• the quality of pilot country documents with regard to their treatment of forest governance issues;
• the design of the FCPF and UN-REDD initiatives to better support and encourage pilot countries in addressing governance challenges; and
• the links between the FCPF and UN-REDD initiatives so they systematically address governance and other issues vital to the success of REDD.

[Editor’s note: On April 24, U.S. Treasury Secretary Timothy Geithner hosted meetings with finance ministers from the world’s top economies to discuss increased oversight of the global financial system. The meetings preceded semi-annual gatherings of the International Monetary Fund and World Bank in Washington, D.C.]

The April G-20 meeting in London secured a lot of positive media attention after world leaders announced a $1.1-trillion global package for economic recovery and reform, mostly for the International Monetary Fund (IMF).

However, Jesse Griffiths, coordinator of the London-based Bretton Woods Project, says the package actually will deliver less than half that amount in new or guaranteed resources. And, he says, the plan did not include specific information about the much-needed operational reforms to the IMF and the World Bank. [See related Web sidebar]

Decades ago, those who created the IMF and World Bank designed a system for a very different world, Griffiths says. Because it has not been adapted for current global changes, the system is now fundamentally flawed, he says, so it is time to develop a new one.

“The ideology [of the IMF and World Bank] has failed and the accompanying structures have failed,” Griffiths said.

“In addition to the current enormous economic instability, the system has failed to create equity and eradicate poverty; it has failed to ensure that human rights are protected, and it has failed to address environmental issues.”

The system Griffiths refers to was first designed during World War II when leaders from 44 nations met in Bretton Woods, New Hampshire, to rebuild the international economic system. Along with policies and procedures, leaders also created the IMF and World Bank, which have come to be known as the Bretton Wood institutions.

The Bretton Woods Project was established in 1995 by a group of environment and development organizations in the United Kingdom. Today, its staff members work with non-governmental organizations (NGOs), researchers and public officials to monitor policies and practices and push for reforms at international financial institutions (IFIs).

The Bretton Woods Project is housed in ActionAid. Under the International Finance for Sustainability program area of the Mott Foundation’s Environment program, ActionAid has received six grants totaling $1.2 million since 2000 for the project.

Fundamental changes are needed at the IFIs, Griffith says, and it is problematic to pour hundreds of billions of dollars into the IMF and World Bank without first committing to making those crucial changes.

Yet, the G-20’s much-publicized $1.1-trillion Global Plan for Recovery and Reform fails to mention much about IFI reforms at all. Instead, it broadly outlines where huge chunks of money will go. For example, it notes that $500 billion will be allocated for the IMF, which is misleading, Griffiths says, because $250 billion of that amount was a general promise from the G-20, and not a firm commitment from specific countries.

Of the remaining $500 billion, $200 billion had been announced previously -- $100 billion each from Japan and the European Union -- so it is not considered new money. Most of the new $50 billion would come from China’s reserves. Another $250 billion has been promised to countries through new allocations of the IMF-issued Special Drawing Rights (SDRs).

A SDR allocation is akin to “printing new money” because it is the IMF’s own internally created reserve asset, Griffiths explains. SDRs don’t have strings attached like other IMF funding, he says, but they are allocated according to IMF voting shares, which are dominated by industrialized northern nations. Consequently, the primary benefit will be to these industrialized northern countries and not the poor developing ones.

Griffiths says the current financial and economic crisis creates a clear and strong link between people from developed countries in the North, who traditionally have access to power and decisionmakers, with those from poorer developing countries in the South, who have little access to either but are most affected by the decisions made.

“In addition to the current enormous economic instability, the system has failed to create equity and eradicate poverty; it has failed to ensure that human rights are protected, and it has failed to address environmental issues.”“Hopefully, that North/South linkage will be one of the things changed as a result of this economic crisis,” Griffiths said. He added that there are two other necessary elements of change: building more transparency and inserting more public accountability into the system.

Although the global media were welcomed to cover the G-20 talks in London, he says, the leaders of dozens of other countries were excluded from the meeting. Also, there was no provision made for civil society representatives to be at the talks, and some of the few who were allowed to be there as media were excluded by the British government at the last minute.

Additionally, Griffiths says, there is an enormous transparency gap, with most G-20 information kept from the public. For example, there are four G-20 working groups, but the names of group members were not given to the public, even after NGOs requested them.

“It was difficult to get specific information about these groups, even for the Bretton Woods Project, and we’ve got good contacts within the U.K. government,” Griffiths said.

“We want to know who is negotiating on our behalf, but there’s no transparency with citizens.”

Institutional reform was not a topic at the recent G-20 meeting, which caused concern for Griffiths and also Fraser Reilly-King, coordinator of the Halifax Initiative, which is an Ottawa, Canada-based IFI reform project of the Tides Canada Initiatives, a Mott grantee.

“The G-20 meeting and the accompanying leaders’ communiqué delivered something big and flashy [the $1.1 trillion announcement], but it completely failed on substance,” Reilly-King said.

He and Griffiths agreed that several issues were not addressed. They included:

• The lack of tools to help developing countries address corporate tax abuses.
• No commitment to end controversial pre-lending conditions, such as requiring borrowing countries to either freeze or reduce public sector wages and increase interest rates before receiving IMF bailouts.
• No international plan for addressing “toxic assets” in banks around the world. (A term that describes financial assets whose value has fallen so significantly that there is not a market available where they can be sold reasonably).
• The absence of details about the promised availability of $250 billion of trade finance raises concerns that this financing will go through export credit agencies (ECAs), which have poor track records, according to Griffiths. (ECAs are institutions that act as finance companies, providing government-backed loans, guarantees, and insurance for private domestic entities conducting business abroad.)
• Not a single reference to the March 2009 preliminary report released by the United Nations’ commission of experts about the need for IFI reform, which was chaired by Nobel Prize-winning economist Joseph Stiglitz and focused on the impact of the global economic crisis on developing countries.

“The reforms announced at the G-20 meeting are superficial. It is akin to a group hug on the deck of the Titanic,” Reilly-King said.

New rules for global finance -– similar to those developed by the United Nations’ Commission of Experts on Reforms to the International Monetary and Financial System –- should ensure the development of a long-term sustainable and productive economy, “not a better regulated casino,” he said.

“Without fundamental economic reform, the current crisis will simply be the next in a long and continuing line of financial booms and busts.” 

(Return to top of page) NGO to G-20 leaders: "The global economy needs to be managed." International financial institutions, such as the World Bank and the International Monetary Fund (IMF) have failed in many ways, including by strictly adhering to the belief that all developing countries will benefit from the same solutions, no matter how different their internal challenges are, said Jesse Griffiths, coordinator of the London-based Bretton Woods Project. Jesse Griffiths “It has proven pretty disastrous to use the same solutions for every country,” he said. IFIs also got it wrong about the financial markets. “They said, ‘Let the market run on its own.’ But we’ve learned that the global economy and national economies need to be managed,” Griffiths said. “If we are going to eradicate poverty, address global climate change, and protect human rights, we can’t cling to ideologically based assertions. “We need to accept that governments and citizens need to manage economies so that they deliver the outcomes we want.” While there have been some positive changes at IFIs in the past 20 years -– largely due to NGOs and social movements playing a watchdog role -– there are still more changes needed, Griffiths said. “People only get serious about change when it is categorically obvious to everyone that the system has failed, and the global economic system has definitely failed,” he said. Simply put, the current structure of governance of the world economy doesn’t work because it isn’t democratically accountable, Griffiths says. Additionally, to make more positive changes, world leaders need to set objectives for IFIs that are concrete, equitable and measureable. According to Griffiths, the key to reforms can be summed up in two words: citizen participation. He says things would begin to change if people around the world stopped accepting “pat answers” from their government leaders and started asking critical questions such as, “What kinds of global financial institutions are needed in the 21st century? Why didn’t the IMF warn the world that there were trade imbalances and lack of regulation in financial markets that could cause global economic problems? Are World Bank policies really helping eradicate poverty or are they making it worse?” Questions like these are necessary on a global scale, Griffith says, because “we’re all in this together.”

