DTE IFIs Update No 37/ April 2004

The Fourth World Social Forum (WSF) was held in Mumbai, India, on 16-21 January 2004. The First WSF was held in Porto Allegre in 2001 as a response to the World Economic Forum sponsored and supported by the World Bank, the IMF and the WTO. The WSF “Another World is Possible” campaign has been developed as an open forum in order to reflect, exchange ideas and experiences as well as building links between civil society organisations and movements that oppose neoliberalism and the domination of capital. The WSF aims to prove that there are people-based development alternatives. The WSF was attended by over 75,000 participants from all over the world representing NGOs, indigenous peoples, activists as well as Noble prize winners.

In response, the World Bank has questioned whether there is “another world” as proposed by the WSF, whether this other world may be implemented or whether it is no more than rhetoric. As far as the World Bank is concerned, this dream is still far away from reality and in fact humane globalisation may only be attained thorough collaboration with the IFIs and corporations that the WSF is opposing.

Indigenous peoples and NGOs concerned with forestry issues harnessed the momentum of the WSF by holding a strategic meeting in order to discuss conservation and indigenous forest-dwellers' rights. The four main issues discussed were: the impact of conservation, global environmental politics, development mistakes that impact on local communities and a focus on the negative impact of monoculture plantations that are more concerned with serving the interests of industry rather than local community needs. The meeting issued the “Mumbai Forest Initiative” declaration (http://www.wrm.org.uy/statements/form_Mumbai.html), which outlines principles for forest conservation and the protection of peoples' rights over forests. The declaration also made a number of recommendations, including that IFIs must no longer have any role in forest policy-making and forestry related projects given the role the IFIs play in the destruction of forests.

The Indonesian environmental NGO, WALHI, which participated in the WSF and also in the World Economic Forum in Davos, focussed its attention on three main issues: corporate responsibility, water resources and globalisation. WALHI believes that the TNCs only serve their own interests without giving enough consideration to the negative impact of their activities on local communities. Thus WALHI is involved in campaigning for corporate responsibility legislation at national level.

On 26-30 January 2004, the ADB held a meeting in Manila to discuss water resources under the theme, “Water for the Poor: Setting the Rules and Finding the Money”. The meeting was attended by 350 participants from the Asia-Pacific region and resulted in the setting of a number of priority activities that would provide the poor with better access to water resources. The meeting focused on the problem of rural poverty. It was agreed that it was important to increase rural financing and make improvements to finance mechanisms through decentralisation. One means is through rural credit schemes and improvements to the mechanisms for financing rural economic activities (see IFI Update No. 35 November/December 2003).

Priority activities agreed upon include: 1. decentralise financing to local communities and NGOs; 2. carry out action research and assessment of the results of pilot projects in order to improve project design and incorporate them within existing institutional structures; 3. promote the local private sector as a key source of financing and a key partner in water projects; and 4. focus on incremental action at local level.

The IFIs identified the main reason for poor water access and services as inefficiency of government and funding. Erna Witoelar, UN Special Ambassador for the Millennium Development Goals (MDGs) for Asia and the Pacific, has stated that the problem does not lie in lack of funding and technical ability, but rather political obstacles and lack of political will. So is the approach suggested the correct one, are there appropriate policies and institutions already in place that are able to respond to the aspirations of women, the poor and the marginalised?

The assumption also emerged that there is a conspiracy behind water resource management that marginalises the poor. Charles Andrews, ADB Water and Sanitation specialist agreed with this opinion and added that the conspiracy is strengthened by weak government administration and low tariffs. The solution is to give more autonomy and proportional financing, encourage the role of the private sector, effective leadership and a strong civil society as a catalyst. Water Aid Director, Ravi Narayanan, underlined the need to broaden the focus on poverty because of its impact on women. The poor should not only be viewed as victims, but also as potential sources of knowledge, capacity and resources.

At this meeting the ADB took the opportunity to honour the Phnom Penh Water Supply Authority in Cambodia for its achievements over 12 years. These include improvements to the water supply that have resulted in 80% of the population having access to clean water and the reduction of inefficient water use from 72% to 22%. The ADB believes that this success was attained through creativity and innovation in water policy and implementation.

ADB Vice-President, Liqun Jin, closed the meeting by emphasizing the need to: 1. set the poor as the target of development; 2. strike a balance between short term and long term strategies; 3. improve the access of the poor to funding, not only from external sources but also by harnessing internal potential; 4. increase knowledge and information networks and; 5. promote gender-balanced leadership. In order to improve access to water resources by the poor, all the participants agreed that inefficient water supplies should not be tolerated, the public should be mobilised to apply pressure on politicians and bureaucrats and that all clients must receive good services.

One of the ADB's recommendations - the decentralisation of water - has already been taken up in Indonesia. Also in January, the ADB allocated a loan of USD 73 million for the decentralisation of irrigation management in Indonesia, specifically for participation in irrigation and water resource management. This programme, which is being implemented in 25 regions in Lampung, Banten, West Java, Central Java, East Java and South Sulawesi, prioritises rural areas where 40% of the population lives below the poverty level.

A study carried out beforehand concluded that the main problem with sustainable irrigation was weak policy, low levels of stakeholder participation and insufficient evaluation and funding of irrigation maintenance and operation.

Will decentralisation strengthen the control of marginalised communities over water or will it merely legitimise the involvement of the private sector in water through privatisation? Poor government administration has been identified as an obstacle, and this is also being used to legitimise private sector involvement.

