Week of Global Action Against Debt and IFIs 2008

September 2008

We urge you all to join the Week of Global Action against Debt and International Financial Institutions – a week of various forms of citizen’s actions and mobilizations worldwide from October 12 to 19, 2008.

Download the call (PDF)

The Week includes many special dates:

October 12 - Continental day of resistance to colonialism and neocolonial neoliberalism (Americas)
October 13 - Day of Action against Debt, IFIs and Climate Change
October 14 - Day of Action against IFIs, Debt and Privatization
October 15 - Day of action for Debt Repudiation (anniversary of the death of Thomas Sankara, ex-president of Burkina Faso who called for debt repudiation just before his assassination)
October 16 – Day of Action for Food Sovereignty
October 17 – Day of Action against Poverty 

Together let us challenge and confront northern governments, international banks, transnational companies, and multilateral institutions such as the IMF, World Bank, and WTO to take responsibility for debt domination and illegitimate debt.

Let us also demand past and present governments and government officials in the South to be accountable for their role in the debt problem.  Let us declare our readiness to stand in solidarity with those who choose to repudiate illegitimate debt. 

Let us pursue alternative and responsible financial relations, principles and standards to stop the re-accumulation of illegitimate debt.  These will involve major changes in international and national structures, processes and policies towards the establishment of equitable and just economic, financial and political relations.

Initial Conveners:
Global and Regional entities:
Jubilee South, CADTM International Network, Southern Peoples’ Alliance of Ecological Debt Creditors, Oilwatch South America, Jubilee South/Americas, Asia-Pacific Movement on Debt and Development/JS Asia and Pacific, Hemispheric Social Alliance (Americas)

National and locally-based entities:
Observatori del Deute en la Globalizació (Cataluña, Estado español), Irish Coalition on Debt and Development, Jubilee USA Network, Dialogue 2000 (Argentina), Jubilee South Network Brazil, Brazil Network on International Financial Institutions

Bangladesh govt asks Unilever, Aventisto offload shares: TNCs ignore repeated calls for going public

Asif Showkat, NewAge, September 

The industries ministry has again asked Unilever and Aventis to offload their 10 per cent shares, including five per cent stakes of the government in each of the two global consumer goods and pharmaceutical giants.
   

The government made the fresh offer after the two multinational companies sought to acquire the government stakes, industries ministry officials said.
   

The ministry had sought legal opinion from the stock market watchdog, Securities and Exchange Commission, about selling the government’s five per cent shares out to the public.
   

‘We’ve asked the SEC to initiate legal procedure to allow offloading of the shares in the two multinationals,’ said a high official of the ministry, who attended a meeting Tuesday on how to offload their shares.
   

Rules allow the majority shareholder of a company to buy the stakes of the smaller shareholder if the latter agrees to sell its shares.
   

However, in this case, the government wants to sell its five per cent shares to the public and asks both Unilever and Aventis to offload another five per cent shares through the country’s two stock markets.
   

The issues were discussed Tuesday at an industries ministry meeting, presided over by Mahbub Jamil, special assistant to the chief adviser, and attended by senior officials of Unilever, Aventis and SEC.
   

Officials of the two multinational companies offered to buy the government stakes while the industries ministry proposed that the government’s five per cent shares should be sold in the country’s capital market.
   

The Unilever Bangladesh board earlier rejected a similar proposal of the industries ministry to offload five per cent of its 39.5 per cent stakes in the company. The government holds about 40 per cent stake in the Bangladesh operations of French drug maker Aventis, now known as Sanofi-Aventis.
   

The government had decided to offload at least five per cent of its stakes in the multinational companies such as Unilever and Aventis by April 2006 as part of its wide-ranging plan to strengthen the country’s capital market.
   

But no visible progress could be made in more than two years since then due to indifference of the multinational companies, industries ministry officials said.
 ‘Unilever shares are already being traded in Pakistan and other regional capital markets. But here the company is opposed to the government’s proposal to offload a small amount of its shares,’ said economist Professor Abu Ahmed.
   

Multinational companies can enjoy tax exemption if they offload shares in the stock markets, he pointed out.
 The capital market expert expressed his strong reservation about the company’s proposal to buy the government’s stakes instead of offloading their shares in the stock markets.
 Formerly known as Lever Brothers Limited, the Anglo-Dutch fast-moving consumer goods company has been operating in the country since 1964, with the government holding minority shares.
   Renamed as Unilever globally, the company is the market leader in Bangladesh with its popular beauty soap brand Lux and about 40 other toiletries and consumer brands.
   

Unilever Bangladesh has been witnessing double-digit growth since 1990s with annual gross turnover estimated at $200 million, maintaining its stronghold in the country’s fast-growing consumer market. Experts said Unilever stocks would be the most sought-after ones in the capital market if it decides to go public.
   

An inter-ministerial meeting held last week at the finance ministry reviewed the progress of the government’s plan to bring quality shares, including those of multinationals and public sector companies, to the country’s stock markets.
   

The meeting was told that multinational companies had ignored repeated appeals of the industries ministry for taking steps towards share offloading, while listing of state-owned enterprises also faced hurdles from bureaucracy and litigations.
   

The government’s year-old plan to bring major state-owned companies, including the good performing ones, to the capital market also did not see much progress.
 The finance ministry meeting that reviewed the status of the government’s plan found that only three out of nearly 40 state-owned enterprises had so far offloaded their shares. They are Jamuna Oil Company Limited, Meghna Petroleum Limited and Titas Gas.
   

