Panos Radio podcasts report on Phulbari resistance

October 29, 2007

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Photo: Shahidul Alam

Panos Radio South Asia (PRSA), an undertaking of Panos South Asia, on October 15, 2007, podcasted a report on community resistance against Phulbari Coal Project in Bangladesh.

In this latest edition Panoscope went to Phulbari, a small hamlet in north Bangladesh where, for the past several years, local residents have been resisting an open pit coal-mining project that threatens to displace thousands of people and destroy the environment. The controversy revolves around a clandestine deal between the erstwhile Bangladesh government and a British coal company called Asia Energy (now renamed Global Coal Management PLC). Asian Development Bank (ADB) is planning to provide US $ 100 million loan and US $ 200 million political risk insurance to Asia Energy. ADB is now conducting its due dilligence and scheduled to approve the funding the project in March 2008.

Download and listen to the report.

Download the complete transcript: phulbaripanoscope.doc

Visit Phulbari Resistance for more information on the community resistance against open pit coal mining in Phulbari.

Photo essay on Phulbari: Profits versus the poor


US bill for RMG market access needs govt engagement

October 28, 2007

NewAge, October 28, 2007. Dhaka, Bangladesh

The current military-driven interim government has yet to take up any visible initiative to back the new bill placed in the US Congress to provide more access to Bangladeshi garment products, which it must. The congressmen and senators in favour of the least developed countries would be able to make a better case if the authorities in Bangladesh as well as other concerned quarters, provide them with solid data and research, writes Tanim Ahmed*

Fully free market access of garment products to the developed world has been a consistent and long standing demand of Bangladesh as far as trade is concerned. Every mini ministerial meeting of the least developed countries, typically preceding a full blown ministerial summit of the World Trade Organisation, since 2000 has concluded with this demand in the very first paragraph.

The full ministerial summits have also acknowledged the demand as justified and have typically promised as much in their declarations. As of the last ministerial meet, held in Hong Kong in 2005, 97 per cent of products from least developed countries will enjoy preferential market access in the developed countries as soon as the current round of trade negotiations are concluded, subject to a number of other conditions. More often than not, these conditions dilute the concession to such a degree so as to render it almost useless.

Having already secured reasonable access to Europe and Canada, Bangladesh has been desperate for similar access to the lucrative American market for garment products. The ready made garment sector, accounting for over three-fourths of Bangladesh’s export earnings, is naturally of utmost concern for the government as well as the business groups. The garment exporters have also been lobbying the United States establishment to enact a bill that allows duty-free import of garment products from all least developed countries. Although many of the poorest countries are allowed preferential access to the US market, only a handful are left and not given this preference, which incidentally includes Cambodia and Bangladesh

A new bill styled ‘New Partnership for Development Act 2007’ that was introduced in the House of Representatives of the US Congress on October 18, by Congressman Jim McDermott among others, strives to provide all least developed countries with such access. Quite understandably the duty-free and quota-free access is limited to a certain extent to apparently provide African countries with some leverage and advantage over Cambodia and Bangladesh that happen to be the most competitive apparel manufacturers among the least developed countries. These two countries have been referred to as ‘significant apparel supplier’ in this bill and are subject to more restrictive provisions than the other LDCs.

It has been a matter of concern that countries in sub-Saharan Africa, especially those covered under the African Growth and Opportunity Act which was also authored by Congressman McDermott, and other countries that currently enjoy concessions under the generalised system of preferences would see their margins completely eroded faced with the stiff competition from Bangladesh and Cambodia.

Quarters have it that the US textile lobby, the National Council of Textile Organisations, and the trade union body, the American Federation of Labour and Congress of Industrial Organisations, are actually playing the Africa card to ensure protection of the local textile industry in the US. There have been attempts previously as well to prevent the US giving fully free market access to Bangladeshi apparel items with scores of senators and congressmen writing to the US president to block any agreement that provides duty and quota free access of Bangladeshi apparels to the US. Only last month, there was a hearing at the United States Trade Representatives office initiated by the American trade union body, regarding alleged labour rights violations in Bangladesh with a petition to cancel Bangladesh’s preferential access facilities.

The bill striving towards a duty-free access for all least developed countries puts a cap on the volume of exports made to the US from Bangladesh and Cambodia during the calendar year of 2007 for eight types of products— trousers, slacks, breeches, shorts, knit shirts and blouses, non-knit shirts and coats—that would be eligible for duty-free treatment from 2009 to 2019. It means that the duty-free facility for these products will be limited to the volume of their exports made to the US during the current year for 10 years beginning 2009. The quantitative restriction may increase a maximum of 15 per cent every year provided that the ‘significant apparel supplier’ meets certain labour standards and upon consultations and approval of certain officials and congressmen.

