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World Bank Preparing To Scrap Protections For The Environment, Indigenous People

August 9, 2016

also Concern over World Bank proposals to roll back safeguards for indigenous people

Moving news forward.
Jul 30, 20145 min read

World Bank Preparing To Scrap Protections For The Environment, Indigenous People

Activists protest plans to raise the height of the Sardar Sarovar dam in India. CREDIT: AP IMAGES

By Will Freeman

A leaked document from the World Bank says that the international lending organization is about to scrap key safeguards that protect indigenous peoples and the environment in their project sites. The World Bank, which lends up to $50 billion a year to developing nations, instituted the protective policies after several high-profile development projects in the 1980s and ’90s led to grave human rights abuses and environmental degradation.

The draft policy would allow countries receiving World Bank loans to “opt-out” of abiding by the organization’s rules protecting the rights of indigenous peoples. In response, a coalition of NGOs, activists, and community groups issued a statement to the World Bank warning that the proposed change in policy “represents a profound dilution of the existing safeguards and an undercutting of international human rights standards and best practice.” Even some of the World Bank’s top leaders have expressed reservations about the plan.

If the World Bank presses ahead with the changes, we could see repeats of flagrant abuses from the past that alienate more people than they help, leading to fierce criticism of the international financing system from the left at the turn of the century. Here are three of the World Bank’s past blunders the current safeguards would have prevented that are definitely not worth repeating:

1. The Dam That Displaced 300,000 In India

In 1985, the World Bank made a $450 million loan to the Indian government to build a massive dam in the Narmada Valley of Gujarat state. While Indian authorities and World Bank officials argued that the dam would provide irrigation and drinking water to millions, indigenous peoples living in the protested that the huge reservoir created by the dam would flood their homes and displace hundreds of thousands.

Working with a coalition of activists from across India, the residents demanded that the World Bank stop funding the dam. After the activists’ hunger strikes and civil disobedience attracted the attention of human rights advocates worldwide, the World Bank finally buckled under pressure and allowed an unprecedented independent review in 1991. The review board, headed by a top U.N. official, found that the World Bank had repeatedly broken its own guidelines and legally-binding agreements with the Indian states and called on the Bank to radically overhaul its plan for the dam. But the Bank decided to completely ignored the findings of its own review board, prompting the U.S. Senate Committee on Appropriations to join the calls for an end to the project. Under pressure from governments and activists around the world, the Bank finally agreed to withdraw from the project in 1993. However, in 2000, the Indian Supreme Court approved continued construction. To date, the dam has displaced 300,000 people. The World Bank’s indigenous peoples policy, now under threat of rollback, was instituted as a direct result of international outcry caused by the dam.

2. Palm Oil Plantations That Uproot Millions In Indonesia

Since the 1980s, the World Bank has invested over $2 billion in promoting the global palm oil trade. In Indonesia, which produces half the world’s palm oil, the World Bank funded a massive expansion of palm oil plantations over the past few decades. Now, Indonesia has the highest deforestation rate in the world. According to a report commissioned by the Bank itself, 70 million Indonesians live on or near state forest land, but with palm oil plantations quadrupling in area since 1990, the United Nations Environmental Program (UNEP) has predicted that Indonesia’s natural rainforest will be wiped out by 2032.

Throughout the ’80s and ’90s, the World Bank supported worked with Dictator Suharto’s to deliver one third of all forests to logging companies and another third to palm oil plantations. Only after years of devastation to local communities did the Bank conduct an internal review, which found that poverty skyrocketed throughout the 1990s. Indonesians trapped in the path of the encroaching plantations have reported earning less than half their previous wages after deforestation forced them to take up work on the plantations. Floods, landslides, and droughts also plague regions where forest has quickly disappeared. In 2009, louder and louder criticism finally forced the World Bank to place a two-year moratorium on new lending for palm oil investments. If the World Bank ditches environmental and human rights safeguards, however, palm oil giants won’t face any obstacles going forward.

