Testimonies at 'World vs Bank'

15 October 2007
>>Public hearing on the World Bank The Hague, 15 October 2007 West African Gas Pipeline
In November 2004, the World Bank Group approved guarantees for one of Africa’s largest fossil fuel projects, to be carried out by a consortium led by ChevronTexaco and including Royal Dutch Shell. The proposed pipeline, which would run from Nigeria through Benin and Togo to Ghana, is surrounded by controversy. Originally, the project was supposed to reduce harmful gas flaring in the Niger Delta, but to date it is not certain whether this promise will be complied with. Local people fear the project will cause regional conflict and lock the four countries into fossil fuel energy paths for decades to come. In addition, local communities were not adequately consulted and compensated and pipeline construction is already leading to damage to fisheries. In 2006, more than a dozen Nigerian communities filed a formal complaint with the Inspection Panel of the World Bank, which carried out an official inspection visit in July 2007. At the Hearing, Michael Karikpo from Environmental Rights Action, Nigeria, will talk about the results of this visit and the view of the communities.
Kashagan Pipeline
Oil extraction in the Caspian region presents extreme risks for the environment and health of the hundreds of thousands of people living in the region. Kazakh oil in Northern Caspian contains very high percentages of sulphates – around 18% - and other toxic elements like mercaptans. The International Financial Cooperation (IFC) - part of the World Bank Group - has been financing several infrastructural projects for the oil industry in the area. The Berezovka Initiative group was formed by the citizens of the Berezovka village, located at 5 km from the IFC financed Karachaganak Oil and Gas Condensate Field. Suffering from severe environmental degradation and chronic illnesses due to emissions of the Karachaganak field, the villagers are asking for relocation to a safe and healthy location and compensation for their suffering. Svetlana Anosova, music teacher in Berezovka, is the leader of the Berezovka Initiative group that was created to understand why the health of the community has been deteriorating and to attain a healthy and environmentally sound resolution for the villagers.
Cotton Sector Liberalisation in Mali
Together with its neighbouring West African countries, Mali is among the leading cotton producers in the world. In spite of the labour intensive methods traditionally used to produce cotton, these countries have managed to build up a competitive industry struggling with artificially low prices on the world market due to subsidies in other parts of the world, such as the US. The Malian ‘Compagnie malienne de développement des textiles’, of which the Malian state is the major shareholder, has been put under pressure by the World Bank for many years. In 2004, a US$50 million loan was held back by the Bank until the Malian government in 2005 gave in and liberalised the cotton sector by removing the price regulation mechanisms that ensured farmers a predictable income. As a direct result, the revenues of 3 million Malians dropped by 20 % in a short period of time. Cotton is Mali's largest source of income, and one quarter of the population is dependent on cotton for survival. Temo Tamboura from CAD, a civil society network in Mali, will talk about the social impacts the economic condition has had in Mali, one of the poorest countries in the world with 90 % of the population living on less than 2 dollars a day.
Electricity Privatisation in Nicaragua
The electricity sector in Nicaragua was privatised as a result of IMF and World Bank conditions linked to loans and debt relief. The process started in Nicaragua in 1998 with electricity generation and was followed by the granting of a monopoly over the state’s distribution companies to Unión Fenosa in 2000. Privatisation has led to disastrous results for consumers and Nicaragua’s poor. It has brought no significant investment and no improvement in efficiency. Consumers have seen a worsening quality of service – including a severe increase in power cuts – and have had to pay much higher bills. Many small businesses have folded due to their spiralling losses, and hospitals and other public services have been badly affected. There are also serious grounds to suspect that the generators and the distributor have colluded to cause crisis-inducing power cuts to force the government to grant subsidies and to allow higher tariffs to be charged. Throughout the crisis, the government has not been able to regulate private sector operators, nor champion the interests of consumers. Good practice from managing privatisation of energy sectors in developed countries has been ignored. There is strong evidence that the electricity system in Nicaragua simply cannot function on a commercial basis. This fact is still being ignored by the World Bank and IMF who continue to call for higher tariffs on consumers. Gonzalo Salgado from the National Consumer Defence Network in Nicaragua will report at the hearing how this will heavily penalise the poor while improving the bottom lines of companies operating in the sector.
The World Bank’s Role in Causing Food Insecurity in Malawi
Malawi is heavily dependent on agriculture, both for its economy and the livelihoods of around 90% of the population. From 2000, Malawi suffered from persistent food insecurity and widespread hunger, which was made much worse by the policies pushed by the World Bank, including massively reducing the government’s support to small-holder farmers. Malawi had to privatise its grains marketing authority and remove fertilizer subsidies as a precondition for receiving a WB structural adjustment credit in 2003. In 2005 when a food crisis hit the country, Malawi’s government insisted on reviving its fertilizer subsidy, releasing over $60 million from national funds. The goal was to lower the price of fertilizers and enable agricultural producers to prepare for the following year. The resulting success and aversion of an impending famine has been described as resounding. The results of rejecting World Bank prescriptions were startling – agricultural output more than doubled in 2005, and has continued to rise since. Collins Magalasi, of ActionAid Malawi, will give evidence on the social impact of World Bank conditionalities on food security in Malawi.
The World Bank’s Push for Mining Reform in Peru
In general, World Bank supported reforms in Peru’s mining sector concentrated on improving policies and institutions in favour of foreign investors, without strengthening policies and institutions for the poor and the environment. This led to a mining boom which was accompanied by poor revenue management, social and environmental conflicts, and weak forward and backward economic linkages. Furthermore, the reform programme appeared to exacerbate some macroeconomic weaknesses: Peru’s economy became more vulnerable to external shocks and more dependent on primary commodities. Most notably, the reforms did not reduce poverty and social unrest increased. As mining growth outpaced program efforts to improve environmental management, environmental degradation remains a significant problem in Peru. Miguel Palacin, President of Peru’s National Coordination of Mine Affected Communities, will discuss the impact of mining operations all over Peru.