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FINANCING GLOBAL FOREST
DESTRUCTION
excerpts from W R M B U L L E T
I N 95 - June 2005
- The World Bank, Forests and Forest Peoples: Policies, Impacts and
Implications
New policies, old problems. Ever
since the 1970s, the World Bank has struggled to define an approach to
forests, which reconciles its expressed commitment to poverty alleviation with
its model of promoting 'development' through top-down growth and
commercialisation. Free market models of development based on private property
rights do not fit well with conventional forestry approaches. Since the 1700s,
the dominant model of 'scientific forestry', developed in Europe, has opposed
the free play of market forces by reserving forests for State-chosen strategic
interests. This has entailed State control of forest reserves, as 'public
goods', to the exclusion of both local communities and (at least in theory)
destructive industries. Forestry ministries, which favour State control and
public ownership, and agricultural ministries, which favour private property
and free markets, have long been suspicious of each other.
This model of 'scientific forestry'
was first imposed on developing countries by the British in Burma in the
1840s. Ever since, the political economy in tropical forests has been
dominated by unhealthily close relations between those in State agencies, who
control forests, and large-scale loggers, prepared to pay them back-handers to
get access to the timber. 'Scientific forestry' has thus not only favoured
collusive corruption but has led to the development of institutionalised
graft, whereby substantial proportions of timber profits bank-roll politicians,
their patrimonial networks and - in today's so-called democracies - political
parties. Corruption and social exclusion have penetrated the forestry sector
so seriously that the goals of 'scientific forestry' - which aimed to reserve
forests for producing timber for strategic industries and ensure environmental
services - have been wholly defeated. Forests have been mined for the economic
and political gains of business elites, with severe social and environmental
consequences.
This kind of forestry has not only
been riven with economic 'inefficiencies' - so distasteful to World Bank
economists - but has imposed huge costs on local communities and indigenous
peoples, whose rights were denied in setting up State forest reserves, to such
an extent that the contradiction between forestry and the poor has been too
harsh for even the World Bank to ignore. Since the 1980s, the World Bank's
favoured solution to these problems has thus been to promote market- based
approaches to the concession system - through measures like competitive
bidding, market transparency, undoing log export bans - on the one hand,
while promoting 'social forestry', usually outside forest reserves, on the
other. 'Social forestry', based on the Chinese model of mass plantings by
State-directed peasantries, was meant to provide rural people with at least
some forest products. However, in more capitalist countries it was quickly
found that these plantations could be designed to benefit pulp mills and paper
industries more than local farmers, whose labour was co-opted for planting and
looking after seedlings and saplings but who got scant access to the trees
once they matured.
It was only in the mid-1980s, that
the World Bank's approach to forests was seriously challenged by social
justice and environment movements. Once it became clear that the World Bank
was funding the mass destruction of tropical forests and indigenous peoples -
through colonisation schemes, plantations, dams, mines, road building and
agribusiness - the World Bank promised reforms. It set up a new environment
department, adopted what came to be called 'safeguard policies' - required
procedures designed to protect vulnerable social groups and environments from
the worst impacts - and announced that its goal was to promote 'sustainable
development', an oxymoron made popular by the Brundtland Commission.
NGO focus on the World Bank's
forestry policy, however, only really started in earnest with the unveiling in
1986 of the Tropical Forestry Action Plan (TFAP), a proposal from the World
Bank, FAO, UNDP and World Resources Institute to slosh US$ 7 billion of aid
money into tropical forestry. This was to be more of the same - more
commercial logging, more plantations modelled on the Aracruz example in Brazil
and more top-down social forestry of the kind that was dispossessing peasants
and covering ill-named 'wastelands' in India with a sea of Eucalyptus. One
response from NGOs was to set up the World Rainforest Movement, which was
founded at an international conference in Malaysia in 1986 as a riposte to
TFAP.