• London Summit G-20 Leaders’ Statement, April 2, 2009
• Global economic woes, climate change increase importance of NGO oversight - An article in the winter 2009 issue of Mott Mosaic
• Rethinking Finance Web site, which addresses the changes needed at international financial institutions
• G-20 London Summit working groups final reports
• Halifax Initiatives
• Tides Canada Initiatives
• G-20 Economic Summit to assess global financial crisis - A Mott Web article about the November 2008 G-20 meeting

]]>EnvironmentThu, 23 Apr 2009 12:44:19 GMT7A38EA0C-BD03-485C-9F8E-27A3E4898424http://www.mott.org/news/news/2008/urguay07ar02.aspx [Editor's Note: This is a companion article to the 2007 Annual Report]

By MAGGIE I. JARUZEL

Eduardo Gudynas scouts new frontiers in the Amazon and Andean regions of the world, but not in the way most people would suspect.
 
“We explore new problems and also new perspectives for well-known problems,” said the director of the Uruguayan Study Center of Appropriate Technologies in Montevideo.
 
“We’ve been exploring the impact of biofuels on the region for many years so when the topic made headlines in 2007, we already had finished critical reviews and analyses.”
 
Staff members at the study center also seek environmentally sound alternatives to large infrastructure projects such as roads, bridges and dams funded by international financial institutions (IFIs).
 
“One of the main criticisms of those who work on environmental and social issues is that we rely too much on complaining and denouncing,” Gudynas said.
 
“Decisionmakers usually ask, ‘OK, so what’s your alternative?’ We work heavily on providing alternatives.”
 
Since 1985, the center has researched and promoted development projects that are environmentally, socially and economically sustainable. Staff members work in Uruguay and other southern South American countries, including Argentina, Bolivia, Brazil, Chile, Ecuador and Paraguay.
 
The Mott Foundation has provided six grants to the center totaling almost $720,000 since 2000 to help address sustainable development issues.
 
One of its successes has been to help change the way people view environmental challenges, Gudynas says. Now citizens see them as cross-border issues rather than isolated national concerns.
 
With the center’s prodding, decisionmakers at all levels have come to understand the importance of sharing policies and practices across borders as a way to better use the continent’s natural resources.
 
For example, there is currently a strong push for an international network of highways and bridges throughout the region, Gudynas says. Many isolated rural residents would welcome quicker and shorter access to education and medical centers.
 
“Through our work, we are able to see that there are not just a few but many alternative options to reach a sustainable development pathway.”But those same people also want to ensure that the projects will be regulated. That way, adverse impacts are minimized -- not just in specific pockets with strong policies, but regionwide -- because what happens in one country directly affects others nearby.
 
In addition to pushing for governmental cooperation, the center serves as a coordinator so local, national and regional non-governmental organizations (NGOs) can share information about current or proposed IFI-funded projects.
 
By either hosting and/or helping sponsor more than a half dozen workshops annually -- some of which are conducted via Internet and e-mail -- the center can share relevant and timely information with people living in the most remote corners of South America.
 
“We consider the NGOs as spiders,” Gudynas said. “We are small, we move fast and we spin webs that connect different environmental and social groups in many countries.”

Electronic communication also makes it possible for the center to identify local people who are interested in sustainable development issues, but who probably couldn’t attend national or regional gatherings. Gudynas points to a previous Internet training session to illustrate how the center's work empowers people with knowledge and hands-on skills.
 
In that case, a man who had enrolled in the training course was the only person with Internet access in his small town in the Andean highlands of Peru. Consequently, he served as a liaison between the center and his community, downloading information and sharing it during regular local meetings.
 
“Each week, these people living in a remote town -- the so-called ‘roof of the world’” -- were waiting for our documents,” Gudynas said.
 
“After they got them, they would reply with their answers and experiences.”
 
Knowing that the center's work helps improve daily life for people throughout the continent is not only rewarding but also humbling, he says, because there is still a lot left to do.
 
“We are witnesses of the last large remains of the natural heritage in Latin America,” Gudynas said.
 
“We have the potential to preserve that heritage while using it wisely to eradicate poverty. But we also have the potential to destroy it.
 
“Through our work, we are able to see that there are not just a few but many alternative options to reach a sustainable development pathway.”]]>EnvironmentWed, 21 Jan 2009 10:01:17 GMT1BC9CBCE-0231-446A-BFA1-8BBCCCF7F9CEhttp://www.mott.org/news/news/2009/mosaicv7n2cov.aspx By MAGGIE I. JARUZEL

[Editors note: This story is the lead feature of the Fall/Winter 2009 Mott Mosaic.]

The current global economic crisis is pushing international financial institutions (IFIs) -- such as the World Bank and the International Monetary Fund -- back into the public spotlight and increasing their importance in developing countries.

Additionally, in the past 18 months the World Bank has invested a lot of management time in redefining itself as the climate-change bank in hopes of funding projects in developing countries that address global climate-change issues, says Chad Dobson, who founded the Bank Information Center (BIC) in 1988 to monitor and reform IFI lending practices.

Dobson’s return to BIC in December 2007 to become its executive director after a 10-year absence coincides with BIC’s 20th anniversary and comes at a time when its watchdog work is more relevant than ever, given the world economic and climate-change concerns.

International anxiety about the downturn in the financial markets -- coupled with growing concern about the impact of climate change -- has prompted global government and NGO leaders to take renewed looks at the IFIs, which were formed more than 60 years ago to regulate financial markets and promote development.

Two decades ago BIC was one of only a handful of non-governmental organizations (NGOs) that led an international movement seeking transparency and accountability from the World Bank and other IFIs.

NGOs like BIC have played -- and still play -- a vital role by putting pressure on the World Bank for fundamental changes that can make the Bank better and more effective,” Dobson said.

Since 1989, BIC has received 27 grants totaling $3.25 million to support its work through the Mott Foundation’s Environment program. The goal of Mott’s International Finance for Sustainability strategy is to shape international investment and trade policies and practices to support sustainable development, which balances social, environmental and economic concerns.

As the global economic market downturn makes it more difficult for developing countries to access loans from private banks, they increasingly could look to IFIs for project funding.

"IFIs have been desperately awaiting the new business this financial crisis will likely generate,” Manish Bapna said.

“Lending from the World Bank and IMF is often counter-cyclical. Their services are found to be more important when developing countries are doing less well and when these countries have less access to private capital.”

Prior to his current job as executive vice president and managing director of World Resources Institute (WRI), Bapna served as BIC’s executive director. He also worked for seven years as a senior economist for the World Bank. That experience, plus his background with BIC and WRI, gives him the ability to see IFIs from a variety of perspectives.