It has already been pointed out that these categories of clothing items that face quantitative restrictions account for about 65 per cent of Bangladesh’s exports to the United States, which are also presumably of importance to the United States itself for the sake of its own political interest to protect the local industries. Quantitative restrictions should not apply to any other garment product. On the other hand, with China entering the US market in 2009 when the currently imposed emergency safeguard expires and faces quantitative restrictions, Bangladesh will apparently have a rather hard time to even retain the market share it currently does, let alone grow at the phenomenal rate of over 20 per cent that has been the case for the last few years. Thus, the provision of 15 per cent increase every year with this year’s export volume set as the base year might turn out to be reasonable.

However, the main point of concern is the rules of origin stipulating 35 per cent value addition in case of Bangladesh and Cambodia, while it would be 25 per cent for other countries covered by the act. According to garment manufacturers, most of the exports to the US market are woven items in which case value addition is hardly between 20 and 25 per cent. Thus 35 per cent would indeed be too steep a requirement for it to be meaningful. It might be argued that value addition requirement be decreased by equal percentage points for both the significant apparel suppliers and other countries so as to make it less steep and more meaningful.

Alternatively, it could also be argued, based on rigorous research of course, that products not in competition with those from other countries, especially those from sub-Saharan Africa, may be allowed a lower value addition requirement or that equal to the other least developed countries. The argument would be further strengthened if it could be demonstrated convincingly the extent of poverty reduction that such benefit might result in or how much more it means in increased wages for the garment factory workers in Bangladesh.

According to a newsletter titled ‘Trade Fact of the Week’, dated February 21, 2007, published by the US based Progressive Policy Institute, Bangladeshi exports to the United States worth $3.3 billion in 2006 faced tariffs of $496 million and Cambodian products worth $2.2 billion faced tariffs of $367 million. The same year British exports worth $53.5 billion faced tariffs of $430 million and French products worth $36.8 billion faced tariffs of only $367 million, the same amount as that of Cambodia.

In 2006, France’s per capita income was $34,810, 74 times that of Bangladesh with $470 and 91 times that of Cambodia with $380. The United Kingdom’s per capita income was $37,600 in 2006—80 times that of Bangladesh and 99 times that of Cambodia.

Another point of serious concern is the requirement to accord foreign and local investment equal treatment. While the requirement to implement intellectual property rights takes into cognisance the benefits and concessions accorded under the World Trade Organisation rules, meaning an exemption till 2016 for essential drugs and 2013 for everything else, the demand for a similar provision, accommodating the WTO concessions accorded to least developed countries in case of investment should be made rather strongly or it would compromise national interests severely.

It is presumed that the preference scheme will expire at the end of 2019 but there are no directions regarding its renewal even if it is subjected to further review before approval in the Congress. One of the main problems with the current GSP programmes of the United States is that they expire every few years and have to go through a long tortuous process, while a case of renewal might lessen the amount of energy and time to have a new bill written and enacted afresh.

The bill notes rightly that advanced developing countries such as India or China and other Organisation for Economic Cooperation and Development members could greatly help reduce poverty in the least developed countries if they provided similar benefits. The bill also directs the US president to take up such an initiative with these countries.

This bill has the provision of spending $250 million every from 2009 through 2018 on such development projects as capacity increasing for small and medium enterprises, agriculture, financial institutions and investment promotion as assistance to leverage trade preferences. Under aid for trade the bill stipulates expenditure of another $250 million per year between 2009 and 2019 for financing economic diversification and infrastructure projects, improvement in the transport of goods and services, improves distribution of electricity, food and water and improves the provision of education and healthcare.

It is understandable that these funds will be used with the intention of eventually benefiting US interests, either commercial or political. But it is the contention of certain quarters that countries like Bangladesh could benefit from these projects if the proposals are well thought out and appropriate in the local context.

The law, if enacted, will apparently set up appropriate offices that will produce a report card every three years based on which it would be decided if certain countries are eligible for the benefit. The requirements are largely core labour standards, such as freedom of association and recognition of collective bargaining, that are well justified. There would also be a mechanism to consider public petitions and examine them regarding observance of labour standards and working environment in the industries.

Although the government asks the garment manufacturers every few months to implement the minimum wage along with the 10-point agreement signed last year, the manufacturers hardly pay heed and continue to violate those stipulations as reports in the media testify. The foreign pressure, especially from the United States, might in fact spur them to action and compel them to strive towards better standards in exchange for the benefits. According to insiders, such pressure from the foreign quarters is often more effective than relentless requests of the local authorities.

