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Logo of Phnom Penh Post newspaper Phnom Penh Post - Stalled WB loan gets green light

Stalled WB loan gets green light

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Logs await transport from Tumring commune land concession.

The World Bank (WB) approved the release of a $15 million loan tied to forestry reforms

on December 17 in Washington D.C. in a move bitterly contested by civil society groups.

Following the decision, NGOs condemned the release as removing the last obstacle

to widespread logging in Cambodia's viable forests.

"I think that forestry reform is largely dead in the water," said Andrew

Cock, forestry advisor at NGO Forum, following the decision.

"Most areas of valuable forest are now being classified as rubber plantations

or land concessions..... I think that will condemn the remaining forests over the

next couple of years."

The Bank stated that the money was being released since legal conditions of the loan

contract had been met. Jemal-ud-din Kassum, WB vice president for the East Asia and

Pacific Region, replied to inquiries by NGO Forum that the Bank was satisfied with

government actions regarding the loan.

"We have been clear that the release of this tranche would in no way be a signal

that all is right in the forest sector," he wrote in the December 17 letter.

"But the Government has met the forestry conditions under which the [loan] was

signed and agreed."

The funds, part of a Structural Adjustment Credit (SAC), carried provisions to enact

forestry reforms including cancellation of non-performing logging contracts, restructuring

the management plans of logging concessions and abiding by regulations to award new

contacts. It was delayed for 18 months due to the government's failure to fulfill

these conditions.

But on December 18, after the WB Board of Executive Directors did not raise objections

to waivers for some conditions of the loan, the money was released. Kassum indicated

in the letter that the conditions were adequately fulfilled.

"The World Bank Management is satisfied that the specific conditions of the

SAC have been met-with the exception of two (non-forestry) conditions, for which

waivers are being requested....and the Government is continuing to support the main

thrust of these conditions."

That assertion had been vehemently denied in an earlier letter sent by NGO Forum

to Bank officials on December 11.

It detailed a litany of "contraventions" of the SAC agreement that should

block release of funds.

"Forestry is a litmus test for governance reform in Cambodia," it stated.

"Acquiesce[nce] to government strategies designed to circumvent the very reforms

donors have promoted will only encourage intransigence [by] vested interests."

It mentioned among the most disturbing violations was the government's practice of

subverting the 2002 logging ban by granting development licenses to clear vast swaths

of forest through land concessions, rubber plantations and "stump" and

"firewood" collection permits.

The logging operations were documented by groups such as Global Witness. They recorded

cutting and removal of thousands of trees from land concessions in former concessions

like ones in Tumring commune, a violation of the moratorium declared by Hun Sen,

said Marcus Hardtke, a monitor with Global Witness (GW). Sub-contractors who had

worked for the canceled concessionaires were then employed by land concession managers

to remove many of the remaining trees.

Proliferation of these "permits" has led to widespread logging and dimmed

hopes of preserving the remaining commercially viable forests.

But the Bank stated that the Government had the right to issue such permits under

the Forestry Law allowing non-logging activities like firewood collection.

"We are satisfied the Government has not awarded new forestry concession of

the type barred under the SAC conditionality," the letter stated. It notes that

the SAC was never intended to stop all timber transactions or land developments.

"This would have been unrealistic and unachievable," wrote Kassum.

However, Global Witness contends that the WB has been negligent in its duty as an

international lender by abandoning the terms of its loan.

"The fact that there were conditions attached to the SAC is one of the few things

that pushed the government to take positive steps," said Mike Davis, an assistant

campaigner with GW. "The conditions aren't met. To claim otherwise is two parts

extremely narrow legal analysis and two parts imagination....The Banks actions are

irresponsible."

But the Bank contends its loans, and continued involvement in the sector with the

recently appointed independent forestry monitor, Societe Generale de Surveillance,

funded by the WB, will benefit the country.

Kassum wrote that the Bank had not achieved as much as it would like and intends

to remain engaged.

"Forestry reform is difficult," he wrote. "It takes a unified and

concerted effort by all concerned over an extended period of time."

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