Issue 4, April 2003

1.World Bank Looked to for Iraqi Reconstruction: Risks Reputation

2.New Report: Poverty Reduction or Poverty Exacerbation? World Bank Group Support for Extractive Industries in Africa

3.Project Finance Principles Welcomed With Caution

4.Baku-Ceyhan Fact-Finding Mission Detained in Turkey: Campaigners Call for Moratorium

5.Environmental Legacy of Ex-Im President Merrill Could Be Tarnished by Camisea Project

World Bank Looked to for Iraqi Reconstruction: Risks Reputation

At the World Bank's spring meetings, finance ministers and development officials from around the world endorsed a significant role for the World Bank in Iraq's reconstruction. But a recent leaked draft report from the Bank's own evaluation department shows the Bank should be skeptical about investing there. The report assesses how the Bank factors governance issues into its extractive industry operations, and concludes that the World Bank should not invest in countries with poor governance (see "Confidential World Bank Report Criticizes Extractive Industry Investment in Developing Countries" at: http://www.foe.org/camps/intl/news/issue3.03.html).

The report's finding that extractive industry investment leads to bad development outcomes in countries with poor governance should preclude the Bank from investing in Iraq's oil industry. "We all want to maximize development effectiveness and poverty alleviation in Iraq and elsewhere, and the Bank's lending operations should reflect this goal," said Steve Herz of Friends of the Earth. "This report should serve as a high-pitched warning as the Bank contemplates its role in Iraq."

For more information, contact Steve Herz at (202) 783-7400 ext. 122 or sherz@foe.org.

New Report: Poverty Reduction or Poverty Exacerbation? World Bank Group Support for Extractive Industries in Africa

A new report - sponsored by Friends of the Earth, Oxfam America, Environmental Defense, Catholic Relief Services and the Bank Information Center - examines the development impacts of World Bank-sponsored fossil fuel and mining projects in Africa.

FoE and other groups question whether the Bank is fulfilling its mandate of poverty alleviation through its efforts to increase foreign investment in the extractive industries. The report describes the challenges of resource-led development, and proposes a set of research questions that the World Bank must answer if it is to justify its continued investment in these sectors.

The report is available at: http://www.foe.org/res/pubs/pdf/pegg.pdf. For more information, contact Steve Herz at (202) 783-7400 ext. 122 or sherz@foe.org.

Project Finance Principles Welcomed with Caution

Four major investment banks have agreed to adopt a set of procedures and standards for project financing derived from the World Bank's private lending arm, the International Finance Corporation (IFC). Known as the "Equator Principles," Citigroup, ABN-Amro, West LB and Barclays' announcement has been met with cautious welcome from the community of NGOs active in the field of investment bank reform.

Friends of the Earth, the first NGO that the banks approached for feedback on the "Equator Principles," believes that they could be a significant beginning step, if adequately implemented. However, the "Equator Principles" currently do not have the accountability or transparency measures that would allow endorsing banks or the public to measure how effectively they are being implemented.

For a copy of the "Equator Principles" and further analysis, contact Michelle Chan-Fishel (510) 848-1155 ext. 315 or at mchan@foe.org.

Baku-Ceyhan Fact-Finding Mission Detained in Turkey: Campaigners Call for Moratorium

An international fact-finding mission of environmental and human rights organizations and Friends of the Earth's partners tracking the proposed Baku-Tbilisi-Ceyhan (BTC) oil pipeline was detained during a recent trip to Turkey. The group was followed by Turkish security forces throughout its trip, and was detained for several hours for questioning.

This detention and surveillance are the most recent in a series of events that call into question the ability for local people to be consulted about the project and express their opinions freely. In early March on national television, the Azeri president's son threatened people who oppose the pipeline project. The World Bank and many other public institutions are considering funding this pipeline. The atmosphere of repression surrounding the pipeline casts heavy doubt on the possibility of BTC adhering to the safeguards policies of the Bank.

The mission's full report will be released this week. For more information about the BTC pipeline, visit http://www.foe.org/camps/intl/institutions/bakuceyhan.html. For more information, contact Carol Welch at (202) 783-7400 ext. 237 or cwelch@foe.org.

Environmental Legacy of Ex-Im President Merrill Could Be Tarnished by Camisea Project.

The upcoming decision by Ex-Im President, Philip Merrill, on whether or not to finance the destructive Camisea fossil fuel project in Peru, could tarnish his environmental reputation.

The Camisea project involving the Bush administration's oil friends, Hunt Oil and Halliburton, is killing isolated indigenous peoples, degrading the Villcabamba tropical forests and is slated to build a gas export terminal in the Paracas World Heritage Site. "Whether its the Chesapeake Bay or a World Heritage Site in Peru, we don't want U.S. taxpayer dollars to harm the environment," said Jon Sohn, campaigner for Friends of the Earth.

Merrill is a former board member of the Chesapeake Bay Foundation and a visionary for the environmentally efficient Merrill Center, which houses the foundation. He prides himself on a lifelong commitment to the environment.

For more information, contact Jon Sohn at (202) 783-7400 ext. 231 or jsohn@foe.org.