IF-EYE Newsletter
Issue #37
Thursday, December 18, 2008
A publication of the Bank Information Center (BIC)
Welcome to the December 18, 2008 issue of the IF-EYE – the Bank Information Center’s monthly synthesis of key developments concerning international financial institutions. This issue spotlights a critique of the Phulbari Coal Project, BIC's comments on the second draft of the ADB's safeguards, and a BIC and Global Witness' report assessing the IMF and World Bank Group's Extractive Industries Transparency Implementation. Please send suggestions, contributions and subscription requests to: info@bicusa.org. Thanks for reading!
In this issue:
1. SPOTLIGHT: Phulbari Coal Project: critique of environment plans sets off alarms
2. SPOTLIGHT: BIC comments on ADB safeguards 2nd draft
3. SPOTLIGHT: IMF and World Bank need to bolster transparency measures in the extractive industries
4. Civil society updates
5. IFI updates
6. Announcements and Resources
7. New at BIC! BIC welcomes Josh Lichtenstein and Christian Velasquez-Donaldson
1. SPOTLIGHT: Phulbari Coal Project: critique of environment plans sets off alarms
12/11/2008 Bank Information Center; Nostromo Research, UK
A report commissioned by Bank Information Center titled "Phulbari Coal: A Parlous Project" written by Roger Moody of Nostromo Research, UK makes the case that the integrated Phulbari coal mine, coal rail-river transport and coastal coal offloading project in Bangladesh is of such dimensions that it would prove highly challenging to implement in any country. It poses not only numerous socio environmental problems, but also demands a highly sophisticated degree of regulatory adhesion, long-term monitoring and component implementation. The Asian Development Bank, which was actively considering funding the project until civil society organizations drew attention to its ill-prepared environment and social plans, would do well to support the development of a less controversial energy alternative for the country.
BIC’s objective in commissioning this report was to provide Bangladeshi and international civil society organizations with user friendly expert critiques of the environmental and social assessments prepared by GCM/Asia Energy.
Read the report "Phulbari: A Parlous Project", prepared by Nostromo Research, November 12, 2008 (Acrobat pdf, 368 KB)
Phulbari Coal Project page (BIC website)
Read more (BIC website)
2. SPOTLIGHT: BIC comments on ADB safeguards 2nd draft
12/4/2008 Bank Information Center
In April 2008, BIC provided extensive commentary on the first Consultation Draft of the Safeguard Policy Statement (SPS) of October 2007. BIC's commentary emphasized two themes. First, it expressed disappointment that the Asian Development Bank (ADB) had not used the SPS process to help define the next generation of best environmental and social practices for its peer development finance institutions. BIC noted that the Consultation Draft did not improve upon the existing standards of peer institutions in any notable way, and frequently adopted policies that lag far behind those of its peer institutions. Second, it noted that the Consultation Draft made little effort to align ADB policies with relevant international conventions, codes, action plans, soft law instruments, and sectoral ―best practice standards regarding economic and social development and environmental protection.
While the second draft strengthens ADB’s policy commitments in a number of areas, for the most part, concerns about the Consultation Draft have not been adequately addressed in the current version. Like the Consultation Draft, the current Draft seems to aspire only to an ad hoc harmonization with some of the policy commitments of ADB’s peer institutions. It continues to fall short of their environmental and social standards in a variety of areas, and does not adopt any standards that are more protective of environmental and social values than its peer institutions. Moreover, the ADB’s proposed approach to a Country Systems Strategy continues to introduce significant risks that standards will be diluted further.
Read ADB's 2nd Draft SPS from October 2008 (Acrobat pdf, 426 KB)
Read more (BIC website)
3. SPOTLIGHT: IMF and World Bank need to bolster transparency measures in the extractive industries
11/18/2008 Bank Information Center & Global Witness
According to a report written by the Bank Information Center and Global Witness, the International Monetary Fund (IMF) and World Bank Group are falling short in fostering fundamental measures of transparency in the oil, gas, and mining industries.
The assessment of IMF and World Bank Group engagement in 55 resource-rich countries revealed that while the institutions have made numerous commitments to strengthen transparency in the extractive industries in order to combat corruption, their application of these measures has been highly inconsistent and not comprehensive.
The study recommends that the two institutions should: make extractive industry (EI) transparency measures core criteria as progress indicators/program benchmarks for all resource-rich countries and EI projects, including disaggregated, project- and company-level extractive industry revenue disclosure; and public disclosure of EI contracts; and increase activities to ensure meaningful civil society engagement in the implementation and monitoring of EI transparency processes, including in oversight mechanisms.
