28 February 2005
The IIRSA Update provides information about the banks, the civil society groups and the policies affecting South America's future.
By Eric Giménez and Lyra Spang, The Bank Information Center, February 2005
También disponible [en español]
Background
Infrastructure development in the name of regional economic integration poses one of the greatest challenges to environmental sustainability and social justice today. The initiative for Integration of Regional Infrastructure in South America (IIRSA) is a striking example of this new trend. IIRSA proposes a series of large-scale, explicitly high-risk (and debt-heavy) mega-projects that would result in extensive alterations to landscapes and livelihoods in the region. In this development framework, mountains, forests, and wetlands are seen as barriers to economic development and rivers become the means for extracting natural resources.
Coordinated by all 12 South American governments, with technical and financial support from the Inter-American Development Bank (IDB), the Andean Finance Corporation (CAF), and the Financial Fund for the Development of the River Plate Basin (FONPLATA), the IIRSA initiative consists of: (a) 10 axes or "hubs" of economic integration crisscrossing the continent and requiring significant investments in transportation, energy, and telecommunications; and (b) 7 sectoral processes of integration designed to harmonize regulatory frameworks between countries. IIRSA governments have already identified 31 priority projects and hundreds of other infrastructure improvement projects for potential financing, with an aggregate cost in the tens of billions of US dollars. At such an enormous cost, these projects may contribute to the region's already unsustainable public debt. Given its magnitude, and the scale of its potential impacts, many environmental organizations refer to IIRSA itself as a 'giga-project'.
The combination of investments in highway construction, widespread dredging, and dams proposed under IIRSA, and significant private sector investments in resource extraction and large-scale agricultural production (e.g. soybeans) will have both direct and indirect effects on biodiversity conservation, small farms and agricultural labor. Historically, such projects have led to the displacement of rural and indigenous peoples, massive migration, and deforestation.
Many of the projects proposed under IIRSA are in fact old, unfinished national infrastructure projects that are being integrated into the regional framework in the hopes of breathing new life into them. The environmental, social, cultural, and economic impacts of these projects on such areas as the Andes piedmont, the Amazon Basin, Brazil's Matto Grosso and Pantanal, and the Paraguay and Paraná rivers will be significant, and in many cases, irreversible. Experience shows that negative impacts from large infrastructure projects occur because of:
- Inadequate environmental, social, and cultural standards (and at times the lack of standards altogether) to address the complex dimensions of infrastructure development;
- Lack of government and/or multilateral development bank (MDB) commitment to fulfill these standards;
- Lack of government and/or MDB capacity to meet standards; and
- Absence of independent accountability processes to provide means for appropriate redress when standards are not met.
Large infrastructure projects financed by IFIs - International Finance Institutions - continue to cause significant harm to indigenous communities (Camisea Natural Gas Project) and the environment (Bolivia-Brazil Pipeline), and can incur crushing national debt (Yacyretá Hydroelectric Reservoir). IIRSA appears poised to repeat the same mistakes as past projects. Significant shortcomings in IIRSA include:
- Limited access to information about proposed projects and policy reforms;
- Weak environmental and social standards and therefore inadequate impact mitigation programs;
- Limited institutional accountability;
- Lack of open and transparent participation of civil society in development decisions;
- Inadequate monitoring programs, and an absence of demonstrable linkages to poverty reduction.
The architects of IIRSA claim that industry, governments, ecosystems, and people will all benefit equally from the development of regional infrastructure. This is based on the assumption that "open regionalism," a combination of trade liberalization, regional insertion in global markets, and massive infrastructure, will automatically lead to sustainable development. However, even the IDB's president Enrique Iglesias admits that the driving force behind new financing for large infrastructure projects is not the Bolivarian dream of regional integration, but "excess liquidity." The easy solution to the global fiancé capital's problem of 'too much money with too little to spend it on', are big loans to large, expensive, infrastructure projects. Thus, while IIRSA's development discourse is integrationist, its logic is largely financial.