The decision of offloading of the shares of other companies did not progress due to procedural delays. Legal restriction held back the offloading of the government’s 25 per cent out of 51 per cent stake in Usmania Glass Sheet manufacturing company.


The government has also planned to offload more of its shares in Atlas, National Tubes and Eastern Cable, which are already listed with the stock market.
 Earlier, finance adviser Mirza Azizul Islam had instructed officials to complete asset valuation of some of the fully government-owned companies by June to pave the way for their listing with the stock market.
   

A committee was formed comprising officials of SEC, Investment Corporation of Bangladesh and industries ministry to find out by June 2008 whether shares of any of the state-owned sugar mills can be offloaded.

A worrying week on Wall Street

Al Jazeera, September 19, 2008

The collapse of America’s fourth largest investment banks and fears about the stability of other financial institutions have led to some on the most tumultuous days in Wall Street’s history. Al Jazeera’s John Terrett reports on a week that has seen the Dow Jones index have its best and worst days in over half a decade.

Wall Street teeters, the Empire and China shake

The Real News, September 18, 2008

Markets nosedive, recession spreads, world financial system shaken. 

The World Bank and water privatisation: public money down the drain

EURODAD, 18 September 2008

Though the World Bank may be changing its formerly dogmatic approach to full privatisation of the water sector, key cases in Tanzania, Armenia, Zambia and India highlight that the Bank may not be learning quickly enough and that the poor may be left both without improved water and paying for botched privatisations.

At Water Week in Washington in May, Bank vice president Kathy Sierra asserted that privatisation was not “the only answer” – there was the full spectrum of public-private mix of investments instead. Only a few days earlier, a senior World Bank official, Shekhar Shah, reported in New Delhi how the Bank had “learned the hard way” that it was not correct to leave it to the private sector.

But the statement by Lars Thunell, head of the Bank’s private-sector arm the International Finance Corporation (IFC), at World Water Week in Stockholm in August shows that the Bank is still not interested in pursuing public solutions to water provision: “We believe that providing clean water and sanitation services is a real business opportunity.”

Currently the IFC’s focus is on creating the right conditions for private investors, including a $100 million fund, called IFC Infraventures, to “provide risk capital for early stage development of infrastructure projects in the poorest countries, but also to encourage more public-private partnerships.” Thunell also claimed: “The debate is shifting. Instead of ’should the private sector be involved in water?’ the question is ‘how can we work together for sensible and fair solutions?’”

Tanzanians’ nightmare 

A fair solution has still not been reached in Tanzania, where the Bank-supported privatisation of water services resulted in sharply higher water prices, little improvement in supply and the eventual termination of the contract with UK-based multinational Biwater in 2005 (see Update 55, 46). In August this year, the Bank’s International Center for the Settlement of Investment Disputes (ICSID) issued its ruling in Biwater’s lawsuit against Tanzania, and found that while technical breaches of Biwater’s investors’ rights did occur, Biwater was not entitled to compensation because the breaches were worth zero in monetary value and the termination of the contract was inevitable.

“The Tanzanian water privatisation project was a scandal right from the beginning,” said Vicky Cann of the World Development Movement. “It is absolutely right that this Court has found that Tanzania owes Biwater nothing, but shocking that Biwater saw fit to drag the government of such a poor country through the courts in the first place.”

Even though the ICSID has refused Biwater’s claim to compensation, the Tanzanian people will have to carry the financial burden of $140 million loan without benefiting from improvement in their water sector. The lawyer who defended the Tanzanian government suggested that the World Bank should pay reparations to Tanzania as “the whole affair was the prescription of the World Bank. It will be fair that they should pay the government”.

At the very least, as Mussa Billengeya from the Tanzanian Association of NGOs said, “The failure of this policy should be a lesson to the World Bank, aid donors, and governments that privatisation is not a solution for problems in developing countries. In fact, this failure has added a burden to a country that is already struggling to reach its international poverty target on access to water.”

Armenia water corruption 

In August US-based NGO Government Accountability Project (GAP) released a new report investigating the corruption allegations facing the water privatisation project in Armenia’s capital Yerevan (seeUpdate 57).

Armenia borrowed from the World Bank in 1998 to restore the Yerevan water utility, with water-sector multinational ACEA eventually winning the contract to take control of the facility. During the course of the first two years, complaints about unreliable service and contaminated water increased, and the exclusion of local vendors from ACEA tenders led to allegations of corruption.

The GAP report validates the finding of an Armenian parliamentary commission set up to investigate the project in 2004. The parliamentary study revealed that the representative of the international operator ACEA, in collaboration with corrupt state officials, had diverted project materials and equipment to commercial enterprises for personal gain. The study also showed that costly improvements to the systems had been abandoned and replaced by improper for-profit schemes and that the representative of the international operator had used his position to establish a network for the purpose of embezzling public funds.

In 2007, the Commission sought advice from GAP after the Bank failed to investigate the allegations. GAP has been equally unsuccessful in getting the Bank’s Department for Institutional Integrity to investigate what seems to be a flagrant case of project-related corruption. The Bank may be unwilling to take its share of responsibility to redress the harm done or compensate citizens who have lost millions in public funds.

Upfront investment needed 

Privatisation and commercialisation of water in the developing world has suffered – and still does – from several flaws. Companies that took over contracts for water management soon realised the lack of short-term profitability of a sector that required large investment. Unable to fully offset their costs, the companies failed to invest with negative effects on citizens who faced increases in tariffs and declines in access. Often governments could not supervise company performance or hold them accountable as proper regulatory frameworks were not in place.

