Multinational Monitor

NOV 2003
VOL 24 No. 11


Smokescreen: Fire, Forests and the Bush Administration’s "Healthy Forest" Plans for Increased Logging
by Orna Izakson

Writing Off Indonesia’s Forestry Debt: How the IMF, the Indonesian Bank Restructuring Agency and Bank Mandiri are Financing Forest Destruction
by Chris Barr and Bambang Setiono

The Politics of Parks: Indigenous Peoples Assert Their Rights Against Mining, Markets and Tourism
by Marcus Colchester

From Worst to First: Under Pressure, Boise Cascade Agrees to Stop Logging Old-Growth Forests
by Jeff Shaw


Public Lands and the Public Good: Firefighting, Outsourcing and Other Threats to Sound Public Land Management
an interview with Andy Stahl


Behind the Lines

The World Bank and Forests: Here We Go Again

The Front
Tanzania: Planning for Poverty - Ill Feelings at HealthSouth

The Lawrence Summers Memorial Award

Names In the News



The World Bank and Forests: Here We Go Again

Imagine you are a parent of a 4-year-old child. You have a policy that your child shouldn't run into the middle of a heavily trafficked street. But he keeps doing it anyway, injuring himself and causing numerous accidents as cars swerve to avoid him.

Do you:

a) work to find a better way of enforcing your policy; or

b) decide that it is OK for your kid to run into the middle of the road, now that you have adopted a new, revised policy urging him to look both ways before running into the busy street?

If you are like most parents, you go for option A.

If you are the World Bank, it seems, you go for option B.

At least that's how the World Bank had handled its problems in the forestry sector.

In 1991, the Bank adopted a precautionary forest policy that proscribed lending for logging in primary tropical moist forests and mandated the Bank consult with indigenous peoples living in forests on projects that would affect them.

A decade later, it was apparent the Bank had not followed this admirable policy.

So the Bank junked it.

In late 2002, the Bank adopted a new Forest Policy and Strategy. Among other components, the new policy removes the ban on financing of commercial logging in primary tropical forests. The new policy contains no new protections for forest peoples, except a reliance on poorly defined forest certification schemes (the idea is that certifying agencies will provide assurances that funded projects are being carried out in a sustainable fashion).

The old policy, says the Bank in a booklet summarizing the new policy, was "guided by a ëdo-no-harm' principle that focused largely on environmental issues and on pure protection options." The result, the Bank complains, is that the Bank was constrained from engaging the forestry sector (in fact, as environmental groups point out, the Bank throughout the 1990s financed numerous projects with devastating effects on tropical forests) and tropical forests have continued to be destroyed at a rapid pace. The solution offered by the new policy is "responsible engagement."

Responsible engagement for the Bank means facilitating effective markets for forest products and services. This includes clearly desirable elements -- such as eliminating illegal logging -- but the Bank's commitment to pursue anti-corruption and good governance remains questionable. Marketizing the forest also means supporting logging and commercial operations in forests, and here there is little doubt about the Bank's enthusiasm, including from its International Finance Corporation, which invests directly in private sector projects in developing countries.

Environmental Defense, Friends of the Earth and the International Rivers Network have characterized the Bank's new forest policy as part of a new impetus at the World Bank to support high-risk projects (and including renewed support for large dams and loans and investments for oil, mining and gas projects).

"The Bank has promoted large-scale high-risk projects, correlating risk with potential reward," the groups argue in a September 2003 report, "Gambling with People's Lives." "While this relationship may hold true for individual investors buying high-risk shares or bonds, there is no evidence to suggest this is a valid approach for the promotion of sustainable development." In fact, they argue, "small-scale, locally based projects are more sustainable and better targeted to the needs of the poor."

But such projects do not excite the lenders and investors at the Bank. They like the big stuff. And they like playing with the multinational corporations, not troublesome indigenous peoples.

The Bank in October hosted a "Forest Investment Forum" for senior execs of forest product companies and others. What excited them were the big investment opportunities: "There is considerable likelihood of expanded investments in the forest sector in many developing regions of the world; major prospects among these are in Russia, China, Brazil and India," stated the Forum's "Outcome Statement."

Absent from the Forum were indigenous peoples representatives. Relatedly, and not surprisingly, reference to forest peoples is almost wholly absent from the Forum's Outcome Statement.

It has long been clear that protecting forests in developing countries is a very complicated matter, requiring a wide-range of policy interventions, and not just directly in the forestry sector. For example, really protecting forests will require cancellation of developing countries' foreign debt (to relieve pressures to export logs to earn foreign currency), and implementing land reform within these countries (so that landless rural people do not encroach on forests). But one thing that is perhaps most clear is the crucial importance of honoring forest peoples' historic success at maintaining forests, protecting their land rights, and engaging them centrally in any projects related to forests in which they reside.

The Bank's failure even to include forest peoples at its Forest Investment Forum, and its eagerness to embrace commercial logging in tropical forests, do not auger well.

The good news, as the environmental groups point out in their report, is that "the World Bank will find it difficult to actually implement its high-risk strategy. Local communities, social movements and non-governmental organizations are better organized today than they were 10 years ago."

And they won't stand by idly while the Bank gambles with peoples' lives and the planet's crown jewel natural resources.



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