About sixty-eight people met in Joensuu in the Karelia region of Finland for a regional consultation organised by the World Bank on the FPIRS, for two and a half days, 3-5 April 2000. These notes on the meeting are not supposed to be comprehensive and just summarise my personal impressions of the most significant aspects. The notes sprawl a little – but I thought I’d send them out quickly rather than spend time polishing them up. They may help people prepare for the Zurich meeting etc.

Participation:

There was a good balance between Government, NGOs, IPOs, and Private Sector. Forest owners were under-represented. NGOs however were nearly all environmental NGOs and there were no human rights NGOs, development NGOs or women’s groups, for example. Funded NGOs had been self-selected through the ‘Underlying Causes of Deforestation’ network. Their skewed representation illustrates the way NGOs are also narrowly sectoral, though perhaps not quite so much as the governments that they criticise. FPP and PERC, as self-financed participants, were the only ‘international NGOs’ present. IUCN was there both as an adviser and as a Russian stakeholder.

The Bank dominated the presentations and the shape of the agenda on the first day. In this sense the process was less participatory than the 1994 process when NGOs and academics had been invited to act as ‘Keynote’ speakers to set the meetings off. However, on the second day, short presentations by non-Bank people were allowed at the request of individual participants. The Bank continued to play a strong steering role during the second day, however. There was very little time for dialogue during plenary, presentations being followed by very short question and answers sessions only. Even in the break out groups, debate was limited to brainstorming answers to preset questions. The first two days were intense and I had the feeling that the meeting was trying to cover too much in too little time, but other participants while agreeing all found different parts of the presentations informative. So I was not clear exactly which parts could have been cut.

There was a final evaluation session. It was agreed by the Bank that some sectors had been poorly represented. Among the reactions: it was recommended that the Bank should consult NGOs and Governments separately so both would be more frank; it was felt that the documents and discussion themes should have been sent to participants longer in advance; participants felt that the Bank was lecturing about its findings rather than seeking opinions; it was felt that the Bank was being too defensive when ideas were raised. Most participants found something useful about the meeting however. The general feeling was that the meeting had been very well organised logistically.

Agenda:

The agenda, chairing and facilitation process was not really offered up for discussion or acceptance, but no one seemed to mind or if they did they didn’t say so.

The Bank started by summarising the objectives of the workshop – basically to develop a new World Bank forest policy/strategy. Summaries were then given of:

q       the way the Bank works

q       the findings of the OED implementation review

q       the process for developing a new policy/strategy

q       the main issues that the Bank sees as important for the ECA region

q       some issues that the Bank had seen as important from the analytical studies

q       key issues for dealing with forests

q       the available Bank financial and technical tools relevant to the sector

q       the carbon sequestration fund

During the first day, break-out groups were asked to consider: what was missing or misconceived in the presentations and what were the priorities and key issues for their regions.

During the second day the regions were asked to brainstorm about their regional visions for forests and then, after another presentation by the Bank on the tools at its disposal, on how the Bank might assist in achieving these visions. Recommended elements for a revised Bank policy/strategy were requested by the Bank.

During the third day there was a good question and answer session, which allowed a much freer dialogue and was probably the most illuminating part of the meeting. In my opinion there should have been more of this.

Documentation was all available in English and Russian and was more than adequate but it would have been much better to have had this stuff sent to us long before the meeting. Copies of the print outs of the ‘Power Point’ summaries were also distributed and were especially useful for those far from the screens.

Reactions of Participants to Content:

The first breakout was asked to raise concerns about the Bank’s initial presentations. Among the points made were the following:

q       Bank focused on problems not solutions

q       Focused on regional needs and not internal reforms

q       No discussion of which incentives, sanctions and controls are needed to ensure implementation.

q       Lack of focus on causes of Bank’s failures in the Bank’s forestry projects in the tropics.

q       Need more clarity on definitions. Eg SFM is more than sustained yield

q       Mountain forests and old growth require special attention

q       No analysis of whether commercial forestry alleviates poverty.

q       Not enough about the poor in general

q       Not cross sectoral enough.

q       Not clear that a ‘Bank approach’ is suitable for forest sector development.

q       Need to respect indigenous forest related knowledge.

q       Indigenous Peoples issues were not properly addressed.

q       IPs should not be treated as just part of the poor.

q       More emphasis needed on capacity building.

q       More critical assessment needed of the role of plantations.

q       Links with other forest policy processes need to be clarified (eg PAN Europe and IPF).

q       Can the Bank share risks of projects going wrong?