Read the report: Assessment of International Monetary Fund and World Bank Group Extractive Industries Transparency Implementation, Bank Information Center and Global Witness, October 2008. (Acrobat pdf, 646 KB)
Read more (BIC website)
4. Civil society updates:
Over 160 CSOs issue joint statement calling for UN climate fund
12/11/2008 International Forum on Globalization (IFG) Climate Strategy Working Group
On December 11, 2008, at the United Nations climate talks in Poznan, Poland, over 160 civil society organizations (CSOs) from around the world issued a statement voicing support for the establishment of a major new Global Climate Fund under the United Nations Framework Convention on Climate Change (UNFCCC). Furthermore, CSOs in the statement support the demand that no funds outside the UNFCCC process, particularly those of the World Bank, be "counted toward binding commitments of financial support by developed to developing countries."
Read the joint statement: Towards a Global Climate Fund (IPS website)
Read more (BIC website)
Mass tribunal on WB, IMF, ADB in Bangladesh
12/2/2008 Mass Tribunal Preparatory Committee
On December 1 2008, an independent mass tribunal in Dhaka charged the World Bank, the International Monetary Fund, and the Asian Development Bank with offenses of causing damage to Bangladesh’s economy and society and asked the government to demand reparations from these institutions. The tribunal recommended that the accumulated losses in economic and social sectors due to lenders’ policies and activities should be calculated by a committee of experts and that the three agencies should pay compensations for their misdeeds. The government was also ordered to try the lending agencies’ local collaborators for carrying out anti-people activities.
Read more (New Age National website)
"Seeing REDD: forests, climate change mitigation and the rights of indigenous peoples and local communities - Update for Poznan (UNFCCC COP14)" - December 2008
12/1/2008 Forest People's Programme
The Forest People's Programme (FPP) has updated an earlier 2007 report on 'reducing emissions from deforestation and for degradation' (REDD), in an effort to try and capture some recent developments and critical issues. Note that this is an advance "draft" report and the final version may contain additions, corrections, or changes. This report contains information and updates on topics such as the UNFCC REDD discussions in 2007/2008; rights and accountability in international REDD finance; ongoing rights, equity, and accountability concerns; the local benefits potential of existing and proposed REDD initiatives; some views and recommendations of indigenous peoples and civil society; and concluding observations.
Read the report: Seeing 'REDD'? Forests, climate change mitigation and the rights of indigenous peoples and local communities, Tom Griffiths, Forest Peoples Programme, December 1, 2008. (Acrobat pdf, 725 KB)
Indonesian groups urge ADB to pull out from Citarum water program
12/1/2008 The Aliansi Rakyat untuk Citarum (ARUM) or The Peoples Alliance for Citarum
A network of West Java and Jakarta civil society organizations have uncovered serious flaws in the design of the Asian Development Bank's (ADB) Integrated Water Resource Management Investment Project (ICWRMIP) and are urging the ADB's Board of Directors to pull out from investing in the proposed project unless a "significant, meaningful, strongly and broadly supported re-assessment of the entire program is undertaken."
Read the update: Indonesian NGOs consolidate advocacy strategy on ADB's Integrated Citarum Water Resource Management Project (BIC website)
Read more (BIC website)
BIC releases brief on World Bank's climate change policy in South Asia
11/11/2008 Bank Information Center
This brief details the World Bank's climate change policy, different carbon funds, and the World Bank's climate change mitigation and adaptation work in South Asia.
The World Bank considers climate change an impediment to socioeconomic development and believes that failure to address the issue at the policy and project levels hampers its goals of poverty eradication and environmental sustainability. However, the World Bank Group’s longstanding commitment to financing carbon intensive development projects has raised serious questions about its climate strategy in the past and will continue to be an issue in the future.
Read the South Asia Climate Change Brief, Bank Information Center, November 5, 2008. (Acrobat pdf, 235 KB)
Read more (BIC website)
5. IFI updates:
West African Gas Pipeline comes online at last
12/18/2008 World Bank
Reuters reports that the World Bank-supported West African Gas Pipeline (WAGP) at last delivered its first gas to Ghana on December 11. The 680 km pipeline stretches from Nigeria, where the natural gas is sourced from the oil- and gas- rich Niger Delta, across Benin and Togo to Ghana. Benin and Togo will each take relatively small amounts of the fuel, with the bulk going to the industrial centers of Tema and Takoradi in Ghana. The initial 30 million cubic feet of gas per day is expected to help address recent power shortages in Ghana, which have forced some companies to suspend operations.
Read more (BIC website)
Ghana pipeline gets first Nigerian gas by Kwasi Kpodo, Reuters, December 13, 2008 (Forbes website)
Zambia dam among IFC’s first casualties of the financial crisis
12/16/2008 International Finance Corporation
According to Reuters, the World Bank’s private sector arm, the International Finance Corporation (IFC), reports that the proposed $1.5 billion Kafue Lower Gorge Dam in Zambia has been put on hold, as many investors shy away from major commitments in light of the financial crisis. While the IFC attributes the delay in part to technical considerations, the more likely scenario is that the precipitous drop in copper prices has caused financiers to reconsider.