It is obvious that the new bill is rather progressive and barring a few provisions, would be beneficial to the poorest countries of the world as it stands at the moment. But it is still at the most primary stage. Currently, as of October 18, it has been referred to the House Financial Services Committee, and will subsequently be referred to the committees on Ways and Means and Foreign Affairs before coming up for debate and hopefully approval at lower house of the Congress. A similar process will be in place at the upper house, the Senate. If approved at both houses the bill will be referred to a Conference Committee in order to make sure that the bills that the House and the Senate enacts are identical, where it would be subjected to further scrutiny and editing. There is a great likelihood that the bill would be diluted further and further at every stage of editing and scrutiny.

The different stages of the passage of the bills are evidently where lobbyists will be in action to further their own interests. A delegation of the Bangladesh Garment Manufacturers and Exporters Association has already left for the United States where it will meet different quarters including the congressmen and senators who might be in favour of the bill.

The current military-driven interim government has yet to take up any visible initiative in this regard, which it must. The congressmen and senators in favour of the least developed countries would be able to make a better case if the authorities in Bangladesh as well as other concerned quarters provide them with solid data and research. It would also be of great benefit if the African and Asian countries lobby Washington together. While private quarters and non-government elements, the Centre for Policy Dialogue, Oxfam, and the chambers of commerce for instance, are upbeat and active about the fate of the new bill, it remains for the government join hands with their efforts. The government’s presences would quite understandably lend these efforts a higher degree of credence and acceptability.

*Tanim Ahmed works for NewAge, a leading English newspaper in Bangladesh. He can be reached at: tanimahmed@gmail.com


IMF suggestions to Bangladesh to hit the majority hard

October 27, 2007

Editorial, NewAge, October 27, 2007. Dhaka, Bangladesh

The International Monetary Fund has recently submitted a set of recommendations to the central bank. According to a report in New Age, the lending agency has recommended scrapping of zero tariff and tax exemption facilities besides expanding the coverage of value added tax. It has asked the government to implement these measures by next year and have them approved by the agency in order for it to continue to provide support. Reportedly, the prescriptions require the government to frame new tax legislations. The IMF recommendations have a myopic objective of merely increasing the exchequer’s revenue without any consideration to the welfare of the common people. Lending agencies, being removed from the ground realities, typically make such recommendations and have brought about economic crises in many countries across the world, and are thus losing their ground.

The zero-tariff facility that had been in place was mostly offered in the case of industrial raw materials and capital machinery in order to encourage industrialisation. Mirza Aziz, the finance adviser to the military-driven interim government, surprised even those quarters privy to the budget-making process, when he declared in June this year sweeping tariff measures scrapping this facility for hundreds of items that would surely impede industrialisation. Higher import tariffs of such machinery and raw material would only discourage further investment and thereby hamper employment generation, increase of wage and eventually lead to low economic growth. The tax exemption facility is in place once again, only to encourage investors to establish industrial units in the country. Scrapping this provision would only send out wrong signals. Such measures – low import tariff of raw materials and machinery, and tax exemption – have been followed by countries, including those that today instigate these agencies to recommend the contrary, on their path towards economic prosperity and development.

The value added tax, as we have previously mentioned, burdens the common man since it is paid by everyone and at the same rate regardless of their affluence. Increase in the coverage of this indirect tax would only mean that the common people, especially those from the poorest section of the populace, who are outside the income tax net, would have to pay taxes. This tax, in the case of education and health services, would in fact amount to penalising citizens for seeking enlightenment or for striving to be in good health. Such measures would also seem to deny that the government itself is obligated to provide such services to its citizens.

We find the recommendations made by the lending agency inappropriate and inconsiderate of the plight of the common man. These recommendations, increasingly nudging the state towards a free market economy that results in inequity and disparity, are more likely to bring about crises and economic devastation than genuinely trigger wholesome development, like they have done in many other countries. We expect that the government will not give in to the pressure of the lending agency for the sake of national interest.


News and update: IMF sets fiscal agenda for Bangladesh government

October 26, 2007

Nazmul Ahsan, NewAge, October 26, 2007. Dhaka, Bangladesh

The International Monetary Fund has set economic and financial agenda for the government of Bangladesh in advance for the next fiscal year, asking the latter to implement those to qualify for future assistance.

The lending agency wants the government to agree to implement the policies and fiscal reforms spelt out in a recent document by November, finance and central bank officials said. In its latest move, the IMF asked the government to initiate budgetary exercises by further reducing the zero-tariff facility, tightening tax exemptions scheme and expanding value added tax.

The government is asked to get these recommended budgetary measures for the next fiscal year endorsed by the Fund by May, 2008, one month before the next fiscal year begins. The wish list and conditions summarized in a document, styled ‘economic and financial policies for November 2007,’ have recently been submitted to the Bangladesh Bank and the finance ministry.