Some interesting issues that came up

Discussions ranged widely over the following days. Here are some things that came up that intrigued me:

The Bank and its Clients:

The Bank identifies Finance Ministries as its primary clients. Inter-Ministerial coordination is therefore needed. The Bank would like to feel the “country’’ is its client rather than a government, but de facto it is the Finance Ministry view which dominates. If the Finance Ministry doesn’t want to borrow the Bank can’t lend. [This is interesting as Ian Johnson has said in the OED  workshop that in future the Bank wanted to treat the ‘country’ as its client not the government. Clearly this is going to be hard to achieve in reality, if the Bank even has a job feeling it is a partner with other Ministries let alone ‘the poor’ or ‘civil society’ or ‘stakeholders’ etc etc.]

A Policy or a Strategy?

Participants were irritated by the confusion about whether we were talking about a strategy or a policy. Bank staff are quite evidently themselves highly confused as to whether they are now developing a ‘policy’ or a ‘strategy’. They agreed that if they now develop a new more philosophical ‘strategy’ and then a new OP (‘policy’), they will still also need an ‘operational strategy’ as well. Staff seem to resent the legal department’s messing around with this. ‘Policy’ was the appropriate word for what is now being termed a ‘strategy’, whereas a ‘strategy’ is what is adopted to implement a ‘policy’.

Is the Forest Policy a Safeguard Policy?

Bank staff noted that the Forest Policy was treated as a ‘safeguard policy’ by the Bank’s foresters and in forestry projects but not by other staff and in other sectors of the Bank (and see below on implementation).

Expectations on Future Bank Forest Policy and Assistance:

The main view from the meeting was that a future World Bank forest ‘policy’ – no one thought the initial outcome should be a ‘strategy’ - should be short and contain basic principles and restrictions. As one Bank staffer said, it should set out the ‘rules of the game’. Too long or detailed a policy will not suit local situations. Participants suggested that the new policy should be consonant with Agenda 21, and IPF and IFF resolutions. It should be supplemented with national strategies. Regional ‘policies’ may suit no one, falling between what Bank staff need and what country clients need.

The Baltics would like the Bank to assist them in dealing with the problems arising from forest restitution. The Balkans seek Bank loans, and want more grants, for infrastructure projects (roads etc.), strategy development, for introducing certification and for transboundary projects dealing with air pollution. The Asian countries (Turkey, Caucasus and the ‘Stans) want Bank help with watershed afforestation, developing incentives for forest protection and the resettlement of forest villages into lowland centres (Kurds? – tricky stuff). Russia wants more grants to develop the forest sector, measures to encourage inward investment in forestry and would consider conditionality on adjustment loans.

Contradictory messages were sent to the Bank on its project cycle: projects should be better researched, more transparent, all documents should be made public, there should be more participation, more cross-sectoral and project preparation should be shorter. (A bit like city buses which should be smaller and have more room in them). Local knowledge should be used much more. There should be better M&E and project assessments, especially on the contribution to the local economy. Projects should be country-wide not local.

Indigenous Peoples:

Bank staff admit that the IP policy (OD 4.20) is seen as controversial in the Bank. ‘People are not sure about how rigidly it should be applied. It is not clear to Staff whether all the uncertainties should be resolved at the beginning before a project can go ahead’ (OD 4.20 suggests they should). ‘The concern is that this can take a long time and the world can’t wait.... The policy is applied and is meant to be adhered to strictly’ .....’ but we have to admit that the policy is not always successfully applied and not all issues are always successfully resolved’. During the meeting, Bank staff were not to be drawn on the question of whether the Bank had problems adhering to the policy because of internal capacity and resource constraints. In coffee breaks etc. however this was readily admitted (and see implementation below).

The Bank in its forest policy documents and ECA regional assessments sees the IP issue as part of its poverty alleviation strategy, but the IPOs present said that they should be treated as a separate group. They emphasise that recognition of their interests is a matter of international human rights. The IPOs clearly appreciate the need for OD 4.20 better than staff, who seem to see it is another obstacle in the way of their projects.