The outcry was so loud and the
evidence uncovered by the NGOs so compelling that, in 1990, the G-7 summit
called for the TFAP to be revamped - it soon fell apart. For a short period,
the critical voice of NGOs was so strong that, when it became clear that there
was barely a single example worldwide of sustainable forest management in the
tropics, the Bank felt obliged , in 1991, to adopt a forest policy based on a
precautionary approach to natural resource exploitation. In the absence of any
good evidence that tropical forest logging could be sustainable, the new 'Forestry
policy' proscribed World Bank funding of projects that would damage primary
moist tropical forests.
The Return of the Market: divide
and rule. Unfortunately, NGOs did not hold firm in their rejection of market
models for forestry reform. True, some such as WRM did prioritise alternative
approaches to forests, based on the restitution of the rights of indigenous
peoples, land reform to bring justice for peasants and the landless rural poor,
the promotion of local livelihoods, gender justice and self-governance.
However, many others, including major conservation bodies like the WWF, were
attracted by the potential of harnessing market forces to provide the private
sector with incentives to manage forests 'sustainably', which they hoped would
in turn drive forestry reforms. The immediate result was the Forest
Stewardship Council, set up in 1993, which while its principles and criteria
included strong protections of the rights of local communities, indigenous
peoples and workers, led to the rehabilitation of the suspect concept of
Sustainable Forest Management. In 1998, the WWF and the World Bank announced a
new joint 'Forest Alliance' dedicated to promoting the certification of 200
million hectares of forests in World Bank target countries by 2005. The World
Bank was back in the forestry game.
The problem remained for the World
Bank, that its 1991 forest strategy was not really compatible with a market
approach to forests. However, with the NGOs divided, the Bank embarked on a
complex manoeuvre designed to legitimise its return to the promotion of
tropical forest logging and market based reforms. It carried out a lengthy
Forest Policy Implementation Review and Strategy Development, undertook
extensive regional consultations, commissioned a series of papers examining
worthy matters like poverty alleviation, indigenous peoples and community
forestry and, then came to the unsurprising, though contested, conclusion that
it was time to do forestry again just as it had in the 1970s and 1980s -
promoting market-based reforms of forest industry, while doing 'community
forestry' to show it still cared about poverty. The proscription on funding
logging in primary moist tropical forests was lifted, the precautionary
approach dropped.
The new Strategy and associated
policy, adopted in 2002, however, has even more of a market emphasis than
before. New markets in environmental services are to be promoted, alongside
markets in 'green' timber, which the policy aims to achieve through voluntary
certification. Carbon trading is also being promoted through the Bank's new
Biocarbon Fund.
As detailed in the April issue of
the WRM Bulletin (No. 93), unleashed by the new policy, recent World Bank
investments are causing serious problems - expansion of socially and
environmentally harmful investments in plantations, agribusiness and phoney
carbon sinks; top-down community forestry schemes which trample the rights of
indigenous peoples, while best practice examples of Bank-funded certified
sustainable forestry operations are nowhere to be seen.
Markets without rights. No one
should be surprised that the World Bank favours a market approach to dealing
with forests, but what is tragically inconsistent about the World Bank's
approach is its treatment of the property rights of the poor. Of course, NGOs
tend to argue for the recognition of the land rights of indigenous peoples and
local communities on the grounds of human rights and natural justice, but
capitalist economists, such as De Soto, have also stressed that development
cannot work in favour of the poor without a strong framework to protect
property rights.
As the eighteenth century free
market philosopher Adam Smith noted, for 'free markets' to work, the State
must protect 'as far as possible, every member of the society from the
injustice or oppression of every other member of it...' through the 'establishment
of an exact administration of justice'. The rule of law, Smith concluded, is
required for the protection of private property, and this must be done fairly
if it is not to 'excite the indignation of the poor', leading to the great
risk that 'civil government, so far as it is instituted for the security of
property, is in reality instituted for the defence of the rich against the
poor' (Adam Smith, The Wealth of Nations).
