MAC: Mines and Communities

Pressure Rises on World Bank on Funding for Mining

Published by MAC on 2004-02-13

Pressure Rises on World Bank on Funding for Mining

Bob Burton, IPS

February 13th 2004

World Bank President James Wolfensohn has come under increased pressure, in the wake of a call by five Nobel Laureates, including Archbishop Desmond Tutu, for him to embrace proposals from an internal review that would set much higher standards before financing would be provided to the mining, oil or gas industries.

At a meeting in Melbourne Thursday evening, Wolfensohn was presented with a Feb. 9 letter from the five -Archbishop Tutu, Jody Williams, Sir Joseph Rotblat, Betty Williams and Mairead Maguire - urging him to adopt the recommendations of the Extractive Industries Review.

"We urge you in the strongest possible terms to embrace the spirit of the report and accept the recommendations in their entirety when devising a strategy for moving forward," they wrote.

"War, poverty, climate change, greed, corruption, and ongoing violations of human rights all of these scourges are all too often linked to the oil and mining industries. Your efforts to create a world without poverty need not exacerbate these problems. The Review provides you an extraordinary opportunity to direct the resources of the World Bank Group in a way that is truly oriented towards a better future for all," they wrote.

Their letter keeps up the pressure on the Wolfensohn and the World Bank to adopt the advice of the Review, days after reports were leaked of a draft Bank reply indicating plans to reject the review's main recommendations.

The Extractive Industries Review (EIR) was initiated at the 2000 World Bank Annual Meeting in Prague by Wolfensohn, to assess whether support for extractive industries was consistent with the bank's goal of poverty alleviation.

The final report of the review team - which was headed by former Indonesian environment minister Emil Salim - was presented to the World Bank on Jan. 16.

At the Melbourne meeting, Wolfensohn distanced himself from an internal report that was leaked last week in which bank staff dismissed key recommendations of the EIR report.

Kate Walsh, campaigner with the Sydney-based watchdog group Aidwatch, said Wolfensohn was quizzed on the topic at a meeting of Australian Council for Overseas Aid (ACFOA) member groups. "He is clearly critical of the management report, which he said was poorly written and not very well researched," she said.

A spokesman for the World Bank confirmed this and that there will be a further round of consultation. "That leaked report does not represent the final Bank view of the EIR report as there will be further internal and external consultations à Given the importance of the topic we will take as long as necessary to get it right," he said.

The EIR report recommendations are bitterly opposed by the mining, oil and gas industry. A key recommendation of the final report is that project proponents be required to obtain prior informed consent of affected local communities and indigenous peoples. It is a recommendation that has been strongly advocated by community development and indigenous groups.

However, it is a proposal opposed by the global mining industry lobby group, the International Council on Mines and Metals (ICMM), which represents companies including Mitsubishi, Nippon Mining, Sumitomo, BHP-Billiton and Rio Tinto.

In mid-December 2003, the ICMM dispatched a submission to Salim opposing his support for prior informed consent and arguing that the World Bank should leave it to governments to decide.

"ICMM believes the Report should à confirm that it is the role of governments to define how mining decisions are to be made in the best interests of the nation and of Indigenous Peoples, taking into accounts the human rights conventions to which they are committed," they wrote.

But Matilda Koma, campaigner for the Papua New Guinean non-government organisation Environmental Watch Group, argues that the recommendation supporting prior informed consent is fundamental to reforming mining practices.

"It is a way of respecting local and Indigenous peoples' culture or way of life, particular in areas where land resource ownership is paramount to the people," she wrote in congratulating Salim on his recommendation.

Koma argues that not only should the World Bank adopt standards governing prior consent, it should also ensure a grievance procedure is included.

Noting government and mining industry opposition to prior informed consent, World Bank staff reviewing Salim's review preferred only that additional work be done "expanding awareness of the human rights dimension of World Bank Group policies".

Salim's recommendation that the World Bank's phaseout of the funding of oil and gas projects by 2008 has horrified the oil industry.

In a January 2004 submission from four major oil companies -- Shell, BP, the International Association of Oil and Gas Producers and Norsk Hydro -- argued that while World Bank involvement in the sector was relatively minor, the recommendations would have a major ripple effect.

An end to World Bank funding, they argued, "would be perceived by many external observers as a 'seal of disapproval' for oil development in general. If implemented it would threaten the industry's 'social licence to operate'.

"As such it could likely add significantly to the cost of borrowing by entities, including governments engaged in oil development and would be seen by many as reason for not investing in oil stocks for ethical reasons," they complained.

According to Walsh, Wolfensohn has already made up his mind not to exclude funding for coal and oil projects. "He was really opposed to the idea of a phaseout of coal and oil,"' she said.

Despite this, she is hopeful that the global community campaign that resulted in Salim's strong recommendations will continue to build and blunt the mining industry lobbying campaign. "We welcome his commitment to further consultation and will be stepping up the campaign to push them to accept all the recommendations in the final review report," she said.

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