Last week, the Government of Norway signed an agreement at the headquarters of the World Bank in Washington setting up the “Guyana REDD+ Investment Fund” (GRIF). Like much else in the brave new world of REDD, the deal raises more questions than answers.
REDD-Monitor received the following anonymous commentary on the Norway-Guyana deal. It is posted here unedited.
REDD-Monitor would like to suggest some background music for this post. Roger Waters clearly wasn’t thinking of the president of a small Latin American state when he wrote the song in the early 1970s, but it seems strangely appropriate to President Bharrat Jagdeo’s political philosophy: “Money, it’s a hit. Don’t give me that do goody good bullshit.”
REDD rubber hits the road in Guyana: skid-marks a-plenty
On October 9th, the governments of Guyana and Norway, and the World Bank, announced that they had concluded negotiations on the establishment of the ‘Guyana REDD+ Investment Fund’ – through which Norway’s promised REDD funding for Guyana will flow, a potential US$250 million by 2015. The announcement stated that the first payment of $30 million from Norway was now “being processed”.
Whilst this development will no doubt come as a massive relief to President Jagdeo – who has staked much political capital on Norwegian funding for his so-called national Low Carbon Development Strategy – anyone interested in seeing REDD succeed as a credible concept should be deeply troubled by almost every aspect of what has recently transpired in Guyana. As some observers have been predicting, Norway’s largesse looks set to result in increased deforestation and forest degradation, and a worsening of the corruption which tarnishes almost every aspect of government in Guyana.
The Norwegian government itself looks to be particularly culpable. Its November 2009 Memorandum of Understanding with Guyana was quickly criticised, because of the artificially high interim ‘base-line’ rate of deforestation, which was set at possibly 50 per cent greater than the actual rate, opening the possibility that deforestation could rise, but the country still receive REDD payments, as the President readily acknowledged. Nevertheless, the agreement held out the promise that the government of Bharrat Jagdeo could be brought into a transparent and progressive process resulting in the country embarking on a lower carbon emissions development path.
Central to the Norway-Guyana MoU was the establishment of the Guyana REDD+ Investment Fund (GRIF). Under the MoU, the expenditure of all money entering the Fund from Norway would be subject to the “safeguards as well as fiduciary and operational policies” of the organisation appointed to run the GRIF – which, it was later agreed, would be the World Bank. But this arrangement has proven uncomfortable for President Jagdeo, who has repeatedly and publicly castigated the Bank for delays and complications in releasing any funding. Quietly caving in to pressure from Jagdeo, and contravening the terms of the MoU, the Norwegians agreed a new approach for the GRIF, such that the “safeguards and operational policies” of other international funding partners for Guyana’s ‘low carbon development’ projects could be applied, rather than just the more onerous requirements of the World Bank – even if such safeguards were substantially weaker or even non-existent.
This might not be so problematic, were the policies of those other institutions actually applied. But the very first project to be funded under Norway’s funding through the GRIF – an access road to the site of a proposed hydroelectric dam at the Amaila Falls on the River Kuribong river, deep in Guyana’s rainforest – appears to have circumvented any safeguards altogether.
The Amaila Falls project, and particularly the necessary 110km new access road to it, has been mired in controversy from the outset. The proposed dam is a pet project of President Jagdeo, and long predates the country’s ‘Low Carbon Development Strategy’. Experts in the country have questioned the economic rationale for the scheme, warning that it could saddle the nation with more international debt and tie it into buying expensive electricity from the dam’s operators, through weaknesses in both the construction project and the power purchase agreements. However, despite the potential for the dam to cause the flooding of a substantial area of forest, Norway’s promised REDD funding has provided the perfect platform to get the project off the ground.
Immediate concerns have focused on the construction of the new access road to Amaila Falls, the US $15.4 million contract for which was inexplicably awarded to a Florida-based real estate dealer, Makeshwar Fip Motilall, whose company, Synergy Holdings Inc, has no previous experience of building either roads or hydro-electric schemes. Synergy has never operated at such a scale in difficult terrain such as Guyana’s interior. Local observers and experts detect the whiff of corruption; the Government’s National Industrial and Commercial Investment agency, NICIL, has been unable to explain how Synergy was awarded the contract against four other competitors, even though it appears to fail every eligibility test. A US$3 million ‘security bond’ for the construction of the road has been issued to Synergy by the ‘Hand-in-Hand Insurance’ company – which relies heavily on government business – also under unclear circumstances. Synergy has subsequently received a US$1.5 million loan from Government and exemption from import duty on apparently second-hand road-building equipment, which has already been imported and has been standing ready for several weeks.
Approval for construction of the road to proceed – which will involve the clearing of an estimated 6,000 hectares of rainforest – was granted by the Ministry of Public Works on October 5th, though the government announced only on 11th October (two days after announcing the establishment of the REDD+ Investment Fund) that works would proceed this week. The government-owned propaganda sheet, the Guyana Chronicle, today claimed that the road works had received a “positive review by the Inter-American Development Bank (IDB) of key environmental and social aspects and the contractor’s Environmental & Social Management Plan (ESMP)” – though the IDB has so far declined to confirm that it is even funding the dam or the road, or whether either have complied with the Bank’s project safeguard policies; all that the IDB has agreed so far is co-funding of the environmental and social impact studies.
The President of Guyana has reiterated that all REDD+ projects and his LCDS schemes will be subject to the free, prior and informed consent of affected indigenous Amerindians – but there is no evidence that the Amerindian rights over the Amaila Falls access road route or the dam reservoir area have even been mapped, let alone subject to a FPIC process, although they are guaranteed by Guyana’s Amerindian Act 2006.
