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Nixed Bolivian highway offers environmental lessons to big Brazil bank

  • Bolivia’s TIPNIS Highway, which would have bisected a national park and remote indigenous lands, was to be largely financed by BNDES, Brazil’s development bank. Instead, the project met with intense protests from indigenous groups and environmentalists, and was abandoned.
  • The highway project was cancelled in 2011 before BNDES had contributed any money to the project, but after construction had begun.
  • Earlier this year, three civil society NGOs sent a joint complaint to BNDES, alleging that it had failed to adequately consider the environmental and human rights impacts of the TIPNIS highway.
  • The groups say that the BNDES investment process was not adequately transparent, did not meet social and environmental criteria, or offer a complaint process; and conclude that the bank needs to improve its standards on future projects. The bank refutes these accusations.
Protesters against the TIPNIS Highway arrive in La Paz after marching 375 miles from the Bolivian lowland city of Trinidad. Photo by Candelaria Herrera Vasquez under a Creative Commons CC BY-NC-ND 2.0 license

Bolivia’s TIPNIS Highway — defeated by mass protests from indigenous groups and environmentalists — rates as one of the most controversial Latin American construction projects of recent years. The role that BNDES, Brazil’s giant development bank, played in that debacle requires reassessment and evaluation, says a complaint filed by three civil society groups earlier this year.

BNDES, the Brazilian National Development Bank, made the TIPNIS Highway fiscally feasible in 2009 by agreeing to fund 80 percent of the costs for the project — a major, 190 mile-long roadway through some of Bolivia’s wildest territory.

The bank quietly signed an agreement officially ending that commitment in September 2013.

Paving the way for protests

When first proposed in 2010, the highway — which was to stretch from the well-connected town of Villa Tunari to the Jesuit Mission town of San Ignacio de Moxos in the Bolivian Amazon — had appealed greatly to both the Bolivian and Brazilian governments.

To Brazil, the road was a means for exercising soft power and asserting regional dominance, while on a practical level, it was a seen as a way of improving the transportation infrastructure connecting Brazilian territory with Bolivian ports on the Pacific, making export to Asia easier.

To Bolivia, the highway held the promise of linking the historically isolated Amazon region to bustling coastal urban centers. Bolivian Vice President Alvaro García even claimed a precedent: saying that plans for a highway along this strategic route dated all the way back to the country’s independence in 1825, or perhaps even earlier, to the Spanish empire.

Bolivian president Evo Morales (left) and former Brazilian president Lula Inacio da Silva. On August 22, 2009, President Morales and then President da Silva signed the financing protocol for the construction of the Villa Tunari San Ignacio de Moxos Highway — also known as the TOIPNIS Highway — in Bolivia. Photo courtesy of Agência Brasil under the Creative Commons Attribution 3.0 Brazil license

The deal made between the two nations seemed too good to be true: Brazil would bankroll most of the construction; Bolivia would benefit from the jobs created; while isolated rural communities would gain newfound access to services and markets.

But environmentalists and indigenous peoples were not impressed.

The large-scale highway-to-be was to cut through the heart of a 3,860 square mile protected Amazonian rainforest and indigenous reserve known as the TIPNIS National Park. The preserve’s 2.5 million acres are home to the endangered giant otter (Pteronura brasiliensis) plus many other threatened species, and contains some of the most biodiverse, and poorest, areas in Latin America.

In August 2011, with construction of two sections of road outside the indigenous territory already underway, Indians and environmentalists organized a 65-day protest march that was to traverse 375 miles from the town of Trinidad to Bolivia’s capital of La Paz.

As the protesters walked, they accused the Bolivian government of violating national and international law by failing to consult local indigenous communities regarding the highway.

The protest fired up the national imagination and garnered widespread support, coming as it did just six years after the election of Evo Morales, the country’s first indigenous president, and two years after the approval of a revolutionary new constitution that enshrined environmental protections and the rights of indigenous people.

Opposition to the highway mounted after police violently tried to suppress the march.

The group of indigenous and environmental activists swelled to a throng of thousands by the time the demonstrators reached the capital. There, a vast gathering of supporters assembled to greet the marchers. The international press, including outlets that usually passed over Bolivia, smelled a good story and covered the event.

A man walks through the TIPNIS reserve near the River Secure. The park is home to thousands of plant and animal species, many of them endangered. Environmentalists feared that the roadway would open this remote area to poaching, illegal logging and other incursions. Photo by Fernando Locatelli under a Creative Commons CC BY-NC-ND 2.0 license.

