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Has the World Bank Learned Lessons from Forestry Fiasco in Cambodia?

Global Witness today welcomed the commitment of World Bank President Paul Wolfowitz to improve forest management in Cambodia, but questioned whether the Bank management has fully learned lessons from its failed Forest Concession Management and Control Pilot Project.

The president’s statement came after a report by the Bank’s Inspection Panel ombudsman condemned the Bank’s five-year project, finding it had broken six internal safeguard policies, ignored the views of forest-dependent communities and failed to take on the Bank’s key objective of poverty reduction. In response the Bank management has produced a remedial action plan committing to continued engagement in Cambodia’s forest sector. It contains an assurance that future Bank forest projects in Cambodia will include consultation with people affected, support granting of land and resource rights to local communities and adopt community-based forest management approaches.

“The remedial action plan lays down some sound principles for future Bank engagement in Cambodia’s forest sector, however it gives no guarantees as to what, if anything, the Bank will actually do or when it might do it,” said Global Witness Director, Simon Taylor. “President Wolfowitz should task the Inspection Panel with monitoring progress to ensure the Bank management does go on from here to play a constructive role.”

While the Bank has acknowledged some of the flaws in its project, wider questions of debt, accountability and the Bank’s approach both to forest management and combating corruption remain unanswered. A key issue the Bank has declined to address directly is why the Cambodian people should have to repay a $5 million debt incurred via a project that yielded no benefits for them. Moreover, those responsible for the project have faced no action within the Bank.

“It is not enough for the Bank simply to say that it has learned lessons and moved on,” said Simon Taylor. “In most institutions, employees breaching multiple regulations and producing expensively botched outcomes would face consequences. We see no sign of that happening in this case, which does raise questions as to what extent the Bank is accountable and to whom.”

The Bank must now demonstrate that lessons from Cambodia are being applied across Bank forest sector interventions globally. This imperative is underscored by a recent Inspection Panel investigation into the Bank’s forestry work in the Democratic Republic of Congo which has highlighted similar failings in project design and implementation.

The Cambodia experience has also highlighted fundamental deficiencies in the way in which the Bank engages in highly corrupted environments.

“The Bank’s bungling in Cambodia stemmed from its insistence on engaging with mafia-style companies in a forest sector governed by corruption and high-level vested interests. If President Wolfowitz’s encouraging moves to introduce a new approach to tackling corruption are to succeed, Bank management will have to reflect carefully on cases such as this one,” said Simon Taylor “When it comes to natural resource management projects, the Bank’s priority should be strengthening governance rather than lending technical support to the extraction process.”