3. Paraguay’s $15 Billion “Monument To Corruption”

Between 1979 and 1988, the World Bank shelled out $210 million to help build another huge dam on the Argentina-Paraguay border. The Bank signed on with a plan devised by Paraguay’s then dictator, Gen. Alfredo Stroessner, to turn the poor, landlocked nation into an “energy superpower” by building the huge hydroelectric dam. When construction began in 1983, however, demand for electricity lagged 25 percent behind the original forecast, calling into question if the dam should even be built. The World Bank forged ahead anyway. An internal audit concluded “the Bank did not act decisively when confronted with the facts” but instead “accepted repeated violations of major covenants.” The Bank lost nearly $11 billion on the project by 1996 and the dam only operated at 60 percent of its capacity a few years later. But the costs to the local population were even worse.

In the end, 100,000 poor and indigenous people on both sides of the border were displaced and fish populations were decimated, destroying many locals’ primary source of income and food. While the Bank promised to compensate the displaced, many have still not seen a cent. “Not a single business was created to give people real jobs, either on the Argentine side or on our side,” said Jorge Urusoff, a resident of Encarnacion. People living on the edges of the giant reservoir created by the dam are still haunted by sewage-contaminated water that has upped the risk of malaria and other diseases in the area. Argentina’s president throughout the ’90s, Carlos Menem, called the dam a “monument to corruption,” and today the name sticks.


If the World Bank drops basic safeguards, disasters like these are bound to repeat themselves. “The Bank’s policy review is an opportunity for the World Bank to finally make itself accountable on human rights,” said Jessica Evans, a researcher with Human Rights Watch. “If the Bank’s board allows the draft policy to go out without fixing these major flaws, it sends a message that respect for human rights remains discretionary at the Bank.” This is not what international development should look like.


Concern over World Bank proposals to roll back safeguards for indigenous people

Dana MacLean/IRIN
BANGKOK, 3 September 2014

Activists warn of a harmful regression in the World Bank’s safeguard policies, claiming that proposed changes being considered this autumn could weaken the rights of indigenous people, and others in danger of displacement and abuse as a result of Bank-funded development projects.

"This [version of the safeguards] will be dangerous backsliding into their bad legacy of treatment against indigenous people if it is approved," said Joan Carling, secretary-general of the Asia Indigenous Peoples Pact (AIPP), a network that operates in 14 Asian countries.

According to the World Bank, "the proposed Environmental and Social Framework builds on the decades-old safeguard policies and aims to consolidate them into a more modern, unified framework that is more efficient and effective to apply and implement."

However, campaigners say the current draft dilutes the protective promise of the safeguards and fails to include indigenous rights considerations in projects funded by the World Bank by obtaining "free, prior, and informed consent" for development interventions. The proposed changes, including an "opt out" policy, could leave development decisions solely at the discretion of governments.

"In order for grievance mechanisms to work, environmental and social standards need to be clear and prescriptive," said Kristen Genovese, a senior attorney with the Center for
International Environmental Law (CIEL), a Washington-based watchdog.

Other adjustments suggest a broader attempt to roll-back responsbilities: "The elimination of clear, predictable rules also appears to be a clear attempt by the Bank to avoid accountability for the negative impacts of projects that it funds," BIC said.

With more than US$50 billion in development aid at risk of being funnelled into projects that could forcibly evict, displace, or fail to adequately compensate communities for resource losses, pressure is mounting on the Bank as board meetings begin on 3 September.


The pending amendments retain the requirement for project-affected peoples’ "free, prior and informed consent" to relocate; proper compensation; labour rights of workers; and non-discriminatory development. However, the draft includes options for the Bank’s non-compliance, which leaves it for governments to decide how to proceed with projects – including by ignoring indigenous people.

"Allowing [governments] not to recognize groups [as indigenous] is incredibly problematic particularly when we know the history of government violating indigenous peoples’ rights," said Jessica Evans, senior researcher on international financial institutions at Human Rights Watch’s (HRW).

According to the UN Declaration on the Rights of Indigenous Persons ( UNDRIP), indigenous people are those who maintain historical continuity with pre-colonial groups, have strong relationships with natural resources and land as the basis of their cultural and physical survival, and self-identify themselves as indigenous as part of their belief systems which differ from the dominant society.

