International investment banks are
lobbying the World Bank to rebuff the recommendations of an
independent study that urged the global lender to bail out of
gas, oil and mining projects.
According to a leaked letter sent to World Bank President James
Wolfensohn and seen by IPS, several investment banks that lend
for such projects want the World Bank to reject the findings of
the Extractive Industries Review (EIR), an effort to assess the
bank's heavily criticised support for mining and energy projects.
The EIR submitted its final report to the World Bank on Jan.
16, urging the world's largest public lender to stop funding
extractive industries like coal and oil by 2008, and to shift its
investments to cleaner renewable energy instead.
Among its many recommendations is a call for the bank to
implement "much more effective social and environmental
But in their undated letter, the banks argue the review ignores
that extractive industries remain critical to global economic
growth and poverty reduction and that, in some countries, the
sectors generate important revenues that finance government
"We believe that the EIR has not given sufficient consideration
to the fact that the extractive industries are essential to
global economic growth and poverty reduction," says the letter.
The investment banks form what is called the Equator Principles
group -- some 20 international investment banks that have
adopted the World Bank Safeguard Policies and Sector Guidelines,
created to help banks manage social and environmental issues
related to the financing of development projects.
The guidelines make recommendations on how to deal with such
issues as natural habitat, indigenous peoples, involuntary
resettlement, dam safety and cultural sites.
The Equator Banks, which include world names like ABN AMRO
Bank, Barclays, Citigroup, Crdit Lyonnais, Credit Suisse Group,
Dresdner Bank and Royal Bank of Canada, sometimes co-finance
projects with the World Bank in extractive industries and related
Collectively they were responsible for 54 billion dollars worth
of financing for such projects in 2003.
The banks say they are worried that if the World Bank withdraws
from extractive industries, the move could have a ripple effect
on private capital. World Bank involvement in a development
project has often been seen as a green light for other lenders to
They also warn that the bank's pullout could result in lower
standards of governance and operations by companies carrying out
some of the more challenging projects.
The banks argue that projects like the 1,070-km Chad-Cameroon
pipeline in Central Africa and the Baku-Tbilisi-Ceyhan (BTC)
pipeline in the Caspian region are exemplary models for
The World Bank has provided loans for the two projects despite
loud protests from civil society groups who say the pipelines
harm the environment and have already displaced indigenous
The letter also seeks to discredit renewable energy, such as
wind and solar, as a possible alternative to non-renewables,
arguing that many are not yet commercially viable and that
economies of scale will not allow renewables to play a
significant role in meeting current or expected future energy
The banks' letter has infuriated environmentalists and other
activists. They charge that the lenders are preventing the World
Bank from possibly adopting even higher standards of corporate
"The Equator Banks are acting like wolves in sheep's'
clothing," said Daphne Wysham, a fellow with the Institute for
Policy Studies, in a press release.
"Though wearing the outer trappings of higher standards, this
letter reveals the Equator Banks actually trying to impede the
World Bank's attempt at implementing higher social and
"They are playing an obstructionist role in the recommendations
that are for the World Bank not for them," added Michelle
Chan-Fishel, programme manager of the green investments project
of Friends of the Earth -- U.S.
She argued that the World Bank is obligated to heed the EIR's
recommendations. "The World Bank has a development mission and
is dedicated supposedly to alleviating poverty. (The investment
banks) trying to get in the way of that is really inappropriate".
Support for the review has been gaining momentum. On Apr. 2,
more than 100 parliamentarians worldwide, and the European
Commission, called for the full implementation of the EIR
In March, six Nobel Peace Prize laureates, including landmines
activist Jody Williams and South African Archbishop Desmond
Tutu, also wrote Wolfensohn to urge that the World Bank adopt the