348. Telegram From the Department of State to All Diplomatic Posts1
SUBJECT
- Multilateral Assistance and the Environment. For Ambassadors and AID Principal Officers from the Acting Secretary and AID Administrator. Ref: State 2974 (Notal).2
1. Summary—There is growing public and congressional sentiment that the USG should exert greater influence on projects financed by the multilateral development banks to reduce their adverse environmental impacts. Your personal involvement is requested to ensure that we are responsive to this concern, and in a manner which recognizes the potential political sensitivities of this issue in host countries. End summary.
2. The United States has historically been the world leader in shaping and supporting international development assistance efforts, utilizing both bilateral and multilateral channels. Despite ups and downs of our economy over the years, support for such assistance has remained a strong constant.
3. We have learned that the development process must be based on solid foundations if it is to result in real progress. In recent years these foundations have come to include the capacity of the environment and natural resource base (soil, forests, etc) to sustain development over the long term. The adverse impacts on development of misuse of the environment and mismanagement of natural resources have been well documented. Not only do they include the reduction of anticipated benefits in the developing countries, but the direct and indirect costs to the donor nations are wide-ranging. The influx into the U.S. of economic refugees from ecologically devastated Haiti or the emergency relief costs of famine in Ethiopia are telling examples.
4. While concern about the environmental aspects of international development assistance had been largely focused on the policies and [Page 852] practices of bilateral donors in recent years, attention has now been shifted to the multilateral development banks (MDBs) and U.S. responsibilities thereto. In 1980 the major multilateral development institutions adopted a “Declaration of Environmental Policies and Procedures Relating to Economic Development” in which they committed themselves to promote environmentally sound development. However these high principles have not always guided specific activities of these institutions.
5. Over the last three years a series of congressional hearings has been held on the environmental policies and practices of the MDBs. (See reftel, being repeated to those not originally addressed.) One of the results was a directive to the Department of State to play a more active role, in cooperation with AID and Treasury, in promoting improved integration of environmental considerations into MDB projects.
6. Recently, the House Appropriations Committee, in its report on the FY 1986 Foreign Assistance Appropriations Bill, urged the USG to oppose any MDB loan which “results in the use of natural resources at an unsustainable level, endangers species survival . . . (etc.).” And, on September 18, Senator Kasten threatened in a hearing to “use the appropriations process” to move the MDBs faster toward more environmental sensitivity. Responding to congressional concern, the World Bank suspended on environmental grounds earlier this year disbursements on a large loan for highway construction in the Brazilian Amazon.
7. This heightened interest in the environmental and resource management implications of development is thoroughly justified. While USAID is widely recognized as the world leader among bilateral donors in promoting environmentally sound, sustainable development, we must now do all we can to promote similar forward-looking development policies and practices among the multilateral development institutions.
8. In recent months State and AID have been working with Treasury and others to develop an effective strategy for addressing this need. It is very clear that we must exert influence in the early stages of project development if we are to (1) ensure that environmental considerations are effectively integrated into the project design; and (2) minimize the potential for bilateral friction likely to occur when we are required to speak out against a particular loan when it comes up for final approval. (This happened earlier this year in relation to a large IDB loan when our request for additional environmental safeguards just prior to a final vote created a predictable stir.)
9. Action requested—Developing country addressees.
[Page 853]In order to help us develop and implement an effective politically-sensitive strategy, we ask you to do the following:
In countries which borrow from one of the major multilateral development institutions, assure that your staffs give serious heed to the request (State 2974) for early reporting on the environmental implications of prospective MDB projects. Close contact with visiting MDB missions and resident staff should assist in this process. To help put our review of MDB projects into context, please also report on the environmental issues your host government considers of high priority.
In all developing countries, please use your personal influence, and that of your staffs, to maintain constructive dialogues with host government officials on this matter. We should attempt to heighten awareness that development which does not integrate careful attention to wise resource management will be more costly and potentially less productive in the long run; and also help design necessary safeguards.
10. Action requested—developed country addressees.
OECD members recognized the importance of linking environmental assessment and development assistance in a recommendation adopted by the OECD Council last June. ECE governments are working on a project to expand usage of environmental assessments. Such interest can hopefully serve as a solid basis from which to approach the practical environmental implications of MDB activities, and we wish to provide encouragement and support whenever possible. Consequently, in developed countries which, along with the U.S., are funders of the MDBs, we would welcome your assessment of how the U.S. might most effectively engage your host government in complementary unilateral efforts and/or coordinated approaches in multilateral fora aimed at influencing MDBs more effectively to integrate environmental considerations in their lending activities. Thoughts from any other posts on this subject would, of course, also be appreciated.
11. If any post desires background materials on the general issue of the environment and development, or specifically on how we are seeking to influence the MDBs, please slug your requests: “Attention State OES/ENR and AID/PPC.”
- Source: Department of State, Central Foreign Policy File, Electronic Telegrams, D850736–0796. Unclassified. Drafted by Paul Glasoe (OES/ENR); cleared by Negroponte (OES), Michelle Bova (S/S), Richard Benedick (OES/E), Bill Long (OES/ENR), Ruth Van Heuven (S/S-O), James Tarrant (EUR/RPE), Richard Derham (AID/PPC), Robert Beckham (ARA/ECP), R. Banque (Treasury/IDB), P. Daley (AF/EPS), John Riddle (EB/ODF), Robert Cekuta (NEA/ECON), Robert Duncan (EAP/EP), and Edmund Kelly (H); approved by Armacost.↩
- Telegram 2974 to all African diplomatic posts, all American Republic diplomatic posts, all Near Eastern and South Asian diplomatic posts, and all East Asian and Pacific diplomatic posts, January 4, is in Department of State, Central Foreign Policy File, Electronic Telegrams, D850009–0544.↩