Increased scrutiny of IFI-funded projects in developing countries should go hand-in-hand with their enlarged importance, Bapna says. IFIs need to resist the “tyranny of the urgent,” he says, and not succumb to “mission creep,” allowing their mandates to expand constantly to include the latest global challenge. Instead, in his view, a key element of their mission should be to support “smart” infrastructure -- small-scale projects that respond to local demand and are sustainable over the long term.

The World Bank, created in 1944, is one of the largest and most well-known global sources of financial and technical assistance with offices in more than 100 countries.

Historically, the Bank and other IFIs have made grants and interest-free or low-interest loans to developing countries for major infrastructure projects such as dams, oil and gas pipelines, road construction, and other projects that seek to promote economic growth and alleviate poverty.

Because of its tremendous size and resources, the Bank needs monitoring, says U.S. Rep. Barney Frank. He is chairman of the House Financial Services Committee, which has jurisdiction over the U.S. government’s relationship with IFIs, including responsibility for authorizing commitment of U.S. funds to these institutions.

“The information we get from NGOs on the ground is different from what the officials give us. I observed this firsthand when I was in Ghana and South Africa last spring,” Frank said.

“We take those NGO reports very seriously. We need to listen to the experience of civil society.”

Frank said he is prepared to use his chairmanship to put more pressure on IFIs to strengthen their environmental and social policies.
 
He said he also would continue pushing the World Bank to revise the way countries are scored and ranked in its annual Doing Business report. The report measures selected business regulations in 178 countries and ranks each based on its ease of doing business.

A central flaw of the report, Frank says, is its index on “Employing Workers,” which gives the best scores to countries with the lowest levels of worker and social protection.

“The worse you treat your workers, the better you are rated,” Frank said. He pointed to the 2008 report in which Saudi Arabia had a more favorable ranking for employing workers than Sweden, despite Saudi Arabia’s total ban on trade unions and systematic discrimination against women, and Sweden’s “exemplary worker protections.”

Frank says he will continue to use U.S. financial support for IFIs as leverage for change, if necessary. Today, the U.S. earmarks almost $1.5 billion annually for IFIs.

Fifteen years ago, Frank was chairman of the House Subcommittee on International Development, Finance, Trade and Monetary Policy. At the time, BIC, the Center for International Environmental Law (CIEL), and other nonprofits provided legislators with research indicating a need for major policy changes that would result in greater openness and public accountability at the Bank. But the Bank’s leaders resisted the suggested changes, Frank said, until he and other legislators threatened to stop the flow of U.S. dollars.

“They needed funds, and we needed an inspection panel,” he said.

Under this pressure, the Bank’s Executive Board of Directors created the inspection panel in 1993. It is often called the “granddaddy” of such panels because all development banks now have them.

The three-member, independent panel provides oversight of the bank’s lending to ensure that its own policies and procedures are followed. The panel also gives citizens a legal venue for enforcing their rights.

This set an important precedent in international law because it allows citizens to challenge the activities of a major international institution, says Daniel Magraw, CIEL’s president and CEO.

CIEL, a public interest law organization and Mott grantee, uses principles of ecology and justice to strengthen global environmental law. Since 1990, CIEL has received 21 Mott grants totaling $3.6 million for its work in this arena.

Along with BIC, CIEL is commonly recognized as one of the key nonprofit organizations that helped make the first inspection panel a reality.

At that time, Magraw was director of the International Environmental Law Office at the U.S. Environmental Protection Agency. From his vantage point, the creation of the panel was a “sea change” because it dramatically increased the accountability of the World Bank to follow specific lending guidelines that addressed environmental standards, rights of indigenous people and resettlement of those displaced by projects.

“There was tremendous push back from the Bank’s management,” Magraw said. “It’s human nature; nobody likes having their feet held to the fire.”

Previously, the Bank had not sought feedback from local people either before, during or after a project was funded, he says. The institution’s management consisted of “mostly good people trying to change the world who wondered why anyone would question their motives or actions and who too often were motivated simply to move money by making loans, rather than look at impacts on communities,” Magraw says.

While the inspection panel has paved the way for the Bank to operate more democratically, Magraw says, there still needs to be stronger policies and better implementation. In addition, potentially affected communities need to be better informed and assisted so they can effectively use accountability mechanisms, he says, adding that organizations such as BIC and CIEL play a critical role in ensuring that happens.

“We’ve worked with the Bank to improve its overall approach by providing detailed critiques and descriptions of new and improved ways forward,” Magraw said. “We’ve not just said, ‘Don’t do this’ or ‘Don’t do that.’”

The same is true for BIC, he says, which has a track record of both looking at specific policies and seeing how they fit into the bigger picture.

Through its 20-year history, BIC has been instrumental in helping open the World Bank’s doors to the public by working with other NGOs in the U.S., Asia, Europe and Latin America that were concerned about the social, environmental, economic and cultural impacts of development projects.

Although outside interest in the lending practices of the Bank has waxed and waned through the years, Dobson said, BIC has been steadfast in seeking to change IFI policies and install safeguards so those most affected by IFI policies and projects could have information and provide input.

Today, there is an increase in the number of NGOs focusing their attention on the activities of the Bank, partly because of international media reports about the damaging effects that development projects in the Amazon Basin and elsewhere could have on the planet, and partly because of the new prominence of IFIs in light of the financial crisis.

Increasingly, sustainable development discussions around the world are focusing on three issues: the global economic crisis, global climate change, and the emergence of new sources of capital for development, including the so-called BRIC countries of Brazil, Russia, India and China, Dobson says.

His peers agree, noting that these issues often are linked.

That has prompted many leaders in the field to call for global standards for all IFIs to follow, whether they are supported with funds from many countries, such as the World Bank, or supported by a single source, such as BRIC governments that have cash available for lending in a tightening global economy.

Currently, if the World Bank attaches conditions to its funding, or refuses to finance an infrastructure project because of significant environmental risks, another funding source with fewer or no environmental standards can -- and often does -- finance the work without any strings attached, says Korinna Horta, senior environmental economist at the Environmental Defense Fund (EDF).

“There needs to be a global response, so we get common standards that everybody everywhere adheres to,” she said. “We do not need a race to the bottom.”

Just as BIC and other NGOs recognize a need today for IFIs to finance projects that better preserve the planet’s resources, these same groups realized many years ago that people needed access to accurate project funding information and a system that guaranteed their ability to get it.

As a result of their work, the World Bank today operates public information centers, posts project information online and releases written reports in several languages. In addition, all Bank-funded projects now must include social and environmental impact studies.

Consequently, the Bank has a fully staffed Environment Department, and about 500 of its approximately 10,000 employees address some aspect of environmental impacts, Dobson said. When BIC first sought reforms, the Bank had only three employees to address environmental issues.

At a celebration marking BIC’s 20th anniversary, leaders from government and the nonprofit sector -- including senior World Bank staff members -- acknowledged the importance of the organization’s work in educating nonprofit leaders and legislators about the need for policy and procedural changes at public lending institutions.

They noted that from the beginning BIC sought safeguards to ensure that community voices were included when decisions were being made about major development projects that could affect their lives, livelihoods, environment and culture.

