introduction

introduction

women hulling corn, luang prabang, laos

“we are very rich …that is why we are so poor.”
title of a poem by nnimmo bassey, friends of the earth nigeria

For many of us, it is unthinkable to go through a single day without the comforts provided by fossil fuels, metals and minerals. Almost everything that we do or use has some connection with oil, gas and minerals: homes, food, drinks, clothes, pots, knives, plates, pencils, pens, paper, plastic, glass, cars, trains, airplanes, guns, bullets, computers, telephones, televisions, refrigerators, freezers, factory equipment, farm implements, needles, thread, toothpicks…The list is endless.

Production and consumption of these goods happens at a great cost. Although the comforts they provide are taken for granted by many, sustaining their cheap availability has come at a huge expense for others. In the name of development, International Financial Institutions (IFIs)1 use taxpayer money to support the exploitation of oil, gas and mineral resources

International Financial Institutions have pressured governments in poor countries to rigorously open up to foreign investment in the extractive industries, and have channeled billions of dollars directly to large transnational corporations (TNCs) to finance the construction of drilling platforms, pipelines and large-scale mines. While the external debt continues to grow and on the ground development benefits have yet to materialize, the coal, oil, gas and minerals are exported out of the country. This export-led development paradigm has been devastating for local communities: poverty is soaring, and ecosystems are ravaged. Corporations, which rake in large profits, benefit the most from this lopsided arrangement.

It seems paradoxical that many of the nations that are rich in natural resources are poorer in monetary terms than are countries with scanty resources. Less-developed, resource-abundant countries are forced to trade away their natural wealth and to bear the adverse effects of the extractive industries. These countries have become mere sources of cheap labor and raw materials, and rarely have the opportunity to add value to create revenues that remain at home. IFI involvement in these countries has not led to poverty alleviation or increased people's opportunities to carve out sustainable livelihoods. Quite the opposite: investment in the extractive industries has destroyed the natural resource bases upon which the survival of human beings depends. Yet all of this is contrary to what International Financial Institutions are mandated to achieve. It is the mission of IFIs to alleviate poverty and contribute to sustainable development. The donor governments that direct the investment of these institutions have all committed to eradicating poverty. The evidence that financing oil, mining and gas projects has no place in this mission is overwhelming.

While Friends of the Earth International understands that the extraction and consumption of oil, gas, and minerals cannot end from one day to the next, we feel the need to question current production and consumption patterns and how they relate to the world's real needs. For example, about 84% of the gold currently being mined is made into jewelry.2 Friends of the Earth International believes that we will only achieve socially just and environmentally sustainable societies by dramatically changing our consumption patterns.

Communities all over the world are voicing their concerns about the plundering of their resources and the lack of benefits they receive. The Pacific island of Bougainville , for example, has suffered through a horrific war over a foreign-owned gold mine that decimated its population. Even more recently, many Bolivians died in mass riots against the export of the country's gas reserves.

Confronted with the enormous adverse effects of oil, mining and gas projects, Friends of the Earth International believes that public funding should not support the interests of extractive industries but should only be used for projects that clearly and immediately benefit the marginalized. Therefore, we are calling for a gradual phase-out of IFI lending for fossil fuel and mining projects and programs. IFIs should also take responsibility for the legacies they have left behind around the planet, through the rehabilitation of degraded areas, the payment of reparations to impacted communities, and the provision of transition assistance for workers after project closure.

Finally, Friends of the Earth International proposes that funds intended for sustainable development be dedicated to financing decentralized and participatory initiatives that truly benefit people and the environment, for example in the area of renewable energy for sustainable societies. .

1. When we refer to IFIs in this publication, we mean all multilateral development banks and bilateral export credit agencies (see glossary) . The case studies in this publication focus only on financial support from public financiers.

2. Only 4% of the mined gold is used for coins and medals, 6% for electronic equipment, 2% for odontological purposes and 3% for other industrial and decorative uses, according to 1997 data from the Costa Rican Ecological Association AECO-AT.
According to Project Underground, central banks and IFIs hold more than 34,000 tons of gold, which is more than 13 times the annual production of the world's mines and which if sold, could satisfy gold demand for more than 8 years.