are organizing large protests and demonstrations to take place during those meetings.
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