Implementation of the conditions is linked to the future assistance from the Fund under its PRGF (poverty reduction growth facility) arrangement, sources said. ‘The attached draft document on economic policies more fully outlines the type of reforms that would be needed to support a request for a PRGF arrangement,’ reads a letter of Thomas Rumbaugh, IMF’s adviser for Asia and Pacific, written to finance adviser AB Mirza Azizul Islam recently. ‘It is drafted to reflect policies to be agreed and implemented by November 2007, a possible date for finalising a PRGF request, as well as policy commitments through December 2008’, the letter further reads.

According to the list, the IMF has asked the government to reach an agreement with the lending agency by May 2008 on the tax measures to be taken in the 2008-09 fiscal year. The government will have to get the Fund’s approval for new income tax law, reduction in number of zero-rated commodities, expansion of VAT to retail level and phasing out of remaining tax exemptions.

The IMF’s latest script on the economic and financial policies will also require the government to rewrite the income tax legislation by February 2008 and assess the cost and efficiency of all income tax exemptions.

Furthermore, it asked the government to enact a new VAT law with a modern invoice-credit based system, and separate excises from VAT. Officials at the finance ministry and National Board of Revenue expressed their reservations over the IMF’s suggestion for further reducing zero-tariff facility in the next budget.

The government drastically reduced the same facility in the current budget amid widespread criticism from industrialists, chamber leaders and economists, they argued. ‘We should not go for further reduction in zero tariff facility and tightening tax exemption to appease the IMF,’ a member of the NBR told New Age. ‘The present government did the same thing in the current budget ignoring the reservation of revenue officials,’ he added.

The budget for the current fiscal year withdrew zero-tariff facility from above 400 items, mostly raw materials and capital machinery at the insistence of the IMF at the last moment, sources said.

Four per cent infrastructure development surcharge has been withdrawn from about 2600 items, of which more than 1600 are finished and luxury products, sources said. Industrialists and economists said the measures cost the local industry heavily and opened the floodgate for less important imports.

Revenue officials said the government cannot withdraw all tax exemptions overnight, which could stall the growth of local industry. An NBR survey in March 2006 revealed that tax exemptions cost the government heavily. Tax relief enjoyed by corporations and big businesses cost the exchequer Tk 350 crore in foregone revenue during the 2004-05 fiscal year alone. These exemptions accounted for nearly 74 per cent of the total revenue forgone by the government in order to encourage and facilitate industry during the period. Currently, tax exemptions are offered to the corporate sector under about 18 categories and another 20 categories at individual level, tax officials said.

Asked about the rationality of the IMF conditions and necessity for further PRGF arrangement, economist Anu Muhammed said no government with dignity can reach agreements with a multilateral lending agency on how to frame its budget and what fiscal measures would be taken. ‘It is humiliating and disgraceful, and the government should reject such diktats outright,’ he told New Age on Thursday.

The economist also opposed any further deal with IMF for PRGF as he believed that there was no link of poverty reduction with the PRGF, which is designed to destroy the country’s industrial base and which has been rejected by many countries.


Profits versus the poor

October 25, 2007

Republished from ShahidulNews, September 2007.
Photo: Munem Wasif/DrikNews Text: Shahidul Alam

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“I have lost a son, maybe I’ll lose another, but I won’t let them setup a coalmine here.” To Tahmina Begum who had lost her son Toriqul to police bullets, her land was also her family.

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It could have been a ‘B’ rated western except that it is set in the east.

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People wanting to hang on to their ancestral land versus mining companies wanting huge profits. There have been only minor changes from previous scripts. When farmers wanted fertilizers and seeds, the police had opened fire killing them, when they wanted electricity to irrigate their soil,

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the police had opened fire killing them. Now that they want to retain their land rather than have it converted into coal mines again the police have opened fire killing them.

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Shaotals, being indigenous minority groups, find themselves even more vulnerable within this persecuted community. In the shootings on the 26th September 2006, in Phulbari, Dinajpur, in northwestern Bangladesh, at least six villagers are known to have been killed, over a hundred are said to be missing.

Reminiscent of his predecessors on this land, Gary Lye, the CEO of the British company Asia Energy Corporation (Bangladesh) Pty Ltd, which wants the mining rights, denied the Phulbari project would harm the environment saying it would benefit local people instead.

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He did add “It is up to the authorities to determine exactly what happened, but it would appear that the unforgivable events and the needless loss of life and suffering that took place yesterday in Phulbari are entirely the fault of the organisers (of the protest).”

It had been the fault of the farmers when they wanted fertilizers and seeds, it had been their fault when they wanted electricity to irrigate their lands. It was now the fault of Tahmina Begum and her son Toriqul, for wanting to stay on land that was their own.