Efforts aimed at reforming the World Bank eventually led to changes within other IFIs, including the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, and the Inter-American Development Bank Group.

Also, new NGO networks were created to address emerging challenges, such as monitoring other lenders that were willing to fund environmentally risky projects, including private banks and national export credit agencies -- private or quasi-governmental institutions that act as intermediaries between governments and exporters to issue financing.

While the work has expanded, BIC also has grown from a few employees in Washington, D.C., to 23 people who also work in offices in Bolivia, India, Indonesia, Kenya and Thailand. These sites operate as regional centers for the organization’s on-the-ground work.
In addition to being credited with helping to make the World Bank’s inspection panel a reality, BIC also has been cited as playing a key role in bringing about an earlier watershed moment in IFI reform history.

That victory came when Congress passed legislation in 1989 sponsored by U.S. Rep. Nancy Pelosi. Known as the “Pelosi Amendment,” the policy forbids U.S. executive directors of all major IFIs from voting in favor of projects if either of two conditions is present: The projects were professionally reviewed and likely would have adverse environmental impacts, or assessments were completed but had not been made public at least 120 days before the vote.

This amendment was monumental because it opened the door for community involvement earlier in the planning process, says Horta of EDF. This made it possible for the World Bank to learn about adverse environmental and/or social impacts before the projects are too far along. Consequently, they can be redesigned, adjusted, delayed or even halted entirely, Horta said.

Since 1988, Mott has provided 14 grants to EDF for work on IFIs totaling close to $2.1 million.

Although a lot of major changes have been made for the better, there is still work to do, Dobson says.

For example, he wonders whether the World Bank’s process for lending an allotted $23 billion annually should be changed. If it gave out less money, he asks rhetorically, could it do so more responsibly and with greater monitoring?

“With this current model, the theory is the more money you move, the more development you get. But this model doesn’t look at whether the projects are good or not. You just get money out the door and don’t look back to see how projects went because you have already moved on to next year’s funding cycle.”

The World Bank’s current way of doing business also creates inherent internal tensions, Dobson says, because it pits employees against each other -- those who must move the money quickly against those who must ensure projects adhere to sustainable development principles.

During his 20 years in the field, Dobson points to the most important lesson he’s learned: Sustainable development can’t happen outside the democratic process. Experience has shown that the best projects are those in which the people most affected are involved, he says.

“The democratic process is both efficient and effective.”]]>EnvironmentThu, 15 Jan 2009 14:02:41 GMT52828B45-8986-4F7E-B157-4850EB6DB109http://www.mott.org/news/news/2008/sobrevivencia07ar02.aspx [Editors Note: Oscar Rivas, featured in the article below, was name Paraguay’s Minister of the Environment in May 2009. When his appointment to the cabinet-level post was announced, Rivas said issues related to water are a primary concern. “We need to get results right away, yesterday actually, on issues such as the consequences of climate change, including droughts, and the reconstruction of water sources that have been systematically destroyed from a lack of investments.” He emphasized that the lack of water is affecting productivity in sectors such as cattle, and food production.]

By MAGGIE I. JARUZEL

Oscar Rivas and Elias Diaz Peña have been recognized internationally for their environmental work in the Pantanal region of South America. Yet, both are quick to say they don't have all the answers.

Rivas and Diaz co-founded Sobrevivencia (Spanish for "survival") in 1986 in Asuncion, Paraguay. The staff of the non-governmental organization (NGO) conducts research and assesses the impact of current and proposed large infrastructure projects -- bridges, hydropower dams and highways -- funded by multilateral development banks (MDBs).
 

Sobrevivencia people speak out.

"Our role is to ask the hard questions so development decisions are made in the best interest of the local people," Rivas, director of Sobrevivencia, said through an interpreter.
 
"The questions that need to be asked are these: 'Who benefits from the projects approved?' 'Are the projects responsive to the community's needs?' 'Who wins and who loses in the end?'"
 
Sobrevivencia works to promote and build sustainable communities. The organization also provides public education campaigns to inform citizens about specific development projects and how they could affect critical ecosystems in Paraguay and the nearby countries of Argentina, Bolivia, Brazil and Uruguay.

Since 2005, the Mott Foundation has provided two grants totaling $250,000 to support Sobrevivencia and its efforts to strengthen community-based organizations and grassroots groups that work to reduce the negative social, economic and environmental impacts of projects financed by MDBs or the Initiative for Integration of Regional Infrastructure in South America (IIRSA).
 
Sobrevivencia plays a watchdog role, working to ensure that democratic decisionmaking processes are in place when considering large-scale development projects -- whether at the local, national or transnational levels.
 
When it comes to development, bigger isn't always better -- or even necessary, says Rivas.
 
"It's not that the people here don't want water, road or hydro-electric projects. They do want these things, but they don't want -- or need -- them on the scale that is proposed."
 
In addition to taking into consideration information provided by development funders, Rivas says, decisionmakers also need to accept the technical expertise provided by professionals within NGOs and listen to the views of citizens who will be most affected by specific projects.
 
"The questions that need to be asked are these: 'Who benefits from the projects approved?' 'Are the projects responsive to the community's needs?' 'Who wins and who loses in the end?'"
"There are seriously conflicting visions for this region," he said.
 
"The people in the region see themselves living in harmonious ways with smaller, sustainable development projects, but the vision of the MDBs is to propose mega-projects as solutions to poverty."
 
Government leaders with a genuine desire to reduce poverty in the region seem to be caught in the middle as they try to determine the right thing to do, Rivas says.
 
Also caught in the middle, he says, are the thousands of local people who earn their livelihoods from small-scale fishing and agricultural endeavors.
 
The Pantanal is the world's largest tropical wetland system, containing one of the most important sources of drinking water on the planet, Rivas says.
 
"What's threatened is the ecological health of the region,'" he said. "The models of infrastructure development that are proposed would benefit large businesses and force the displacement of many local people."
 
Most NGOs, grassroots groups and citizens favor building more roads where they are justified, Rivas says. But they oppose erecting expensive, ocean-to-ocean superhighways that would benefit only private-sector interests and damage or even destroy community livelihoods.
 
When it comes to suggesting solutions for the transportation challenges facing their home country, Sobrevivencia staff members point to Paraguay's railroads as better ecological and economic choices than superhighways.
 
They also have provided alternative ideas for proposed dam projects in the region, including the Corpus Dam that would straddle portions of Paraguay and Argentina.
 
"Why further desecrate the river when there is already ample electricity in the area?" asked Diaz through an interpreter.
 
The love that the two men have for the Pantanal region and its people is being passed on to a new generation. By linking youth with longtime community leaders in several fields -- environment, development, human rights and women's groups -- Sobrevivencia has re-energized its own staff, because the enthusiasm of the young people is infectious, Rivas says.
 
"After spending time with them, we are refreshed and renewed in our commitment. They bring back that sense of hope," he said.
 
"They make us push the reset button to think about things in new ways. We are convinced that today's young people can bring about real change in the Pantanal region."]]>EnvironmentWed, 26 Nov 2008 12:00:00 GMT34EC2756-4463-4576-A04B-9A06DA4EFEDDhttp://www.mott.org/news/news/2008/IFIissuepage.aspxThe U.S. sub-prime crisis has shaken the global financial system and prompted questions about the abilities of the regulatory architecture -- known as the Bretton Woods institutions -- to monitor and balance the global financial system. To address both the current financial crisis and assess the capacity of the global regulatory system, the Group of 20, composed of world leaders, gathered in Washington, D.C. on November 15th.

