World Bank's pipeline to disaster
BY SEAN HEALY
The following article is an updated version of a piece that appeared in the 7 June issue of Green Left Weekly, a progressive Australian newspaper, available online at www.greenleft.org.au/ We are grateful to Sean Healy and all at Green Left for their kind and comradely assistance.
Having given up on getting the World Bank to comply with even its own environmental and social development policies, 200 non-government organisations from 55 countries have called for the institution to withdraw altogether from financing oil, gas and mining projects.
The 200, including Friends of the Earth and many grassroots organisations in Third World countries directly affected by such projects, issued a joint platform during the 16 April Washington DC protests against the World Bank and International Monetary Fund, arguing: ``Nowhere is the incompatability of environmental destruction and poverty alleviation more evident than in the World Bank Group's investments in the extractive industries: oil, gas and mining.''
The World Bank's oil, gas and mining projects, the platform states, ``enable wealthy multinational corporations to extract resources and profits from poor countries, leaving poverty in their wake. They fuel global climate change, pollute the environment and lead to deforestation. Even worse, extractive industries have further entrenched corrupt and dictatorial regimes, and exacerbated human rights abuses.''
In 1999, the World Bank Group lent 3.8% of its total portfolio for oil, gas and mining projects. Its private-sector arms, the International Finance Corporate (IFC) and the Multilateral Investment Guarantee Agency, which work hand-in-glove with the big transnational corporations, lent 16% of their total portfolio for such projects.
Leverage
At the top of the list of the NGOs' concerns is the Chad-Cameroon oil pipeline project, which involves drilling 300 oil wells in the southern Doba region of Chad, then pumping the oil along a purpose-built 1100-kilometre pipeline to Cameroon's Atlantic coast at Kribi. The project is anticipated to produce 225,000 barrels of oil each day.
The COTCO/TOTCO consortium, which will run the project, comprises ExxonMobil, the world's largest oil company, with a 40% share, the Malaysian oil company Petronas, with 35% and US oil giant Chevron, with 25%.
ExxonMobil and Chevron have appalling environmental and human rights records. Chevron is currently being sued in US Federal Court for violations of international human rights law over its complicity in Nigerian police killings at its oil facilities in the Niger River delta. Besides its long history of oil spills, ExxonMobil has been implicated in murders of local people at its sites in the Doba region.
The World Bank Group board announced on 6 June its intention to fund the pipeline project, describing it as ``an unprecedented framework to transform oil wealth into direct benefits for the poor, the vulnerable and the environment''. The Bank will loan $93 million to the two countries to finance their equirty share in the project and a $100 million International Finance Corporation loan to the joint-venture pipeline corporations. The IFC will also mobilise up to $300 million in syndicated loans from commercial banks.
ExxonMobil made it clear from the initial stages of the project that World Bank involvement was crucial to the project going ahead for two reasons: IFC involvement would allow the recruitment of other multilateral and private lenders and the World Bank is at the centre of the consortium's political risk management strategy.
Chad and Cameroon are deeply in debt and are dependent on World Bank goodwill for further aid and loans. The consortium hopes that such ``leverage'' will ensure that neither government interferes in its business.
Devastating
NGOs in Chad and Cameroon say the project will be environmentally and socially devastating.
The Doba region is at the centre of escalating conflicts between the area's largely Christian and animist inhabitants and the Muslim government in the north, over demands for southern self-rule. The Chadian military has killed hundreds of civilians in the region, including massacres in November 1997 and March 1998 which the government has refused to investigate. The unrest means that adequate environmental impact surveys have not been able to be conducted along large sections of the Chadian pipeline.
In Cameroon, the pipeline traverses major rivers 17 times, passes through areas inhabited by the Baka and Bakola pygmy peoples and cuts into the country's Atlantic littoral forest. According to a report by the US-based Environmental Defense, the pipeline, and attendant roads and construction sites, will threaten loss of biodiversity and intensify deforestation; Cameroon already suffers one of the world's fastest rates of deforestation.
The pipeline's terminal, in Kribi, is a single-hulled floating refinery located in front of the Lobe waterfalls, one of the rare waterfalls that flow directly into the ocean. Kribi is nestled between two nature reserves and is presently dependent on eco-tourism.
The environmental studies have come in for prolonged criticism from environmental groups and local communities. The first report was deemed inadequate by the World Bank but the second, despite its length (19 volumes), fails to fix many of the earlier report's problems. For example, the plan still does not include an adequate oil spill response plan, despite great dangers of spills.