In a policy brief released by the UNDP-sponsored International Poverty Centre in June, academics Hulya Dagdeviren and Degol Hailu conclude that “So far, Zambia’s liberalisation strategy has emphasised tariff rationalisation. This has failed to ensure full cost recovery and has further constrained affordability and accessibility. The correct policy prescription is up-front public investment to renew and extend infrastructure.”

So why has the Bank not warmed to this policy prescription? A new book analyzing the Bank’s water privatisation agenda in India from Indian NGO Manthan Adhyayan Kendra blames the Bank’s structures for producing knowledge (see Update 54, 53). Author Shripad Dharmadhikary writes: “the Bank’s process of generating knowledge is flawed and exclusionary. It excludes common people, and their traditional expertise and knowledge. The Bank’s knowledge is frequently created by highly paid, often international, consultants, who have little knowledge of local conditions. The knowledge creation is mostly directed towards arriving at a pre-determined set of policies – privatisation and globalisation. This knowledge creation is often selective, in that information, evidence or experiences that do not support these pre-determined outcomes are ignored.”

Based on case studies of the Indian water sector review in 1998, the Bank-support Public-Private Infrastructure Advisory Facility (seeUpdate 56), water privatisation in Delhi, and a project for water restructuring in the Indian state of Madhya Pradesh, Dharmadhikary finds that “[the Bank's] policies have cut people’s access to water, led to environmental destruction, resulted in displacement and destitution of people, stifled better options for water resource management, have had huge opportunity costs, and privileged corporate profits over social responsibility and equity.”

Remunicipalisation wave 

Though the World Bank seems to be unwilling to counsel countries on how to reform public services, developing countries looking for advice can now use a new web site on the de-privatisation of water services. The so-called water remunicipalisation tracker provides information on different cities globally that have successfully taken back public control over water. It is a participatory initiative to which global activists can contribute.

The site, promoted by European NGOs Corporate Europe Observatory and Transnational Institute, says “It’s apparent that a global remunicipalisation wave is emerging.” It indicates that “Approaches differ depending on local circumstances but undoubtedly lessons can be learned from the different but inspiring experiences of remunicipalisation.” That seems to be more than the Bank is willing to offer.

Dhaka Wasa plans 20pc hike in water tariff

Ershad Kamol, The Daily Star, September 18, 2008

Dhaka Wasa is planning to increase water tariff by 20 percent, only after a month it slapped a five percent increase in tariff.   

Dhaka Wasa Managing Director (MD) engineer M Raihanul Abedin said, “The Board has approved increasing water tariff by 20 percent and the proposal has already been sent to the LGRD ministry for final decision.”

“The Dhaka Wasa Board has the mandate to increase tariff up to five percent annually. The Board increased tariff by five percent in July after three years. But it is not sufficient to meet the expenditure as the salary of Wasa employees were increased by 20 percent,” he said. 

He said due to frequent power outage, they have to run pumps often by generators, which is contributing to a rise in water lifting cost. 

However, the decision of increasing tariff without improving the service of Wasa facing systems loss has raised questions.

Transparency International Bangladesh (TIB) Chairman Prof Muzaffer Ahmad said, “An organisation needs to tackle systems loss before increasing tariff.”

“Wasa should improve its service first,” he said, adding that it should conduct a survey before making such decisions.

However, the Dhaka Wasa MD is confident of providing the city residents with better service in the near future. 

“We shall install more water treatment plants to increase our production. Water supply in the city will improve after implementation of the Asian Development Bank (ADB)-funded Dhaka Water Supply Sector Development Programme at a cost of Tk 1,456 crore. Moreover, we shall purchase 75 generators,” he added.

Food security inexorably linked to farmers’ security

Tanim Ahmed*, NewAge, September 18, 2008

The future of small and marginal farmers and small-scale food production, and thereby food security to a large extent, revolves around access. It involves access to land and natural resources, access to inputs, access to finance, access to services and access to markets


QUITE in line with its predictably renewed focus on agriculture and in a bid to tap into the emerging global credit demand arising out of the food crisis, the World Bank has recently finalised another deal with the military-controlled interim government as part of its hastily designed ‘Global Food Response Programme’.
   

A release of the lending agency dated September 14 reads that the agency and the interim government have successfully concluded negotiations for a $130-million Food Crisis Development Support Credit. The proposed programme, claims the release, will assist the Bangladesh government to implement its ongoing policies and pro-poor programmes to cope with high food prices.
   

The World Bank also signed an agreement of about $62 million last year that focuses on agricultural technology and research. The new credit package has components that include food price policy, social protection mechanisms, increasing domestic food production and marketing response while the previous programme focuses on technology and research.
   There is no doubt that one of the primary preconditions for sustainable food security is food production. As such, there is no alternative to increasing food production.

However, merely production of enough food cereals is not enough because people must also have the purchasing capacity to procure enough food from the market to survive. In order to ensure that on a sustainable basis, the livelihoods of the small and marginal farmers must also be brought into focus. These small and marginal farmers not only form the backbone of the domestic economy and feed the entire nation, but also constitute almost half the labour force and an overwhelmingly large portion of the people living in poverty.
   

Attainment of meaningful food security would then naturally require such measures that ensure livelihoods of this vast number of people on the margins. At the same time, meaningful food security, since it is related to agriculture, requires interventions not just at the research end or in areas that lead to higher productivity but also in areas that can bring about positive change in the current agricultural system and benefit the small farmers. In that context, food production and increased focus on research would only be addressing a small segment of a much larger problem.
   

