Subject: American Anthropological Association

Please find below a series of letters exchanged between the American
Anthropological Association (AAA) and Wolfensohn. Wolfensohn responded a
full seven months after the release of the report issued by the AAA.
Enclosed is the full exchange.
>
>The AAA findings are available on the web at:
>http://www.ameranthassn.org/pehuenc.htm

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>October 21, 1998
>
>Dr. Jane H. Hill
>President
>American Anthropological Association
>4350 North Fairfax Drive
>Suite 640
>Arlington, Virginia 22203-1620
>
>Dear Dr. Hill:
>
>Thank you for your letter of September 30, 1998, relating to IFC's
>handling of the Pangue hydroelectric project in Chile. I share your
>concerns about this project. I have said on a number of occasions
>publicly, both in Chile and elsewhere, that there were serious
>shortcomings in the way that IFC handled the Pangue project.
>
As a result of close scrutiny and review of Pangue and other projects, IFC
learned important lessons and resolved to improve its environmental and
social performance. The direct result of that process is a new and more
stringent environmental and social review procedure, which has now come
into effect, and IFC safeguard policies which follow closely those of the
World Bank. IFC has also substantially expanded its environmental and
social science review staff and further expanded its social science
capacity by working with other social scientists in many countries.
Moreover, IFC is working closely with the specialists in the Bank to
augment its resources. With these changes, IFC will be able to focus on
assuring first-rate environmental and social performance on its projects,
both at the design stage and during implementation.
>
I note your concern regarding the lack of progress made in responding to
the March 1998 report by the American Anthropological Association's
Committee for Human Rights. This has been a difficult issue for IFC and I
share the frustration you expressed in your letter. However, it is
important to recognize that IFC's capacity to influence outcomes of the
projects it helps finance varies, depending on when in the project cycle
intervention is needed. In addition, it remains an ongoing challenge in the
private sector projects to accurately define the issues to be addressed by
the client company and those that must, by their scope and nature, be in
the domain of the national government. Understanding and recognizing these
challenges and constraints is central to accurately assessing IFC's present
capacity to address the issues the Committee has raised in its report.
>
In the case of the Pangue project today, years after Board approval and a
year and a half following prepayment of the IFC loan by Pangue S.A., the
simple fact is that IFC's leverage to address existing deficiencies in the
social area is extremely limited. IFC cannot take unilateral action in
connection with the Pangue project. I believe IFC management and staff had
conveyed the constraints they faced during the extensive discussion with
the members of AAA's Committee on Human Rights both in open and closed
session in November of last year. Many of the recommendations of the
Committee's report were raised and addressed at that time. IFC management
are under my direction to continue to work with Pangue S.A. and other
directly impacted parties to reach as positive an outcome as possible as
long as it remains a 2.5% shareholder in the company. However, given the
reality of present circumstances, I cannot promise success in achieving
some or all of our objectives, or the objectives of the Committee.
>
While the lack of progress in this matter is frustrating for all of us, I
hope that the valuable lessons learned from the Pangue project and the
frank exchange on issues such as human rights and development, and
indigenous peoples, with your organization and many other interested
parties will continue, as will the evolution of the Bank Group policies and
operations to better reflect the interests of those impacted by the
projects we help finance.
>
>[written in by hand:] I will continue to press in every way I can.
>
>Sincerely yours,
>
>James D. Wolfensohn


