The IDB, Camisea and Peru: A sorry, sorry safeguards story

The Inter-American Development Bank (IDB) played a catalytic role in the development of the Camisea gas project in the Peruvian Amazon in 2002/2003 despite having no specific policy for projects impacting indigenous peoples. When the Bank adopted one in 2006, a key provision on isolated peoples was ignored when it made a US$400m loan the following year. Meanwhile, attempts by the Bank to ‘protect’ a reserve for indigenous peoples in ‘voluntary isolation’ directly impacted by the Camisea project have proven almost entirely ineffective and are now being further undermined by plans to expand operations within the Reserve. The IDB is required to approve these plans and could do so imminently.

The IDB has played a catalytic role in the development of the Camisea gas project in the Peruvian Amazon. For example, in 2002 it approved a US$5m loan to Peru’s government to strengthen its capacity to monitor ‘environmental and social aspects’ of the project and establish sustainable development initiatives in its area of influence,[1] and in 2003 a US$75m loan to a private consortium, Transportadora de Gas del Peru (TGP), for downstream operations.[2] The IDB’s involvement was particularly significant because it encouraged the loans of other financial institutions. This in turn was especially important following the fierce criticism of the Camisea project on social and environmental grounds by civil society, and the fact that some financial institutions, like Citigroup, the US’s Export-Import Bank and the US Government’s Overseas Private Investment Corporation (OPIC), had refused to get involved.

One key criticism was that the Camisea project was operating in territory inhabited by indigenous peoples in ‘voluntary isolation.’ Indeed, 74% of the most important concession in the Camisea region – called ‘Lot 88’ and operated by a private consortium led by Pluspetrol – is superimposed over the Kugapakori-Nahua-Nanti Reserve (KNNR), which was established to ‘guarantee the right of the Kugapakori and Nahua native peoples over the lands where they live in a traditional way.’[3] Surely the IDB’s loans in 2002 and 2003 violated its policies on projects impacting indigenous peoples? Yes and no. Yes, because the IDB’s Environment and Social Impact Guidelines then in effect stated that indigenous peoples must be in agreement with projects affecting them, and no because it didn’t have a specific policy on indigenous peoples at the time.[4] 

In 2007 the IDB increased its involvement in Camisea by approving a US$400m loan to another private consortium, Peru LNG, for new downstream operations.[5] This was approved despite consistent and detailed criticism of the Camisea project’s social and environmental impacts, particularly on indigenous peoples, including those in ‘voluntary isolation.’ It was also approved despite the IDB’s adoption in 2006 of a specific policy on indigenous peoples, titled ‘Operational Policy on Indigenous Peoples’. This policy provided specific protection for ‘isolated peoples’ establishing that the Bank will ‘recognize, respect and protect (‘isolated’ peoples’) lands and territories, health, environment and culture’ and only ‘finance projects that respect the right of these peoples to remain in said isolated condition and to live freely according to their culture.’[6]  Despite this, prior to approving the US$400m loan, the IDB had admitted that the new operations’ ‘associated facilities’ would further impact on ‘indigenous peoples living in voluntary isolation within the Nahua-Kugapakori Territorial Reserve.’[7] How does this respect their ‘isolated’ condition?

Although the ‘Operating Guidelines’ for the IDB’s policy on indigenous peoples acknowledge its obligation to abide by national and international laws, including the Inter-American system’s case law, the fact is that the policy now falls well short of evolving international standards about ‘isolated’ indigenous peoples. Last year the UN’s Office of the High Commissioner for Human Rights (OHCHR) issued ‘guidelines’ recommending that ‘isolated’ peoples’ territories should be made ‘untouchable’, echoing calls made by indigenous organisations for years. Similarly the Inter-American Commission on Human Rights has consistently emphasised states’ duties to protect ‘isolated peoples’, and the UN Committee on the Elimination of Racial Discrimination (CERD) has expressed concern about extractive activities on their territories and recommended their suspension. Indeed, in March this year CERD called on Peru’s government to ‘immediately’ suspend expansion of the Camisea project within the KNNR. [8] More generally, the International Labour Organisation (ILO) and Inter-American Court on Human Rights have emphasised indigenous peoples’ rights to participate in decision-making about projects affecting them – which is impossible to do with ‘isolated’ peoples without seriously endangering them. Despite all these standards and legal rights clearly outlined, the IDB’s policy on indigenous peoples states it is prepared to finance projects with ‘the potential of directly or indirectly impacting (‘isolated’) peoples, their lands and territories, or their way of life.’

The IDB might try and defend its involvement in Camisea by citing a series of social and environmental commitments that it insisted on as a condition of its loans in 2002 and 2003 – some of which applied to operations financed by the IDB, e.g. TGP downstream, as well as operations it didn’t finance, e.g. Pluspetrol upstream. However, civil society organisations in Peru have reported that many of these conditions haven’t been met,[9] and even when they have they have sometimes meant little or nothing. For example, arguably the most important commitment made by Peru’s government regarding ‘isolated’ peoples was to further protect the KNNR by raising its legal status. That was implemented with a Supreme Decree in July 2003 which stated that ‘development of economic activities’ and ‘new rights to exploit natural resources within the Reserve’ are ‘prohibited’, yet that Decree is now being ignored by Pluspetrol’s plans to expand its operations in the reserve. An Environmental Impact Assessment (EIA) for the construction of three wells was approved by Peru’s Energy Ministry in 2012, and another EIA for 18 further wells, a 10km pipeline and 2D and 3D seismic tests – almost all of which is scheduled to be deeper into the KNNR – is now pending approval.