Yet, the new market-based 'Forests
Policy' of the World Bank falls into exactly this trap. The World Bank notes
that some 1.2 billion poor people worldwide depend on forests for fuel-wood,
water and other basic elements in their livelihoods. Of these, 350 million
people are forest-dependent people, while only 60 million of these are
classified by the Bank as 'Indigenous Peoples'. Although, the new forests
policy does require that Bank-funded logging projects ensure 'recognition and
respect for legally documented or customary land tenure and use rights', no
such protections are extended to peoples impacted by other Bank-funded
projects that affect forests, like dams, mines, roads, colonisation schemes,
agribusiness and plantations. Instead of addressing these concerns head
on, the World Bank said it would deal with these broader concerns about tenure
in its revised Indigenous Peoples policy, even though this policy is only
aimed at some 5% of the 1.2 billion people that the World Bank estimates
depend on forests. In effect, the World Bank is prepared to impose its
market-based policy for the 'development' of forests and plantations without
dealing with the tenure rights of some 1.1 billion people who depend on these
forests for their well-being.
Moreover, even the Indigenous
Peoples policy, which was finally adopted by the World Bank in May 2005,
offers very uncertain protections. Although the policy is a slight improvement
on discussion drafts issued over the previous four years, the new policy does
not call for full recognition of land rights. It only requires borrower
governments to set out an 'action plan' for either full legal recognition of
existing customary land tenure systems, or a process for converting customary
rights into ownership rights, or measures for legal recognition of long term
use rights.
Indigenous peoples have not been
happy with the new policy. A signed statement by many of the main indigenous
peoples' organisations attending the UN Permanent Forum on Indigenous Issues
in May 2005 noted of the new World Bank policy that:
"The newly revised policy has
made important improvements in several areas, such as requiring that the
commercial development of affected indigenous peoples' cultural resources and
knowledge be conditioned upon their prior agreement to such development.
Nevertheless, we continue to be extremely concerned about these Multilateral
Development Banks lack of recognition of indigenous peoples' customary rights
to their lands, territories and natural resources and to their related right
of free prior informed consent, and their derogation of international
standards to national law."
Indigenous peoples have in
particular been concerned by the way their demand for recognition of the right
of impacted communities to free, prior and informed consent to projects
proposed on their customary lands, has been turned into a requirement for 'free,
prior and informed consultation' leading to 'broad community support'.
According to the Bank's new policy, such consultation and the assessment of 'broad
community support' is to be carried out by the borrower government, does not
entail the right of the community to veto the project, and is only verified by
World Bank staff through their review of documents provided by the government.
All this allows far too much room
for projects to be imposed without adequate respect for indigenous peoples'
rights to their lands and to self-determination. As Canadian indigenous rights
activist Arthur Manuel noted:
"Consultation sounds good,
but does nothing. It's a mechanism to allow for the ultimate theft of our
indigenous propriety interests free of charge. Prior informed consent is
recognition of our land, culture, and way of life."
By Marcus Colchester, Forest
Peoples Programme, e-mail: marcus@forestpeoples.org.
Further details on the implications of the World Bank's Forests Policy can be
found on http://www.wrm.org.uy/actors/WB/brokenpromises.html.
For additional background information see: www.forestpeoples.org
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- The IMF's role in the
destruction of tropical forests
Let us make no mistake. When the
IMF talks about a "favourable environment," it is referring to
business, to a favourable environment for direct foreign investment through
operations on the stock exchange, or indirect foreign investment through the
operation of transnational companies. The sporadic references made to
the environment in their loans, grants, documents and strategies are
functional to their classical recipes based on adjustment and stabilization
programmes, which if properly applied, should lead us to sustained
development, understood of course in terms of the continuous growth of the GDP.
The IMF continues to believe, or to insist on making us believe that there is
a magic or "virtuous" circle in which "sustained" economic
growth reduces poverty and increases available resources to improve the
environment. Furthermore, this circle has its own feedback (1). Something
similar to the invisible hand of Adam Smith.
The IMF itself confesses that it
does not take environmental problems into account as it is limited by its
mandate and by the scant preparation of its staff in such matters. This
institution declares itself to specialize "only in issues referring to
macro- economic, monetary, trade and tax policies on a national and
international level" and that it is other organizations such as the World
Bank, the United Nations or the regional development banks that are "better
equipped" to address environmental problems." (2). In this way, the
IMF eludes all responsibility for the environmental impacts generated by its
stabilization and structural adjustment programmes.