The Failure of Implementation:

The Bank continues to insist that the failure of implementation is linked to the limitations of the policy which currently provides the wrong incentives to staff to apply the policy. They emphasise that the ‘logging ban’ (they will not desist from using that phrase even though they know it is technically inaccurate) is ‘irrelevant’ and makes Country Managers ‘risk averse’ (see old growth below). The Bank notes that borrowers who don’t like the language in the OP about Bank support being conditional on national commitments to SFM (ie who want to trash their forests) are reluctant to borrow from the Bank as a result (thank goodness).

The Bank did not answer the question on HOW they will apply a forest policy to structural adjustments. They agree it is necessary. (But see ESW below)

A strong question was expressed by the IUCN (Russia) that ‘a policy is not enough. What is needed in addition to the policy to ensure implementation?’.

Revising Staff Incentives:

The Bank does agree, however, that the ‘transaction costs’ of effective application of the policy are higher than the Bank can afford. NGO Q: So who will pay these higher transaction costs in future? Bank: this is a good question. What we have seen in recent times is that managers have seen that costs are too high so they have just not done projects related to forests. So we will ask the board for more money to do it. The question is, will the Board approve higher transaction costs for these kinds of activities. At the moment the Bank is trying to cut back. We should also see how can we reduce transaction costs.

After a bit of a tussle it seemed to be agreed that the need is to have proactive policies which encourage staff to apply the policy and not just restrictions which discourage them engaging in the sector at all.

Some Bank staff seemed to feel that if the policy was made less prescriptive (and proscriptive), then the staff would be less ‘risk averse’. However, in discussions over coffee etc, NGOs pointed out that lowering the standards would only make NGOs even more critical and vigilant of forest-related lending and so weakening the policy would not lead to staff being more ‘risk averse’. The issue was could the Bank find the money so that they can apply a forest policy effectively. If they can’t find the ‘transaction costs’ to lay the ground properly for their projects then they are basically not capable of doing sustainable development. In this case it would be better for the Bank to get out of forests altogether. This view was also expressed by the representative of GmBH (German technical assistance). One Bank staffer agreed that the Bank should either find the funds for doing it right or not pretend it can deal with forests. (The problem with this approach though is that, like it or not, through its work in other sectors and through SAPs, the Bank is ‘dealing’ with forests. Its engagement on forests is ineluctable, so long as there are any left!)

Enforcing Borrower Country Compliance:

NGO Q: How can the Bank enforce compliance. Bank A: the Bank can cease disbursement as in SSP in India. However, the Bank is now out of the irrigation sector in India altogether and so has no influence. So this is a hard tool to use.

[This was a very defensive and unhelpful discussion. In fact the Bank has all sorts of other ways to encourage borrower compliance. In other contexts they have endlessly emphasised that they want to have a ‘country’ engagement, improve  participation and shift the balance of power in decision-making towards those currently marginalised etc. Looking into this would have allowed a constructive dialogue. An opportunity lost.]

Structural Adjustment and Forest Conditionality:

Bank staff noted that ‘the way that the Bank currently does adjustment is not well suited to addressing the forest sector’. They are very quick and fast and only allow time for a few stroke of the pen changes. They cannot achieve improved monitoring for example. NGO Q: So what needs changing and can you change it? Bank A: As for the latter that depends on senior management. SAPs or SALs need to be linked to programmatic lending with much more time for consultation and consensus building before negotiation. The Bank says it should limit its inputs to areas where it has a comparative advantage and work with other donors to provide for programmatic engagement and long term reforms.

The Bank agrees that SAPs are a very limited tool for making reforms. There is a need for a complementary programmatic approach to make adjustment relevant to the forest sector but it is important to realise that adjustment may be desirable in its own right – for other reforms. The forest policy may not need to be applied in all SAPs. The Bank held up Cambodia, PNG, Indonesia as examples where SAPs and SALs are usefully addressing forests and forest dwellers. [Not what I get from the OED studies let alone other literature]. The Bank admits that adjustment lending does have limits so it needs to be complemented. It is not clear that adjustment themselves can be adapted. APLs and LILs are useful for this.