The future of small and marginal farmers and small-scale food production, and thereby food security to a large extent, revolves around access. It involves access to land and natural resources, access to inputs, access to finance, access to services and access to markets.
   

The first requirement for any agricultural activity is land. But as yet there are no land use policies that govern the future of arable land and its redistribution. There is a perceptible concentration of arable into a few hands in different corners and pockets of the country with increasing investment in agribusiness. It also implies that small and marginal farmers will become increasingly landless. One study finds that if all government khas land is distributed among all the landless people in Bangladesh, it would ensure ownership of up to 100 decimals of land per head.
   

Considering that the only means to increasing profit from agricultural businesses and large-scale investment is through the acquisition of ever larger acreage and that there are no effective ceilings on land ownership, especially relating to arable land, larger tracts will continue to be concentrated in a few hands as contract farming and corporate agriculture emerge. Acquisition of more land would necessarily mean that few moneyed quarters would be buying land from a large number of small farmers. This could also be seen as the primary source of livelihood for thousands becoming concentrated into the hands of a few seeking to maximise commercial gains.
   

Although land reforms in the neighbouring West Bengal had seen marked improvement in agricultural productivity, this is a topic that would be frowned upon since the very concept goes against a social norm rooted in medieval feudalism. Ruling establishments, being an extension of that very feudal class, would instead turn to the second best option. But even on that front there has been little progress. In an open market, especially the predatory type that the governments generally practise in Bangladesh, the authorities are unlikely to initiate land reform or even initiate such policies that strive towards redistribution among the landless. As for the landless agricultural labourers there are no laws or regulations that even recognise farm labour as a formal sector. There are yet to be any laws stipulating minimum wages and other rights and privileges that apply to industrial labour.
   

Moving on to agricultural inputs, mainly seed, fertiliser and pesticide, there is a constant shortage at the farmers’ end, especially in case of fertilisers. One thing to note here is that the country’s agricultural system has gradually become seriously dependent on chemical inputs and from the initiatives undertaken by the military-controlled incumbents it appears that even in case of seeds, farmers will very quickly shift from traditional or high-yielding varieties to terminator seeds and then on to genetically modified seeds. Whether it was by design or default, whether it is a matter of conscious policy choice or not, the fact is that although the agricultural system is moving away from its traditional and natural roots to one dependent on artificial inputs, the government is losing its ability for effective intervention. Private quarters are gradually taking up the market of seeds and pesticides, often with little effective quality control or assessment of environmental impacts of pesticide.
   

In fact, the government machinery is increasingly being used in favour of private companies selling certain brands of products. Although there is substantial debate about unquestioned acceptance of terminator technology the policymakers have not engaged in consultation with the experts, scientists or farmers’ representatives to hear their opinion. On the other hand, the government has not scaled up its activities and initiatives appropriately to ensure that input supply matches with that of the rising demand. As a stopgap measure, the government declared a programme to produce 10 tonnes of organic compost at the union level under each sub-assistant agriculture officer. It only indicates the lack of concerted and coordinated plan on this front.
   

It is widely recognised that chemical pesticides and herbicide destroy soil fertility severely and runoff from these lands ending up in nearby rivers and canals often kill off entire fish populations. Use of chemical pesticides has also severely limited fish production, which is part of the traditional rice farming system growing in the stagnant waters of paddy fields. Yet, there are no bars on sales of chemical pesticides, nor is there any effective stress on use of natural and integrated pest management system.
   

That the farmers do not have access to sufficient finances is only evident. In fact, there are no genuine agricultural loan packages from the government and the criteria applied by even the state-owned nationalised banks for agricultural loans automatically exclude the marginal farmers. The only mechanism meant for providing small farmers with some funds is the small loans of Tk 5,000 riddled with irregularity and corruption but even that is hardly an agricultural loan.
   

Compared to the loan packages, for instance ‘marriage loan’, ‘education loan’, ‘housing loan’ or ‘holiday loan’, meant for urban consumers of private banks, the so-called agricultural loans do not take into consideration the crop cycle, its profitability, it growth cycle or its vulnerability. On the other hand, the urban consumer’s education loan factors in all those considerations. Besides this small loans programme there are no other policies or regulations that stipulate lending to the small farmers from any other financial institution or bank, private or public.
   

With increasing instances of extreme weather events such as floods and cyclones and droughts, apparently fallouts of climate change, the small farmers’ vulnerability is also increasing. In this regard, there has been much talk about crop insurance but no effective initiative. Additionally, and in case crop insurance is instituted, there remains the question of monitoring financial institutions and regulating them appropriately to prevent cases of fraud where fly-by-night operators might make away with large amounts of deposits as insurance premiums, never to be seen or heard from again.
  

 It is a general complaint that agricultural extension offices are not active enough and cannot really be relied upon. There is quite understandably a serious constraint of resources in the extension services but at the same time agricultural services could be strengthened and activated. Apparently, there are over 20 different services at the upazila level from the government including agricultural marketing, information, extension and veterinary services besides a host of others. Only a handful of these services are actually active so as to benefit the farmers.
   

The farmers might benefit substantially from increased services and information through the agriculture department. Before that concrete and meaningful roles of each different department must be ascertained and duly assigned in consideration of farmers’ demands, needs and consultations with them. The agricultural services are a classic instance of gradual withdrawal of the state from providing services to the citizens. Its revival will require substantial mobilisation of resources and sincere effort from quarters concerned. However, if revived prioritising the farmers’ needs it could add substantial value to agriculture in general.
   