Although the World Bank manages the Guyana REDD+ Investment Fund, and will be passing on the Norwegian REDD money to the government of Guyana to start the clearing of the rainforest road, it has disavowed any responsibility for application of its safeguard policies, even though it was required to apply them under the Guyana-Norway MoU. Subsequent to the November 2009 MoU, the financial safeguards have been slackened by putting the Norwegian funds into a new arrangement, a Financial Intermediary Fund (FIF), similar to the World Bank’s Haiti post-earthquake reconstruction fund. The World Bank then simply acts as a cash box for the yet-to-be-appointed ‘Partner Entity’, which will come to a mutually acceptable arrangement with the Government of Guyana about environmental and social safeguards and fiduciary due diligence. It is thus unclear how Norwegian money can be passed to Guyana this week, without the formal appointment of a Partner Entity, a role which the World Bank has also explicitly disavowed.
The starting-up of any projects under the Norway GRIF also contravenes the MoU in two other important respects. According to the agreement, and the stated intentions of the Norwegian government at the time, any payments to Guyana would be “results-based” – the terms of which were set out clearly in the agreement. As yet, however, not even basic mechanisms have been established to determine whether Guyana is reducing its forest-based carbon emissions (or, more likely, increasing them within the limit of the artificially high base-line rate). In fact, only in August, the Guyanese government announced the awarding of a new 167,000 hectare ‘pre-harvest’ logging concession (a ‘State Forest Exploratory Permit’) in unexploited forest to a new company, Sherwood Forrest Incorporated, which will further require the construction of an access road variously stated as 120 or 250 km in length. Norway’s ‘International Forests and Climate Initiative’ has not stated how the likely substantial carbon emissions from this operation will be monitored and assessed and any financial penalty for the Guyanese government calculated.
Worse still is that the release of funds through the GRIF also by-passes an important safeguard that was ordered by the MoU. Under the agreement, “commencement and annual continuity of result-based financial support from Norway will depend on agreed progress” regarding seven “factors”, which were defined in the agreement. The task of assessing whether Guyana had complied with these seven factors was to be delegated to a “neutral expert organization” which will “provide an annual status report for the Governments of Norway and Guyana”. In this status report, the ‘neutral organization’ will “outline its independent assessment of all Participants in the REDD+ process, and make recommendations for process and capability improvements. This will include an assessment of whoever is selected as the administrator of GRIF.”
By means which are not clear, this independent auditor task has been handed to the New York-based ‘not for profit’, the Rainforest Alliance. On October 6th – a mere three days before the Government of Guyana and the World Bank proclaimed the start-up of the GRIF – the Rainforest Alliance announced [pdf file 86.3 KB] that it was “implementing this review as of October 4. The review will include information gathering in Guyana during the period from Sunday, October 10 to Saturday October 16” – i.e. after the start of the GRIF had already been approved and the first project given the go-ahead.
The appointment of the Rainforest Alliance to monitor Guyana’s progress in preparing for Norway’s REDD funding raises yet further questions. The organisation has a dismal record in forest sector auditing, and numerous of its certificates under the Forest Stewardship Council have been challenged or proven highly controversial. It has a disturbing track record of certifying operations as ‘environmentally acceptable, socially beneficial and economically sustainable’ that later prove not only unsustainable but also illegal. Quite how ‘neutral’ the Rainforest Alliance would prove is also open to question: it has as recently as 2008 been seeking business in Guyana for its logging certification subsidiary, SmartWood, and would also no doubt very much like to open new markets for its REDD ‘verification’ services. Worse still, one of Rainforest Alliance’s Guyana assessment team, Dr Gary Clarke, is also a director of the new logging operation, Sherwood Forrest Incorporated. The Norwegian government has not yet stated whether it considers that the Rainforest Alliance team is sufficiently ‘neutral’, but the conflicts of interest look very clear to most outsiders.
Altogether, even before the first dollar of Norway’s money has been disbursed, REDD in Guyana has descended into a morass of broken agreements, dodgy backroom deals, conflicts of interest, lack of transparency, failure to uphold basic safeguards and due process, and strong grounds to suspect corruption. Rather than Norway’s REDD funding raising the quality and transparency of decision-making in Guyana, what seems to have happened is that the government of Norway and the other international ‘partners’ have sunk to the dismal level of Guyana’s governance. Norway used to have a reputation for upholding indigenous rights, but even that seems to have been abandoned along with other principles.
Quite why the Norwegian government is willing to tolerate the inevitable consequences of all this is hard to fathom. It has been aware of every aspect of this slide into abuse of REDD, yet it has done nothing. The pressure to disburse its overall $2.6 billion REDD funding pot is clearly huge – even at the expense of damaging the credibility of REDD, wasting its taxpayers’ money, and potentially fuelling corruption and graft in Guyana. Bharrat Jagdeo, meanwhile, will no doubt be relishing the prospect of a comfortable retirement when he steps down as president in 2011, and anticipating that his party in power will benefit from the no-questions-asked money now flowing from Oslo.
UPDATE – 13 October 2010: Photographs of Synergy’s bulldozers and road-building equipment added and link to the 12 October 2010 Guyana Chronicle article, “Amaila hydro access road construction to begin this week.” Also added a link to Rainforest Alliance’s 6 October 2010 notice, “Verification of Guyana REDD+ Enabling Activities Reporting” (pdf file 86.3 KB).