The poor deal that Bangladesh appears to be getting, the massive profits predicted for Asia Energy, The foot dragging on the investigation of Nasreen’s death, are suspicious on their own. The close friendship between Asia Energy and Bangladeshi government officials that has emerged looks ominously close to Shell’s friendship with General Abacha. Despite this friendship, faced by the massive protest of over 20,000 people,

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the government has again had to back down, but with the increasing appetite for energy of war hungry nations, and with pliant governments ready to please in the hope of hanging on to power. Tahmina Begum might well lose the other family member that she has nurtured and tilled all her life. The west meanwhile continues to promote ‘freedom and democracy’ worldwide.

Further resources:

Visit Phulbari Resistance for regularly updated information about community resistance against Phulbari Coal Project.


The Coal Debate in Bangladesh

October 25, 2007

By M Inamul Haque*, NewAge, October 25, 2007. Dhaka, Bangladesh

BANGLADESH has tremendous renewable energy sources in the form of wood (65 per cent of the total energy consumed), generated annually on its surface through the growth of vegetation. This is because of our fertile soil, regular rainfall and the energy of sunshine consumed by the plants together. The sunshine also consumed by the animals, directly and indirectly in many ways is difficult to quantify. The energy of wind and water currents in the rivers and seas consumed by the ecosystem supports our economy in many ways but is never quantified.

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The non-renewable energy we have in the form of gas, oil and coal lies underground. These, if not extracted, remain stored for the next generation. However, the rate that we are consuming gas now, it will finish by the year 2014 unless new reserves are discovered. Discovery of oil has not been significant. The coal reserve is 2.7 billion tonnes, of which just about 1.4 billion tonnes is recoverable. However, the policy as regards how to extract and use it remains debatable.

Bangladesh has peat coal in the northeast haor and southwest beel areas, a few metres under the surface. There the poor people spend their days digging soil in the hope of extracting a chunk of coal and selling it for their living. This coal is not commercially feasible for extraction by companies who seek to make a pound spending a penny. These companies want shares, investments, contracts, markets and monopoly. They were in a similar action in Phulbari to dig a few hundred metres to extract our black gold.

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Bangladesh is mostly a plain land of alluvial soil, deposited by the rivers since at least six million years past (the Late Miocene Age). From the groundwater model of Bangladesh shown in Figure 1, the layers over the Gondwana Hardrock basement are the Lower Dupi Tila, Upper Dupi Tila, Dhamrai Clay and the Barind Madhupur clay formations. These alluvial formations from the Permian to Holocene age of present time are about 300 metres deep in northwest Bangladesh, whereas in the coastal areas it is about 20 kilometres deep.

From the geological and hydrological sequence given in Chart 1, the Pre-Cambrian formation is the oldest igneous and metamorphic rock basement (570 million years past), upon which all the sediment formations of later ages lie. The Pre-Cambrian basement comprises of granite, granodiorite, gneiss and schist. This formation is accessible at Madhyyapara of Dinajpur at about 150 metres below the surface. The Permian Age (245 million years past) is next, when the Gondwana mudstone, coal and sandstone deposited. This formation is accessible near Barapukuria and Phulbari of Dinajpur at about 300 metres below the surface.

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The secondary Permian Age Gondwana coal was discovered first in 1959 in Bogra at a depth of 2,381 metres. In 1961, the Jamalganj-Paharpur deposit of 1,050 million tonnes was found, but it is too deep to mine. In 1962, the Tertiary Age ligno-bituminous coal was found in Takerghat-Baglibazar area at a depth of 45m to 97m. The beds are 0.90m to 1.70m thick and reserves were estimated at 3 million tonnes. The Gondwana coal was found at Barapukuria in Dinajpur in 1985, Khalaspir in Rangpur in 1989 and Dighipara in Dinajpur in 1995. According to a feasibility study, the Barapukuria mine had a reserve of 390 million tonnes, 70 million tonnes of which is recoverable at depths ranging from 118m to 506m. Coals in Khalaspir and Dighipara (406m below surface) are at similar depths. In 1997, the Phulbari coal was found at about 150m below the surface (Banglapedia).

The mining at Barapukuria started with two 6m shafts of 280m depth to extract one million tonnes of coal a year, of which 80 per cent was to be consumed for a 300-megawatt power plant. By the time the Petrobangla/Power Development Board started the power plant, the Barapukuria mine was redesigned to a production capacity of 500,000 tonnes (50 per cent less than before) and the cost of coal production doubled (from $35 per tonne). It was found that the project had actual IRR 13 per cent. However, to make it viable, it was shown 39 per cent in the feasibility study by fictitious projections and investment that never took place. The project cost rose from Tk 887 crore to Tk 1,600 crore. According to the Daily Star report of September 15, 2006, the Barapukuria coalmine was made the nation’s liability.