During the past few months, a lot has been written about whether the Bretton Woods institutions are still relevant and have the correct mandates. The November 15th Summit was the first of what is expected to be a series of high-level meetings that are being compared to the historic Bretton Woods summit. Established in 1944 at an international summit held in Bretton Woods, New Hampshire, these institutions were created to manage the post-World War II global economy. Today, key governments have raised expectations that could potentially lead to changes at the Bretton Woods institutions.

Mott grantees -- supported through the Environment Program’s strategy to reform international financial institutions (IFIs) -- are keenly interested in the Group of 20 gathering held in Washington, D.C. For 20 years, grantees have monitored these institutions and advocated for changes to make them more transparent and accountable. As a way to share the insights and analyses of Mott grantees, as well as more general background information from a broad array of public information sources, the Foundation has created this space to share a collection of position papers, news articles, and other related materials. 

Press clippings and background information
 

• The Christian Science Monitor (by Howard LaFranchi) - A new economic club of nations: The G-20 summit this weekend will grapple with a global crisis
  
  
• Financial Times (collection of articles) In Depth-G20
  
  
• Financial Times (by Krishna Guha) - World leaders set to present united front
   
• Financial Times (by Alan Beattie and Krishna Guha) - Bretton Woods II unlikely to emerge from G20 Summit
  
  
• Globe and Mail (by Brian Laghi) - World Leaders Let Harper Off the Deficit Hook
  
  
• The Guardian (by Kevin Gallagher) – Milestones for trade: Fixing the global financial system while reforming US trade policy should be a top priority for the Obama administration
   
• The Guardian (collection of articles by several economists) – A new Bretton Woods
  
  
• The Guardian (by Deborah Summers) - Tony Blair to host international summit on economic crisis
   
• Inter Press Service (IPS) News Agency (collection of articles) - Financial Meltdown
   
• Inter Press Service (IPS) News Agency (collection of articles) [Note: Spanish version] - Financial Meltdown
  
  
• New York Review of Books (by George Soros) - The crisis & what to do about it
  
  
• New York Times (by Cheryl Stolberg) As leaders Wrestle with Economy, Developing Nations Get Ringside Seats 
  
  
• NPR, All things Considered - Ahead of Economic Summit, Bretton Woods Recalled
  
  
• Reuters - Brazil's Lula hails G20 meeting as decisive change
  
  
• San Francisco Chronicle (by John Heilprin) - UN calls for new 'Bretton Woods' financial rules
  
  
• The Wall Street Journal (by Douglas A. McIntyre) - G20 Meeting on Financial Crisis a Failure
   
  
• The Wall Street Journal (Official Declaration Summit on Financial Markets and the World Economy) -
  G-20 Statement Following Crisis Talks
   
  
• The Wall Street Journal (by Michael M. Phillips, Alistair MacDonald and Kara Scannell) - G-20 Leaders Tighten Grip on Banks: After Weekend Summit, Economists Say Emphasis on Lending Restrictions Threatens a Quick Recovery
  
  
  
• The Wall Street Journal (by Sebastian Mallaby) – A 21st-century Bretton Woods: Success at global finance summit hinges on China’s willingness to play role once taken by U.S.
   
• Washington Post (by Joshua Partlow) - At Brazil Conference, G-20 urges swifter action on financial crisis  

Grantee and other NGO Analyses and Position Papers

• Bank Information Center (media release) - The IMF is back in business
   
• Bank Information Center (signed by a coalition of 630 organizations from 104 countries) – New undemocratic ‘Washington Consensus’ won’t fix global crisis, state over 630 groups from 104 countries
   
• Bretton Woods Project (staff analysis) - G20 heads of state meeting 15th November 2008: Summary and analysis of Washington meeting
  
  
• Bretton Woods Project (Package of materials, including a seminar report, video, presentations, and background papers) - UK seminar: A coherent civil society response to the financial crisis
   
• The Brookings Institution (a new report by Brookings researchers) - The G-20 Financial Summit: Seven Issues at Stake
  
  
• Centre for Economic Policy Research (collection of essays edited by Barry Eichengreen and Richard Baldwin)
  What G20 leaders must do to stabilize our economy and fix the financial system
  
  
• Center for Global Development (Q & A with Nancy Birdsall) - G-20 Summit and the International Financial Institutions 
  
  
• Center for Global Development (by Nancy Lee, Guillermo Perry, and Nancy Birdsall) - The Age of Turbulence and Poor Countries: The Case for MDB Help with Risk Management
  
  
• Center for Economic and Policy Research (by Mark Weisbrot) - South America: Recession can be avoided [Secured author’s permission to post here.] [Spanish version]   
  
  
• Corner House (by Nicholas Hildyard) – A crumbling wall of money: Financial bricolage, derivatives and power 
   
• Corner House (by Kavaljit Singh) – Taking it private: Consequences of the global growth of private equity
  
  
• Council on Foreign Relations (by Julia Sweig and Shannon K. O’Neil) - Latin America: Not so insulated after all  
  
  
• Latin American Center for Social Ecology (by Eduardo Gudynas) - After globalization cannibalizes itself [Note: This article discusses the root causes of the financial crisis and the potential impact of the crisis on Latin America. Spanish only.]
  
  
• Latin American Information Agency (by Julio Gambino) - On the Washington Summit  [Spanish only]
  
  
• Latin American Information Agency (by Eduardo Gudynas) - The Crisis of market ideology and the return of environmental policy [Spanish only]  
  
  
• Latin American Trade Network (by Kevin P. Gallagher) The global financial crisis and foreign direct investment in Latin America 
  
  
• Oxfam America - If Not Now, When? Three actions the G20 must take now to protect the world’s poor from the economic crisis and build a new political and economic governance system
  
  
• Oxfam America - If Not Now, When? Three actions the G20 must take now to protect the world’s poor from the economic crisis and build a new political and economic governance system  [Spanish only]
   
• World Economy, Ecology & development (WEED) (by Peter Wahl) - With Realistic Radicalism: Which approach to the upcoming era of reforms?   

Links to the Web sites of three major IFIs

• International Monetary Fund (IMF) 
• The World Bank
• Bank for International Settlements

After work by the U.N. Intergovernmental Panel on Climate Change and former U.S. Vice President Al Gore was honored with the 2007 Nobel Peace Prize, one chapter of the global climate change discussion appeared to end while another began.

Trucks pass by a field littered with pipes in Sakhalin, Russia.

“Previously, a lot of time had been spent battling global warming ‘deniers’ …,” said Steve Kretzmann, executive director of Oil Change International (OCI), a Washington, D.C.-based research and advocacy organization.

“While there’s huge room for disagreement about what the solutions are, there’s no longer any credible doubt -- in the U.S. or elsewhere -- that climate change is real.”

There’s now global consensus that climate change is caused by humans and that the change is happening at a faster pace than previously understood, Kretzmann said. Consequently, the world community faces the next chapter of challenges: changing the way energy is used, developing new energy choices and adapting to the changes that result from global warming.

A key element of these challenges is to alter the mix of global financial investments made in the energy and transportation infrastructure sectors, particularly in developing countries, because these long-term investments can lock countries and communities into extractive technologies and energy sources for decades.

