Number Sixteen: 10 December 2002

World Bank caves in on forest industry reform


Undaunted by the continuing revelations of human rights abuses, illegal logging deals and gross environmental damage that all add up to a massive social cost for the most disadvantaged people in society, the World Bank and the Government have reached agreement on the immediate expansion of the log export industry.

The Prime Minister confirmed last week in Sydney that the Government and World Bank have reached agreement on the future direction of the controversial logging industry and that three or four new logging projects will begin next year.

The deal that has been struck will allow the Government to go ahead with its proposed new logging concessions, with the exception of Kamula Dosa, and in return the World Bank will be permitted to implement it’s Forestry and Conservation Project.

The existence of the deal has been confirmed in a sworn statement from the Managing Director of the National Forest Service, David Nelson, filed in the National Court (see below). Nelson says that the World Bank and the Government have "agreed and settled" their differences and that the deal has been endorsed by the National Executive Council.

The controversial agreement, which had been kept under wraps by both sides until the Prime Ministers comments in Australia, was celebrated in an extravagant dinner at the exclusive Bacchus restaurant in Port Moresby last month when senior Forestry Staff and World Bank officials were seen to be wining and dining together in what has been described as a ‘convivial atmosphere’.

The National Executive Council endorsed the deal in its meeting on the 6th of November (see below). The NEC has directed that the FCP project launch should be allowed to go ahead and that the National Forest Board should ‘work closely’ with the World Bank to ‘ensure successful implementation of the FCP’. At the same time the NEC directed the Minister for Forests to process 10 new timber projects, with the exception of Kamula Doso, ‘without any hindrances’.

The deal follows a protracted standoff between the Bank and the Forest Authority in which Mr Nelson forced the cancellation of the FCP launch and threatened the project team with eviction from the PNGFA HQ, while the Bank refused any further financial assistance to PNG unless it allowed the FCP to proceed.

At the heart of the dispute were the detailed recommendations of the 2001 Independent Forestry Review that highlighted a long list of legal defects in the proposed new forestry projects. The necessary remedial steps identified in that review were then incorporated into a Forestry Action Plan that was approved by the National Executive Council in November 2001.

The implementation of that plan was a condition of the agreement between the Bank and the Government for the funding of the Forestry and Conservation Project.

However the new Government wants to speedily endorse new forest projects without having to delay for the implementation of the review recommendations, which it argues will be time-consuming and costly.

The deal also resolves the issue of a new forest inventory and a probity commission; the two sides have agreed that these issues can be dropped and that they will not affect either the new allocations or the implementation of the FCP.

The deal is a clear win-win situation for the Government and the Bank but it ignores the serious legal defects in the individual new logging projects that relate to the failure to properly consult with and implement the wishes of landowners and the failure to observe and implement the requirements of the Forestry Act.

The deal also ignores the economic folly of the government selling off the last remaining forest resources as cheap logs when the massive logging exploitation of the 1990’s has clearly failed to deliver any lasting benefits for the economy or rural people.

The deal is sure to anger civil society organisations who will see this as another example of the Bank and the Government colluding to allocate logging concessions while ignoring the rights of local landowners and the law and despite the clear evidence of the debilitating impact of logging operations on rural people.

The agreement may also stir further animosity between the World Bank and the Australian government who have been involved in a very public spat over recent weeks about the effectiveness of their respective aid programs. The Aussies may not be pleased to see the findings of the Forestry Review, which they funded, being ‘shoved in the bin’ by the World Bank.

The deal has also come as a blow to the Western Provincial Government, which has been independently trying to block new forest allocations that it sees as illegal and unconstitutional. The Province last week secured court injunctions to stop the National Forest Board going ahead with the allocation of East Awin and Kamula Dosa.


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