The Barapukuria coalmine has become a quagmire where hundreds of crores of taka from the government exchequer is draining down (Tk 600 crore by August 2007), with little possibility of good return. According to its first project proposal, 60 per cent of the coal was extractable, but now it has come down to 20 per cent only (The Daily Star, September 7, 2007). It is the depth of the coal reserve (too deep underground) that makes it hard to be a profitable mine. However, the promoters of the coalmine project at Phulbari wanted ‘open pit’ excavation there, blaming the ‘shaft method’. The Phulbari coal lies at a lesser depth but not less than 300m on average.

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Figure 2 shows the variable depths of Phulbari coal lying under the Dhupi Tila formations. Open pit mining shall have to remove tertiary age alluvial deposits of 150-300 metres depth, and then secondary age sandstone deposits of 100 meters depth to reach the coal seams. It shall be an unprecedented operation, removing soil of about 30 square-kilometre area to the depth of 300 metres on average. Open pit mining is only feasible where the coal lies near the surface. The coal there then extracted removing the topsoil in strips. The extracted pit filled back by the removed soil of previous pit. Being too deep at Phulbari, ‘open pit’ excavation and removal of the coal by strips (as in Germany) is not feasible here, technically. Moreover, the Phulbari ‘open pit’ operation shall need to dry up the entire 200-metre deep Dhupi Tila aquifer, which shall have depletion effect to subsoil water of about 500sqkm surrounding area. People in the locality were reasonably just in their opposition and agitation, as any sort of rehabilitation programme would be a mess, people would have to migrate. The remaining people after the mining would have to survive in inhuman condition around a poisonous lake with their cultivable lands devoured and distorted forever.

In my understanding, investment has now become a corporate gamble than an investor’s liability. As most of the investors in the corporate capital do not have direct knowledge of the daily proceedings, a mastermind in the game can extract profit even from a loosing company at any time. The corporate company behind Phulbari coal has already raised capital from the market, whose share value has halved after increasing tenfold. The company showed improper documents to the government to keep authority on the project. However, after strong resistance from the locals the project prospect is now bleak.

Figure 3 shows the location of the Barapukuria coalmine, Madhyapara hardrock mine and the proposed Phulbari coalmine area. The Phulbari mine would cover a large part of the Parbatipur, Nawabganj, Birampur and Phulbari upazilas. Having the worse experience of shaft mining at Barapukuria, people could not accept the open mining option at Phulbari fearing loss of no bound. Shaft mining does not displace people but it causes pollution to the streams by acid mine drainage. In absence of proper treatment facility for the acid mine waste, the rivers and wetlands around Barapukuria are severely polluted and toxic.

The proposed coal policy of the government is now open to the public for debate. For Phulbari coal, the government had reduced its royalty share from 20 per cent to 6 per cent only, with the rest allowed to export. This raised strong objection from energy activists in the country. Now the pertinent questions of why should the ownership for the people should not be 100 per cent and why export should not be an option until and unless there is enough to meet the domestic demand for the next 50 years remain unresolved. The search continues for technically, socially, economically and environmentally suitable methods to make the coal mining beneficial to the people of Bangladesh.

*M Inamul Haque is director general of the Water Resources Planning Organisation (WARPO), Bangladesh.


Declaration from the Public Hearing on the World Bank, The Hague, October 2007

October 24, 2007

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Convened by the World Bank Campaign Europe, under the auspices of the Permanent Peoples’ Tribunal, The Hague, 21 October, 2007

Upon request from the World Bank Campaign Europe, a Public Hearing was convened on October 15 in the Hague, The Netherlands under the auspices of the Permanent Peoples’ Tribunal to provide a forum to assess the performance of the World Bank in the last 15 years.

The Permanent Peoples’ Tribunal (PPT) in continuity with the Russell Tribunal supported by the Lelio Basso Foundation, has the stated goal of giving public profile and a juridical qualification to violations of fundamental rights that do not find a proper redress at the institutional level. It bases its actions on the Universal Declaration of Peoples’ Rights of Algiers, 1976.

The PPT held specific sessions in Berlin in 1988 and Madrid in 1994 to assess World Bank and International Monetary Fund activities and roles against their impact on peoples’ rights. Other sessions have also taken place that are relevant to the specific area of work and analysis of the later Hearing, addressing the challenges posed by the globalized economy to peoples’ rights and self-determination.

