By Abid Aslam
September 26, 1999
Washington- The World Bank says it has made significant environmental progress in the past 10 years but critics - and the agency's own documents - say otherwise.
''We have quite clearly come a long way,'' says Ian Johnson, the Bank's vice president for Environmentally and Socially Sustainable Development, in launching this year's 'Environment Matters', an annual Bank progress report. The agency's staff of 10,000 now includes some 250 environmental experts - up from a handful - and 800 policy and technical officers are working on sustainable development issues, according to Johnson. The agency in recent years has begun lending directly for environmental projects, with the volume of loans rising to two billion dollars last year.
By contrast, an analysis of World Bank Group operations - prepared by environmental groups using the Bank's own figures - shows that financing in 'enviromentally destructive sectors' including transportation, energy, mining and industry remains unabated since 1995. The World Bank Group consists of the Bank itself and two affiliates - the International Finance Corporation (IFC), which invests in private-sector projects, and the Multilateral Investment Guarantee Agency (MIGA), which provides political risk insurance for projects in developing countries.
The percentage figures for environmentally-questionable loans from the World Bank itself fell from 32 percent to 23 percent last year, largely because of an increased volume of emergency lending to countries in financial crisis. The IFC level rose from 45 percent in 1995 to nearly 54 percent in 1998 and MIGA's rate has remained above 60 percent throughout. Robert Watson, director of the Bank's environment department, says the figures show that the Bank is a 'demand-driven institution' - it has to respond to the needs of its borrowers and these overwhelmingly include environmentally-tricky projects aimed at boosting economic growth.
The Bank can't run away from a project that might harm the environment when it is being put forward by ''a country which may not have many development options,'' Watson says. '' Poverty alleviation and the environment often are at odds. There are some real trade-offs you have to make.'' But according to Korinna Horta, senior economist at the Environmental Defence Fund here, ''for years the Bank has said there is no trade-off, that all development has to be sustainable development. Now they seem to be back-pedalling on this.''
''The Bank continues to approve projects that are very controversial,'' says Horta, noting that the lender's ''largest project in the works for Africa is the Chad- Cameroon oil and pipeline project.'' The Bank and IFC for years have been seeking entry into the venture, which would sink 300 oil wells in ecologically-fragile southern Chad and run a 1,050- kilometre pipeline the entire length of neighbouring Cameroon to an offshore oil terminal in the Atlantic Ocean.
The Washington-based agencies have contemplated the project - which is led by the oil companies Exxon, Shell and Elf - since 1993, repeatedly hinting that approval was at hand only to put off a decision amid roiling controversy in the environmental community and among the agencies' own staff. Watson argues that the effort represents the countries' best hopes of economic development and that the Bank's involvement has served to raise environmental standards. The lender has minimised harm to pristine forests and wildlife habitats along the pipeline's route, for example, by insisting that it largely follow the path of existing roads and railways.
Horta notes, however, that under existing project plans, the offshore marine terminal will consist of a single-hulled oil tanker - not a double-hulled vessel - and therefore increases the risks of oil spills. In addition, documents released to date include no plan to respond to an oil spill. This puts at risk an Atlantic coastline along which small-scale fishing and eco-tourism support a 1.5 billion dollars-per-year economy, Horta says, citing a study by Britain's University of Warwick. By contrast, the oil project is expected to generate 500 million dollars for the local economy over the course of 30 years, she adds. According to Exxon, the project could yield up to five billion dollars in revenues for the two countries - depending on world oil prices in the coming three decades. The Bank is taking steps to ensure some of the proceeds reach schools and health clinics but their efforts remain clouded by corruption and political repression in the region, say project critics in the US Congress, who cite US government and independent human-rights reports.
The Chad-Cameroon venture awaits approval by the Bank's executive directors. Meanwhile, says Johnson, the agency is moving to 'green' the agency's structural adjustment and other policy- based lending operations throughout the world. That will be no small task, according to an internal review of 54 adjustment loans approved between July 1997 and January 1999. The loans - worth 21 billion dollars and going to 42 countries - reflect ''a disconnect between Bank policy and practice,'' the report says. 'Disconnect' is a polite Washington term for 'contradiction'.
The Bank's policies on adjustment lending and environmental assessment mandate investigation of the potential environmental impacts of planned policy, institutional and regulatory actions - not just individual projects. Yet, of the 54 loans examined, only 20 percent had ''any (somewhat) substantial mention of potential environmental concerns,'' the report says. ''This is a dramatic reduction from...(a) review of 1994, which found that 60 percent of the projects sampled included environmental goals or conditionalities.'' Of the total, 19 loans have two-sentence environmental statements that ''include no details of components, measures, or assessment and cannot be seen as a serious attempt to discuss the environmental consequences of the projects,'' the report states.
It adds that loan officers have even claimed that banking sector operations affecting agriculture and public sector reform projects involving energy, infrastructure and fisheries will have ''no impact'' on the environment. In addition to 'green' concerns, social needs and local views also are overlooked, according to the document. ''Social analysis and mechanisms of consultation and engagement of stakeholders are rarely considered, even when the Bank's experience suggests that they are essential components of sustainability,'' it states.
The report blames this on scant resources allocated to the Bank's Environmentally and Socially Sustainable Development vice- presidency and a loan-approval process that allows the department's staff time only for ''quick document reviews during the last stages.'' Staff members and analysts say these are among numerous indications that environmental concerns, and environmental staff, remain marginal within the Bank - contrary to the agency's public statements. This marginalisation, they add, may explain why, four years after the Bank advanced its agenda of 'mainstreaming the environment', Watson reminded his colleagues Friday that ''environment is not (just) a sector. We need all sectors (of the Bank) to be involved in this work.''
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