Home | News    Monday 14 June 2004

World Bank ponders role in the environment

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By Lesley Wroughton

WASHINGTON, June 14 (Reuters) - With the World Bank facing a decision on whether it should continue backing oil and mining projects, its chief environmental official says it should stay involved to ensure high standards of environmental protection.

Ian Johnson said in a recent interview with Reuters that halting the bank’s criticized role in lending money for major oil, gas and mining projects in Africa, Latin America and other developing regions would bring greater environmental and social harm.

"I believe the bank should stay engaged because I do think we can add value," said Johnson. "I am more and more convinced that our presence in a great many circumstances is justified even where we get criticized," he added.

On the weekend Central African leaders officially opened the taps on a 660 mile (1,070 kilometer), $3.7 billion oil pipeline from landlocked southern Chad to an export terminal in Cameroon in the Gulf of Guinea.

The World Bank provided about 4 percent of the funding and committed to monitor the profits of the project, developed by a U.S. Exxon Mobile-led consortium.

To Johnson the impact of the Chad-Cameroon pipeline would be more devastating without the World Bank’s participation because of its greater adherence to international standards.

"We made sure the environmental and social standards were good," he said. "It is always a difficult argument of what would the project have looked like if we weren’t there. You don’t know. My instinct tells me there are many cases where by being involved we added value."

Opponents of the project say that, despite the bank’s participation, the pipeline will harm the environment and foment corruption without eventually helping the poor.

In another criticized project, World Bank affiliate International Finance Corp provided $310 million in credits for the development of a 1,040-mile (1,760 km) oil pipeline — the longest of its kind in the world — from Azerbaijan’s capital Baku, through Tbilisi, Georgia, and across Turkey to the Mediterranean port of Ceyhan.

Because of the complaints, the bank last year sought an independent review on whether oil, gas and mining projects contributed to its main mission of poverty alleviation.

Led by former Indonesian environment minister Emil Salim, the review recommended that the bank cease funding oil and coal projects because of environmental concerns.

The bank’s management will begin discussing its response this week. While a full withdrawal from such projects is unlikely, the review showed a greater sensitivity to the criticism from environmental activists and the anti-globalization lobby.

World Bank President James Wolfensohn said recently that failing to address the unstoppable population explosion in developing countries with sustainable and environmentally sound development projects and strategies would be disastrous.

The bank today has more than 100 environmental specialists on its staff compared to just one 15 years ago.

Johnson said current direct lending for environmental projects amounted to between 8 and 15 percent of the World Bank’s active portfolio.

World bank lending for environmental projects is expected to nearly double to $2.1 billion next year from $1.1 billion in 2003.

"The onus is on us to sort of prove the point that the environment does matter and therefore we should give it the seriousness with which it deserves," Johnson said.

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