The latest session held in Vienna in May 2006 within the Enlazando Alternativas 2 process, dealt with the responsibilities of European Transnational Companies (TNCs) in Latin America. It analysed cases of the privatisation of public utilities and the extraction of natural resources. It pointed out the “complicity of European governments that support their TNCs“ and the role of international institutions such as the World Bank, the WTO (the World Trade Organisation) and the International Monetary Fund. The last of a series of hearings held by the PPT Chapter in Colombia, focusing on the oil sector, acknowledged the relevance of the concept of ecological debt when dealing with the responsibilities of European TNCs.

At the end of September 2007, an Independent People’s Tribunal on the World Bank took place in India. Finally, a few days before the The Hague Hearing, another PPT session was held in Managua, Nicaragua, on the Spanish Company Union Fenosa.

The later hearing in The Hague was an important opportunity to continue developing new approaches to the current area of activity, by deepening the analysis of the World Bank’s role in various countries of the Global South.

It took place on the first day of a Global Week of Action on Debt and the World Bank, launched by a broad platform of NGOs and social movements across the globe calling for a substantial change in World Bank policies and practices, an end to public financing of fossil fuel projects, an end to the imposition of strict conditionalities that instead of leading to poverty alleviation lead to further impoverishment, and a commitment by governments to launch public audits on foreign debt. It developed along two areas of work, namely the human, social and environmental consequences of the World Bank’s role in imposing economic and policy conditionalities, and the role of the Bank in support of fossil fuel extraction and use.

The expert panel was chaired by Francesco Martone, an Italian Senator in representation of the Permanent Peoples´ Tribunal and was further composed by Charles Abugre, development economist and head of policy and advocacy for Christian Aid from Ghana, Maartje Van Putten from the Netherlands, former member of the World Bank’s Inspection Panel, Marcos Arruda a development economist and publisher from Brazil, member of PACS and the Transnational Institute and Medha Patkar, from India, Founder of the Save Narmada (River Valley) Movement and National Convenor of National Alliance of People’s Movements.

The expert panel heard testimonies by:

Gonzalo Salgado, of the National Consumer Defence Network (Nicaragua) on the liberalisation of electricity services;

Collins Magalasi, of Action Aid Malawi, on the issue of food security;

Temo Tamboura, of CAD Mali, on the liberalization of the cotton sector;

Miguel Palacin of the Coordinadora Andina de Organizaciones Indigenas (CAOI), from Peru on reform of the mining laws in Peru;

Svetlana Anasova, of the Berezovka Initiative Group, Kazakhstan on “The Karachanak Oil Pipeline” (as she was unable to attend the Hearing in person, her submission was read aloud);

And Michael Karikpo, of Environmental Rights Action, Friends of the Earth Nigeria on the West African Gas Pipeline;

Findings and Outcomes of Testimonies:

The World Bank came into existence after the World War II in order to rebuild Europe and with the purpose of creating new markets, mobilizing resources while supporting infrastructure and productive capacity. Notably after the creation of the International Development Association (IDA) it has repositioned itself in support of poverty alleviation, its avowed goal, while advancing a global free trade agenda through its lending and conditionalities. A parallel and unofficial history of the World Bank tells us years of resistance at the local and global level by social movements and communities eager to reclaim their right to self-determination and control over their resources.

The testimonies presented to the Panel in The Hague indicate that the World Bank has been rather influential while dealing with the State and the public sector in borrowing countries. Its interventions have gone much beyond its formal limited role of a lending agency and went into policy-making, prioritizing, budgeting and planning in every sector of governmental action. This has enabled the Bank to generate and force a development paradigm that is market- and growth-oriented rather than aimed at meeting basic human needs while attaining social and environmental justice. Its lending conditionalities lead to the conversion of life-supporting natural resources such as land, food, air, seeds and energy into merchandise.

In the case of *Nicaragua* the panelists listened to an extensive explanation of the developments in the energy sector what in brief showed a failure of the privatization process of public utilities in guaranteeing full and broad access to electricity for the poor majority of the country, while generating huge profits for the Spanish monopoly Union Fenosa while at the same time creating indebtedness for the State.

In the case of *Mali *the Panel was told that Mali was forced to privatise the cotton sector in order to meet World Banks conditions with the purpose to receive a debt reduction of 70 million and eligibility for the Enhanced Indebted Poor Countries Initiative. As a result, according to the witnesses, the cotton prices were liberalised what subsequently led to a decrease by 20% while cotton is the principle source of the country’s revenue. It is significant for the panellists that the timing of World Bank programs in Mali coincided with the cotton liberalisation negotiations at the WTO.