Three decades have gone by since
the first structural adjustment experiments were implemented by the bloody
dictatorships of Uruguay, Chile and Argentina in the mid- seventies.
Since then and with no distinction of a historical, geographical, cultural or
social nature, the IMF has been imposing a single recipe for any country
attempting to access its funds, which supposedly aims at achieving economic
growth. The IMF takes advantage of the opportunity to impose structural
adjustment and stabilization programmes as a conditionality to obtain its
loans. These include the implementation of measures aimed at overcoming
the budgetary deficit through cuts in public expenditure, the implementation
of privatization processes, deregulation of the economy including trade and
financial liberalization and economic growth based on an increase in exports.
These adjustments involve a structural reform of the State, making it possible
to eliminate barriers preventing access to resources and the creation of an
environment favourable to foreign investment. Such "barriers"
include any type of social regulation (including measures for labour and
environmental protection). Summing up, when a country has difficulties
with its balance of payments and is on the verge of bankruptcy it finds itself
forced to accept the IMF's financial "assistance," but in fact
it really starts to sink in a process whereby it looses control of its
resources (understood in the WIDE sense) and of its sovereignty.
The protests and demonstrations of
the affected communities, civil society organizations and studies by
environmental organizations have proved over and over again, that in most of
the IMF client countries, in addition to the development objectives not being
attained, the general results of these policies have been devastating on the
environment" (3). And forest ecosystems do not escape this rule. In
the year 2002, a study by the American Lands Alliance concluded that the
International Monetary Fund (IMF) credits and policies caused a notorious
increase in deforestation in Latin American, Asian and African countries
possessing great biological wealth. The study points out that the IMF strategy
of promoting growth based on exports and foreign investment, while putting
pressure on the countries to cut back on their expenditure on environmental
programmes, has also accelerated deforestation." The IMF seems to have
promoted the logging of endangered forests in Brazil, Cameroon, Chile,
Ecuador, Ghana, Honduras, Indonesia, Côte d'Ivoire, Madagascar, Nicaragua,
Papua New Guinea, the Central African Republic, Russia and Tanzania.
The response to this report by the
IMF was that it would seem to have been based on "old or incorrect"
information. The Fund argues that it has incorporated conditions requiring the
reform of forestry policies - aimed at reducing illegal logging and at
strengthening forest protection - and that it has even suspended loans to
various countries in an attempt to halt illegal logging and deforestation (4).
However, the truth is that so far, the Fund refuses to acknowledge the
environmental impacts of its structural adjustment programmes.
For example, the study points out
that in Brazil, where the tropical forests represent one third of all the
rainforests left on the planet, the Government reduced its environmental
expenses by almost two thirds, as a condition for an agreement on an emergency
package of 41,500 million dollars signed with the IMF in 1998. This
implied a budgetary reduction in which 10 of the 16 environmental programmes
in Brazil - several of them aimed at enforcing forest exploitation standards
and forest protection - ceased to be applied.
In Cameroon, one of the countries
with the greatest biological diversity in Africa, the IMF managed to get it to
devalue its currency and reduce taxes on exports of forest products.
"This made forest exploitation more profitable, and increased the number
of commercially viable species, thus increasing the volume logged per hectare."
As a result, the number of logging companies operating in Cameroon increased
from 177 to 479 between 1990 and 1998, compared to the scant 106 operating in
1980, with the result that over 75 per cent of the country's forests have been
logged or will have been logged in the near future.
In Papua New Guinea, which hosts
1,500 species of trees, 200 species of mammals and 750 species of birds, half
of which are endemic, cuts in public expenditure resulted in the dismantling
of the Environmental and Conservation Department. To encourage the
timber industry, the IMF managed to have taxes on forest exports cut from 33
per cent to between zero and five per cent in 1998. The result did not
take long to appear: various large Malaysian logging companies immediately
established themselves in Papua New Guinea, seriously affecting the forests of
that country.
