Miami, FL — As Inter-American Development Bank (IDB) governors and directors convene for their 49th annual meeting, the institution continues with unaccountable and opaque lending procedures and unsustainable policies that too frequently exacerbate rather than alleviate poverty.
Challenging IDB management to live up to the Bank’s original mandate and improve the lives of millions of Latin Americans will be a broad alliance of human rights, environmental, developmental and indigenous representative organizations from across Latin America, the US and Europe.
Despite differing priorities, the NGOs share a common agenda of reforming the IDB and making it accountable to ordinary Latin Americans, privileging their needs and stated wishes over those of the corporations whose “development” mega-projects the IDB currently tends to subsidize, at the expense of the spread of access to healthcare, education and meaningful jobs within communities across the region. And despite half-a-century of IDB lending, Latin America has the highest rates of economic inequality in the world. Key areas of concern include:
President Moreno’s leadership
The first two-and-a-half years of Luis Alberto Moreno’s Presidency at the IDB appear to have marked a significant step backwards for the organization. Shortly after assuming the post in October 2005, President Moreno launched a major institutional shake-up. The result, in 2007, was a year of near-record lending totaling $9.6 billion, but with environmental and social safeguards apparently falling by the wayside. A former TV news producer and diplomat, President Moreno has left staff concerned about his inability to listen and his lack of a development background, while civil society has found him indisposed to engage in substantive dialogue about their broad range of concerns. More specifically, President Moreno has largely ignored the Blue Ribbon Panel of Advisors on the Environment’s recommendations regarding the bank’s reforms, and has overseen the appointment of Roberto Vellutini, who led the Bank’s involvement in the disturbing Camisea and Cana Brava projects, as Director of the Infrastructure and Environmental Department. Meanwhile, under President Moreno’s leadership the IDB continues to resist calls for meaningful attempts to measure the bank’s development effectiveness ¬— its very raison d’être; warnings from the Bank’s external evaluation unit (OVE) on the weak informational system regarding loan performance have gone unheeded since Mr. Moreno came to power.
IIRSA
Threatening massive environmental impacts, the Initiative for the Integration of South American Regional Infrastructure (IIRSA by its Spanish and Portuguese acronym) is a pan-regional integration scheme, bringing together dozens of transportation and energy infrastructure projects from Patagonia to the Darien Gap. Now 40 percent complete, IIRSA involves the industrial penetration of pristine landscapes including the Amazon rainforest, facilitating the unsustainable extraction of timber, soy, minerals and other commodities from the region, and social impacts on numerous communities living within various project footprints. With global deforestation accounting for approximately one quarter of all greenhouse gas emissions, pushing a scheme such as IIRSA is arguably the last thing the IDB should be doing. Given the numerous other issues at the IDB, including inadequate environmental and social safeguards and the lack of a transparent and verifiable policy to limit carbon emissions, IIRSA represents a major challenge to sustainable and community-based development in the region.
Climate change
The IDB’s carbon footprint is immense and despite a widespread international consensus on the need to stop global warming in its tracks, the Bank has yet to even establish climate change indicators for its projects. The Bank has a long tradition of financing fossil fuel projects; from the Earth Summit in 1992 through March 2004, the IDB lent over $6 billion to various fossil fuel projects that together were estimated to generate more than three billion tons of carbon dioxide emissions, more than twice the amount of such man-made emissions for all of South America, Central America, and Mexico in the year 2000. Last November, the Bank announced that one of its new projects would be to help Colombia produce “green coal”; the IDB was planning to use funding from its new Sustainable Energy and Climate Change Initiative (SECCI) to support the largest open-cast coal mines in the world, helping provide technical assistance biodiesel for its fleet of trucks and wind power. With coal being the dirtiest of all fossil fuels, attempting to package this support as sustainable in any way was a stark illustration of the IDB’s continued evasion of the need to dramatically reshape its energy portfolio to respond to the global warming crisis.
Indigenous Peoples
Despite its first ever indigenous peoples (IP) policy, the IDB is still failing to take Latin America’s estimated 75 million native peoples seriously, even though this vast population has some of the most pressing developmental needs in the region, and an increasingly recognized right to self-determination and collective ownership of ancestral lands. Under President Moreno, less than 10 out of 200 applications have been approved for loans that in some way address IP needs. In 2007, the Bank lent less than $50 million for IPs —roughly one percent of its portfolio for the year. Equally, the IDB has yet to adopt the international human rights benchmark of Free, Prior and Informed Consent (FPIC) for indigenous communities that stand to be affected by the bank’s projects. The Camisea gas project (see below) is emblematic of the IDB’s outdated and dismissive approach towards millions of Latin American citizens and their unique human rights enshrined in international legal documents such as ILO 169 and, from 2007, the UN’s Declaration on the Rights of Indigenous Peoples.
