World Trade: Opic Set to Approve Bolivian Pipeline Loan Environment Campaigners Fear for Tropical Forest:

The US Overseas Private Investment Corporation is today expected to approve a Dollars 200m loan for a gas pipeline in Bolivia, a project opposed by 60 environmental groups in 25 countries.

Opic, which promotes US foreign investment by offering financing and political risk insurance, has recently approved new stricter environmental guidelines. However, when it votes on the pipeline loan, environmentalists will be protesting outside its doors, insisting the agency is violating its own rules.

The pipeline, an Enron-Shell venture, would transport gas through eastern Bolivia to a power plant in Cuiaba, Brazil. It would cut through the vulnerable Chiquitano Forest, described as "among the most floralistically diverse dry forests in the world," home to several endangered species, such as jaguar, ocelots, and marsh deer.

Opic maintains the project is "green" in that it provides "clean power" - gas - and avoids further damage to the Brazilian Amazon. When complaints about the project arose, officials say they made changes in the pipeline route as well as measures to limit the damage.

However, conservation groups say any new paths through the forest will open the way for poaching, logging, hunting, farming and settlement. They say the project violates a commitment by President Bill Clinton in a 1997 speech to the United Nations when he called for a prohibition on infrastructure projects in primary tropical forests.

Opic, like the World Bank, defines a primary forest as one that is "relatively intact. . . that has been essentially unmodified by human activity for the past 60-80 years."

The agency insists that the forest, which has a road system and low-level commercial activity, falls under the definition of a secondary forest. However, the status of Chiquitano has been confused by the opposing conclusions of two different reports.

One report, by an environmental consulting firm, Entrix, found that the area around the planned pipeline is "low to fairly intervened secondary forest." This report was paid for by Enron at the insistence of Opic.

However, many of the scientists who were sent to the region by Entrix recommended using an alternative route to preserve Chiquitano's sensitive ecosystem.

Another study, arranged by the World Wildlife Fund, concluded that Chiquitano is a primary forest and that construction of the pipeline would "catalyse an increase in the human activities in the region, which would result in habitat degradation, deforestation, forest fragmentation and reduction in wildlife population."

Environmental lobbyists spent last week urging members of the Opic board to oppose the project. Atossa Soltani, director of Amazon Watch, a non-governmental organisation, took five leaders of indigenous tribes to the US Treasury and Opic to complain that the project was rushed through the Bolivian regulatory agencies without consultations with local people.

Enron has said it will proceed with the project, whether or not it gets Opic funding. It has agreed to spend Dollars 2m to set up a hospital in the region.

The US this week is pressing foreign export credit agencies to agree on common environmental standards. After two years of talks, a deal could be announced at the Group of Eight meeting in Cologne. Greens, who have been pushing for common standards, say the national export credit agencies, which now support 10 per cent of world trade, are providing financing for environmentally devastating projects, which the development banks will no longer touch.

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