Multinational Monitor

MAY 2002
VOL 23 No. 5


East Meets West: European Union Expansion and the Troubled Former Communist Countries
by Tony Wesolowsky

Chernobyl Fallout: The Uncertain Future of Ukraine’s K2/R4 Nuclear Project
by Olexi Pasyuk

Pipeline Dreams: The World Bank, Oil Development and Environmental Protection in Georgia
by Manana Kochladze

Bank Accountability Redux: The Campaign for Compliance and Appeal Mechanisms at the European Development Banks
by Petr Hlobil

Fate of the Forests: Will the World Bank Replicate Amazonian Failures in Central and Eastern Europe?
by Jozsef Feiler


Countering the New Masters: Central and Eastern European Workers Struggle to Hold Their Ground in Hard Economic Times
an interview with
Jasna Petrovic


Behind the Lines

Restraints for the World Bank and IMF

The Front
Shredded: Justice for BAT - Enron Associates

The Lawrence Summers Memorial Award

Names In the News


Fate of the Forest: Will the World Bank Replicate Amazonian Failures in Central and Eastern Europe?

by Jozsef Feiler

“The Romanian forest remains host to a full range of European forest biodiversity, including top predators that are either extinct or rare in other parts of their former range. Approximately 60 percent of all European brown bears and 40 percent of wolves and lynx occur in Romania.”

So says the Environmental Assessment Report of the Romanian Forest Development Program, a World Bank project now under preparation.

But acknowledgement of the forest’s unique environmental value has not stopped the Bank from boring full-speed ahead with its support for the project.

According to the Bank, the declared objective of the project is “to increase the contribution to the national economy from the sustainable management of Romanian forest resources.”

The project has three main components. First, it devotes $11 million to support the newly established forestry inspectorates and establish a forest monitoring system. Second, it allocates $3.4 million to help the ongoing forest restitution process, through which land is being returned to its pre-communist era owners. Finally, it provides a $26.5 million capital injection into the National Forest Administration (NFA), the public company managing state forests. The NFA monies will support a “pilot project” of the reconstruction of roughly 500 kilometers of forestry roads, as well as the construction of approximately a hundred kilometers of new roads in state-owned forests. Along with European funding, NFA officials intend to use these and future World Bank loans to construct in total more than 1,000 kilometers of new forestry roads in coming years.

The World Bank rates the projects as posing a high degree of environmental risk — designating it environmental Category A, the top category, but Bank documents say the project has “the potential for a significant and beneficial environmental impact.”

The staff responsible for the project preparation say the current forest restitution process risks serious environmental degradation without proper advisory and law enforcement services in place. They also argue that the forest road-building component will benefit the environment by shortening skidding distances, the distance over which tree trunks are dragged on non-paved tracks and thus cause soil erosion. They explain that road building will be done according to a best practice guideline which helps to avoid harmful environmental consequences of the construction.

A coalition of Romanian environmentalists has formed to oppose the project, charging that Bank safeguards will do little to alleviate damage, and that road-building will intensify deforestation. In January 2002, the environmental non-governmental organizations (NGOs) published a document criticizing the project titled “Comments on the Romanian Forestry Development Program.” At stake, they believe, is the future of Romania’s forests, and maybe even those of the entire region.

Corruption and Construction

Above all, say the NGOs in a letter to the board and president of the World Bank, the extreme and thorough corruption of Romanian government agencies precludes any forest protection safeguards from succeeding.

“Once, the Romanian National Forest Administration (NFA) had significant organizational capacity with excellent specialists, detailed management plans and sufficient funds,” they write. “Now, the picture is completely different. Since 1990, the system has been very chaotic and corrupted. According to the media, NFA is one of the most corrupted authorities in Romania. As long as the problem of corruption is not properly addressed, the project has hardly any chance of success. The most effective way to increase income from the forestry sector would be to combat the corruption, not to increase harvesting.”

Romania is ranked 69 out of 91 countries on Transparency International’s corruption perceptions index, with lower rankings signaling a higher level of corruption. The country receives a 2.8 score out of 10 on Transparency International’s corruption perceptions index.

A 2001 World Bank survey of corruption in Romania reaches similar conclusions, providing details of pervasive bribery. “Thirty-eight percent of public officials reported that they had been offered a gift or money during the previous year,” the report finds. “Twenty-eight percent and 42 percent of enterprises and households, respectively, reported that they either were made to feel that a bribe was necessary or directly offered bribes or atentie (“attention”) to various public officials during the previous 12 months.”

The World Bank now estimates that illegal logging totals 5 percent to 20 percent of all timber cutting in Romania. A 1999 working paper concluded, “It became a mass phenomenon and very often forestry guards were threatened, beaten or even killed. None of the criminals were ever caught. Yet, forestry guards were not allowed to have arms. Illegal logging was tolerated by the NFA, and later on it was allegedly promoted by the same authority.”

