CONGO: World Bank accused of razing Congo forests

The World Bank encouraged foreign companies to destructively log the world's second largest forest, endangering the lives of thousands of Congolese Pygmies, according to a report on an internal investigation by senior bank staff and outside experts. The report by the independent inspection panel, seen by the Guardian, also accuses the bank of misleading Congo's government about the value of its forests and of breaking its own rules.

Congo's rainforests are the second largest in the world after the Amazon, locking nearly 8% of the planet's carbon and having some of its richest biodiversity. Nearly 40 million people depend on the forests for medicines, shelter, timber and food.

The report into the bank's activities in Democratic Republic of Congo since 2002 follows complaints made two years ago by an alliance of 12 Pygmy groups. The groups claimed that the bank-backed system of awarding vast logging concessions to companies to exploit the forests was causing "irreversible harm".

It will be discussed at board level in the World Bank within weeks and may lead to a complete rethink of how forestry in the DRC is practised.

It is particularly embarrassing for the British government, which is a development partner of the bank and its third largest financial contributor. It encouraged the bank to intervene in the Congo forests with export-driven industrial logging and has earmarked £50m for further Congo basin forestry aid.

When the bank moved back into Congo in 2002, after years of war which cost up to 4 million lives, it said industrial forestry could contribute most strongly to the country's recovery. In its rush to reform the economy it devised new forestry laws, divided the county into zones and aimed to create a favourable climate for industrial logging.

But although the bank is legally committed to protecting the environment, and trying to alleviate poverty, the panel found that the policies it imposed on the Congo were having the opposite social and environmental effects:

· An area of 600,000 square kilometres (232,000 square miles) of forest was earmarked for logging companies.

· The bank failed to address critical social and environmental issues.

· It ignored between 250,000 and 600,000 Pygmies believed to be living in the Congolese forests, even though their presence was well known and documented.

· It put the Pygmies in serious potential harm.

Criticism is made of the forestry reforms that the bank imposed in return for loans of more than $450m. Initially, said the panel, "the bank provided [to the government] estimates of export revenue from logging concessions that turned out to be far too high. This encouraged a focus on reform of the forestry system at the expense of pursuing sustainable uses of forests, the potential for community forests and for conservation.

For the most part foreign companies, or local companies controlled by foreigners, have been the beneficiaries of this," the report said.

In a scathing analysis of the bank's economic reasoning, the panel said the bank had "distorted the real economic value of the country's forests" by looking solely at the tax and revenue that increased industrial logging might generate. "There seems to have been little action to support alternative uses of the forest resources," it said.

The panel travelled deep into the forest to take evidence from the Pygmy communities, who told it they were not consulted before the bank launched its wide-ranging forestry reforms.

One Pygmy leader told the panel: "We are being made poor in every aspect ... the [logging] company prevents us from going into the forests." Another said that the company had bought the land so that people could no longer live in the forests.

"Roads are going ever deeper into the forests, opening it up. We are increasingly deprived of our foods and drugs. We have never seen anything from the bank except promises," said a third.

Research by non-government groups last year showed that 12 foreign-owned or foreign-controlled companies were encouraged by the bank to dominate the entire industry. Some had concessions of more than 5m hectares, and all included Pygmy communities in their holdings. The bank is reviewing the legality of many of these concessions.

Yesterday international groups that have worked with Congolese communities said they were shocked by the panel's findings.

"The Pygmies must be fully involved in developing any future plans for the forest, and the bank need to find ways of helping them uphold their rights, rather than helping logging companies to destroy them," said Simon Counsell, director of the Rainforest Foundation.

"The World Bank must change drastically its forest policies. Industrial logging is not contributing to poverty reduction, while its expansion undermines future financial benefits for environmental services," said Staphan van Praet, the Africa forest campaigner for Greenpeace International.

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