In a further twist it now appears that the expansion cannot go ahead without formal approval by the IDB, under certain (as yet undisclosed) commitments made on condition of its US$75m loan to TGP. An IDB document dated June 2003 stipulates that ‘If there are any subsequent expansion or new works (e.g., pipeline looping, etc.) that may have potentially significant impacts or risks relating to environmental and social matters, the Project Component company shall: (a) develop and fully implement an Environmental Impact Assessment in form and substance satisfactory to IDB. . .’ [10] The IDB’s Office of External Relations (OER) recently confirmed this: ‘The EIAs have to be satisfactory to the IDB. This wasn't included in the common terms agreement since TGP was not responsible for the upstream component but rather in the Upstream Consortium Support Agreement (UCSA).’ The OER has advised that the UCSA is ‘confidential’ and, as of 24 April, neither of the EIAs were ‘yet satisfactory to the IDB.’ But how can they ever be ‘satisfactory’, given the IDB’s commitment to ‘protect’ the KNNR and its policy on indigenous peoples in which it claims to ‘recognize, respect and protect (‘isolated’ peoples’) lands and territories, health, environment and culture’?

Moreover, in what seems to be a gross irony, the IDB announced last December that it will give US$1m to Peru’s government partly to protect ‘isolated’ peoples’ reserves by altering their legal status and converting them from ‘reservas territoriales’, as the KNNR is now, into ‘reservas indígenas’, a new category established by a law in 2006.[11] This law states that the ‘reservas indígenas’ are ‘untouchable’ and prohibit ‘any kind of activity different from that of the ancestral customs and uses of its indigenous inhabitants’, but it also includes a loophole. Specifically, Article 5, Clause C, says that natural resources can be exploited if considered ‘necessary’ by the government. In the KNNR’s case, conversion from a ‘reserva territorial’ to a ‘reserva indígena’ will mean removing the ‘protection’ provided by the Supreme Decree, thereby further undermining the IDB’s commitments to ‘protect’ the KNNR and weakening it even more.

Given all this, it is not surprising that in recent condemnations of the Camisea project’s expansion indigenous organizations in Peru have repeatedly highlighted the IDB’s responsibility. In a statement last December announcing their intention to take Peru’s government and the ‘company responsible’ to court to stop the expansion, AIDESEP, FENAMAD, ORAU and COMARU stated that the government had failed to meet the social and environmental commitments agreed to as a condition of its IDB loan. Daysi Zapata, AIDESEP’s vice-president, says that the experience of Camisea shows that ‘the IDB needs to establish much stricter standards for operations in such sensitive areas, especially those that affect isolated peoples.’[12] The question that now remains is whether the IDB will finally meet its commitments and obligations to ‘protect’ the KNNR Reserve and its inhabitants and withhold permission for the expansion plans.

David Hill[13], Independent Journalist and Consultant

[1] http://www.iadb.org/en/projects/project-description-title,1303.html?id=PE0233

[2] http://www.iadb.org/en/projects/project-description-title,1303.html?id=PE0222

[3] Ministry of Agriculture, Ministerial Resolution No. 00046-90-AG/DGRAAR, 14 February 1990.

[4] Anne Deruyttere, Perceived Challenges to Recognition on Prior and Informed Consent of Indigenous Peoples and other Local Communities: The experiences of the Inter-American Development Bank, Sustainable Development Law & Policy, Volume 4, Issue 2 Summer 2004: Prior Informed Consent: p. 40.

[5] http://www.iadb.org/en/projects/project-description-title,1303.html?id=PE-L1016

[6] http://tinyurl.com/cym78p4

[7] IDB (2006) ´Environmental and Social Strategy: Peru LNG Project Project Number: PE-L1016, IDB, Washington, July, 2006.

[8] http://www.forestpeoples.org/tags/expansion-peru-s-camisea-gas-project-peruvian-amazon

[9] For two examples see DAR, 2007 ‘Diagnóstico Situacional del Nivel de Cumplimiento de los Compromisos asumidos por el Gobierno del Perú en el ámbito del Proyecto Camisea’ and DAR/Acción Cuidadana Camisea, 2007, ‘Los 21 Compromisos Socioambientales de Camisea: Mucho Camino por Andar.’

[10] The IDB’s 2003 Environmental and Social Impact Report lists a large number of these commitments.

[11] http://www.iadb.org/en/projects/project-description-title,1303.html?id=PE-T1258 and http://www.iadb.org/en/projects/project-description-title,1303.html?id=PE-T1276

[12] Daysi Zapata, personal communication.

[13] David worked as a consultant for FPP between October 2012 and January 2013