GFMC: Environmentalists Urge World Bank to Stop Lending to Russia

Environmentalists Urge World Bank to Stop Lending to Russia

Bloomberg, 11 July 2000


Washington — Russian and U.S. environmentalists called on the World Bank to freeze a $60 million woodland management loan to Russia, after the world’s most heavily forested nation eliminated its forest protection agency. The loan was approved in May by the bank’s executive board less than a week after Russia abolished its national forest service and its state committee on ecology. It is the first loan for Russia from an international lender since Vladimir Putin was elected president in March. The 68 environmentalists, most of whom are Russian, asked World Bank President James Wolfensohn in a letter to halt the forestry loan and refrain from lending the country any money for environmental projects until the government restores its ecology protection agency or establishes a new one. They are also sending the letter to the World Bank board’s 24 members. “The legality of a loan intended for an abolished agency must be questioned”, the environmentalists wrote. Without an agency to protect forest ecology “we do not believe World Bank Group projects that impact the eenvironment in Russia can proceed in an environmentally, financially or legally sound way”.

Objections to the loan, approved in May, come just days before World Bank staff begin a visit to Russia to consider the government’s request for more than $1 billion in loans to support Putin’s new economic program. Bank staff are due to arrive in Moscow on 17 July 2000 for a mission that could last up to three weeks, said Gina Ciagne, a World Bank spokeswoman. The environmentalists’ attempt to stop the World Bank’s loan also comes just days after China was forced to withdraw its request for a loan to resettle farmers onto land inhabited by Tibetan and Mongol herders. The $40 million loan was the subject of international opposition spearheaded by supporters of Tibetan rights. “There’s a growing awareness of the need to integrate human rights and environmental concerns into projects”, said Doug Norlen, policy director the Pacific Environment and Resources Center in Washington, an environmental group that monitors forestry, oil and gas production and mining in Asia. Environmental Oversight The Russian government appears to be leaving environmental oversight to the natural resources ministry, an agency that licenses mining and oil drilling, according to the environmentalists who sent the letter. The bank and Russia’s representative to the bank’s board had no immediate comment on the abolition of the government’s environmental protection service. Both the IMF and World Bank have said that Putin is in the best position of any leader since the collapse of the Soviet Union to push free-market reforms. The forestry loan was the first tangible sign that the lenders will back their verbal support with new money. “Amazon of the North” Russia has more acres of forests than any other country, amounting to more than one-fifth of the world’s forest cover. The project will concentrate on three forests: one near St. Petersburg, another in central Siberia and a third in the country’s east. “It’s the Amazon of the North”, said Norlen, who was one of the environmentalists who signed the letter. The end of the forest service will “lead to lawless logging”, he said. With the money from the loan, Russia is supposed to improve its forest regulations, including clarifying whether companies can lease forest lands; improve its fire and pest protection; and increase training for companies in how best to use the forest. Training will focus on how to tap forest products, including the processing of berries, mushrooms, honey, cedar nuts and pine resin, according to bank documents. Since Russia joined the bank in 1992, following the collapse of the Soviet Union, loan commitments to the country have reached about $11 billion for 45 projects. In 1998, the bank agreed to lend Russia $1.5 billion to improve tax collection and improve the efficiency of state-owned monopolies in power, railways and other businesses. The project was part of a larger $22 billion bailout of the country by international lenders, and was the largest single loan ever made to Russia. Lending under that program has been stalled since last year, largely because the IMF suspended new loans for Russia. The World Bank follows the IMF lead in lending to support government finances.


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