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>Text of original letters on the Pehuenche Matter
>
>>Mr. James D. Wolfensohn
>President
>The World Bank Group
>2121 Pennsylvania Ave, NW
>Washington, D.C. 20433
>
>March 19, 1998
>
>Dear Mr. Wolfensohn,
>
>I write as president of the American Anthropological Association, with a
>membership of nearly 11,000 professional anthropologists working in the
>United States and elsewhere. With this letter I convey to you a copy of an
>extensive report, prepared by the Association's Committee for Human
>Rights, concerning IFC-financed hydroelectric development on the Bío-Bío
>river in southern Chile.
>
>You will be well acquainted with the project, involving the Pangue Dam,
>the prospect of further dams upstream, and the protest lodged by IFC
>consultant Theodore Downing. I point out that Dr. Downing, a former
>president of the Society for Applied Anthropology, is a distinguished
>member of my profession. The IFC and its project partners placed Dr.
>Downing in a profound
conflict of professional ethics that he had specifically sought to preclude
through the insertion of special language in his contractual agreement with
the IFC. I protest this. Dr. Downing is owed an apology and reinstatement
of his working relationship with the Bank Group.
>
>The conduct of the Pangue project violated in several ways the human
>rights of an indigenous people, the Pehuenche. The Pehuenche were not
>adequately informed of the impending project's ramifications for them. The
>IFC poorly monitored the Pehuen Foundation, a promising creation for
>linking the project and the Pehuenche; this allowed the Foundation to fail
>in its purpose, leaving the Pehuenche unprotected. Timber on Pehuenche
>lands has been appropriated; the Pehuenche have
thereby effectively financed the assault on their own lifeway and culture.
Still worse, the IFC appears to have turned a blind eye to the engineered
linkage between the Pangue Dam and the second, upstream Ralco Dam which
will soon be built. Ralco will displace as many as 1000 Pehuenche to lands
clearly unsuitable, even dangerous, to their cultural survival. And there
are still other failings detailed in the report.
>
IFC and the World Bank Group responded to this case by drafting new
guidelines for disclosure of environmental and social impacts. This is
helpful but insufficient. I call upon the entire World Bank Group to take
the following actions: (a) adopt a uniform and uniformly binding commitment
to guarantee the human rights of all groups impacted by its development
projects, (b) institute organizational changes that will prevent
project-level implementation from ignoring the Bank Group's human rights
directives on human rights, resettlement and participation by local
populations, and (c) assure that the Bank Group's project information flow
and accountability for human rights, moves fully from bottom to top of the
Bank Group's structure, and is distributed beyond the Bank to public groups
and to the peoples affected by those projects. Recommendation 6 of Part IV
of the enclosed report speaks directly to this point.
>
>I call upon you to direct the IFC to return to the Bío-Bío and remedy the
>Pehuenches' violated rights. I reject the proposition that IFC's
>obligations ended when its loan was repaid.
>
I and this Association stand ready to work with you to fashion a Bank
Group-wide policy on the protection of human rights within the development
process, and to propagate that policy to private lenders, to governments,
and to development contractors. As Third World development increasingly
privatizes, the Bank has an historic opportunity. I ask you to lead the
effort to entrench the honoring of human rights in the development process
at all levels, by all participants. The American Anthropological
Association stands ready to join you in this critically important effort,
and I propose meeting to begin
this work.
>
>Yours truly,
>
>Jane H. Hill, President
>American Anthropological Association
>
>ec: http://www.ameranthassn.org/chrhome.htm
>(report and letter)
>
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>
>Carol F. Lee
>Vice President and General Counsel
>International Finance Corporation
>2121 Pennsylvania Ave, NW, Rm. 7P-228
>Washington, D.C. 20433
>
>March 19, 1998
>
>Dear Vice-President Lee,
>
>I enclose the report of the Committee for Human Rights on the Pehuenche
>matter. I also attach the text of a letter I have sent to James
>Wolfensohn, president of the World Bank Group, which describes the
>position I have taken and the actions I urge be taken by the World Bank
>Group in general and the IFC in particular.
>
The report is to be understood as a briefing document, prepared by the
Association's Committee for Human Rights, that has formed the basis for my
letter to Mr. Wolfensohn and the other actions the Association will be
taking. The report will be posted on the AAA's website shortly, at
http://www.ameranthassn.org/chrhome.htm. I thank you for meeting with the
Committee last November and ask that, in concert with the World Bank Group,
that the IFC act positively and promptly on the recommendations it
contains.
>
>Yours truly,
>
>Jane H. Hill, President
>American Anthropological Association
>
>ec: http://www.ameranthassn.org/chrhome.htm.
>(report and letter)

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Aleta Brown
Campaign Associate
International Rivers Network
1847 Berkeley Way
Berkeley, CA 94703 USA
Phone: 1.510.848.1155
Fax: 1.510.848.1008
email: aleta@irn.org
http://www.irn.orghassn.org/chrhome.htm.