The sheer magnitude of the IIRSA project poses a serious challenge to conservation and sustainable development. Preventing devastating impacts to the South American region will require sustained, informed, and effective citizen involvement in IIRSA, particularly in regards to project and policy assessment, and for setting, monitoring, and enforcing social and environmental safeguards.
The monthly IIRSA Update will provide timely information about IIRSA and MDB-financed projects in South America. The Update will also share experiences and perspectives from the communities and organizations confronting and engaging with IIRSA and the MDBs.
Recent News and Developments
No News is Good News? IIRSA Website Shows No Recent Reports on Technical Group Meetings
The Technical Groups that are in charge of the different IIRSA hubs have published no new updates since June of 2004, almost 8 months ago. In addition, no new links, updates on projects or information about loans have been posted on the official IIRSA website. The last meeting by an official IIRSA organizing committee was the 6th reunion of the Executive Committee on the 23rd of last November. Whether this apparent lack of action is good news for civil society on the continent remains to be seen. To view the newest official updates, see the official IIRSA website.
Mixed Reports on IDB Funding of IIRSA
Mixed messages are coming from the IDB regarding their funding of IIRSA projects. IDB officials have stated to BIC staff that the IDB currently has no IIRSA projects in the pipeline. However, the official list of proposed projects on the IDB website includes several IIRSA projects. These include a $5,000,000 loan to Perú to rehabilitate and build new border control infrastructure, and a $75,000,000 loan to build roads connecting costal Perú to the northern Amazonian border. In addition, the Bank is conducting environmental assessments and risk management studies on several projects, including the Corredor del Norte, which will link La Paz to Guayaramerín and Cobija. The Bank also directly and indirectly funded a number of IIRSA Projects in 2004, one of the most recent being a $33,000,000 dollar loan to Bolivia, approved the 1st of December, to construct a roadway linking La Paz to Río Branco, Brazil- a key project in the Perú-Brasil-Bolivia Hub. To read the project document, see:
For the Peruvian loans, see:
The Río Madeira Complex: Most Costly IIRSA Project not included on List of Priority Projects
While some large road systems claim a place on the list of 31 priority projects approved December 8, 2004, they are nothing compared with the Río Madeira Hydroelectric Complex in the Amazonian state of Acre, Brazil. Costing over $6,000,000,000, and comprising two enormous dams, hydroelectric plants, and other associated infrastructure, this project is by far the most expensive proposed project of all 330 projects to be officially included in IIRSA. Its location on a tributary of the Amazon River, in a remote and ecologically sensitive environment, makes it a potentially controversial and unpopular program, which may explain its low profile and lack of funding. For more about projects in the Perú-Brasil-Bolivia Hub,see the IIRSA PBB Hub Report (official IIRSA website).
Argentina increases its Participation in the Corporación Andina de Fomento (CAF)
In a move expressing its loyalty to the IIRSA plan, Argentina signed an agreement on the 16th of February, 2005, agreeing to increase its monetary investment as a financial partner in CAF by $75,000,000. In return it will receive a series of loans from the bank totaling $600,000,000, to be applied to economic reconstruction and IIRSA-related infrastructure development. See press release.
MDB Consultations and Policy Updates
Consultations on IDB Draft Environmental Policy and Guidelines wrapping up
Following meetings in Barbados, Washington DC, Brussels, Rio de Janeiro, Panama, and Lima, the official consultation period for the IDB's new Environmental policy will end (March 8). The policy is an important tool for civil society groups working in the regions affected by IIRSA (and throughout the Americas). If it is applied, many of the projects slated under the IIRSA umbrella could be called into question for violating the IDB's new, stricter environmental regulations. For more information on the consultations and civil society concerns about the policy, see BIC's Latin America Page.
Consultation on the IDB's Independent Investigation Mechanism
A good Environmental Policy is only as good as its accountability mechanism, and vice versa… On February 4 the public consultation process for the new Independent Investigation Mechanism officially began. However, the consultations have not been widely advertised and civil society is demanding a more participatory approach (see civil society updates). The IIM is the only official tool available for the public to seek redress and demand compliance with the social and environmental policies and safeguards at the IDB. Without an effective IIM the public has no way to ensure that the IDB complies with its own policies. For more information about this important policy, see: BIC's page on the IIM and IDB's IIM website.
