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PAPUA
NEW GUINEA RAINFOREST CAMPAIGN NEWS
World
Bank Threatens to Withhold Loans Over Forestry Changes; and Then Does
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Forest
Networking a Project of Ecological Enterprises
8/12/96
OVERVIEW
& SOURCE by EE
The
Papua New Guinea government is being taken to task for "persistent
attempts
to amend the Forest Act 1991" and general failure to abide by
conservation
commitments made, in some cases, to receive international
funding. The first item below details that the World
Bank is concerned
with
amendments to the PNG forest act which it views as a blatant attempt
to
compromise "the power and independence of the Forestry board." The
second
article provides coverage of the World Bank's subsequent
cancellation
of loans. Essentially the World Bank
has pulled out of PNG
over
the issue of consistently poor forest policy.
It is centralized
forest
policy decision making (typically in the office of the Forest
Minister)
which has lead to repeated high level corruption in the granting
of
industrial forest contracts; and a resultant squandering and general
diminishment
in PNG's forest resources and ecosystems.
Local NGOs are
calling
for pressure to be exerted on other bi-lateral and multi-lateral
donors
to reassess their PNG assistance in light of continued misguided
forest
policy.
Glen
Barry
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TEXT STARTS HERE:
ITEM #1
Source: The Independent
Headline: "Loan arrangement in doubt... Forestry
changes anger World Bank"
July
26, 1996
Front
Page, Banner Headline
By Abby
Yadi
THE
WORLD Bank has threatened to withold the second portion of the economic
recovery
loan worth K25 million, claiming the government had reneged on
assurances
it would not make major changes to the Forest Act.
The
bank now wants the government to immediately reverse some of the
changes
that were made in the Forest Act bill passed by parliament on
Wednesday
in the current session, or risk not getting the money at all.
Leader
of the bank's recent review missions to PNG, Pirouz Hamidian-Rad
told
_The Independent_ from Washington, DC, USA, they are upset at the
decision
of the government to push the changes through parliament, despite
assurances
they received that the Forest Act would be upheld.
"This
happened when things were looking good for the loan. We were to go
to the
bank's board by the end of August to recommend for its release," Mr
Hamidian-Rad
said.
"But
if what we hear that the amendments were passed in the original form
is
true, there could be some problems," he said.
He said
the passage of the bill was totally in contradiction to the
agreements
that were reached during discussions in PNG.
"If
they (the government) do not do anything (to reverse the changes) in
this
session of parliament, it will jeopardise everything.
"If
they do not change it, we will not release the loan at all," he said.
During
discussions with Prime Minister Sir Julius Chan in the May-June
mission,
it was agreed that the amendments to the Act be limited to just
the
separation of the position of the chairman of the National Forest board
and the
managing director of the National Forest Authority; and some other
amendments
of a minor technical nature relating to provincial reforms.
The
bank has expressed concern in those meetings at the persistent attemps
to
amend the Forest Act 1991 in a fashion that would undermine the power
and
independence of the Forestry board.
"The
World Bank remains concerned that such a turn of events would not be
in the
best interests of PNG," the mission said in its summary of findings
and
assesments.
Parliament
on Wednesday passed a number of amendments, including those that
were
specifically opposed by the bank, after several attempts by Forest
Minister
Andrew Baing.
The new
amendments give the minister for Forests the power to recommend to
cabinet,
people to be members of the board and the chairperson of the
board. The new Act says that members of the board
will be appointed by NEC
"on
the recommendation of the Forest Minister." The old Act stated that
NEC
would make the appointments "in consultation with the minister".
Apart
from the managing director, other members will include the president
of the
Forest Industries Association or his nominee, two departmental heads
or
their nominees, and five persons to be appointed by the minister.
The
minister, under the new laws, will apoint someone from the latter five
to be
chairman of the board.
A new
section has also been added, Section 139A, which deals with transfer
of
state-owned land that have been allocated for use by the Forest
Department
or the Forest Industries Council to the Forest Authority.
ITEM #2
Source: _The Independent_
Headline: "World Bank axes loan"
August
2, 1996
By Abby
Yadi
Page 1
PARLIAMENT
on Thursday moved to refer the heads of the recent World Bank
missions
to PNG to appear before the Privileges Committee, as word spread
that
the Bank had cancelled the second tranche loan of K25 million.
The
bank, it is understood, sent a faxed message to the Prime Minister Sir
Julius
Chan, and copied to Deputy Prime Minister and Minister for Finance,
Chris
Haiveta, advising the government that the loan had been cancelled.
The
bank earlier threatened to cancel the loan after parliament passed the
controversial
amendments to the Forestry Act, which the bank claimed gave
substantial
powers to the Forest minister in appointing board members to
the
Forest board.
According
to sources, the matter was decided when Mr Haiveta unexpectedly
launched
a stinging attack on the World Bank in parliament this week.
Mr
Haiveta said that the amendments were now law and that the World Bank
could
not be allowed to question the parliament's and the country's
sovereignty.
The
likely implication of the World Bank cancellation is that other
international
donors such as the International Monetary Fund, Asian
Development
Bank, Exim Bank of Japan and the Australian government may be
more
reluctant to provide aid money.
The
donors have indicated a total support for PNG worth over K200 million.
In
Parliament Thursday, the Speaker ruled that the conduct of the World
Bank
officials in openly questioning the authority of parliament in passing
the
Forestry amendments amounted to a "contempt of Parliament."
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