In early 1994, the Ecuadorian government
announced the seventh round of oil leases to open
up ten new areas of the Amazon for oil exploration
and production. At the same time, the Ecuadorian
Congress was discussing a legislative proposal devel-
oped with advice from the World Bank to allow pri-
vate-sector participation in the oil sector. The Bank,
meanwhile, was preparing a $20 million loan to the
Ecuadorian government to privatize the state oil
company Petroecuador, and implement other public-
sector reforms.’
Both the oil leases and the new law were met with
harsh criticism by indigenous groups from Ecuador’s
Amazon region, who have suffered the negative
consequences of oil development for decades. New
oil expansion in the Amazon, they argued, would
lead to greater encroachment into their territories
and further pollute their environment. After learn-
ing of the Bank’s proposed loan, Ecuador’s most
powerful indigenous organization, the Con-
federation of Indigenous Nationalities of Ecuador
(CONAIE), along with other indigenous groups and
non-governmental organizations (NGOs), sent a let-
ter to the Bank, urging it to apply Operational
Directives 4.01 and 4.20-the Bank’s established poli-
cies to mitigate the adverse effects of Bank projects
on the environment and indigenous peoples, respec-
tively. The Bank refused, arguing that the loan had
no direct implications for the environment or indige-
nous peoples.
Indigenous organizations and NGOs have long crit-
icized the World Bank for financing projects that
destroy the lives and livelihoods of indigenous peo-
ples around the globe. Dam projects have displaced
entire indigenous populations, while road building has brought new agricultural settlers, loggers and miners into their territories. The Bank adopted its first policy toward indigenous peoples in 1982, partly in response to violent indigenous opposition to a World
Bank-funded dam project in the Philippines. 2
The policy, which was updated in 1991, looks good
on paper. The objective of the current policy,
“Operational Directive 4.20: Indigenous Peoples,” is
to provide “policy guidance to (a) ensure that indige- nous people benefit from development projects, and (b) avoid or mitigate potentially adverse effects on
indigenous people caused by Bank-assisted activi-
ties.” O.D. 4.20 recognizes the rights of indigenous peoples to natural and economic resources, and
urges their “informed participation” in Bank activi- ties that affect them. The Bank, it suggests, should
assist borrowing governments “in establishing legal recognition of the customary or traditional land-
tenure systems of indigenous peoples.” When a pro-
posed investment might harm indigenous concerns,
borrowing governments should develop an
“Indigenous Peoples Development Plan” that would
commit resources for health care, productive infra-
structure, education, or “entitlement to natural resources.” The policy includes mechanisms for the participation of indigenous peoples in developing
such a plan, but indigenous communities cannot veto Bank projects. There is, however, a provision for stop- ping or postponing projects where “adverse impacts
are unavoidable and adequate mitigation plans have
not been developed.” “O.D. 4.20 is a valuable tool that can be used by indigenous peoples to avoid becoming victims of Bank-financed projects,” says Cindy Buhl of the Bank
Information Center. “However, its practical value depends on implementation.” The Bank does not
routinely apply its indigenous policy to projects that have only an indirect negative impact on indigenous
peoples. In fact, Operational Directive 4.20 is often
not enforced in lending that directly affects indige- nous peoples. 3 For example, three of the five cases filed with the World Bank’s Inspection Panel since 1994 allege that the Bank violated, or did not apply appropriately, O.D. 4.20 in the projects. The Pangue
dam on the Bio Bio River in Chile, financed by the
Bank’s International Finance Corporation (IFC), was
one such case. The claimants alleged that the IFC failed to consult adequately with Pehuenche leaders
who opposed the dam, among other violations. The panel rejected the case because it does not have jurisdiction over the IFC, which lends to the private sector.
One problem with implementation of O.D. 4.20 is that many Bank task managers are unfamiliar with the policy. Others resist applying it to their projects.
While some operations staff have been trained in how to apply the policy, implementation seems to
depend largely on those few Bank staff in the Environment Department and regional technical
departments that are interested in and concerned about indigenous peoples. 4 Moreover, the policy is straightforward for projects with a territorial impact, like dams or roads, but it is less clear how the effects of sectoral lending might be addressed. O.D. 4.20 was not considered applicable in the case of Ecuador, even though privatizing the oil sector could have accelerated oil development in the
Amazon with clear negative consequences for Amazonian indigenous peoples. Another central problem is that the Bank deals only with govern-
ments, who are often unconcerned about the impli- cations of their development projects for indigenous populations.
BY KAY TREAKLE
Outside pressure, coupled with increased staff
awareness, can sometimes lead to greater implemen-
tation of O.D. 4.20. For example, in 1994 the Bank
began to apply the policy in a proposed loan to the Mexican government for aquaculture development,
but only after NGOs brought to the Bank’s attention the existence of indigenous fishing communities that would be adversely affected by the development of
industrial fish ponds. The Bank responded by ear- marking 7% of the loan for indigenous development. The Bank is currently revising O.D. 4.20 to clarify
which parts of the policy must be complied with and
which parts are only advisory. Indigenous organiza-
tions have requested that the Bank hold consulta- tions with them before formalizing the draft. While
Bank staff have agreed, this consultation process has yet to be implemented.
Indigenous organizations have increasingly assert- ed their right to participate in Bank policy revisions
and specific Bank projects. If more vigorously applied,
the World Bank’s indigenous policy may help reduce
the negative impact of Bank-funded projects. At the same time, however, O.D. 4.20 fails to address the
impact of the neoliberal development model itself on
indigenous peoples, which ultimately undermines
their traditional economies and cultures.
1. World Bank, Ecuador: Public Enterprise Reform Technical Assistance Loan, November 22, 1994. 2. See Marcus Colchester, “Changing World Bank Policies on Indigenous Peoples,” Third World Network Features 1093 (Malaysia), 1993. 3. Andrew Gray, “Development Policy-Development Protest: The World Bank, Indigenous Peoples and NGOs,” in Jonathan Fox and L. David Brown, eds., The Struggle for Accountability: Social Movements, NGOs and the World Bank, forthcoming from MIT Press, 1996. 4. Andrew Gray, “Development Policy-Development Protest: The World Bank, Indigenous Peoples and NGOs.”
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