Date: Wed, 26 May 93 21:56 EDT From: opirgc@web.apc.org (OPIRG Carleton) To: wcsbeau@ccs.carleton.ca Subject: World Bank Loses India Dam Loan /* Written 11:52 am Mar 31, 1993 by cdp:irn in web:dams.general */ /* ---------- "World Bank Loses India Dam Loan" ---------- */ 29 March 1993 Contact: Owen Lammers, Executive Director International Rivers Network (510)848-1155 WORLD BANK LOSES INDIA DAM LOAN India Government to Request Cancellation of World Bank Loan for Controversial Sardar Sarovar Dam on Narmada River The government of India is today (30 March, 1992) expected to request the cancellation of the World Bank loan currently funding construction of India's Sardar Sarovar Dam. The loss of the loan is a serious setback for the World Bank, which despite international protest has been determined to remain associated with the project to protect its $300 million investment to date. Environmentalists and human rights activists who have actively opposed the project are celebrating what they see as a major victory in their efforts toward stopping the Sardar Sarovar Dam and exposing the problems associated with many World Bank projects. "Though the World Bank has held comprehensive documentation of the environmental and social destruction caused by the Sardar Sarovar Dam, it has, time and time again, insisted that its investment was sound and good for the people of the Narmada Valley. If the Indian government had not finally confessed that it was incapable of mitigating the impacts and requested the World Bank to cancel the loan, the Bank would still be supporting the project today," says Owen Lammers, Executive Director of International Rivers Network. The announcement that India will request cancellation of the loan follows years of heated dispute over the dam, which is part of a massive $3 billion project intended to provide irrigation and drinking water to 30 million people. Critics have long disputed the projects ability to perform. Pressure for the World Bank to withdraw its support grew intensely over the past year, as human rights violations against the thousands of people forcefully displaced by the project increased. Construction has been underway on the Sardar Sarovar Dam since 1987. International outcry over the potential environmental impact of the project, and the fate of the estimated 240,000 people to be resettled led to the Bank's naming of an independent review of the project in 1992. That review team, headed by Mr. Bradford Morse, a former administrator of the United Nations Development Project and Mr. Thomas Berger, a former Candian Supreme Court judge recommended in June 1992 that the World Bank "step back" from the project. World Bank management disagreed with many of the report's findings, and in an 11 September memorandum submitted to the World Bank executive directors, recommended that funding continue and remedial actions be taken to mitigate the impacts of the projects. By a slim margin of 59 percent to 41 percent, World Bank executive directors backed management plans, calling for a 6 month period in which the appropriate government agencies in India would outline and begin implementation of mitigatory measures outlined by the World Bank. Those measures, labeled by the Bank as "Benchmarks" included improved environmental assessments and better organization and implementation of the massive resettlement program. A World Bank team was expected to investigate India's compliance with the Benchmarks in April. U.S. Executive Director E. Patrick Coady went against Bank management in the October meeting, favouring suspension of the funds. Addressing the executive directors at that meeting, Mr. Coady stated, "We [the US] strongly reject the approach that Bank management has asked us to endorse. It is an explicit repudiation of the central finding of the Morse Commission: that the incremental approach employed for the past seven years has failed and that a continuation of this approach cannot resolve, and may even compound, the project's fundamental problems. If the Board accepts the Bank's option I believe that consequences will be as follows: it will signal that no matter how agregious the situation, no matter how flawed the project, no matter how many policies have been violated, and no matter how clear the remedies prescribed, the Bank will go forward on its own terms." During the six month "benchmark" period, repression and violence against opponents of the project in the Narmada Valley has increased. Hundreds have been arrested and beaten, including Ms. Medha Patkar, winner of 1991 alternative Nobel prize, the Right Livelihood Award and the 1992 Goldman environmental prize for her work with the opposition movement, Narmada Bachao Andolan. (Save the Narmada Movement). Internationally, non-governmental organizations working to reform the policies and practices of the World Bank have focussed on the Sardar Sarovar Dam as a prime example of destructive development. In September 1992 , a coalition of organizations ran full page advertisements in the New York Times and Wall Street Journal calling for the World Bank donor governments to cut support for the International Development Association -- the arm of the World Bank which funded $300 million for the Sardar Sarovar Dam. Echoing their concerns, the Washington Post, in an editorial appearing on September 26 referred to the Sardar Sarovar project as "a human and ecological disaster." (Editorial attached.) According to the findings of the Morse/Berger report on Sardar Sarovar, the problems associated with the project may be replicated in projects throughout India. The report recommended that the Bank undertake a country wide appraisal of projects to determine if this was so. The cancellation of the Sardar Sarovar loan will not prejudice either existing or future loans to India. Meanwhile, other World Bank dam projects in other countries, controversial in their own right for many of the same problems as those apparent at Sardar Sarovar continue, among them: Pak Mun in Thailand, Bio Bio Dam in Chile, Ertan Dam in China, and Yacyreta in Argentina, Lesotho Highland Project in Lesotho. For more information about the Sardar Sarovar Dam and the World Bank, please contact: Owen Lammers, Executive Director, International Rivers Network Leonard Sklar, Research Director (510) 848-1155 Lori Udall, Staff Attorney, Environmental Defense Fund, Washington DC (202) 387-3500. -30-