October 8, 2001

Mr. James Wolfensohn
President
World Bank Group
1818 H Street, NW
Washington, D.C. 20433

Dear President Wolfensohn:

We write to you today, regarding your commitment to an independent review of the World Bank Group's support of extractive industries. In your statements in Prague you offered that the Bank Group would engage in a serious analysis of the pros and cons of these industries, similar to the World Commission on Dams (WCD).

While we commend you for taking that initiative, we are disheartened to see that the emerging Extractive Industries Review (EIR) bears very little resemblance to the WCD, particularly with regard to its independence from the World Bank. This lack of independence is reflected in the draft Terms of Reference (TOR) for the Review, in the essentially closed-door process being used to develop that TOR, in the Bank's insistence that the Secretariat for the review be housed at its headquarters in Washington, DC, rather than in Indonesia with the man who you have chosen to direct it, and now in the World Bank-controlled process being used to invite experts and representatives of various entities to the kick-off and brainstorming session now scheduled for October 29-30, 2001.

Given that the Bank has yet to mainstream the WCD's recommendations, this suggests that the Bank is not yet prepared to engage in a truly independent review of its activities, but instead prefers to listen only to criticism that it carefully controls. If the Review persists in this course, it will be just another paper exercise that yields no useful result. We have little
interest in participating in such a process.

Yet the need for a real review, and deep changes in the World Bank's portfolio, is timely and necessary. Too often, extractive industries exact a heavy toll on the environment, to the detriment of both present and future generations. Land is despoiled by mining, toxic spills, and industrial development, and the poorest pay the highest price, often losing their land
rights as well as their ability to feed themselves to oil, gas and mining projects. Simultaneously, many of these rural poor live without any modern energy services, as the Bank's own reports have long shown. World Bank investments in clean, renewable energy could both address their need for energy services while preserving their environment.

If the EIR can honestly evaluate the realities faced by the poorest in the context of extractive industries, it can lay a foundation for change. At the same time, the Review should provide the space needed to honestly evaluate the priorities for World Bank investments in the energy sector given global climate change. We know that your own senior environmental
advisor, Dr. Robert Watson, has briefed you on the latest scientific research as well as on the urgent need to support the Kyoto Protocol.

The recent release of the Terms of Reference for the Review has only increased our concern. The TOR states "[The World Bank Group] believes such industries can make a positive contribution to sustainable development and poverty reduction in its member countries". This statement reflects a view that is by no means shared by the breadth of civil society organizations that have examined this issue, and underscores the bias with which the Bank
seems to be approaching this Review.

There is still the opportunity to remedy the course of the Review. We are submitting the following recommendations in the hope that you will use your leadership to take the steps necessary to ensure a truly independent Review. That is the only way to obtain an accurate assessment of the Bank's investments in extractive industries and their impacts on the people the Bank is supposed to be serving -- the poorest.

We request that:

(1) the World Bank agrees to abide by an informal moratorium on new financing for extractive industry projects while the review takes place;

(2) Dr. Emil Salim as head of the review be allowed to operate totally independently of the World Bank, determining, for example, where the Secretariat is housed, what the work plan will be for the review, and which experts he wants to assist him in carrying out the review;

(3) funding adequate to carry out a good review as articulated by Dr. Salim and the expert advisors be guaranteed by the World Bank through various sources, such as trust funds by member countries or grants from private foundations;

(4) the TOR guarantee adequate representation of and funding for indigenous peoples and other communities affected by World Bank investments in the Review in order to ensure that those who can least afford to travel are given a hearing;

(5) the consultation includes inputs from experts and scholars who have studied the extractive industries relationship to the standard of living for the poorest, human rights, governance, and the global and local environment as well as representatives of industries that can provide alternative forms of energy;

(6) that the integrity of the consultation process be recognized as the paramount consideration in the completion of the Review - and that other considerations such as timing and cost be recognized as secondary;

(7) the World Bank commits itself to implementing to the best of its ability all recommendations contained in the Consultation Report ultimately prepared by Dr. Salim.

If the Bank is unable to address these points substantively, our organizations are likely to withdraw from this process. We look forward to discussing this with you at your earliest convenience.

Sincerely,

Daphne Wysham
Sustainable Energy & Economy Network
Institute for Policy Studies, USA

Johan Frijns
Friends of the Earth International

Keith Slack
Oxfam America

Jorge Acosta Arias
Centro de Dererchos Económicos y Sociales
Ecuador

Nnimmo Bassey
Environmental Rights Action
Nigeria

Frances Carr
Down to Earth:
The International Campaign for Ecological Justice UK

Paul de Clerk
Milieudefensie/FoE Netherlands

Ophelia Cowell
TransNational Institute

Delphine Djirabe
CAPDHR
Chad

Jozsef Feiler
CEE/ Bankwatch Network

Pamela Foster
Halifax Initiative Coalition
Canada

Paul Horsman
Greenpeace International

Gerardo Honty
CEUTA / Uruguay

Manana Kochladze
Green Alternative
Georgia

Shanna Langdon
Project Underground, USA

Lily La Torre López.
Grupo de Trabajo Racimos de Ungurahui
Perú

Ikuko Matsumoto
Friends of the Earth Japan

Carlos Portugal Mendoza
Grupo de Investigaciones Económicas ECO
Peru

Bineet Mundu
Delhi Forum,
India

Mahalakshmi Parthasarathy
Mines, Minerals & People
India

Miguel Palacin Quispe
Coordinadora Nacional de Comunidades del Perú Afectadas por la Mineria

Isaac Rojas
Coecoceiba / FOE Costa Rica

Heffa Schuecking
Urgewald
Germany

Atossa Soltani
Amazon Watch, USA

Emilie Thenard
Center for International Environmental Law
USA

Antonio Tricario
Campagna per Riforma Della Banca Mondiale
Italy

Ka Hsaw Wa
EarthRights International, USA / Thailand

Carol Welch
Friends of the Earth US

Alex Wilks
Bretton Woods Project