Financial Times (London), September 27, 2000
World Bank Approved Loan To Abolished Unit Russian Forest Service Funding
By Stephen Fidler
The board of the World Bank approved a 60 million dollar loan in May to
Russia's federal forest service, six days after President Vladimir Putin
signed a decree closing it down.
The bank never activated the loan, saying it would wait until it was
satisfied with the new arrangements the government put in place.
But some bank critics expressed incredulity at the decision. "It's the first
time I've seen the bank approve a loan for an institution that no longer
exists," said Doug Norlen of Pacific Environment, a US campaigning group.
Bank officials said the decision to close down the federal forest service
and fold it into the Ministry for Natural Resources was disclosed to the
bank's 24-strong board at the time of the decision. But the board decided to
go ahead with the loan because the design of the programme supported by the
loan was seen as sound.
The board gave the go-ahead for the loan on May 23, six days after the
regulation abolishing the agency was signed and two days after it was
published in the official gazette.
"Mr Putin's decision to reorganise the structure did not affect the design
of our forestry project, but it did require clarification of the
implementation arrangements," said Jan Pakulski, bank spokesman for Europe
and Central Asia. He said soon afterwards the bank told the government that
it would not sign the loan until it was satisfied with the arrangements it
put in place.
Russian environmental campaigners in Prague for meetings with bank officials
said they were worried about the implications of the subordination of the
forest service, as well as the state environmental protection agency, to the
pro-exploitation Natural Resources Ministry.
In September, the bank approved a further Dollars 200m guarantee programme
aimed at encouraging forestry and coal mining investment, which was also
dependent on new arrangements being put in place to satisfy the bank.
Bank officials point out that many countries to which it lends have no
independent forestry or environmental agencies. The government has also
pledged public consultations on its environmental assessment procedures. Mr
Pakulski said there was a good chance that the arrangements that emerged
would be better than those previously in place.
The forest service was widely regarded as a bloated bureaucracy, and Mr
Putin's decision has been interpreted as an effort to streamline government.
Employees have orchestrated a campaign to get it reinstated.
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