Johannes F Linn
Vice President
The World Bank
1818 H Street
Washington, DC 20433 NW
USA

Dear Mr Linn,

Coal and Forestry Sector Guarantee Facility Project: B-1160 RU

We were interested to note that on January 13^th, 2003, the World Bank Board of Executive Directors approved an amendment to the above named project, which now offers  guarantees for investment projects in the Russian Coal and Forestry Sectors up to a maximum of US$50 million each.

We are writing to suggest that there have been potentially serious elisions in World Bank procedures in the elaboration of this project such that both it, and the amended project, do not comply with Operational Directive 4.20 on Indigenous Peoples and Operational Policy 4.36 on Forests.

Indigenous Peoples:

With regard to the former we would like to point out that OD 4.20 requires the Bank jointly with the Borrower government to prepare an Indigenous Peoples Development Plan (IPDP) to ensure that IBRD and IDA projects do not cause harm to indigenous peoples. The Project Appraisal Document notes that this has not been carried out although it is admitted, correctly, that investments in the Coal and Forestry sectors are likely to affect indigenous peoples. Instead, the PAD notes, screening will be undertaken, as investments are proposed, to see if OD 4.20 should be applied on a case by case basis. If the safeguard policy is found to be applicable then the investor is required to prepare an IPDP (see page 44 of Report No. 20712).

We would like to point out that by shifting the onus of compliance from Bank staff and borrower government to the private sector agencies, the effectiveness of the World Bank’s safeguard policies has been considerably attenuated. The information disclosure and participation requirements of OD 4.20 are designed to ensure that framework issues, like national policy and legislation regarding indigenous peoples, are addressed during the preparation of projects and IPDPs. The truncated procedure adopted for this project means that this has not happened.

We are also concerned to note, moreover, that no provisions are written into the project to ensure that IPDPs prepared by the private sector investors are discussed with indigenous peoples or made public. Specifically, the PAD on page 49 makes no requirement of investors in this regard.

We would therefore like to suggest the project be amended such that:

q       Procedures are put in place to ensure that the borrower government and Bank staff will be involved in the preparation of any IPDP in line with the requirements of OD 4.20.

q       Measures are taken to ensure that the transaction costs of borrower and Bank staff’s involvement will be funded.

q       Additional provisions are included to ensure that no guarantees are agreed without full compliance with OD 4.20 and measures are taken to ensure that IPDP are elaborated in a fully participatory manner as required.

Forests:

With regard to OP 4.36 on Forests adopted in October 2002, we note that, in amending the project in January 2003, no effort was made by the World Bank to ensure compliance with the revised safeguard on forests although it had been adopted three months previously. Indeed the memo sent to the Executive Directors specifically notes that there are no changes in safeguard provisions (see R 2002-0232 December 27, 2002, para. 9). Yet, the Bank has been at pains to insist that OP 4.36 provides new safeguard standards for forests and applies specifically to IBRD and IDA projects with borrower governments, again emphasising how it is not appropriate to delegate responsibility for compliance with environmental safeguards, designed to be operationalised jointly by Bank and borrower government staff, to private sector investors. 

We would therefore like to suggest that the project is also amended such that: 

q       Procedures are put in place to ensure that the borrower government and Bank staff will be involved in the preparation of any environmental safeguard provisions in line with the requirements of OP 4.36 and related safeguard policies.

q       Measures are taken to ensure that the transaction costs of borrower and Bank staff’s involvement will be funded.

q       Measures are taken to ensure that Coal and Forestry Sector investments will not cause significant damage to critical forests.

q       Clarity is offered prior to any investments being agreed,  of how Critical Forests are to be defined for the Russian Federation. We strongly urge that there is ample civil society participation in such a process of definition.

q       Measures are included now to clarify, following participatory discussions with civil society groups, which ‘nationally agreed’  certification standards should be applied to any forestry investment seeking guarantees under the project.

q       Likewise clarification  should be offered now on how the customary rights of forest-dependent groups are to be recognised and respected by investments  seeking guarantees under the project.   

We look forward to learning how you plan to amend this project to ensure compliance with OD 4.20 and OP 4.36.

Yours sincerely

 
cc.       
Taiga Rescue Network