The Panel noted the remarks made by the witnesses as to how the World Bank is imposing conditions on countries negotiating a loan, leaving little or no room for these countries to choose their own direction. In at least two cases, the Panel noted that access to the HIPC debt reduction processes was conditioned to the implementation of structural adjustments and liberalization of economies, thereby producing a vicious circle of forced payment of increasing volumes of debt. An uneven distribution of resources and benefits resulted in a massive drain of national resources away from the imperatives that could ensure distributional and social equity and self-reliance. In this process, the traditional, customary, cultural and territorial rights of local communities and indigenous peoples are compromised and sacrificed. International conventions and UN covenants such as ILO 169 on the rights of indigenous populations have been either ignored or violated.

The panel acknowledges the relevance of the concepts of ecological and social debt when dealing with the consequences of such development paradigm. Additionally, evidence of odious and illegitimate debt – such as in the cases of Peru and Nigeria – has been presented, whereby foreign debt accumulated during dictatorial regimes is still being paid off by the victims of the past. Still, the legal frameworks that can be applied to the concepts of illegitimate, odious and ecological debt might require further articulation and development.

In many cases, the Panel noted the points made about violations of peoples’ right to be proactively engaged at all levels of the decision-making process as is laid down in several of the World Banks own policies. Besides the Panel notes this is not in free agreement with the principle of ‘prior informed consent’ in any policy or decision affecting their own lives, and territories.

Hence, through its policy advice, the Bank has prevented the full exercise of participatory and direct democracy, thereby widening the gap between governments and peoples, creating a fictional political space where genuine interests are overlooked if not ignored. In this context, the role of the national parliaments has frequently been undermined if not denied by imposing on them decisions already made by governmental authorities and Washington-based officials.

The Panel learnt however interestingly, that in certain cases, such as in *Malawi* countries might be able to find their own route to social justice, food sovereignty and food security, by rejecting World Bank conditionalities and continuing to subsidize local agriculture and markets, while fostering the inclusion of the poor. The Panel was told that the parliament of Malawi was forced to accept the closure of 400 local rural markets that according to the witnesses led to a dramatic loss of jobs of thousands including rural farmers that did no longer have access to markets to sell their products. This decision in a later stage was turned over and the markets were re-opened. As a consequence of this decision the food situation in rural areas improved substantially.

The cases on mining in *Peru* and oil and gas extraction in *Nigeria and Kazakhstan* show the link between World Bank developmental priorities and the advan, and fossil fuel extraction has, according to the witnesses, resulted in the violation of peoples’ rights to health, a clean environment, and water. No compensation of losses or replacement of livelihoods was ever ensured either by the Bank or the government despite evidence produced by the Bank itself.

More generally, the continued support of the World Bank to fossil fuel extraction and use, with the associated greenhouse gas emissions, rather than small scale renewable energy, raises serious questions about the Bank’s role in and commitment to the Post-Kyoto process and support for eco-friendly technologies. It is another case of “institutional amnesia” considering that the Extractive Industries Review, 2004, supported by the Bank itself, recommended a phase-out of Bank financing of fossil fuel projects, the adoption of the principle of free, prior informed consent and compensation for affected communities.

Recommendations and Next Steps:

Drawing from the testimonies and its own experience and analyses, the Panel believes that:

a. There is a need and urgency to build upon local resistances and alternatives to the dominant economic free-trade and growth oriented paradigm, in order to strengthen alliances and movements, while confronting World Bank culture and ideology, challenging its political and economic role;

b. Commons are for the common good and not for corporate profit. Therefore, the Bank should abstain from supporting – or recommending – the privatisation of the commons and of life-supporting resources such as public energy services and drinking water systems;

c. Social-environmental and economic audits and/or impact assessments of the World Bank should be carried out in a transparent and timely fashion and the same should include the people that could be directly or indirectly affected by the projects funded by the World Bank. Moreover, a moratorium of projects causing conflict should be considered in order to allow for a meaningful assessment and compensation measures to be developed and implemented;

d. The recommendations of the 2004 Extractive Industries Review, the outcome of a multi-stakeholder exercise in global policymaking, on the request of the World Bank itself, are still valid and cogent and should be implemented in letter and spirit as a matter of urgency;

f. Parliaments and governments should initiate independent debt audits in order to identify historical responsibilities, and the social, economic and environmental, as well as juridical implications of debt for peoples’ rights and self-determination. Parliaments and governments should take the opportunity of the ongoing negotiations for the replenishment of IDA (International Development Association) to condition any new replenishment to a significant and urgent change in World Bank’s practices and conditionalities currently aimed at fostering a pro-growth, pro-free trade agenda rather than social, economic and environmental justice;

g. No violations of UN conventions and covenants in any development project can be accepted, with or without bilateral and multilateral funding;

h. Any investment or operation by the World Bank must respect the community rights by practising the principle of ‘free prior informed consent”.

Panel Members:

Francesco Martone, Chair
Charles Abugre
Marcus Arruda
Medha Patkar
Maartje Van Putten