Finally, all efforts would come to nought if the small farmers’ ability to effectively participate in the market spurred by the ‘invisible hand’ is not ensured. The small and marginal farmers can hardly participate effectively in the market selling their produce to the highest bidder. It is a commonplace scenario that marginal farmers are compelled to sell their produce to a certain party without any negotiations, which turns it into a buyers’ market at the periphery and a sellers market at the centre, where the urban consumer is almost hostage to the suppliers and the prices they fix.
   

Farmers’ access to the urban market, or even the local market, and providing them with the facility and scope to sell their produce could potentially benefit the farmers as well as the urban consumers. This would also require serious efforts from the authorities since it would immediately disturb the status quo.
   

This entire set of programmes would require strong political commitment so that it is supported by appropriate and corresponding policies and regulations ensuring the welfare of the peasants. This political commitment should also see farmers or producers’ organisations taking shape in order to be able to gain strength in numbers and allow them to bargain for their demands unitedly.
   But the current loan packages that promote increased assistance for marginalised groups and increased spending on research besides a few other tweaks in the agricultural system would hardly address the underlying problems failing Bangladesh’s small farmers and thus impeding attainment of food security.

*Tanim Ahmed regularly writes for NewAge. Contact: tanimahmed@gmail.com

Reflections on Phulbari Coal Project

NewAge, September 14, 2008

The Phulbari coal deposit is very likely among the largest in the world, with a capacity to produce 15 million tonnes of coal per year. Then why would the original licensee, BHP, abandon it…asks Nazrul Islam*, a former official of the mining company. 

In recent months there has been a lot of talk again about Phulbari coal deposit and Asia Energy Corporation’s open-cut mining proposal to the government of Bangladesh. The Bangladesh Nationalist Party Government had decided not to proceed with Asia Energy’s proposal after vehement protests by local people and the deaths of peaceful protesters in 2006.

Everyone including myself thought that the open-cut mining proposition had been abandoned forever. It is unfortunate for Bangladesh and its people that like Bangladeshi politics, the same old faces and ideas, resurface after lapses of some period. I have been keenly observing different points of view expressed by many individuals within and outside the country. I have also seen the AEC’s video presentation depicting what would be the benign visual nature of things after of the project. It is a good piece of advertisement material for selling a product to allure unsuspecting customers. Technical and scientific nature of the project need a different approach.

BHP had an agreement with Bangladesh government for coal exploration and possible subsequent open-cut mine development. One simple question is this: Why would a world renowned international corporation like BHP that has the expertise of surface-mining equal to none in the world leave despite securing such a deal? Almost ten years of negotiations, exploration and spending millions of dollars, BHP discovered Phulbari Coal Deposit in 1997 and left soon after. There must be some overwhelming reason for abandoning such a large coal mine, possible one of the larges in the world, with a production capacity of 15 million tonnes per year, at least according to the AEC’s proposal. To understand this, one needs to know the background of BHP’s involvement in Bangladesh. Here, I am in a position to fill in the gap.

I was responsible to get BHP involved in Bangladesh coal project. It took 18 long years of sustained effort that started in the seventies. I got a job and immigrated to Australia in September 1970 after resigning from the Pakistan Geological Survey. In early February 1971, I joined Utah Development Company, the biggest coal miner in Australia as a project geologist for coal exploration. Utah’s then exploration manager, Oliver Warin, and chief of coal exploration, Ted Milligan, were sympathetic to the Bangladeshi independence movement. During nine months of the War of Independence, and for long afterwards, both of them kept in touch with the movement that I was involved in to mobilise support of the Australian government and the people for the independence of Bangladesh and subsequent recognition.

The initial rapport and understanding cemented a long-term friendship among us and these two became friends of Bangladesh after its independence. In fact the first Utah-BHP delegation to Bangladesh, headed by its senior vice-president, Oliver Warin, had a meeting with the then secretary of energy & mineral resources, Shafiul Alam and his geological experts. Warin, in his speech, mentioned his contact and indirect involvement with Bangladesh since 1971. 

Ted, a renowned coal geologist, had an office in Canberra for coal research to locate areas of possible coal deposits in different continents. We often talked about the Jamalganj coal deposit where I worked in 1961-62. I did some literature research on Bangladesh coal based on very limited data I had in my possession at the time: borehole data of Jamalganj, reports on geophysical surveys of seismic, aeromagnetic and gravity by oil companies and the Geological Surveys of Pakistan and India. Based on this study, I could infer that there was a possibility of locating coal deposits at shallow depths in the hidden Rangpur Saddle where graben or half graben structure could have been developed in northwest Bangladesh. Ted agreed with my interpretation.

In late seventies Utah was heavily involved with coal exploration in Australia and many other countries resulted with the discovery of many deposits. I was the senior project geologist at the time and was responsible for the discovery of two coalfields in Australia that earned me professional respect. I was always conscious of my obligation to Bangladesh, the newborn country to whom I owe everything, and wanted to do something tangible in economic development of Bangladesh. I asked Ted to convince Utah’s management to permit coal exploration in Bangladesh. He readily agreed and others concurred.

I wrote a letter on behalf of the company in 1979, to Kazi Fazlur Rahman, energy secretary of Bangladesh, expressing coal exploration interest by Utah. This was before Barapukuria was discovered. Bangladesh did not have mining rules for coal exploration by foreign companies at the time. And the secretary’s reply was that Utah might come with a proposal to discuss with the government of Bangladesh. The company did not feel enthusiastic enough at that moment to venture into uncertain territory with non-existent mining rules as well as not having enough available geological information. Moreover, the company was heavily involved in coal exploration in Indonesia.