ESW as a tool:

ESW funds are limited and so x-sectoral work has been limited. However, in Indonesia we are using ESW money to ensure consultation with stakeholders including indigenous peoples.

‘Conservation’ as a Transition Country concern:

Participants were opposed to the Bank’s characterisation of biodiversity and climate issues as being ‘international concerns’ contrasting with ‘national concerns’ for economic development and local concerns for employment, welfare and livelihoods. Climate and biodiversity are also very much national concerns, it was stressed by several parties.

In all ECA region, countries stressed the importance of forest protection and they make use of notion of SFM. Too much emphasis on commercialization was not desirable.

Old growth forests:

Slovak and Russian NGOs argue that the Bank should not finance logging in old-growth temperate and boreal forests.

The Bank notes that under the existing policy it is prohibited from financing logging in primary moist tropical forests. This was adopted by the Bank but the result is that Bank has been shy of being involved even where there is logging in secondary forests. Bank staff feel they cannot even fund projects in countries where it wants to reform and improve natural forest logging. The OED reviewers thus think that the ‘do no harm’ elements have also made the Bank less pro-active in dealing with logging and forests in general. Bank staff do not want to be seen to be associated with controversy. This chilling effect may continue if the proscription is not changed.

Romania govt: All our countries agree the Bank should not support logging in virgin or old growth forests. (Wow – they were no demurrals to this bold statement !). But the Bank should not feel restricted from involvement in natural forest policy.

Bank staff: We hope that operational staff and managers in the staff will get signals from senior staff that they should be proactive. If staff are not encouraged to seek to engage in natural forests, they will be unable to address the problems. Commercially accessible forests will be used sooner or later. This is reality we have to live with.

Marcus: I don’t agree with your analysis on chilling effect, which is one sided. Given strong incentives Bank staff can push ahead on tough issues even if they are controversial. It is a matter or providing the positive incentives at the same time as imposing the restrictions.

Russian NGO: The Bank should not just go with the flow and accept reality, the Bank needs to get wider views. Bank staffer: I agree, there is a need to engage all stakeholders.

Bank staff later: there is no restriction on Bank funding of commercial logging (in ECA). The Bank can finance logging indirectly through IBRD and IDA as well as through IFC.

Bank: Which areas of forest would be of concern? This should be negotiated at a country level and not a prescriptive rule.

Govt: Old growth forests in our region should be protected forests. But not all natural forests should be off limits.

NGO: Bank needs a general statement with a clear indication on what it will or will not do.

Bank: we agree that there should special buffer zones, and areas of high conservation value should be protected... This could come in some global principles or set of objectives.

NGO: There does need to be standardised clarity on which forest are of high forest value established at a global level.

Afterwards and in breaks, one staffer said to me personally that “it would be a disaster for the World Bank if the new policy was to say no World Bank funding of logging in all old growth forests”. I replied that NGOs are unlikely to shift from their insistence that this is included unless the Bank comes up with alternative and convincing language that provide strong, cast-iron guarantees that restrict what Bank staff can fund to ensure that high value forests are not trashed. In the end she agreed that if the Bank is to reassure NGOs it must offer alternative assurances. However, a Bank forester said to me that he would prefer it if the Bank has an operational forest strategy, dispenses with a forest policy as a ‘safeguard policy’ and then develops national forest policies at a national level on a consensus building basis.

In the NGO post-mortem after the meeting we all agree that we must insist that safeguarding is necessary. For example, in Russia, they cannot get such safeguards at the national level: NGO participation is very marginal and they are not able to secure assurances from their governments – ie they need the Bank to make up the ‘democratic deficit’. However, it may well be key to lobby for additional safeguards specific to certain countries at the CAS, National Policy, programme and project level.

M&E discussion:

More M&E needed on implementation of the safeguards. NGO Q: What scope for independent M&E? A: Bank summarises existing procedures. No changes in process are proposed.

Restitution issues:

Issues of land / forest restitution and privatization were the main theme for Eastern Europe, (as expected: see WRM/FPP/FERN report on UC in Europe). This tended to be seen negatively by the foresters but others said it was a political reality and important to poverty alleviation. None of the newly restituted forest-owners were represented at the meeting. The Bank notes that it cannot force people to form associations (to overcome the problems of economies of scale), you have to shape things so it is in their interest. The  Bank can offer services such as help with marketing and in analysis.