For Kretzmann and his OCI colleagues, shifting public and private financing away from large international oil and gas projects and toward alternative energy technologies -- involving wind, solar and geothermal -- that are clean and renewable is one strategy to reduce carbon dioxide (CO₂) emissions.

In 2006, the Mott Foundation provided a two-year, $150,000 grant to OCI to support its international work in the energy industry. This grant is one of several Mott has made under the International Finance for Sustainability program area to non-governmental organizations (NGOs) to explore cleaner and better energy solutions.

This support comes at a time when the world is confronted with dual challenges: rising oil and gas prices, and the impact of climate change.

In developing countries, energy and infrastructure investments are funded by a mix of sources. These include private banks and international financial institutions (IFIs), such as the World Bank, and export credit agencies (ECAs), which are public entities that provide government-backed loans, guarantees and insurance to corporations doing business in emerging economies.

However, NGOs working in the field say the World Bank and other IFIs have not met their goals to promote sustainable alternative energy and infrastructure development.

For example, when G8 government leaders met in Scotland in July 2005, they vowed to lead the fight against climate change and to increase the volume of investments in renewable energy by the World Bank and other IFIs.

To date, there has been more rhetoric than substance, Kretzmann says. Only 4 percent of the World Bank’s $4.4-billion energy sector portfolio funded renewable energy projects in 2006.

The World Bank’s own data show that in 2007 its financial support for fossil fuel projects increased, instead of decreasing, leading to an ever-widening gap in funding between non-renewable and renewable energy projects.

For Johan Frijns, it is important to shift the policies, procedures and practices of the world’s largest private banks that finance large infrastructure and energy projects. He is the coordinator of BankTrack, a network of 18 member and nine partner groups from both developed and developing countries. They work together to monitor and influence private international banks.

This network, coordinated from a secretariat based in Utrecht, the Netherlands, has received $300,000 in Mott support since 2005.

Many in the field of sustainable development applaud BankTrack for its role in working with international private banks in the development and acceptance of the Equator Principles -- a set of voluntary guidelines on how to integrate social and environmental issues into project financing decisions and project implementation.

Today, 50 of the leading international banks, as well as a few ECAs, have signed on to the Equator Principles.

But one major shortcoming of the Equator Principles is that they do not address climate change, Frijns says.

“The Equator Principles are the leading initiative of banks on sustainability,” he said, “but they are completely silent on climate change. The very word ‘climate’ does not even appear in them.”

Frijns says the guidelines address socioeconomic impact, land acquisition, involuntary resettlement of indigenous people and pollution prevention. When appropriate, they also require project sponsors to develop action plans to deal with environmental and social risks, but the guidelines overlook one major area.

Frijns finds it troubling that banks may finance oil and gas infrastructure -- oil wells, refineries, pipelines -- and maintain that such projects are “Equator-compliant,” even though the products themselves -- oil, gas and coal -- may contribute to massive greenhouse gas emissions.

Russia’s Sakhalin pipeline is a prime example of Frijns' concern. He says emerging economies, need access to public and private international finance that allows them to make sustainable energy choices for the future.

Construction of an oil and gas pipeline in Sakhalin, Russia, has changed the landscape of this island community.

As a result, BankTrack calls on “Equator banks” to develop collective policies in or outside the Equator Principles that address the pressing issue of climate change.

Elizabeth Bast, international policy analyst for Friends of the Earth-U.S. (FoE), agrees with Kretzmann and Frijns. She says many public and private banks have expressed interest in addressing climate change, but their actions as yet do not line up with their words.

Bast says there is pressure to find new sources of oil and gas to fuel growth. In response, roads, pipelines and processing infrastructure are constructed for oil and gas extraction, resulting in investment decisions that could have adverse, long-term social and environmental ramifications.

FoE-U.S. has received $4.7 million in Mott support since 1990.

Often, either the energy project itself, or the infrastructure built to support it, is located in or near vulnerable ecosystems, such as the Amazon rainforest. The Amazon and other intact rainforests in Africa and Asia play vital roles in maintaining the integrity of the Earth's climate. According to the U.N. Intergovernmental Panel on Climate Change, current deforestation and land-use practices contribute about 20 percent of the carbon emissions that cause climate change.

The world’s political leaders now realize that reducing the rate of deforestation is one sure way to slow climate change, Bast says.

"Financial support to developing countries will be an essential part of reducing deforestation, but we need to ensure that funding goes toward policies that respect human rights and promote community-based forest management."

How to avoid continuing deforestation in tropical forests will be center stage at the U.N. Framework Convention on Climate Change meeting in Bali, Indonesia, in December 2007.

Delegates from 180 countries, along with observers from the media and NGOs, will gather to define a new framework for a climate change agreement that will replace the Kyoto Protocol, which expires in 2012.

Now that the global community has accepted the realities of climate change and acknowledged a need to reduce greenhouse gas emissions, Kretzmann says, there are two looming questions: how to finance the new technologies that are needed, and how to fund the necessary changes in production processes and lifestyles.

Frijns agrees. From his longtime perspective, the U.N. meeting needs to deliver a regulatory framework that allows for development of market-based mechanisms that are effective and ambitious enough to lead to dramatic levels of CO₂ reductions.

He says leading private banks are not against ambitious reduction targets, because they clearly see the threat ahead. They also are keen on further developing market-based approaches, such as a global system of carbon trading. Companies that emit more carbon dioxide than the allowable limit set for them by an outside authority would be required to buy more carbon dioxide allowances/credits, while those that are more efficient could sell their unneeded carbon credits at a profit.

Such a system may help finance many of the new investments needed to address climate change but only after policymakers deliver a framework that provides a level and predictable playing field for financial institutions for the decades to come.

The new global financing systems will require rules and standards to help ensure that global investments actually will address climate change and that developing countries will benefit.

“There is a tremendous opportunity for achieving sustainability in the world by focusing on the financiers’ projects -- whether public or private,” he said.

“It’s very difficult to get a huge, internationally operating bank to change its course. But once it does, then the effect is felt all over the world. We can achieve systemic change doing it this way and that’s important.”

Herman E. Daly shakes his head in dismay when businessmen and politicians point to ongoing economic growth -- whether local, national or global -- as the panacea for poverty and unemployment. And when world leaders and economists recite only positives about the global marketplace, he cannot keep silent.

“There is almost an idolatry of this concept of growth. You can’t say anything bad about growth -- because it is seen as the solution to everything,” Daly said.

“This is a delusion. There comes a point where growth can

Herman E. Daly

Speaking frankly and challenging the status quo are two of Daly’s trademark characteristics, whether as a professor in a university classroom or as a senior economist in the Environment Department at the World Bank.

For nearly five decades, Daly has lived and breathed economics, focusing the bulk of his career on the interplay between human economies and natural ecosystems.

During his tenure at the World Bank from 1988 to 1994, he joined colleagues in developing policy guidelines that support sustainable development internationally. These policies aim to balance economic growth, environmental protection, and human well-being for large infrastructure projects such as roads, dams, and oil and gas pipeline projects.

The policies sparked changes at other international financial lending institutions, and it is now standard practice to require environmental impact studies before funding is approved for multimillion-dollar projects in developing countries.