(Un)accountability mechanism
The IDB stands alone as the only multilateral development bank without a meaningful accountability mechanism, with the Bank’s Independent Inspection Mechanism (IIM) proving difficult for communities to access and failing to provide real redress when complaints are upheld. Under the current system, complainants have to show that the bank violated its own regulations. In other words, if adherence to the bank’s policies leads to negative impacts, a complaint will be dismissed. Equally, key documents such as an investigation’s terms of reference or a consultant’s finding of whether a complaint merits investigation are not made available to the complainant. Finally, the IDB has not dedicated any fulltime staff to the IIM, failed to guarantee the independence of the IIM or removed the requirement for consent from the host country for any on-site visits. The IDB urgently needs to implement a new and effective citizen’s complaint mechanism in line with the best practice of other development banks, such as the World Bank’s International Finance Corporation (IFC). This is particularly disturbing as the IIRSA juggernaut rumbles on.
Weak environmental safeguards
The IDB’s continued lack of strong environmental safeguards — with existing protections apparently being sidelined as President Moreno leads the Bank’s rush towards record lending — represents a serious abdication of hemispheric leadership. The bank should be integrating these protections into its loan procedures. Instead, it is increasingly marginalizing them, despite the recommendations of the Blue Ribbon Panel of Advisors on the Environment and the stated wishes of many donor countries. High risk projects such as the Camisea gas project’s liquefaction plant (see below) continue to be approved by the bank while the appointment of Roberto Vellutini, who has led the bank’s involvement in several highly controversial projects, as Director of the Infrastructure and Environment Department, has effectively left the fox in charge of the henhouse. Instead of weakening environmental safeguards, the IDB should be proactively promoting sustainability projects. Latin Americans will pay the price for decades and centuries to come.
Unsustainable agrofuels
The IDB’s recent rush to join the “biofuels” boom is unlikely to help rural development and may only exacerbate climate change. The bank recently approved a total of $45 million in loans and technical cooperation funds to agrofuel projects and is now considering another $3 billion in private sector loan projects. Easily the largest investments are supporting export-oriented infrastructure and ethanol facilities, which provide relatively few jobs and do little to support development that reach those who need it most, while the expanding industrial scale mono-cropping threatens ecosystems and biodiversity. Meanwhile, the IDB’s Sustainable Energy and Climate Change Initiative (SECCI) fund, which originally had $20 million to invest in assistance for renewable energy, energy efficiency, adaptation to climate change and development of carbon markets, has been used mainly to promote the expansion of ethanol production for export. Increasingly, studies are now questioning the contribution of agrofuels to abating carbon emissions, given that crop-based agrofuels often increase emissions significantly as a result of deforestation and the destruction of other natural ecosystems that act as carbon sinks.
Camisea gas project
The IDB continues to bankroll Peru’s problematic Camisea gas project. Camisea is located in a highly-biodiverse and remote part of the Peruvian Amazon, home to numerous indigenous communities including some of the last still living in isolation anywhere in the world. Impacts have included deforestation, erosion, gas spills and the loss of fish and game populations on which those communities depend. According to a recent economic study by a former Harvard professor, exporting Camisea’s gas rather than using it to meet domestic energy needs, actually represents a drag rather than a boon to Peruvian development. Camisea has also helped spark an unsustainable and potentially devastating oil rush in the Peruvian Amazon; roughly 70 percent of the region, about twice the size of California, is now zoned into hydrocarbon concessions. Having agreed in January to a $400 million loan to construct a liquefaction plant on the Peruvian coast to export the Camisea reserves, the IDB continues its involvement in what it regards as a flagship project, but which has now become a model of how not to carry out extractive projects in environmentally sensitive areas and near vulnerable indigenous communities. Camisea is also emblematic of the Bank’s continued support for outdated, climate-changing fossil fuels and its insistence on export-led development to the exclusion of more sustainable alternative models that address the needs of citizens rather than the private sector.
Madeira dam complex
The damming of the Maderia River, one of the Amazon’s major tributaries, in Brazil, is one of the most troubling IIRSA projects. The $10 billion scheme, involving two dams supposed to generate 6,450MW of energy, is officially predicted to displace 3,000 local people, mainly rubber-tappers, fishermen and brazil nut gatherers, and substantially impact ecosystems, threatening the survival of migrating fish species, and affecting a total of 33 endangered mammal species. Deforestation is reported to have risen 600 percent in the region since the preliminary license for the two dams was granted in July 2007. Meanwhile, malaria is expected to increase as a result of stagnant water caused by the dam. Indigenous communities will be impacted by thousands of temporary construction workers seeking to make a living from the project. Impacts could include prostitution, STDs, imposed socio-cultural change and the loss of local fish and game populations. The scheme may open the upper Madeira to navigation by larger vessels and, therefore, the extraction of unsustainable products from the threatened rainforest such as soy, timber and minerals. The IDB is currently considering funding the Madeira dam complex, despite requests from environmental and human rights groups to steer clear of this problematic project.