While UNDRIP has been adopted by 143 countries, domestic implementation has been limited. The draft safeguards give governments a loophole to escape recognition of indigenous persons when it comes to Bank-funded development interventions status if it causes conflict or goes against the constitution of the country.

According to a 30 July statement from the Bank about the proposed safeguards draft, indigenous status can be opted out of "in exceptional circumstances when there are risks of exacerbating ethnic tension or civil strife or where the identification of Indigenous Peoples is inconsistent with the constitution of the country…"

"Setting the standard is something an institution as powerful and influential as the World Bank should be considering as mandatory, rather than optional."

As the draft safeguards go under review by the Bank’s board, activists warn that without major reform to the draft, consultations with indigenous groups when designing and implementing development projects have little meaning.

"If they provide the opt out option for recognizing indigenous groups, indigenous people will suffer adverse impacts," warned AIPP’s Carling, adding that government refusal to acknowledge the indigenous status of many ethnic minorities can be a contributing factor to statelessness, poverty and forced relocation.

A history of abuses

A root concern about the proposed safeguards is that they shift the onus for environmental and social responsibility away from the Bank and onto borrowing governments, which means funds could go to states already notorious for land grabs, corruption and human rights violations.

In recent years researchers have documented cases of forced evictions in poor communities as a part of World Bank-funded projects.

For example, in East Badia, a community in Lagos, Nigeria, Amnesty International reported that 9,000 people had their homes razed to make way for luxury apartments. In Colombo, Sri Lanka’s capital, up to 135,000 families will be relocated in the next three years to make way for urban development, the Centre for Policy Alternatives (CPA), a Sri Lankan NGO, argues.

In East Badia, community protests against the razing of homes met all of the requirements to trigger the safeguards for a full World Bank investigation. However, the Bank’s eight-member board instead decided to institute a pilot project for resettlement which compensated communities one-third below the market rate for informal housing in Lagos.

"The compensation was so low it did not enable them to live anywhere else except another slum or precarious accommodation which will put them in danger of being forcibly evicted again," said Alessandra Masci, Amnesty International’s senior analyst for business and human rights, and lead advocate for the report on Lagos.

The Bank’s pilot, implemented in November 2013, was in line with the new direction of the bank (and the draft safeguards currently under consideration), in which vague language creates flexibility in decision-making for the Bank and the borrower government – leaving the poor to fend for themselves, analysts say.

"Banks and panels are standing back and leaving communities completely alone to deal with entities much more powerful than them," explained Masci.

In the case of Sri Lanka, the government, armed with US$213 million of World Bank loans, will forcibly relocate an estimated 300,000 people under the Metro Colombo Urban Development Project (MCUDP), according to CPA.

A commitment to ending poverty?

Critics warn that without airtight safeguards for vulnerable people, the rights of indigenous groups will continue to be violated by development projects, and undermine the very target the Bank has set for itself: to end poverty.

While indigenous people comprise 5 percent of the global population, they make up 15 percent of all people living beneath national poverty lines globally, according to the UN.

"In order for grievance mechanisms to work, environmental and social standards need to be clear and prescriptive," said Kristen Genovese, a senior attorney with the Center for International Environmental Law (CIEL), a Washington-based watchdog.

Some fear that growing competition in international lending – with the emergence of Chinese and Japanese development banks, the Asian Infrastructure Investment Bank, and the BRICS bank – may stoke a fear of losing clients and trigger a race-to-the-bottom panic. Experts argue that the World Bank should see its safeguards as an opportunity to assert its position as a global leader.

"Competition is good. It means more finance for development," said HRW’s Evans. "The Bank could show other lenders best practices and be a model development bank."

Sophie Chao, a project officer with the Forest People’s Programme (FPP), a Netherlands-based indigenous and environmental rights organization, said: "Setting the standard is something an institution as powerful and influential as the World Bank should be considering as mandatory, rather than optional."

Carling asked: "If their main target is to address poverty – if not for the poor, who is development really for then?"

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