IIRSA Project Activities
One of IIRSA's 31 Priority Projects is Funded
The Acre bridge project, one of the 31 infrastructure projects prioritized during third meeting of South American presidents on December 8th, 2004, has distinguished itself by being one of the first to be funded. Located in the Perú-Brasil-Bolivia Hub, the project is being funded by the Acre state government with about $10,000,000 of Brazilian state and federal funds. For more details see the Acre Government website.
BNDES Loans Perú $400 Million for Road Integration Initiative
The Cuzco-Acre Road rehabilitation and building project (located in the Amazon Hub) got a boost December 8th, 2004, when BNDES (O Banco Nacional de Desenvolvimento Economico e Social), the main Brazilian development bank, loaned $400,000,000 to the government of Perú to fund road construction. Considered by some to be environmentally and financially problematic for Brazil, the finished road will connect the remote Amazonian state of Acre to the bustling city of Cuzco, Perú. For more information see the Acre Government website.
CAF Lends Paraguay $10 Million for IIRSA Project, Cements Presence in the Country
On February 18 2005, CAF president Enrique García signed a loan for $10,000,000 to the Paraguay Public Works Department. The money is destined to rehabilitate and rebuild Routes 10 and 11, a project that is part of the IIRSA integration program for that region. CAF also gave Paraguay a $33,850 Technical Cooperation grant, for studies on the country's western road system. See press release.
Civil Society Activities
Civil Society Demands a more participatory IIM Consultation Process.
Thursday, February 24th: A letter signed by numerous civil society groups across the Americas was sent to IDB President Enrique Iglesias as well as the IDB's executive directors and board members. The letter requested that the Independent Investigation Mechanism consultation process be conducted in a participatory manner at least equal to that of the environmental policy consultations. A four point list of suggestions followed, including a recommendation that the bank request input from people living in areas that have tried to utilize the IIM in the past, such as the region around the Yacreytá hydroelectric complex. See letter to Iglesias.
Civil Society Organizations meet with the IDB in Panamá, February 20-21
Civil society organizations (CSOs) met in Panamá last week with IDB officials at the 5th annual Inter-American Development Bank-Civil Society conference. Topics discussed included the draft Independent Investigation Mechanism and consultation process, indigenous peoples and development, the role of civil society participation, regional integration, sustainable development, and the environment. In break-out sessions on Regional Integration, CSOs questioned the basic assumption that free trade and infrastructure were synonymous with development. Most participants were not against trade, but were dissatisfied with the way trade was being negotiated. There were calls to think more strategically by recovering existing and destroyed infrastructure (e.g. railroads) instead of building new infrastructure by slicing across vast forest expanses and connecting major river systems. No one expressed any conviction that the region's insertion in the global market would lead to intra-regional integration. Importantly, people pointed out that the European Union took great pains to create harmonizing conditions for the social, political, and economic integration of Europe. Many countries are not ready for integration, and stand to lose more than they gain. Questions included the following:
- What will the IDB do to create the social and economic pre-integration conditions for regional integration?
- Also, the integration being promoted is monolithic and geopolitically artificial. It is not the continent of South America that needs to be integrated, but its sub-regions and individual watersheds. How would the Bank address these types of integration efforts?
- Economic and commercial integration is always mentioned in IIRSA, but what kind of integration would encourage and protect respect labor rights?
The IDB should also address the ways in which national sovereignty can be protected, not just international commerce. The bank was encouraged to actively open dialogue on other models of thematic, sector, and geographic integration. The CSOs proposed that the bank establish a permanent civil society working group for negotiation and dialogue on IIRSA. The group would have the capacity to bring both government and the private sector to the table to maintain a social process of critical analysis and pro-active dialogue on sustainable integration.