WORLD NEWS: Ecuador pipeline fuels environmental groups' anger By Nancy Dunne FT.com site; Aug 23, 2002 Although governments attending the UN World Summit on Sustainable Development have clashed repeatedly over goals, the richer countries have been able to agree on one proposal: a four-year, $2.92bn (1.85bn) replenishment of the Global Environment Facility, which funds projects in developing countries considered vital to the rest of the world. Mohamed El-Ashry, head of the GEF, has praised the donors for their "leadership, generosity and good will". But many green groups say that, even with new financing, the fund's work is being undermined when economic objectives clash with its environmental goals. "New funding for the GEF will be droplets of good money in an ocean of wasted funds if the rich countries do not mainstream environment in their international private and public sector finance," said Bruce Rich of Environmental Defense, a US-based environmental organisation. A case in point is construction of a 500km pipeline in Ecuador. When completed next year it is expected to carry 450,000 barrels per day of blended heavy crude oil from the Oriente Basin of eastern Ecuador to the Pacific coast near Esmeraldas. The consortium building the OCP pipeline includes Occidental Petroleum, Repsol-YPF, Perez Companc and AGIP. To Ecuadorean officials the pipeline is "the backbone" of the economy and they estimate it will enable the doubling of oil production. More significant is the International Monetary Fund's suggestion that 90-100 per cent of the enhanced oil revenues go toward payment of Ecuador's $14bn-$16bn debt. However, oil spills have already clogged Ecuador's rivers and drinking water supplies, and increased pumping is expected to accelerate environmental degradation. Furthermore, the new pipeline runs directly through the Choco-Andean corridor, a GEF-financed project implemented by the World Bank. As home to numerous endangered species, including 4,500 bird species and a thriving eco-tourism business, the area is one of the world's top habitat conservation priorities. The linchpin for funding the consortium is Germany's Westdeutsche Landesbank (WestLB), one of the leading arrangers of project finance deals in developing countries. West LB says the pipeline - and indeed all its projects in developing countries - meets World Bank environmental standards. But Ute Koczy, chairwoman of the environment committee of the North Rhine-Westphalia parliament, has disputed WestLB's contention, saying ona recent visit to Washington that the bank had no in-house environment department to study its projects and insufficient transparency to allow outside evaluation. A delegation of environmentalists from Germany and the US inspected the pipeline this month. Accompanying them was Robert Goodland, former World Bank adviser who helped draw up the bank's environmental standards and is now writing a report for two environmental groups on the pipeline's impact. From last September protesters began blocking construction of the pipeline. In January they climbed the mountains of Mindo Nambillo cloudforest reserve, setting up on platforms built in the trees. They were ultimately ejected, but not before allegedly "sabotaging" temporary erosion control measures, according to Stone & Webster, OCP's Houston-based environmental consultant. Fundacion Maquipucuna, the local conservation organisation which administers the GEF project, studied the pipeline's construction and found it highly vulnerable to "catastrophic landslides". It said adherence to World Bank environmental standards could protect the eco- system but procedures had "not been carried out with the integrity that a project of this magnitude and potential impact warrants". Although the World Bank administers the GEF fund, a bank spokesman said earlier this month that the bank could not confirm whether the pipeline met its own environmental standards, because it was not a World Bank project. However, last December Ian Johnson, the World Bank's vice-president for sustainable development, warned in a letter to the OCP that the pipeline could pose serious risks, including loss of wildlife habitats and the possibility that oil spills could contaminate rivers. Heffa Schuecking of Urgewald, a German non-governmental organisation, said the pipeline was emblematic of the contradictions within the UN environmental summit in Johannesburg. Rich countries like Germany would spout rhetoric on sustainable development, without taking real measures to ensure that even publicly supported banks like WestLB did not finance global destruction.