Recommends

“I am not sure when the World Bank will start to understand that their policies do not work in this region. They should take their nose out of our politics, before things get out of control.”
Evo Morales, Bolivian protest leader and 2002 presidential candidate, speaking a month after the October 2003 uprisings against the plans of the government to export gas out of the country. The World Bank has been instrumental in opening up Bolivia for foreign investment, and IFIs directly financed several pipelines in the country.

Peruvian farmers looking out over the Yanacocha gold mine, where once were five mountains (photo by Sjoerd Panhuysen

Since the 1980s, environmental organizations and directly affected communities have produced impressive amounts of evidence that International Financial Institutions are financing disasters in the extractive industry sector all over the world. Studies and testimonies have demonstrated that, contrary to their own statements and missions, IFI investments in fossil fuel and mining have had devastating impacts on people and the environment.

Over the past several years, people from communities around oil, gas and mining projects have realized that they face similar threats. They have united and are cooperating with international non-governmental organizations, which in turn have helped to galvanize this unity by facilitating access to resources, providing venues for interaction, and coordinating activities and campaigns. This international cooperation has put immense pressure on governments and IFIs to reconsider their support for the extractive industry sector. And the collaboration by mining-affected people and campaign organizations is showing results: around the world, the recognition of the detrimental impacts of fossil fuel and mining operations is growing.

For example, in mid-August 2000, the Czech Republic amended the country's Geology Bill. The amended bill bans the use of cyanide heap leaching technology in gold mining. Friends of the Earth Czech Republic described the passing of the amendment as “the last nail in the coffin of gold mining projects” in the country. Similar bans have been established in Germany and in the US state of Montana . The Philippines , the US state of Wisconsin , a province in Ecuador , and Costa Rica have all banned open pit mining altogether. In the case of Costa Rica , the ban was a result of an eight-year-long campaign waged by numerous communities and organizations including Friends of the Earth.

In another encouraging victory, public pressure played a role in the October 2002 World Bank decision to withdraw from a controversial Romanian gold mine. The IFC announced that it would not fund the Rosia Montana mine in Romania after being repeatedly and sharply confronted by Friends of the Earth International and local people opposing the project (see case study page 20 ).

The IFIs themselves are becoming wary. In September 2000, in response to ongoing criticism concerning its support for oil, gas, and mining projects, and after publicly being questioned by Friends of the Earth International Chair Ricardo Navarro at its annual meeting, the World Bank launched an Extractive Industries Review (EIR) to determine whether it should have a future role in these sectors. The report published by the review committee identifies many problem areas in extractive industries, and recommends that the World Bank phase out its involvement in coal and oil projects, ban certain dangerous mining techniques, and request prior and informed consent for all projects from communities and indigenous peoples.

As International Financial Institutions generally provide legitimacy and financial security to the projects they fund, their withdrawal from the oil, mining and gas sectors would send a clear signal to other financiers. The bottom line is that extractive industries cannot be regarded a sound investment, and their harmful operations should not be eligible for public financial support. There are many readily available alternatives for more sustainable projects proposed by communities from all over the world.

In order to assist in the transition towards sustainable and equitable societies, Friends of the Earth International recommends that International Financial Institutions take the following steps: IFIs should establish a plan to phase out investments in the extractive sectors, including structural adjustment lending.   As a first and immediate step, IFIs should establish no-go areas such as protected areas, indigenous peoples' zones and areas of armed conflict, where they will not promote oil, mining and gas projects. Similarly, IFIs should immediately establish a ban on dangerous technologies, including the dumping of mine tailings in rivers and oceans, and the use of cyanide.   IFIs should focus their remaining investments in extractive industries on the closing down of mines, on helping displaced industry workers to find new jobs, on restoring degraded ecosystems and communities, and on the shift towards renewable energy projects.   All actors involved – IFIs, governments, industry proponents, legal experts, scientists, NGOs and affected communities – should cooperate in repairing the damage done by past projects. All parties that have played significant roles in causing the damage should be held accountable. Legal experts, scientists and NGOs should assist the affected communities in determining the social and environmental damage.   Governments should shift their financial support to decentralized and participatory initiatives that truly benefit people and the environment, for example a transition to renewable, efficient and decentralized energy production for sustainable societies.