As a result of both his depth and breadth of expertise on the subject, Daly is recognized as an international leader in the field, and many refer to him as the father of ecological economics. Still others credit him with giving a warm heart to what sometimes is called a cold discipline.

Ever the teacher, Daly succinctly reduces the complex study of ecological economics to three key elements: allocation of resources, distribution of income and scale of the economy as it relates to nature.

He has given national and international lectures on the topic; served as co-founder and associate editor of the trade journal, Ecological Economics; written dozens of articles for an array of publications; and authored several books, including Steady-State Economics, Valuing the Earth and Beyond Growth.

The father of two and grandfather of three is known as a humble man. If there is anything he boasts of, it is his 42-year marriage to Marcia. While trips to South America aren’t as frequent as they once were, the couple still travel to her native Brazil to visit the people and places they love.

These days, the professor with a quick smile -- and even quicker wit -- can be found mentoring graduate and doctoral students in the School of Public Policy at the University of Maryland. Recognized as the top ecological economics institution in the country, the university has been the recipient of $200,000 in Mott Foundation grants since 1999 for its “Supporting Tomorrow’s Leaders in Ecological Economics” program.

The program enables Daly to serve as a mentor to promising leaders in the field. It is something he has done formally and informally since his days as a professor at Louisiana State University in the 1970s and 1980s.

One of Daly’s LSU students, David Batker, is known internationally for his own work in ecological economics, specifically in relation to natural disasters. He says damage could have been lessened from the Asian tsunami in 2004 and the U.S.’s hurricanes Katrina and Rita in 2005 if ecological economics principles had been incorporated into major coastal development projects in those areas, such as ensuring that mangroves and wetlands remained intact to absorb some of the storms’ impact before hitting land.

Batker is grateful for Daly’s mentoring and cites him as a pioneer in the field.

“Herman is a supreme teacher and a person of tremendous integrity. His ideas form the most important advancement in modern economics,” said Batker, executive director of Earth Economics (formerly the Asia Pacific Environmental Exchange’s Center for Applied Ecological Economics) in Seattle, Washington.

“On many occasions, I saw Herman speak up in the face of tremendous institutional opposition within the World Bank. He did so with convincing clarity, and without malevolence or a personal agenda, to successfully transform the policies of the World Bank for the better.”

Daly’s views on economics caused controversy at the World Bank and other international financial institutions because they went against the grain of traditional economics. Simplified, the foundation of traditional economics is that Earth’s natural resources -- and its ability to absorb pollution of those resources -- are virtually limitless. For ecological economists, Earth’s natural systems are limited and should be treated as such.

Consequently, traditional economists discuss the ever-increasing exchange of goods and services as necessary for economic growth, while Daly and others point to the “negative impacts” and “disservices” that are characteristic of unlimited growth.

For example, he asks, “What is the true cost of a product?”

If a mahogany tree is cut down, there are costs for chopping it, transporting it to a sawmill and paying someone to make it into products that can be marketed, distributed and sold.

But Daly wonders, “What is the cost of growing another 200-year-old tree?” The market doesn’t measure those costs, yet they are real, he says. So are the costs to people of polluting land, water and air in the name of economic growth and development.

Often when he states other troubling truths for ecological economists, such as the disconnect between the Earth’s static biosphere and the ever-increasing number of humans and their possessions (cars, cattle, houses, etc.), he can predict people’s responses.

“They ask me, ‘So what are we going to do if we are not going to grow?’ I tell them, ‘It means we are going to have to share’ -- and that is not the news some people want to hear.”

His conversations are peppered with provocative questions and vivid illustrations in an effort to make the complex subject matter easier to understand.

For example, when Daly discusses globalization, he mentions strong concerns about governments becoming integrated instead of interdependent. For Daly, the difference between interdependence and integration is like “the difference between being friends and being married.”

At age 68, Daly has garnered more national and international honors than a single wall can hold. Among them, he has been given the Honorary Right Livelihood Award, which is Sweden’s equivalent of the Nobel Prize; the Heineken Prize for Environmental Science awarded by the Royal Netherlands Academy of Arts and Sciences; the Medal of the Presidency of the Italian Republic for his work in steady-state economics; and the U.S. Grawemeyer Award for Ideas Improving World Order, which he shared with theologian John Cobb for the book they co-authored, For the Common Good.

His life’s work has not been done to gain awards or esteem, Daly says. Instead, it has been to leave the planet a wee bit better than he found it -- and to instill that desire in others.

These days, he is slowing down somewhat, evidenced by his move from full- to part-time status at the university.

But the fire in his belly is still fueled. He insists that Planet Earth has room for qualitative development without quantitative growth.

But the snapshot of rural Asian serenity is deceiving, river residents say,

Japanese pagoda.

“Few Japanese people know their tax money is funding developments -- dams, pipelines, mining -- that clearly have negative impacts on the people and environment in developing countries,” said Naomi Kanzaki, project coordinator of the Development, Finance and Environment Program of Friends of the Earth-Japan (FOE-Japan).

She said the $1.2-billion San Roque Dam project, which FOE-Japan has monitored since 1998, is just one of many large developments around the globe financed by Japanese taxpayers.

In fact, Japan is a major world player in guiding how public international financial institutions (IFIs) spend development funds. It ranks second behind the U.S. in the number of votes it has at the World Bank, and is tied with the U.S. for largest voting shares in the Asian Development Bank (ADB).

Japan’s influence is illustrated by comparing the loan commitments of the World Bank -- $20 billion in 2004 -- with those of the Japan Bank for International Cooperation (JBIC) -- $15 billion in 2004 (the latest figures available).

Japan’s interest in international development projects also stems from its increasing oil and gas needs. Consequently, Japan is supporting the largest integrated oil and gas development project in the world, Sakhalin II in Russia. The $20-billion project, located in the Russian Far East, is a joint effort between the Royal Dutch Shell oil company, the European Bank for Reconstruction and Development, and JBIC.

Despite local and international concerns about the pipeline’s route crossing environmentally sensitive areas that are vital to the Sakhalin Island’s fishing industry, the project is moving forward.

“Geographically, it’s close and we need energy to live,” said FOE-Japan’s Shoko Murakami. “So Japanese officials see this as an answer to our energy needs, even if it is not a good answer.”

The staff of FOE-Japan and two other Tokyo-based nonprofit groups -- Mekong Watch and Japan Center for a Sustainable Environment and Society (JACSES) -- are the principal providers of direct support and technical assistance to grassroots groups in communities being impacted by Japanese public-funded projects. In addition, FOE-Japan and Mekong Watch regularly assign staff to work in the field alongside local groups.

These three Japan-based non-governmental organizations (NGOs), all Mott Foundation grantees, help bridge the information gap between project financiers in Tokyo and the people many miles away who are impacted by their decisions. They also help ensure that the environmental and social concerns related to JBIC-funded projects are brought to the attention of the Japanese government.

Together, the NGOs have worked to create rigorous guidelines that would give Japanese IFIs the same level of transparency and accountability as the standards used by the World Bank. In 2002, they successfully advocated for adoption of JBIC Environmental and Social Guidelines, which were implemented in 2003.

The JBIC guidelines divide Japanese-funded projects into several stages: screening, environmental review and monitoring. During these stages the lender uses a variety of approaches -- on-site visits, environmental impact assessment (EIA) reports, and stakeholders’ input -- to assess projects.

