In response to criticism of the World Bank Group's involvement in the oil, mining, and gas sectors, during the Bank's Annual Meeting 2000 World Bank President Wolfensohn agreed that the Bank would review its activities in those sectors and look into the best role of the Bank in the extractive industries. This will feed into the Rio+10 Meeting in September 2002. Dr. Emil Salim, former Indonesian Minister of Environment, has been appointed to lead the review process. While civil society groups applauded the Bank's willingness to conduct the review, the process and independence of the review have been highly criticised. A number of NGOs are calling for the ongoing process to be revised and improved so that these concerns are adequately addressed.

Background

A number of World Bank Group activities in the oil, mining, and gas sectors have generated controversy and criticism on issues around environmental and social sustainability, revenue sharing, the protection of human rights and the effects of development projects on local communities. The World Bank Group funds oil, mining, and gas projects; promotes policies and institutional changes through IBRD and IFC; and provides political risk guarantees for companies operating in these sectors through MIGA. While the Bank's support to these sectors may yield short-term economic benefits for host-countries and significant profits to companies involved, in many cases it does not incorporate social and environmental considerations adequately. In most cases, these investments lack social and environmental protection measures or plans for mitigation of adverse impacts.

The World Bank decided in mid-2001 to appoint Dr. Emil Salim, former Indonesian Minister of Environment, to be the Eminent Person to conduct a review called the Extractive Industries Review (EIR). Dr. Salim is equipped with a Secretariat located at the IFC office in Washington, DC.

Note: the World Bank Operations Evaluation Department (OED) and Operation Evaluation Group (OEG) are conducting ongoing reviews on these sectors. Their reviews will be completed at the end of June 2003, though a draft Report will be available in 2002.

The Process

In October 29-30, 2001 a planning workshop on the EIR in Brussels, Belgium, was attended by 49 participants representing stakeholders from the business sector, governments, World Bank Group, and civil society groups. According to the planning workshop and the EIR website, the review process consists of the following activities:

1. Planning: completed in Brussels, October 2001
2. Regional consultations: four consultations will be conducted for Asia, Eastern Europe and Central Asia, Africa, and Latin America regions.
3. Focused research: three to six research efforts will be identified. At this point, the EIR team is calling for research proposals.
4. Field visits. Dr. Salim and his advisors/expert team will visit selected project locations and meet with local stakeholders.
5. Outcomes from the regional workshops, focused research, field visits, draft OED/OEG report and other unsolicited contributions and comments will be discussed in a Final Workshop, scheduled tentatively for September 2002.
6. Based on the discussion in the Final Workshop, Dr. Salim will develop the Eminent Person's Report.
7. Dr. Salim will submit the Eminent Person's Report to President Wolfensohn and use it for the Rio+10 Meeting in September 2002.
8. Based on the Eminent Person's Report and the OED/OEG draft report, President Wolfensohn will submit Senior Management Recommendations to the Bank Board of Directors.
9. The Bank Board will receive the Senior Management Recommendations and the final report of OED/OEG Review.

Flowchart of the Proposed Process (as of 14 January 2002)

The EIR Team has scheduled the Final Report to be submitted by the end of October 2002 and the entire process to be completed around the end of the year (see the agenda below). Civil society groups have raised concerns about the timeframe, being too short for a meaningful, comprehensive review. To date, the EIR Team has not officially revised the schedule as requested.

Proposed Agenda of Activities:

September 2001	Launch of the Extractive Industries Review Consultation Process; opening of the website, Background Paper of the World Bank Group available on website
October 29-30, 2001	Planning Workshop in Brussels
February 12-15, 2002	Regional Consultation Workshop I – Asia/Pacific Region, Lombok Indonesia
March, 2002	Regional Consultation Workshop II – Latin America and Caribbean Region
April, 2002	Regional Consultation Workshop III – Africa and Middle East Region, Cote d'Ivoire
May 2002	Regional Consultation Workshop IV – Eastern Europe and Central Asia Region, Romania
By May 30, 2002	Interim closing of consultations for report writing
By July 30, 2002	Draft Consultation Report posted on the Web and widely distributed for comments
Early September, 2002	Final Consultation Workshop
October 30, 2002	Final Consultation Report presented by Dr. Emil Salim to World Bank Group President
Within 3 months of presentation of final report	Management Recommendation to WBG Board of Directors on "Extractive Industries"

Source: EIR website. Information downloaded 13 January 2002

The EIR Team

Dr. Salim, based in Jakarta, is leading a four-person Secretariat based in the IFC office in Washington, DC with staff chosen by the World Bank. He is equipped with a personal assistant based in Jakarta. He will set up an Expert Group and Regional Advisory Panels. As of mid-January 2002, these Expert Groups and Regional Advisory Panels have not yet been identified and appointed.