However, the available Bank documentation for the Forest Development Program does not address the corruption plaguing the forestry sector, except for a concern that money from the project should not be siphoned off.

The regulators who are supposed to enforce logging regulations receive far too little support to change tree-cutting practices, say Romanian environmentalists. Even with the support of the World Bank loan for equipment and for undertaking a high-tech forest inventory, the Forestry Inspectorates will be understaffed, underpaid and unlikely to perform well, the environmentalists say.

They also worry that the Forest Department, in which the Forestry Inspectorates are located, was moved during the project preparation period from the environmental ministry to the Ministry of Agriculture. Now the ministry oriented to using the forests to generate revenues controls the institution which is supposed to protect forests and the rule of law, even if it is in conflict with economic interests. “Wolves in charge of the sheep,” one Bank staff admitted privately.

The most significant NGO concern with the project itself is the forest-road component, which is the dominant part of the project. Environmentalists view roads as the biggest enemies of forests, since they make once-remote trees accessible to loggers. If Romanian authorities construct a forestry road network as dense as in Austria, say the Romanian environmentalists, then Romania will have forest biodiversity as poor as Austria.

The Bank says the loan will only be used to repair damaged roads and to extend existing roads in production forests. But environmentalists say these investments will simply increase the efficiency of forest destruction, and have nothing to do with the alleged goal of shortening skidding distances. The Bank’s capital injection will also free up NFA’s road construction budget to build roads in other areas, potentially including virgin forest.

Romanian environmentalists say the Bank has failed to address these and other basic environmental issues. They dismiss the Bank’s 350-page environmental impact assessment as a shoddy piece of work. The document provides no information on the exact location of the planned roads, no assessment of biodiversity impacts, and barely mentions that these roads will spur the logging of mature forests.

The assessment only examines the impacts of two roads out of 74. It suggests road-specific environmental assessments take place only after the project is approved and the road list is final. Environmentalists believe this approach turns the whole assessment into a rubberstamping exercise, since the project will not be able to be revised in light of the environmental impact assessment’s findings.

The environmental assessment calls for an approval process which is “very focused, streamlined and reduced in scope relative to World Bank” standard operating procedure. Streamlined review is not supposed to be available for Category A environmentally threatening projects.

Rubber Stamp Worries

Despite the concerns, the Bank is seeking to rush the project to approval, without slowing to follow Bank procedures, consult locally or even make key documents available to Romanians.

During project preparation, the Bank consulted only three NGOs. Of the 17 groups that have criticized the environmental impact assessment, not a single one even knew about the project during its planning phase.

In November 2001, when NGOs tried to obtain the Romanian version of the study, the external affairs office of the World Bank’s local office in Romania wrote that, “the translation is on-going and going fairly slow as it is a difficult, long document.”

In December, Romanian authorities promised NGOs a place on the Project Monitoring Committee and full transparency in exchange for ceasing their criticism. They declined the offer, vowing instead to continue raising questions about a project threatening a vital Romanian resource.

As a Christmas present, CEE Bankwatch, working in collaboration with Romanian NGOs on the project, received an official protest from the Romanian Minister of Agriculture and Forestry, expressing his view that statements about the project, posted on Bankwatch’s website, were incorrect and inappropriate.

In January, environmentalists prepared a consolidated document with detailed comments outlining concerns about the project.

Meanwhile, for unclear reasons, the project has been repeatedly delayed — giving opponents hope that the dangerous initiative may still be derailed.

In March 2002, the Bank assigned a new task manager to the project. In March 2002, in Brassov, Romania, NGOs, Bank representatives and Romanian authorities met to discuss the project. This time, Romanian authorities made available the draft Project Appraisal Document — the first document available which contains accurate information about the project — providing a basis for meaningful dialogue.

The Project Appraisal Document reveals that foreign companies would be able to bid for road building contracts along with Romanian companies. The project support for road construction is supposed to transfer best practices in forestry road building to Romanian companies, leading some to ask how this knowledge transfer will occur if local companies do not get contracts.

The Bank staff followed up the meeting with a detailed note, explaining that they do not want to commission a new Environmental Assessment. Instead, they intend only to make improvements to remedy serious flaws so that the document can comply with relevant Bank procedures. These “improvements,” however, would come after World Bank board approval of the project.

This proposal leaves environmentalists worried that the Bank’s approach will be to tinker with the existing flawed documents, then rubber stamp them and rush headlong into a project that may decimate Romania’s forests.

Compounding the problem, similar forestry projects are under preparation in Georgia and in Bulgaria, giving rise to fears that the Bank may do to Eastern European forests what it did to the Amazon, with countless hectares of virgin forest sacrificed as a result.

Joszef Feiler is policy coordinator for CEE Bankwatch Network and international coordinator of Friends of the Earth-Hungary.


Mailing List


Editor's Blog

Archived Issues

Subscribe Online

Donate Online


Send Letter to the Editor

Writers' Guidelines