1. Social and Environmental Safeguards in International Development Finance Case Study PULP Mills in Fray Bentos - Uruguay Presented by Center for Human Rights and Environment (CEDHA) - Argentina Harvard Extension Program - June 19, 2007 Jorge Daniel Taillant – jdtaillant@cedha.org.ar

2. ArgentinaUruguay Rio Uruguay Botnia Ence

4. Principal Proponents Companies - Botnia/ENCE IFC MIGA Private Banks (ING / BBVA / Nordea / NIB) Finnvera (Finnish Export Credit Agency) Uruguayan Government (National and Local) Uruguayan Gov Netherlands Spain

5. Key Source of Problem Environmental Impact Assessment Summary – Orion – April 20, 2005 –Two Mills ENCE/Botnia measured separately –Incomplete EIAs and failed engagement generate speculation and mistrust –“Consultations indicate that the project enjoys broad public support”

6. Broad Public Support! Just 10 Days Later!

7. Broad Public Support!

8. Principal Oposition Gualeguaychu Assembly (40,000 personas) (Public/Business/NGOs) Select NGOs and Public in Uruguay Argentine Government (National, Provincial and Municipal) Uruguayan Prosecutor Press CEDHA Gualeguaychu Assembly 40,000 persons Entre Ríos Gov Uruguayan NGOs Argentine Gov Taking to Bridge

9. What to do?

10. A Few Questions to Answer What is the case about? Contamination? Business? Politics? Who governs the situation? (what rules?) Who is responsible? Where can we go with the case? (Media, Streets, Court, Government, World Bank) We chose Accountability thru Finance.

11. Definition of Accountability "Accountability is the means by which power is used responsibly" This goes beyond an exclusive focus on the process of reporting upon - or accounting for - decisions and actions. Accountability also involves taking account of the needs, concerns, capacities and dispositions of affected parties, and explaining the meaning and implications of, and the reasons for, actions and decisions. Accountability is thus a measure of the quality of the relationship between an agent (a body offering a service or product) and a principal (the person or group for whom the service or product is intended). The more powerful the agent, the greater potential there is for abuse and exploitation of the principals. Accountability is the countervailing force which confronts power and ensures that it is exercised responsibly. -Humanitarian Accountability Partnership

12. Possible Channels of Action CAO Inter-American Commission of Human Rights European Commission for Violations to European Citizens Spanish/Finish Courts (Finnvera - ECA) Criminal Actions in Argentina against CEOs International Court of Justice Legal Action in Uruguay Equator Bank Compliance Claim (to BBVA and ING) OECD Guidelines for Multinational Enterprises UN Human Rights Norms for Transnational Corporations UN Global Compact Generally on Corporate Social Responsibility Commitments Corte Internacional de Justicia

13. Complaints – What We Did

14. Grounds of Action at CAO Violations to Environmental and Social Safeguards Violations to Disclosure Policy Violations to International Waterways Policy Poor Stakeholder Consultation Poor EIAs Violations of International Treaties

15. CAO Audit Findings Complaint by 40,000 Stakeholders –“IFC’s due diligence to satisfy itself that the EAs were complete in all material respects was inadequate and not incompliance with the organization’s Disclosure Policy” (CAO, Feb 22, 2006) –Insufficient evidence that proper consultation has occurred –No cumulative impact study; IFC Fosters Separation of Projects! –Need to generate transboundary trust in Local Communities –Botnia’s beginning construction undermines legitimacy –Special Efforts must be made to legitimize future studies –Must study impacts of eucalyptus tree farming on water –Must examine International Law Obligations; MIGA says not needed! –Establishes legitimacy of (Gualeguaychú Assembly) –IFC Fails to Give Clarity on how it will address Study Flaws –“Further technical information and facts will not be sufficient”

16. International Waterways International Waterways policy (OP 7.50)

17. International Court of Justice ICJ Ruling

18. Grounds of Action at IAHRC (for Responsibility of Uruguayan Gov. To Project) Right to Life Right to Physical Integrity Rights of the Child Judicial Process Progressive Realization of ESCR Right to Health Right to a Healthy Environment Access to Information Access to Justice We asked for Preventive Measures

19. Mixed Results Withdrawal of One Pulp Mill Withdrawal of One Major Financial Bank (480m) Posibility New Compliance Procedure at Equator Banks Debate Opening at OECD of Bank Liability to Guidelines Improvement of Remaining Mill 18 Month Delay Board Vote Date @ WB Investigation process initiated at IAHRC Greater Attention to Policy Procedures Awareness Building / Experience

20. What we discovered Finance Network is Precisely Crafted Actors are far more related than they seem World Bank (through IFC) plays a critical role in technical and financial legitimacy Government and State Actors are far more related than it seems The network is self sustaining and legitimizing

21. Exploratory Strategies Articulation of Actions IACHRIndep. Control Mechs Social Movements Human Rights NGOs Prvt Banks IFIs Safeguards Others? OECD -NCPs CSR Press UN CAO World Bank Board National Governments Companies

22. Jorge Daniel Taillant jdtaillant@cedha.org.ar Center for Human Rights and Environment