Critics Turn to World Bank President to Back Reform.

Whether the World Bank adopts the advice of an independent review that it withdraw hundreds of millions of dollars from mining and oil industries worldwide looks to be a decision increasingly hinged on one man - Bank President James Wolfensohn.

Days after the bank's management said in leaked documents that it might reject suggestions from the Extractive Industries Review (EIR), an effort to assess the bank's heavily criticised support for mining and energy projects, civil society groups that have clamoured to end that funding turned to Wolfensohn as a last resort to divert the reported course.

The EIR submitted its final report to the World Bank on January 16, urging the world's largest public lender to bail out of funding extractive industries like coal and oil, and to shift its investments to cleaner renewable energy instead.

But according to a leaked document, the bank's management is preparing to reject the review's main recommendations.

The management's draft response to the EIR reportedly snubs the idea that conditions - like impact assessments on the environment and local communities - be placed on its lending for oil, mining and gas projects. It is also said to argue that opting out of funding oil and gas would deprive poor nations of much-needed sources of income.

Watchdog groups that have argued extractive industries damage the environment and cause suffering for people in many countries, fumed over the draft response.

Those groups say the bank's president, who is due to end his second term in office in 2005, might be risking his own reputation and legacy at the World Bank over the rebuff, since he proposed the EIR in 2000.

"Imagine if a high-level independent review commissioned by the president of the United States and involving high-level government officials called for a restructuring of the intelligence apparatus, and the president responded that, in fact, the findings were simply wrong," said Steve Kretzmann of the Sustainable Energy and Economy Network in Washington.

In an online letter that carries the signature of the Washington-based Institute for Policy Studies, civil society groups say they want Wolfensohn, a former investment banker, to make "a good faith gesture" and instruct staff and management to immediately freeze all further action on policies or projects that could potentially be affected by the EIR's recommendations, until the Bank fully adopts the report's advice.

Two weeks ago, Emil Salim, the head of the EIR, made a similar call when he was in Washington for meetings with Wolfensohn.

Salim, a former Indonesian environment minister, told IPS he could sense that Wolfensohn, who took over the bank's presidency in 1995, wants to make an impact on the bank before he finishes his term in June 2005, and that he appeared willing to work to adopt the EIR recommendations.

"I am appealing to him as the president of the World Bank to make the necessary changes," Salim said.

Observers of the extractive industries say there is still time for Wolfensohn to push for the recommendations to be adopted, since he commissioned the study directly.

"I was extremely disappointed, and to be honest, I was really surprised that Jim Wolfensohn would endorse such a view. My sense is that he hasn't and that it is just bad management," said Payal Sampat of the Mineral Policy Centre in Washington, one group that has been particularly vocal against bank investments in oil, coal and other mining projects.

"My hope is that between now and the final response there will be an opportunity for Mr. Wolfensohn to hear from the renewable industry, indigenous peoples, civil society and governments that have been supportive of the recommendations of the report," she said.

Bank insiders say the 70-year-old president would like to be remembered for his outreach to pressure groups that have criticised the World Bank and for returning the institution to the fight against world poverty.

Wolfensohn's decision is also likely to figure highly in the EIR's fate, because he has kept his personal views on the review to himself so far, which some observers say might indicate that he is yet to decide.

The bank's committee on development effectiveness, or CODE, a subcommittee of the World Bank board, will discuss the management's response to the EIR on Feb. 25, before the bank gives its final opinion.

Analysts say the committee, which has the authority to return the response for revision, can also reject it, with "a little push from Wolfensohn, if he wanted to".

"Wolfensohn, given that he was the one who initiated this review, certainly has a sway over senior management, if not the board directly, and would very much have the authority to push the bank to be more specific on certain recommendations," said a source familiar with the bank's operations.

"As has been seen in the past, when the president wants to take initiative in a certain area, he has a fair amount of leeway to do so," added the source, who spoke on condition of anonymity.

The groups are not only calling on the Australian-born president to act, but are warning that formal rejection of the EIR would reveal the bank is not serious about its publicly professed twin goals of poverty alleviation and sustainable development.

"We will not view as sufficient the adoption of only a certain percentage of the EIR's recommendations," said the online letter, already signed by hundreds of activists.

"The failure to meet any one of them can lead and has indeed led to a failure to contribute to poverty alleviation or sustainable development."

The groups argue that adopting the EIR recommendations is "not only the right thing to do"; it will also spare the bank and project sponsors considerable risk to their reputations and possibly more cost.

[Source: Emad Mekay, IPS, Washington, 11Feb04]

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