Read more (BIC website)
As Yemen suffers from water crisis, Bank support for water sector hinges on private sector solutions
12/8/2008 World Bank
A recent meeting between the World Bank and the Yemeni Planning Minister focused on preliminary negotiations on a proposed water sector project. However, the central question remains whether the Bank is ensuring water access for the poor.
Read more (BIC website)
Uganda dam slammed by World Bank appeals body
12/3/2008 World Bank Inspection Panel
The benefits of the Bujagali Dam project, now being built by private companies on the Nile River in Uganda, have been overstated and its risks understated, according to a 17-month investigation by the World Bank Inspection Panel. Worse, most of those risks fall on Uganda – one of the world’s poorest countries – rather than the project developers.
Read more (BIC website)
Six months after audit report, IFC remains out of compliance at Karachaganak
11/21/2008 International Finance Corporation
Six months after the Office of the Compliance Advisor Ombudsman (CAO) found the International Finance Corporation (IFC) out of compliance with its own environmental and social norms in Karachaganak, there has still been no serious effort made by either the KPO - a consortium of oil companies, or the IFC to mend the situation.
Read more (BIC website)
New EBRD policy comes into effect
11/18/2008 European Bank for Reconstruction and Development
On November 12, 2008, EBRD’s new Environmental and Social Policy came into effect as planned, six months after it had been approved on May 12. Any new projects approved by the EBRD after this date will need to comply with the new policy which comes with important social safeguards and transparency provisions.
Read the EBRD's Environmental and Social Policy 2008, European Bank for Reconstruction and Development, May 2008. (Acrobat pdf, 689 KB)
Read more (BIC website)
6. Announcements and Resources:
Policy brief: IMF policy on the global food crisis 2008
12/1/2008 Bhumika Muchhala, Bank Information Center & Rick Rowden, Action Aid USA
This policy brief analyzes the IMF's Exogenous Shock Facility (ESF) which has been the main loan instrument used by the IMF to boost the lines of credit for developing countries during the global food crisis of 2008. In particular, it analyzes the macro-economic adjustments which were attached as conditionalities to these loans.
Read the policy brief: IMF policy on the global food crisis 2008, By Bhumika Muchhala, Bank Information Center and Rick Rowden, Action Aid USA, December 2008. (Acrobat pdf, 170 KB)
Issue brief: Bank of the South - December 2008
12/1/2008 Halifax Initiative
A year after the Bank of the South (BoS) was launched in Argentina in December 2007, the Halifax Initiative highlights this development institution for Latin America which was designed to be an alternative to the traditional IFIs. The article examines the Bank of the South's raison d'etre and its structure, and it provides a lay-out of the potential problems associated with this initiative, such as issues relating to voting power, policy focus, and capital contributions. With respect to the status of the BoS, the article suggests that in this time of financial crisis, when the IMF's influence seems to be on the rise again, the time is right for an initiative like the BoS to be a viable regional alternative to the IFIs. What remains to be seen is whether the BoS can live up to its original promise, or whether it will revert to the limitations of its IFI predecessors.
Read more (Halifax Initiative website)
7. New at BIC! BIC welcomes Joshua Lichtenstein as Latin America Program Manager and Christian Velasquez-Donaldson as Latin America Program Associate
Josh Lichtenstein joined BIC in October 2008. He has been an organizer and activist working on development and environment issues for more than twenty years. For much of the past decade he has worked in Central America with the Washington Office on Latin America and the EcoLogic Development Fund doing advocacy training and capacity building with the indigenous movement and working on conservation projects. He has worked on a number of campaigns around the IDB and the World Bank along with groups in Central America. Josh has a BA in Anthropology from Colombia University and an MA in Economics from Johns Hopkins SAIS.
Contact Josh at jlichtenstein@bicusa.org
Christian Velasquez-Donaldson joined BIC in October 2008. Previously, he had worked with the Regional Adviser on International Trade of the UN-Economic Commission for Latin America and the Caribbean (ECLAC) doing research on the private-public alliance for export development and economic strategies from Latin American and extra-regional case studies. He was a research fellow at the Institutions and Governance Program of the World Resources Institute (WRI) and the Institute for Advance Development Studies (INESAD), a Bolivian think tank, doing research on the Bolivian hydrocarbon policy before and after its nationalization, the sector’s fiscal policy and the internal allocation system of the sector’s revenues.
Contact Christian at cdonaldson@bicusa.org