In the meantime, Dr. Salim will also be heading the Management PrepCom for Rio+10. This raises concerns about his workload and the possibility of overlapping agendas between his assignments in the EIR and in the Rio+10.

Funding

The World Bank Group, Norway Trust Fund, and Germany Trust Fund are providing a total of USD 3 million for the EIR.

Lack of Independence, Flawed Proposed Process

Initially, the public cautiously applauded the EIR initiative. However, fundamental problems were later found in terms of independence and the proposed process. Civil society groups from northern and southern countries have called on the EIR Team to ensure that it improves its independence from the Bank and revises the process in order for the EIR to be credible. In detail, the concerns are:

• Lack of Independence: to date, the Eminent Person has constantly renegotiated and exchanged letters with World Bank staff in making key decisions. There is also a serious problem with the EIR Secretariat in Washington, DC. Because the staff is selected by the World Bank and comes from the World Bank, they may be accountable to and report back to the Bank, and not necessarily to the Eminent Person, the head of the EIR. In addition, the location of the EIR Secretariat on the same floor as the IFC Mining Department creates great concerns about its independence and impartiality.

• Lack of Budget Authority: The Eminent Person does not have full control over the budget for the EIR or full authority to determine the best uses of the review's scarce resources.

• Flawed Terms of Reference: The Terms of Reference should be revised so that the process is comprehensive in scope, open to all ideas and alternatives, inclusive with regard to participation, and genuinely independent in the hearings, findings, documentation, research, conclusions and recommendations. Input on the Terms of Reference that were distributed for consultations and comments has yet to be incorporated.

• Lack of clarity regarding Expert Group and Regional Advisory Panel: It is still unclear on when and how the Expert Group and Regional Advisory Panel will be developed and what the member selection process will be. Civil society groups have proposed that an 'Expert Group' should be put in place composed of individuals selected by the major interest groups, including (but not limited to) affected communities, indigenous peoples and concerned NGOs. These interest groups would:
  • advise the Eminent Person;
  • help guide the Regional Workshops and the Final Workshop and drafting process; and
  • share the burden of hearing testimony, identifying and analysing focused research and reviewing inputs, and ensuring the production of balanced reports that fairly summarize the information gathered by the process.

• Workshop Procedures: Workshop participants will be comprised of four groups of stakeholders: government, industry, World Bank Group, and others. Stakeholder groups are invited to self-select participants for the Regional Workshops, although Dr. Salim reserves the final decision on who he will invite for the Regional Workshops. The role of the WBG at these meetings has been criticised. The Bank should not participate as an equal 'stakeholder' in these meetings since this would not serve the goal of these consultations--to solicit local perspectives and experiences. Bank staff should be there only to observe and, upon direct request, make factual clarifications. Moreover, having the Bank as a 'stakeholder' in the meetings would enable the Bank to influence strongly the discussions that will be the basis for recommendations to the Bank's Board. This situation undermines the independence of the entire process.

• Schedule: The timeframe for the review should be extended to allow sufficient time to ensure genuinely participatory workshops and well-prepared inputs to discussions. Given the continuing confusion about the secretariat, TOR, budget, and advisory bodies, the current proposal to hold the four regional workshops over the next four months is neither realistic nor likely to be very productive. Some civil society groups propose that the EIR Team should also be given until the end of the year allowed to complete its work.

• OED/OEG Review: Currently the World Bank Operation Evaluation Department (OED) and Operation Evaluation Group (OEG) reviews of Bank involvement in the Oil, Gas and Mining sectors (OGM) will not be completed until June 2003. It is only logical that the EIR, as an independent and public review of the World Bank Group's engagement in these sectors, should be informed by these findings, not the other way round as currently scheduled. Critics recommend that the regional workshops planned under the EIR should be delayed until at least the first phase of the OED and OEG reviews of the Bank's engagement in OGM have been completed and their findings released.

In the next IFIs Factsheet: update on the reforms of the Secretariat, review process, revised TOR, establishment of the Expert Group and Regional Advisory Panel, and updated agenda of events.

Sources:
EIR website www.eireview.org
Report on the Extractive Industries Consultative Review (EIR) Planning Workshop, Brussels, Belgium, October 29-30, 2001.
Oxfam America: Extractive Sectors and the Poor, October 2001
Forest Peoples Programme: The World Bank's Extractive Industries Review: A Credible and independent Review of World Bank Engagement in the Mining, Oil, and Gas Sectors? An NGO Report on the Planning Workshop of the Extractive Industries Review of the World Bank held in Brussels between 28-30th October 2001.
Draft Sign-on letter to Dr. Emil Salim by a number of civil society groups, tentatively dated January 17, 2002. This letter was not sent to Dr. Salim as concerns raised in the letter were being addressed.