Further, according to the Bank Information Center, the project's plans do not address the lack of legal recognition for Cameroon's indigenous people, the lack of local participation and consultation, or the lack of a budget for involving indigenous communities.
The centre lists five World Bank policies that the project violates: the indigenous peoples, environmental assessment, involuntary resettlement, economic evaluation of investment operations and information disclosure policies.
Revenues
The World Bank claims that its involvement is due to ``the crucial importance of the project in fighting poverty''. It claims that Chadian oil export revenues from the project will be approximately US$1.7 billion, 50% of the country's total current revenue, and that Cameroon will earn US$505 million from royalties over the 28-year life of the project.
However, a study by Harvard Law School's human rights centre found that only 4.5% of direct revenue will be spent on development in the affected communities; Baka and Bakola communities will receive only US$600,000. The management structure for dispersing the funds is stacked with local elite figures.
The remainder will be absorbed by general government expenditure. Cameroon has indicated that most of its revenue will be channelled into repayments on its crippling foreign debt, much of it held by the World Bank.
NGOs in Chad and Cameroon also point out that their governments have little or no commitment to development and will use the funds to strengthen their capacity for repression.
Cameroon has been listed by Transparency International for two consecutive years as the most corrupt country in the world and both countries have been condemned by the US State Department for repeated human rights violations. Both governments have closed, or threatened to close, organisations that have criticised the governments' handling of the project, and Chad has imprisoned a member of parliament who criticised the original project agreement.
A leaked 1995 World Bank report even recognises the low government willingness to tackle poverty and expresses concern at financial mismanagement.
``Once the money is flowing'', far from enriching the two countries, speeding up development and weakening the hold of the elite, as the World Bank claims, ``the unholy trinity of oil, power and corruption will make corrective action difficult'', Environmental Defense economist Korinna Horta notes.
A leaked copy of the Project Appraisal Document, which forms the basis of the project, puts net revenues at US$9 billion over the 28 years. Of that sum, US$6.5 billion will be retained by the consortium operators.
ExxonMobil already earns four times the total annual revenue of Cameroon and 40 times that of Chad; the Chad-Cameroon oil pipeline will increase the ratio in ExxonMobil's favour.
Beneficiaries
While perhaps the most flagrant, the Chad-Cameroon pipeline is not the only example provided by the platform of 200 NGOs. Other World Bank-funded or -guaranteed oil, gas and mining projects named as environmentally and socially devastating include:
The Bolivia-Brazil pipeline, operated by Petrobras, Enron and Shell, which crosses three fragile ecosystems from Santa Cruz in Bolivia to Porto Alegre in Brazil, and will open up sections of the Amazon Basin to further deforestation and adversely affect indigenous communities;
Basic Resources International Limited's oil development in the middle of northern Guatemala's Peten region, which includes valuable rainforests and wetlands, and which expands the existing Xan oilfield, located in the middle of the Laguna del Tigre National Park;
Cameco's Kumtor goldmine in Kyrgyzstan, central Asia, one of the world's largest gold deposits, which has suffered three chemical spills in two years, including one in which 1.54 tonnes of highly toxic sodium cyanide were spilled into the Barskaun River;
The Lihir goldmine in Papua New Guinea, operated by one of the world's largest mining company, Rio Tinto, which will dump 362 million tonnes of waste rock and tailings directly into the ocean, a practice that is generally banned around the world; and
The Omai goldmine in Guyana, one of South America's two largest goldmines, whose tailings dam burst in 1995 releasing 3 million cubic metres of cyanide-laced waste into the Omai River.
In all cases the pattern is the same: the projects have been disasters for local peoples and ecosystems, World Bank involvement has been critical to whether or not the projects have been carried out and the prime (frequently the sole) beneficiaries have been among the largest, wealthiest and most powerful corporations in the world.
According to a report published in April by the Sustainable Energy and Economy Network and the International Trade Information Service, despite its public commitment to tackling climate change, the World Bank has put 25 times more funding into programmes involving fossil fuels, which contribute to global warming, than into renewable energies.
Of its fossil fuel programs, nine out of ten favour Western transnational corporations, several of which belong to the Global Climate Coalition, an industry lobby group devoted to stalling action on climate change.
No wonder one of the cries from protesters in Washington DC was ``More world, less Bank!''
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