At international level, around 4,000 NGOs and activists concerned with water resource issues, as well as indigenous peoples from over 60 counties gathered in Delhi on 11-14 January 2004 in the lead up to the Fourth World Social Forum (WSF IV) in Mumbai. Representatives from Indonesia include the Anti-Debt Coalition. This meeting took the form of a debate that was held to coincide with the WSF and organised by the Peoples World Water Forum (PWWF) and the Asia Pacific Movement on Debt and Development. The aim of the meeting was to discuss a vision for action and a strategy to face the global forces that are causing the destruction and privatisation of water resources. In essence, control over TNCs needs to be increased. Water is not a commodity that should be privatised and sold for profit.

The People's World Water Forum comprises of a number of anti-globalisation activists that met at the WTO meeting in Cancun. Many different forums have been established to deal with water issues but they have not as yet been organised enough to engender global solidarity even though the problems are the same, namely secret negotiations and lack of transparency with the result that the public at large is not involved. Dam-building does not take into consideration environmental capacity, or farmers suffering water shortages. Women as the main consumers of water are also victims.

This forum has not yet led to a joint agreement on concrete action, but has already drawn up a draft agreement that will be circulated in order to attain global solidarity against the role of the IFIs and TNCs in water management.

In January 2004, the ADB disbursed a technical assistance grant of USD 300,000 to finance civil society involvement in the development process in Indonesia. Support for the grant was obtained from the UK's Department for International Development (DFID) Partnership for Innovation in Poverty Reduction http://www.adb.org/Documents/Policies/PRF/default.asp. Implementation is under the coordination of the Director General for Rural and Community Empowerment, Department for Home Affairs.

In the short term, this assistance is intended to develop a mechanism to fully integrate civil-society representatives as key regional players and stakeholders in ADB-assisted projects. In the future it is hoped that civil society contributions will be able to institutionalise their contributions to regional development.

At the routine meetings between the ADB's Resident Mission in Indonesia and civil society that have been held since March 2001, it was agreed that there was a need to establish a regional working group that involved civil society in order to interact with regional government and the Department for Community and Rural Empowerment in particular. In this consultation process, civil society groups asked for similar working groups to be set up in a number of locations all over Indonesia, not just in Jakarta. In response, the ADB has established working groups in Yogyakarta, Bandung and Medan, taking into consideration the fact that collaboration between the ADB and civil society already exists in these localities where a number of ADB projects are running. These working groups will be involved in the design, management, monitoring and evaluation processes. The funding is aimed at improving regional data and the dissemination of ADB policies, procedures and operations in the regions. In this regard, does civil society have the capacity to take on a role in controlling ADB projects or will they only become tools for facilitating ADB projects in the regions?

The World Bank has also stated that the East Asia region needs to increase investment in infrastructure by at least USD 200 billion up to 2010. At the moment only USD 20 billion per annum is being financed by the private sector and the IFIs.

Poor infrastructure influences the economic performance of developing countries as well as poverty reduction. In order to respond to this, the World Bank, together with the ADB and the JBIC, will carry out a study in order to assess infrastructure needs and finance strategies through private and public capital. In this context, infrastructure includes energy, transport, water supplies and telecommunications systems. Infrastructure financing must be carried out transparently and must accommodate environmental and social problems as well as equality between rural and urban areas. Currently Japan, China, South Korea and Southeast Asian countries are looking into the possibility of developing the bonds market in order to finance infrastructure. The IFIs very much believe in the assumption that infrastructure has a very important role in poverty reduction through fast economic growth.

In Indonesia, the World Bank and the Committee for Policy on Speeding-up Infrastructure Development (KKPPI) have stated that infrastructure in Indonesia is very poor. Only around 34% of the urban population or 14% of the total population have direct access to clean water. The same applies to the supply of electricity and telecommunications. New Energy and Telecommunications legislation has been drafted that supports the privatisation of state-owned industries.

The Extractive Industries Review (EIR) team finally sent an official letter () to the World Bank concerning the results of the Review and recommendations to the World Bank Group for the future (see IFI Update No. 36, March 2004).

In addition, a number of different organisations have sent letters to World Bank President, James Wolfensohn, the contents of which support the EIR team's recommendations and push the World Bank to implement the recommendations. Organisations include:

Emil Salim and the EIR team met with World Bank President, James Wolfensohn, the management from the Oil, Gas and Mining Division as well as a number of others on 26-30 January in Washington DC in order to discuss the implementation of the EIR team's recommendations. According to the plan, the World Bank Management Team would send in their response to the EIR team's finding on 25 February 2004. However, Wolfensohn decided to delay the response because more time was required to consider the EIR report's findings as well as assess further the positions of all stakeholders.

After that, the World Bank Management would submit its Draft Responses to the EIR recommendations to the Committee on Development Effectiveness (CODE). In his letter to the World Bank, Emil Salim suggested that the prior to submitting the draft, CODE, the EIR team and the World Bank group should meet and the results of the meeting be included in the Draft Responses. The World Bank and the EIR team have scheduled the final meeting for the discussion of the implementation of recommendations for 19-20 April 2004. In addition, Emil Salim also asked that the Draft Responses be made public.

Contact NGOs that have signed the letter to the World Bank via:
Petr Hlobil
CEE Bankwatch Network
Kratka 26, Praha 10, 100 00, Czech Republic
Tel.+fax: 420-2-7481 65
e-mail: energy@bankwatch.org
Janneke Bruil
t: +31 20 622 13 69

Coordinator International Financial institutions Program
Friends of the Earth International
Keith Slack, Oxfam America, 1-202-496-1308 Payal Sampat, Mineral Policy Center, 1-202-247-1180 Andy Whitmore, PIPLinks 44 1865 242264 Emily Caruso, Forest Peoples Programme, 44 1608 652893 Steve Kretzmann, Institute for Policy Studies, 1-202-234-9382 x210.

This IFI update is published by Down to Earth, the International Campaign for Ecological Justice in Indonesia.
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