World Bank Criticised over Oil Projects Funding
By Mike Oduniyi, with agency report
The World Bank has come under attack for its alleged lukewarm treatment of the recommendations of the report by Extractive Industry Transparency Initiative, which in part called on the bank not to fund oil projects further.
The bank whose self-declared mission is "to fight poverty and improve the living standard of the people in the developing world" this week paid lip service to the Extractive Industry Review, but embraced little of the report's controversial recommendations.
This turned out to be somewhat embarrassing for the world bank. It's Chairman and President, James Wolfensohn, commissioned the EIR back in 2002, and former Indonesian Enviroment Minister, Emil Salim was appointed to front the effort.
After three years of research, the report caused a stir when it was published. Among other things, it called for the bank to withdraw from all investment in oil, gas and coal projects within five years.
Wolfensohn was right to reject the radicalelements of the report -a complete withdrawal from oil and gas developments would do far more harm than goodfor impoverished countries - but he have, and should have, embraced more of the sober suggestions.
A statement from the World Bank this week suggested that management has "broadly agreed" that the independent EIR and internal reports on its investments in oil, gas and minning sectors represented "a balanced way forward"for the institution.
But the bank then flatly rejected some of the primary recommendations, and it clearly experienceddiffiulty in reaching concensus on the issue. The statement continued: "Board members expressed a wide range of views on specific issues in the draft management response and, in response, the manageent agreed to refine language on some issues and submit a final of the version of the text in the next few weeks."
Inevitably, the management's proposal to the board indicated that it would continue to invest in oil, gas and mining production, as these projects will continue to play a key role in the development of many poor nations.
"The proposals of management are built around the central theme that our investments and policy advice in the extractive industries should benefit the poor first and foremost", Wolfensohn said.
Environment and human right activits were far from impressed. "The World Bank has ignored the EIR recommendations and endorsed business as usual", complained Jon Shon of Friends of the Earth."The EIR called for an extreme energy makeover and the World Bank opted for a cheap pedicure. it has missed a historic opportunity to brings its lending more in line with its mission to alleviate poverty".
While this seems an overly harsh judgment, critics do rightly point out that Wolfensohn and his team should have given their backing to the EIR's recommendation that the World Bank require that its projects respect human rights and establish a consent mechanism for affected communities.
Some good did come from the review, however, with numerous proposals being made by management. Among other measures, the bank will seek to develop new indicators of project specific poverty reduction impacts; and it seeks to put increased emphasis on natural gas projects and in the renewable energies sector, where it aims to grow its portfolio by 20% per year over the next five years.
The Bank has also endorsed the Extractive Industries Transparency Initiative and is pressing for a more systematic approach to disclosure of revenues. It will begin requiring disclosure of revenue figures for new major extractive industries projects immediately and for all projects within two years.
Wolfensohn summed up the situation with a strong argument: "The harsh reality is that some 1.6 billion people in the developing countries still do not have electricity and some 2.3 billion people still depend on biomass fuels that are harmful to their health and the environment. That underscores the need for our continued, but selective, engagement in oil, gas and coal investment".
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