Consonance with IPF PfAs:

It was agreed that countries should adhere to obligations under UNGASS. The Bank has no position on the desirability or otherwise of a Convention but believes the odds of one being agreed in the near future are 10:1. Bank should encourage compliance with the IPF’s proposals for action but IPF PfAs should not be imposed like TFAP was.

New Bank Financial tools:  ‘Guarantees’ and ‘issues-based lending’:

IBRD is now also offering guarantees to governments to catalyze flow of private financing or underwrite the risks of policy changes (and Bank is now preparing one for Forest Sector in Russia). It complements MIGA, which makes guarantees to private sector.

‘The Bank has severe limits on what it can lend on IDA terms’.

Issues-based lending is a new but, says the Bank, regrettably controversial idea in the Bank. It means that the Bank will allocate a proportion of its funds to a specific issue eg communicable diseases, forests.... It is not yet clear how decisions will be made about how much money would go to which countries. (It was not clear if this was to be soft or hard lending). Issue based lending is being opposed by the regional vice-presidencies and country directors as the money will be removed from their budgets and apportioned instead through sectors.

It was questioned whether sectoral adjustment lending is more fungible or liable to misappropriation than project lending (eg US$60 million of Coal Sector Loan to Russia has been misappropriated).

The carbon sequestration fund was presented. World Bank studiously notes that it cannot take a position on CDM – but it obviously is in fact encouraging including forests and plantations in carbon trading through Joint Implementation. Questions on this were discouraged. The paper was to be presented to the CEOs meeting on 6 April.

Repaying Forest Sector Loans:

NGO Q: Who repays Forest Sector Loans and HOW? The Bank admits that repayment is hard. Loans have to be repaid from national treasuries essentially through collecting taxes. Balance of payments difficulties very often mean that finance ministers do not want to address forests (ie ‘cos rates of return on improved SFM aren’t attractive).

Govts (Forest Ministries): No government in our region will seek loans for forests on commercial terms. The Bank needs to encourage our governments to address forests. Our governments agree that forests are important but can’t borrow against them.

E Europe NGO: the only answer is to mobilise conservation and private sector synergies. Bank cannot help create political will. Bank: Creation of higher political will is being helped by IPF/IFF and hopefully UNFF (!).

Reducing Consumption:

The Bank rejects categorically the need to reduce northern consumption of forest products. Reducing consumption depresses prices and makes forests less valuable. Conversion will then result. (We are back with the old dogma).

Global Alliance:

The Global Alliance will not specify which ‘certification’ standards it is promoting but they have elaborated a check list which they will share with us.

‘The Bank does not endorse a specific certification organisation and will not. The Bank will comment on emerging standards but not choose any particular one.’

Russian NGOs are sceptical of the Global Alliance. WWF is seen as very inefficient and a huge sponge that soaks up scarce funds. The Bank should work more with local NGOs.

Role of the IUCN:

According to World Bank staff at the meeting “the IUCN is coordinating the relationship of the World Bank with NGOs”. The IUCN intervened to say that it is “providing guidance to the World Bank” on coordination with NGOs but “is not coordinating these relations. It is up to NGOs to decide how they relate to the World Bank.”

Next steps:

The official report of this meeting will be written up ‘independently’ by the European Forestry Institute. A draft will be circulated to participants. Comments on the text can be made for a while before it is finalised.

The summaries of all the FPIRS meetings will go to Technical Advisers in late June/ early July and the draft strategy will then be written and goes to the Advisers again in October. The final text goes to the Board in December. It is not clear whether people will get a sight of the draft at all before the EDs see it. The IFC review is late and it is not clear if there will be public consultation about it. There was no clarity about whether and how MIGA is being reviewed.

The Technical Advisory group process will we decided on by nomination and self-nomination is also allowed.

The OED report will also be amended a little to accommodate the inputs from all the meetings. There are size limits on the report, however. Final report goes to the board within this fiscal year (which is when?).

Q: Will there be an implementation review of the new policy? Bank: we hope not.