The IMF -which mainly reports to
the United States Treasury- has not made any substantial changes to improve
the situation. It has merely recognized that its policies have some
impact on poverty, which has implied a cosmetic change in its structural
adjustment programmes. No mention of policies favouring the environment. On
June 11, the Ministers of Finance of the G8 made a public declaration on
"Development and Debt" including a proposal to cancel the
multilateral debt to be submitted to the Annual Meetings of the IMF, the World
Bank and the African Development Bank in September 2005. This cancelling
of the multilateral debt is still linked to observation of conditions
exacerbating poverty, over-exploitation and plundering of natural resources
and the perpetuation of domination over the South. In cancelling the debt, no
restitution or reparation is commuted for slavery and colonization, for the
looting of wealth and natural resources, the exploitation of labour, for
human, social and ecological destruction in the South caused by economic
activities, military operations and wars protecting the interests of
international cleptocracy (5).
The silence of the IMF technocrats,
produced by universities such as Harvard and its peers, is not a mere
coincidence. They have been trained in function of a single objective:
that of removing the obstacles hindering access and control of the planet's
natural resources by the major corporations. Or perhaps the perpetuation of
the United States trade deficit aimed at financing the business of world
cleptocracy. Once more, the end justifies the means: letters of intent are
signed, workshops are organized to build up technical capacity, extortion is
exerted with threats of closing access to the markets of international capital
and those who have the courage to oppose this neo-liberal development model
are repressed. The actors are powerful and well-known: the governments of the
rich countries in the North, the multinational corporations, and the corrupt
elites and oligarchies of the South. The result can in no way be called
development, not if it is done at the expense of destroying healthy ecosystems,
the impoverishment and social exclusion of the communities that inhabit them
or that depend on them for survival, and the perpetuation at all costs of the
present system of global production.
By Marta Zogbi, Friends of the
Earth International, e-mail: marta@foei.org
2. "The IMF and the
Environment", Ved P. Gandhi, July 28, 1998 http://www.imf.org/external/pubs/ft/exrp/environ/
3. "The IMF: Funding
Deforestation" by Jason Tockman, American Lands Alliance. The complete
report may be read (in English) at http://www.wrm.org.uy/actores/FMI/Jason.doc
4. AMBIENTE: FMI bajo fuego por
promover desforestación by Danielle Knight www.tierramerica.net/2002/0203/noticias1.shtml
5. ADITAL 22.06.05 - ARGENTINA
"Respuesta de Jubileo Sur a la propuesta sobre Deuda del G8" http://www.adital.org.br/site/noticias/17311.asp?lang=ES&cod=17311
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- The European Investment Bank:
Surrounded by secrecy
Financial deliberations generally
take place between dubious actors in obscure corners of the political arena.
This is definitely the case with the European Investment Bank, which has only
recently been put in the public spotlight. It is now time to uncover the dirty
secrets of the European Union's house bank.
Established in 1958 to support
integration within Europe, the EIB has never been subject to public scrutiny.
This is quite unbelievable if you look at the figures. The EIB currently has
an annual budget that is bigger than the World Bank's: around 4 billion Euro.
It has a history of financing large scale infrastructure within the European
Union, including many controversial airports and the package of destructive
highways known as the Trans European Networks. Its gigantic lending portfolio
gives it great influence over the development of recipient nations. Many of
its loans go to risky infrastructure projects as well as oil, gas and mining
operations and large hydro dams. Contrary to other financial institutions, the
EIB never bothered to adopt safeguards to ensure that its projects would
protect people and the environment.
While the World Bank and other
banks are acknowledging the need for the establishment of social and
environmental standards, the EIB remains silent. Although the EIB is required
to follow European Union legislation in its activities, there is little
evidence that it does.
The EIB's legal status and its
obligations with respect to the EU have never been properly clarified. There
is confusion over how exactly it can be held responsible to EU laws, and made
accountable for failures to abide by relevant environmental and social laws,
policies and regulations. The Gothenburg European Council (2001) and the
European Parliament (2002) have both underlined the need for the EIB to
integrate the general priorities of the Union in its activities.
