FOR IMMEDIATE RELEASE
June 22, 2002

Institute for Policy Studies * CEE Bankwatch Network * RAIPON- Russian Association of Indigenous Peoples of the North * Polish Green Net

World Bank Scores Own Goal in Budapest. Bank staff fails to prove projects alleviate poverty

For further information, contact: Petr Hlobil, CEE Bankwatch, 420 603 154 349 (mobile)
Steve Kretzmann, Institute for Policy Studies, 1-202-497-1033 (mobile)

Budapest -- Concluding a week of intense debate by the Danube, the World Bank's
Extractive Industries Review (EIR) has ended with a stunning defeat for the
Bank's business as usual policies. Pressed hard by representatives of civil
society from throughout Eastern Europe and Central Asia, the EIR was forced to
acknowledge the social, environmental, and developmental failings in the World
Bank's projects.

Since 1990, the World Bank Group has spent more than $7 billion supporting oil,
gas, and mining projects throughout Eastern Europe and Central Asia. These
extractive industries have been critiqued for the environmental, social, and
developmental destruction that they bring to communities and the environment
around the world.

"The Bank staff here in Budapest repeatedly emphasized their best intentions in
approving these projects. We do not doubt that. But the road to hell is paved
with good intentions. We've shown clearly this week that these projects, almost
without exception, exacerbate, rather than alleviate, poverty and pollution.
This is clearly not sound development strategy, and we call on the Bank to phase
out its support for these sectors," said Petr Hlobil of CEE Bankwatch Network.

Key recommendations of the EIR consultation in Budapest included the need for
full transparency of oil revenues, early start of consultations with affected
communities, and a need for improved focus on governance issues. In addition
the need for certain areas and technologies to be placed off limits for the
future was discussed, and no dissent was recorded.

More than 70 NGOs from the Eastern Europe and Central Asian region had demanded
that at a minimum, areas of critical biodiversity, traditional lands of
indigenous peoples, and areas of high conflict should absolutely be no-go zones
for future Bank investments. Civil society further insisted that the World Bank
should never support projects, which rely on highly toxic processes.

"It is unfortunate that the format of these consultations did not allow for
debate or decision on no-go zones, toxic technologies such as cyanide and other
crucial issues," said Robert Cyglicki of Polish Green Net.

"Most disturbingly, virtually all of the discussions revolved around how the
Bank could do projects better-- not whether or not they should. This wider
perspective must be included in the future, if the EIR is to be true to its
mandate," said Steve Kretzmann of the Institute for Policy Studies.

The World Bank, whose primary mission is to alleviate poverty, is under fire
internationally as the largest source of public funding for the extractive
industries - over $20 billion for fossil fuels alone in the last decade. In
response to these critiques, the World Bank created the Extractive Industries
Review (EIR), a quasi-independent body whose mission is to evaluate whether or
not the Bank's role in supporting these industries helps or hinders the goals of
sustainable development and poverty alleviation. The EIR is currently scheduled
to present their final report to the World Bank in June of 2003.

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