The guidelines vary for the type of developments (e.g., hydropower, mining and forestry) undertaken. But they typically mandate ongoing oversight of a project’s impact on the natural environment in such areas as ecosystems, topography, and the quality of air, water and soil.

The guidelines also require reviewing a project’s impact on the social environment, including whether there will be forced relocation of residents, damage to historic and cultural heritage sites, harm to residents’ livelihood, adequate compensation for economic losses, and other matters.

Several environmental and social factors were ignored in the Philippines, where the local people – mostly indigenous, rural and poor --- were adversely affected by the construction and commercial operation of the San Roque Dam. 

Many Filipinos began questioning the public benefits of the project after initial land surveying began almost a decade ago. Since then, small grassroots groups joined with national NGOs to oppose the project.

With FOE-Japan’s financial support and on-the-ground guidance, they sent local representatives to Tokyo four times to meet with JBIC officials. Once there, they gave firsthand accounts of how the project negatively impacted the Filipino people and the Agno River ecosystem.

Despite local opposition, the dam was built and became operational in 2003.

For opponents, however, the years of battling were not in vain, because several changes they sought are now included as standard practice for JBIC-funded projects.

For example, stakeholders are included in discussions with lenders before funding decisions are made, not after they are well under way like in the San Roque case.

In addition, printed information regarding major JBIC-funded developments must be disseminated in the language of the local people. Also, the JBIC agreed to post information on its Web site in both English and Japanese about possible projects. Because English is more universally understood, people potentially affected by JBIC-funded projects in other countries – India, Cambodia, Kenya -- can either read the material themselves or get it translated more easily.

While these policy changes are important, they do not go far enough, said Kanzaki of FOE-Japan.

“Japan is a unique country, a rich country compared to the rest of the world,” she said. “We want to do what we can to make sure Japan uses its development money responsibly.”

The JBIC is a public finance agency that handles Japan’s Export Credit Agencies (ECAs) and Official Development Assistance (ODA).

The ECAs provide government-backed loans and insurance to home-grown private corporations that plan to do business abroad, usually in developing countries. Collectively, ECAs are the largest sources of public financial support for corporate investments in international infrastructure projects.

Meanwhile, ODA provides financing in two ways, either by giving funds directly to other governments or by providing financing that is channeled to developing countries through multilateral development banks or United Nations' agencies.

“Often times the JBIC calls these ‘poverty alleviation projects,’ but actually they are leading to more poverty, not less,” said Satoru Matsumoto, Mekong Watch’s director.

He and Mekong Watch’s staff often travel throughout the Mekong region in Southeast Asia, and they have observed how lives, livelihoods and ecosystems have been changed for the worse by IFI-funded projects in the six Mekong countries of Burma (also called Myanmar), Cambodia, China, Laos, Thailand and Vietnam.

One of the most well-known projects is the $750-million Klong Dan wastewater management project in the Samut Prakarn province of Thailand, which was funded by the Thai government, ADB and JBIC.

While it was the first time the ADB implemented a formal inspection plan that allowed people affected by the development to provide input about whether all ADB policies were upheld, neither environmental nor social assessment studies were completed for the project. Also, there was concern that the development would contribute to increased pollution in the Gulf of Thailand.

The project, approved in 1998 but halted since 2003, never has been canceled officially. But it was plagued with problems from the start -- lawsuits, charges of political corruption, cost overruns, protests from local residents about their lack of opportunity to provide early input, and the project’s negative environmental and social impacts.

Even Prinya Nutalaya, Thai’s vice minister for natural resources and environment, criticized the project in 2004, saying, “The Klong Dan project clearly illustrates that a lack of adequate public participation and information is at least highly correlated with, if not an invitation to, the potential for corruption and mismanagement of public projects.”

The three Japanese NGO partners agree. They said it is critical that the nonprofit sector assume the watchdog role for large public development projects, especially with the tremendous growth in Asian economies in recent years and Japan’s willingness to provide funding for much of it.

But Japan’s nonprofit sector is still quite small when compared with the country’s overall economy. Consequently, the three NGOs have divided the tasks based on each organization’s strengths.

Staff members of the Japan Center for a Sustainable Environment and Society (JACSES) knew that implementing only visible strategies used by NGOs in the West, such as national protests and advertising campaigns, would not be enough in their more formal society. So the nonprofit focused its energy on working from the top down to change policies and procedures.

It scored a major victory when the Ministry of Finance, which oversees the JBIC, agreed to host ongoing quarterly meetings with NGOs to discuss development projects.

“It is a genuine dialogue, and it’s very important for all of us,” said Yuki Tanabe, who works in JACSES Sustainable Development and Aid Program.

“Yes, we talk about current projects, but we’re also there to have a chance to improve how future JBIC money is given out and to see that it is used effectively.”

During the regular quarterly meetings, NGO staff members share concerns they have heard from people living near JBIC-funded projects. Often times, Tanabe said, local residents are afraid they might create problems for themselves if they ask project proponents too many questions or try to discuss negative factors related to the development. But community members trust NGO leaders to deliver their messages to public leaders in positions of power.

While JACSES concentrates on keeping the doors of communication open between the general public and government officials at the highest levels, FOE-Japan staff members work broadly with projects on several continents. They analyze development data generated by public and private sources, such as environmental reports.

In addition, FOE-Japan conducts its own research and shares the findings with public lenders, private banks and corporations, and local and national government leaders, including members of the Diet -- Japan’s national parliament.

“One of the reasons JBIC keeps funding these types of destructive projects is because they get a beautiful report sent to Tokyo from the borrowers saying how good their projects are. They don’t hear what is actually happening to the local people or details about the adverse environmental impact of these projects,” said FOE-Japan board member Ikuko Matsumoto.

“The reality of the local context is that borrowers can easily ignore the local voices. But when there’s involvement from international NGOs like us, we can create a way for the local people to be heard, and that gets them some room to negotiate.”

Mekong Watch combines its on-the-ground research in the Mekong region with an advocacy role in Tokyo to become the eyes, ears and mouthpiece for residents. With staff also working in Thailand and China, Mekong Watch investigates specific projects, conducts environmental field research and surveys affected people.

One of the strengths of having people on the ground in various countries is the ability to spot future regional trends, said Mekong Watch’s Matsumoto. For example, there is an increased interest from India and China in financial lending to projects in the region. Both nations now have public IFIs and private banks willing to fund Mekong region projects that the JBIC and World Bank have rejected because of their potential for social and environmental damage.

“There is a balancing act here. If the pressure on the JBIC is too great to not fund a project, we have to worry that another government, like China or India, will come in and fund it with much lower guidelines or none at all,” Matsumoto said.

“We need to work with Chinese civil society organizations to establish strategies together so all our work is more effective in the region.”

The NGO leaders agree that the challenges remaining are many, but they point to the successes, which give them hope to keep working for reform of Japanese IFIs. In addition to the gains mentioned earlier, Tanabe’s voice picks up when he talks about one project.

“We created the JBIC Watch Web site as an informational tool,” he said, pausing to smile broadly before continuing.

Grants and loans by international financial institutions for large-scale projects can affect indigenous residents in developing countries.

Global development banks must consider how projects will impact indigenous people.

Nonprofit groups work to ensure that community members' social and environmental concerns are addressed before large development projects are undertaken.

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