In the meantime by acquisition, BHP became Utah-BHP. In 1983, I left Utah-BHP and started my own geological consultancy. I used to have regular contact with friends and former colleagues. After discovery of Barapukuria in 1984, I was able to get my former colleagues and friends in Utah/BHP interested in Bangladesh coal exploration again.

With my assistance as its geological consultant, BHP started negotiations with the government of Bangladesh in 1987 and continued till 1994 when an agreement was signed on August 20, 1994. I was very much aware of the environmental consequences of coal mining in Bangladesh, even before approaching my colleagues. I got the assurance from Ted Milligan and Oliver Warin that the company would adhere to strict environmental studies similar to Australian requirements if coal deposit discovered in Bangladesh. 

BHP was interested in open-cut mining on consideration of several factors. Economics of development costs versus profits by extracting most of the coal, and expertise it had with so many open-cut mines. Ted Milligan took an unusual step to become the project manager of Bangladsh Coal and lived in Dhaka for three years off and on. He never really involved himself so directly in case of other countries. Both Ted and I were not hopeful of finding coal at a shallow depth of around 100 metres that was BHP’s benchmark. But we were hoping that BHP’s management board would change its decision if a large enough deposit could be discovered and opt for underground mining. My own thinking was that even if BHP left then Bangladesh would get a coalfield discovered free of cost without spending a taka. And the country would then be in a better position to develop, by itself, an underground coal mine in the near future with the help of international financial institutions. We knew BHP would not be able to fulfil environmental requirements similar to Australian standards for strip mining at more than 150metres below the ground. 

BHP could not locate a shallow coal deposit around 100m depth; the Phulbari deposit is much deeper between 150m and 260m. BHP knew very well that an open-cut mine at such depth would need multi-dimensional long-term environmental studies besides tackling geological and engineering problems. Considering flood-prone deltaic region having numerous rivers with heavy monsoon rainfall, it is easy to understand that it would be rather impossible to pass through environmental regulations of any country, not to speak of comparable Australian standards. 

Moreover, BHP did not want to create another environmental disaster like Ok-Tedi Copper Mine in Papua New Guinea where it had to quickly abandon the mine and paid hefty compensation to the surrounding inhabitants. The poisonous mine water seepages contaminated the nearby river and destroyed everything downstream. It is obvious to any professional person that open-cut coal mining in Bangladesh is far more complex and needs close scrutiny. 

In fact, after taking over from BHP, AEC was considering submission of a proposal to the government of Bangladesh for underground mining as the logical option. A copy of that ‘Draft Proposal’ has come to my hand. It is intriguing, why and how that position has been changed dramatically. Moreover, AEC’s (now Global Coal Management) surface mining proposal has a marked difference of 80 per cent export component to that of the agreement of BHP where export was considered for excess quantity after satisfying the need of Bangladesh. This is a vital argument in favour of Bangladesh’s energy needs and national interest. Everyone knows Bangladesh’s energy need is very acute and the future economic development is very much dependant on this. A new company like AEC that does not have any mining expertise wants to exploit this situation and ask the government and people of Bangladesh to jump on a mirage like a thirsty wonderer in a desert. In spite of global warming, underground mining is a possible and logical proposition for Bangladesh, considering that clean coal technology may be developed in the near future. Underground mine would not produce enough coal to meet Bangladesh’s needs. But it would still provide some energy for the country and avoid making manmade disasters for generations to endure. Bangladesh cannot afford the luxury to take that sort of a gamble. 

It will not be wise for the Bangladesh government to make a hasty decision for such a complex matter related with vital economic, geological and environmental consequences. My involvement in this project was due to a sense of gratitude to the mother country. If it brings harm instead of benefits for the people of Bangladesh, I would not be able to forgive myself. This is the reason I have taken this step to explain myself in order to solicit forgiveness from those who may have suffered in the recent past and others in the future if such eventuality arises. 

*Nazrul Islam is a former geological consultant for BHP’s Bangladesh Coal Project.

Warming to the dollar

Tanim Ahmed*, NewAge, September 11, 2008

The national climate action plan presented in London at a high-level conference on Bangladesh lacks rigour and falls short of comprehensively addressing climate change impact. The hurriedly prepared document is seemingly being used to ensure substantial and continued flow of funds, with the government, non-governmental organisations, multilateral lending agencies and certain civil society actors vying for a sizeable share.


THE national climate change action plan, styled ‘Bangladesh Climate Change Strategy and Action Plan 2008’, was never really made public, as had been indicated by relevant authorities, and as was generally expected. There are also questions about its preparation, deliberations and recommendations. However, the first question one needs to ask is: Does a military-controlled interim government have the mandate to draw up a 10-year plan, which virtually decides the fate of a nation of 150 million people—of whom almost a fifth could become refugees due to global warming. That the incumbents, almost all of whose self-assigned tasks thus far have ended in resounding failures, have taken upon themselves to draw up the action plan and proceeded with it despite misgivings and reservations of a significant number of experts seem to suggest they do not fully appreciate the value and significance of the document they themselves call the national climate strategy.
   

