In the Run-up to Prague: Proposed World Bank Loans To Undermine Environment And The Rule Of Law

From Pacific Environment and Resources Center, Press Release, Wednesday 6 September 2000

Washington, DC: As it braces for protests in Prague later this month, the World Bank is facing calls to halt approval of pending projects in Russia that critics say would undermine environmental protection and the rule of law. The projects in question, to be discussed at a September 12 World Bank Group board meeting, will be for $200 million to support the forestry and mining sectors in Russia.

President Vladimir Putin, acting by decree last May, abolished Russias independent Committee on Environmental Protection and Forest Service, subordinating their responsibilities under the Ministry of Natural Resources, an agency charged with extraction of minerals and oil. Environmentalists contend that without an independent environmental protection agency, Russian citizens constitutional right to a safe and clean environment is threatened. A lawsuit challenging the legality of the agency abolishment has been brought against the Russian government by Ecojuris, Russia's leading environmental law firm. Outrage among Russian citizens is huge; in a recent poll, 87% of Russian citizens condemned Putins decision.

Without independent environmental enforcement agencies, the World Bank cannot guarantee that its projects will comply with Russia's environmental law, said Doug Norlen, policy director of Oakland-based Pacific Environment and Resources Center. “By approving these projects in the face of, and even in defense of the illegal agency abolishments, the World Bank is undermining the rule of law in Russia.

Environmentalists in some parts of Russia have already noticed a chilling effect from the abolition of the Committee. In one case, a regional head of the Committee in Kamchatka recently abandoned his support for a United Nations program protecting two key salmon watersheds that are also coveted by the Ministry of Natural Resources for their gold and gas deposits. The reason, local activists say, is that he is concerned about keeping his job under the Ministry of Natural Resources.

This is more than just another change of bureaucracy that Russia is so well known for, said Dmitry Lisitsyn of Sakhalin Environment Watch. The abolished Committee on Environmental Protection was one of the major achievements of the democratic movement in Russia following the collapse of the Soviet Union. Meanwhile, the forest service had a proud 200-year history. The result is a wholesale attempt by the government to turn Russia into a natural resource colony.

Controversy around the World Bank's support for projects in Russia erupted in May of this year when the bank approved a $60 million loan to Russia's forest service five days after that very agency had been abolished. “If the World Bank doesn’t have the sense not to lend money to abolished agencies, the overall veracity of its overall portfolio in Russia must be questioned, said Norlen.

Added Lisitsyn, Who will benefit from this? A few Russian oligarchs will, the same ones that Putin claims to be cracking down on. So will some U.S. and European multinationals that will be able to operate here with a free hand. But the environment, and those of us that depend on it, will continue to suffer.

The World Bank Group's consideration of these projects comes just a week before protesters begin to convene at its controversial annual general meeting in Prague. “Approval of projects that harm the environment and undermine the rule of law just fuels the sort of folly the World Bank is famous for,” said Norlen.