The reality in practice is that
the EIB's project appraisal is done on economic, financial and technical terms
rather than by placing sustainable development at the core. While the EIB says
it supports the EU climate change policy, it still engages in the financing of
large-scale fossil fuel projects. It has begun making controversial loans for
the sequestration of greenhouse gases through so called 'sustainable forest
development', and participates in the implementation of disputed mechanisms of
the Kyoto Protocol. "The EIB believes that flexible market-based
mechanisms are the key to cost-effective and timely climate change mitigation
efforts," said EIB Vice President Peter Sedgwick in December 2004.
The European Investment Bank is
now increasingly looking towards investing in the global South. Yet, its
mandate for doing so is very unclear.
The majority of EIB lending
outside the EU is directed towards African, Caribbean and Pacific (ACP)
countries. On 2 June 2003, the EIB started the Cotonou Agreement Investment
Facility for ACP countries, which channels money to the private sector. From
2003 to 2008, about 2.2 billion Euros will be disbursed to the ACP region by
this investment facility, as well as 1.7 billion Euros from the EIB's own
resources. But there is no evidence that the EIB gives any substantive
consideration to the key Cotonou objective of eradicating poverty in ACP
countries. At the same time, the EIB does not have its own development
strategy.
The EIB is more explicit about its
reasons for financing in Latin America. A December 2004 memorandum with the
Inter American Development Bank states that "Lending activity in Latin
America has a clear operational focus mainly in support of European Foreign
Direct Investment". The EIB is clear about its ambitions and states that
the "political reach" of the Inter American Development Bank makes
the cooperation very attractive. The EIB currently has committed to invest
2,480 million Euro to the Asia and Latin America region. The banks look
forward to working together to implement IIRSA, South America's megalomanic
scheme for infrastructure integration. IIRSA's projects are likely to put some
of the region's most delicate cultures and ecosystems at great risk. There is
no assurance that any of these projects will be appropriate or sustainable.
Worse still, the EIB/IDB memorandum goes on to say that project preparation
will generally be delegated to the sponsors. This means that both financial
institutions absolve themselves of any environmental and social responsibility.
Just a few of EIB projects that
have caused grave impacts on the world's communities and forests in the past
decade include Shell's Brazil-Bolivia Gas Pipeline (55 million in 1998),
Exxon's Chad-Cameroon Pipeline (134 million to in 2001), Veracel's Brazilian
Eucalyptus Plantation and Pulp Mill (98 million in 2003) and the Nam Theun II
Dam in Laos (40 million in 2004.
The main problems identified in
European Investment Bank activities include:
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Confusing status as both an EU
institution and an independent entity;
-
Unclear mandate for operations
in the global south;
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Continued secrecy around its
operations;
-
Lack of clear environmental
and social guidelines;
-
Lack of consultation with
affected communities;
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Small number of and
inadequately directed staff;
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No proactive environmental
protection lending;
-
No implementation of
environmental objectives.
As the European Investment Bank
starts to move around the world, so will we. Civil society recently launched a
web site where all projects financed by the EIB in the past ten years can be
traced. With the 'no' to the European constitution, there is now renewed space
for civil protest in the European political area. And we can use it by
exposing the secrets of the European finance activities around the world.
Organise, mobilise, protest and propose in the name of our forests, our
dignity and our lives. Visit www.eibprojects.org
and inform yourself.
By Janneke Bruil, FoE
International, e-mail: janneke@foei.org
Read more at: www.foei.org/ifi/eib.html,
www.eibprojects.org,
www.eib.org
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WORLD RAINFOREST MOVEMENT
MOVIMIENTO MUNDIAL POR LOS BOSQUES
International Secretariat
Maldonado 1858; Montevideo, Uruguay
E-Mail: wrm@wrm.org.uy
Web page: http://www.wrm.org.uy
Editor: Ricardo Carrere
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