According to estimates, higher temperatures and changing rainfall patterns, coupled with increased flooding, rising salinity in the coastal belt and droughts, are likely to reduce crop yields and crop production. By 2050, rice production in Bangladesh could decline by 8 per cent and wheat by 32 per cent compared to 1990 levels. Increasingly saline drinking water may also result in health hazards, especially for pregnant women. Increased riverbank erosion and saline water intrusion in coastal areas are likely to displace hundreds of thousands of people who will be forced to migrate, often to slums in Dhaka and other big cities. It is also estimated that about six to eight million people will have become climate refugees by 2050 and would have to be resettled.
   

This national action plan thanks the UK’s Department for International Development for its technical assistance in preparing the report. People close to the preparation process of the document are learnt to have admitted that a consultant from this development agency was one of the main authors of the report. Among others who have significantly contributed to the formulation of this document include people who have been previously affiliated with international lending agencies. (One of the main contributors has even worked as a consultant for a mining company bidding to set up an open-pit coalmine in northern Bangladesh.)
   

It is not that Bangladesh has a dearth of experts on climate change. In fact, at least four authors of the reports released by the Intergovernmental Panel on Climate Change, the highest global body dealing with climate change under the United Nations framework, were from Bangladesh. None of them was involved in the formulation of the national climate change action plan. Curiously, the name of the PDF format of the final national document is ‘IUCN_BCCSAP_2008’, a clear indication of the influence of foreign quarters on the formulation of the document. Previous involvement with a lending agency or foreign nationality should not necessarily disqualify an individual as an author of the national action plan but such matters quite naturally give rise to apprehensions that deliberations of the document and its preparation process only reinforce.
   

The preface to the action plan, by the environment and forests secretary, claims that the document ‘has been prepared through a fully consultative process involving government, civil society and development partners’. What this seems to mean in practical terms is that there may have been a token meeting with a few non-governmental organisations. (In fact, there was one such meeting where a number of experts actually blasted the report as having no substance; understandably, their comments were not incorporated.) Also, there may have been a few meetings with a few other closely-linked ministry officials. Surely, the ‘development partners’, meaning the lending and aid agencies like the World Bank and the Department for International Development, were given the opportunity to express their views about the action plan and, in effect, plan the nation’s future as far as climate change is concerned. However, there is no mention of the people on the ground who would be affected and those who are already on the verge of becoming climate refugees having lost their livelihoods and homes. The stories of people who have built their homes ten or fifteen times are not unheard of. But this document appears to have been prepared without any meaningful or even token consultations with these vulnerable groups.
   

This action plan estimates a requirement of $5 billion for climate proofing and mitigation of the adverse effects of global warming over the next 10 years. This estimation, it must be pointed, is just estimation and has no credible basis. More importantly, however, there are serious concerns over the management and disbursement of these funds. Lending agencies such as the World Bank would naturally be interested in being the custodian of these funds since this would provide them with another opportunity to impose perhaps even stronger and harsher conditionalities with the release of every tranche of these climate change funds.
   

Different quarters have strongly spoken in favour of a national climate change board that includes and accommodates the voice and effective representation of minorities and excluded groups. It is the geographically remote and economically vulnerable groups of people that will understandably suffer the most from climatic changes. This national board, including all sections of the citizenry, government, politicians, non-governmental organisations and lending agencies, would have full authority over the management and disbursement of climate change funds.
   

Since adaptation funds have also been a much-hyped issue at the last UN climate change convention in Bali, the developing countries’ group of 77 and the least developed countries along with other groups have a rather clear idea of the mechanism of funding and management of climate funds. By and large it broadly stipulates that any climate change fund must be over and beyond the amount that have already been pledged to the poor countries by way of the UN Millennium Declaration or the G8 or any such mechanism. These funds must not be in the form of loans and should be paid by countries that have caused the most pollution, meaning the developed and industrialised North, based on the ‘polluter pays’ principle.
   

But the action plan leaves it open for the lending agencies and countries to donate funds as they see fit and through any mechanism. This document’s overwhelming bias towards infrastructure development validates the reservations that quarters close to the formulation process have already expressed. It is difficult to not trace the resemblance with the World Bank-driven Flood Action Plan, the outcome of which, according to different quarters, has been disastrous.
   

Although there has already been substantial discussion regarding climate migration and climate refugees that would be an inevitable fallout of climate change, due to increased frequency and intensity of floods and cyclones and loss of land due to sea-level rise, the national action plan does not mention this. It refrains from suggesting possible means to remove barriers on international migration of climate refugees to the industrialised countries taking cue from the same ‘polluters pay’ principle. It is understandably awkward and sensitive for the industrialised countries, which are already pushing for removal of barriers to the international trade of environmental goods and services, as was seen at the climate change conference in Bali.
   

This national action plan is being presented as Bangladesh’s strategy to address climate change at a joint conference organised by the governments of Bangladesh and the United Kingdom. The government delegation is led by Mirza Azizul Islam, the finance adviser to the military-controlled interim government, who has already indicated his preference for the World Bank to manage Bangladesh’s climate change funds. This delegation also includes several notable figures of Bangladesh’s so-called civil society some of whom are also involved in environmental advocacy and activism. That these quarters have agreed to join the government and, according to the individuals close to the proceedings in London, will have to refrain from challenging this national action plan, only suggests that the presence of these civil society actors will only lend credence and validity to a document that would have been otherwise unacceptable.
   

What has transpired before and during the hasty formulation process of the national action plan, spanning over a period of two months and a half, was a behind-the-scenes tug of war for climate change funds, likely to be in the billion dollar figure. Different quarters and government divisions and ministries, as they got whiff of the possibility of securing such a high amount of funds, especially with Bangladesh being identified as one of the most vulnerable countries, became involved in the process. While a government division was willing to accept these funds in the form of loans, the more relevant department held out. The different quarters vying for a chunk of the pie have not only pitted government departments against each other, but also non-governmental organisations and multilateral lending agencies trying to secure and consolidate their control over these funds.
   

The presence of certain civil society actors in London on behalf of the government, who have thus far been critical of its mandate, the presence of the lending agencies and the consequent hoopla around it only indicates that the meet is more about securing a share of climate change funds rather than genuine development of the millions of people who would be affected in the years to come or even those who must resettle as the receding waters result in increasing river erosion in Bangladesh.
   

Climate change impact would not be restricted to a certain group of people or certain vocations. Global warming will affect the lives and livelihoods of millions across vocations, livelihoods, ethnicities and geographical regions. A certain ministry, a group of non-governmental organisations or the lending agencies would be unlikely to be able to address climate change without genuine people’s ownership of the programmes. There should be push for a national body that duly accommodates the voices of all stakeholders including such excluded groups as women, ethnic minorities and peasants, government, citizens besides non-governmental organisations and lending agencies.
   

To conclude, it is unacceptable that a 10-year plan has thus far by and large excluded and ignored the political parties, and thus has not brought on board the very people who would presumably be running the affairs of the state as soon as national polls take place that are, for the time being, scheduled for December. The approval and input of political parties and political ownership of this national climate change action plan in order to ensure consistency and continuity is essential. Unfortunately, however, the exercise thus far has merely been a bid for funds and different quarters justifying their rightful share over the others.

*Contact Tanim Ahmed: tanimahmed@gmail.com

Bangladesh Climate Change Conference begins in London: UK pledges £75m climate fund

Nazmul Ahsan . London, UK, NewAge, September 11, 2008

The United Kingdom has agreed to provide Bangladesh £75 million (about $132 million) in grants over the next five years to enable it to recoup the losses caused by the recent natural calamities, including the prolonged floods and cyclone Sidr.
   

The two governments signed an agreement to that effect on Wednesday morning at the ‘UK-Bangladesh Climate Change Conference’ at the Royal Geographical Society in London.
   

The declaration also states that the two governments will work together to reduce the emission of global greenhouse gases by the developed countries by about 50 per cent within 2050 to save the lives and properties of hundreds of millions in Bangladesh and other least developed countries.
   

Douglas Alexander, minister for international development, UK, and AB Mirza Azizul Islam, adviser for finance and planning, signed the declaration in London after the opening session.
   

Mirza Aziz said that the responsibility for managing the Climate Change Trust Fund may be given to the World Bank. The UK government has already pledged £60 million from its total package to this trust fund.
   

However sources close the proceedings pointed out that any involvement of international financial institutions is seriously opposed by different sections of the citizens and the civil society. They also indicated that no concrete decision in this regard had been taken by the interim government.
   

Furthermore, such a position is contrary to that of the least developed countries and other developing countries who feel that any involvement of the lending agencies would lead to further conditionalities for disbursement of these funds and would in fact act as an impediment to swift climate proofing of the marginalised communities and excluded groups.
   

The conference was also addressed by Ulla Tormaes, Danish minister for development and cooperation, and Muzzafar Ahmad, an economist and environment activist.
   

‘I am happy to make the announcement of providing Bangladesh £75 million in grants for mitigating some of its havoc caused by recent Sidr,’ Douglas Alexander told reporters after the meeting.
   Besides the £60 million meant for the trust fund, the UK government will provide another £12 million for different projects funded by UK agencies and £3 million for research. It could not, however, be confirmed whether this fund is over and beyond the overseas development assistance already pledged to Bangladesh or a part of it.
   

Creating international consensus to reduce emissions will be the next agendum to help save developing countries from the dire effects of climate change, said the British minister.
 Mirza Aziz termed the commitment as recognition that Bangladesh was truly vulnerable to climate change.
   

‘At least the aid commitment is a positive beginning for more grants from developed countries,’ said Aziz, adding that Bangladesh needs about $6 billion to withstand and mitigate losses due to climate change and the recent cyclone.
   

Aziz called upon the international community, particularly the developed countries, to reduce their emissions and provide Bangladesh with more and adequate funds to implement its climate change strategy and action plan.
   

‘I propose the establishment of a multi-donor trust fund for harmonised action to supplement our efforts in implementing the climate change strategy and the action plan of Bangladesh,’ said Aziz in his speech.
   

He pointed out that the response from the international community is inadequate to address the losses of developing countries caused by the serious devastation of natural disasters.
   

The joint declaration called upon developed countries to reduce their global greenhouse gas emissions to save the least developed countries and small islands, and also the developing states.
   

‘We believe that in order to minimise the future vulnerability of the LDCs and many developing countries that are particularly vulnerable to the adverse effects of climate change, global greenhouse gas emissions should peak within the next 10 to 15 years, and be reduced to at least 50 per cent below the 1990 levels by 2050,’ read the declaration.
   

‘If we are to achieve this scale of emissions reduction, the developed countries will need to take the lead. To put us on track to achieve this target, the developed countries, as a group, should make the commitment to reduce their emissions by at least 25-40 per cent by 2020 compared to 1990.’ The declaration said the developed countries will enhance the availability of new, additional and predictable financial flows to developing countries that are particularly vulnerable to the adverse effects of climate change.
   

On the other hand, the declaration urged the LDCs and developing countries to integrate climate resilience into their development plans and budgets.
   

A 31-member government delegation comprising government officials and representatives of different non-governmental organisations and citizens’ organisations attended the meeting.