The highway was never built: an embarrassed Bolivian government passed a law in 2011 saying that the TIPNIS territory was untouchable.

Not long after, BNDES announced that it would withdraw its $332 million loan for the project. In the end, BNDES never released any funds for the highway.

Why the TIPNIS Highway matters today

But it’s not exactly case closed. Questions remain about how the road got as far as it did in the first place. A group of civil society leaders are arguing that it never should have been approved and that BNDES was remiss in ever agreeing to fund it.

In March of this year, three civil society organizations sent a joint complaint to BNDES, alleging that it had failed to adequately consider the environmental and human rights impacts of the TIPNIS highway.

The groups argue that even though the road was never built, the question of the bank’s involvement remains important today. BNDES is the biggest development bank in the Americas, and its policies and actions continue to have repercussions for all of Latin America. Mongabay has written extensively about how decisions by the bank regarding project selection, siting, environmental impacts and human rights standards have far-reaching consequences for the present and future.

The NGOs’ complaint alleges that BNDES violated international law regarding the rights of indigenous people to be consulted prior to any project that would affect their communities. The bank’s decision to bid for the contract, the signing of the contract, and the initial construction all took place before indigenous groups living in the TIPNIS territory were properly consulted.

Construction on a section of the TIPNIS Highway, also known as the Villa Tunari San Ignacio de Moxos highway. Photo by Manuel Seoane under a Creative Commons CC BY-NC-ND 2.0 license

“The bidding round occurred in 2008. But the communities had been complaining for numerous years beforehand that they had never being consulted about the plan to construct the road on their lands,” said Chris Moye of Global Witness, a London-based nonprofit that focuses on natural resource related conflict, and an organization that co-wrote the complaint.

Indigenous communities had expressed concern that the highway would cause environmental harm and allow for the invasion of their lands by nearby farmers who produce coca, the main ingredient in cocaine, which is consumed legally in its unprocessed form in Bolivia.

Large-scale corporate interests also came into play, according to another co-writer of the complaint. “In TIPNIS, interests of petro-companies converge with agro-business interests, illegal logging, and the interests of coca-producers,” said Silvia Molina, from the Bolivian nonprofit Center for Documentation and Latin Americas Studies (CEDLA).

The right to consultation

During its planning stages, the TIPNIS road was divided into three sections. Two shorter portions fell outside of the protected national park, but the longest, and most controversial piece of road, bisected the park. Separate environmental assessments were conducted for each of the three sections.

This decision to divide the project into parts — which the civil society complaint calls “highly concerning” — created a questionably legal loophole which allowed construction to begin on the highway sections outside of the park before an environmental assessment or consultation with local communities were completed for the controversial central portion.

According to BNDES, this decision was taken by the Bolivian authorities due to the different environmental and social characteristics found along the three different sections of road.

A woman from the Santa Maria community located inside the TIPNIS reserve. Indigenous people were worried that the highway would open their territory to exploitation, and were angered at not being consulted before construction began on the road segments outside the park. Photo by Fernando Locatelli under a Creative Commons CC BY-NC-ND 3.0 license

The issue of when the local indigenous consultation and environmental assessment for the central section of highway should have taken place is at the heart of the dispute.

Under international law — Indigenous and Tribal Peoples Convention, 169 — indigenous communities have a right to be consulted whenever consideration is being given to legislative or administrative measures which may affect them directly. Although laws requiring consultation do not give indigenous communities veto power, Convention 169 does ensure that such communities have a voice in the process and that efforts are taken to gain indigenous consent before potentially disruptive and destructive projects are launched.

“The consultation should have happened the moment that [the governments] decided that the road was in the national interest of Bolivia to be built,” said Moye.

Indigenous groups who marched in opposition to the highway agreed. “The construction of the highway has been approved without respecting the rights to consultation of the Mojeños, Chimanes, and Yacares indigenous peoples,” proclaimed a 2011 resolution from one of the largest lowland indigenous organizations.

Indigenous groups raised questions then about how fair and open any subsequent impact study or consultation would be, if the project had already been approved and construction had begun outside the park.

BNDES responds

In an email to Mongabay, BNDES said that they were compliant with local and international laws because they called for environmental and legal assessments in the project contract. “The claim that the bank failed in due diligence is incorrect,” wrote a bank representative.

“With regard to the central section [of highway through the TIPNIS preserve], the Bolivian government had not [yet] defined [the] highway route, and the environmental impact studies were in early stages of development, which prevented at that time [the] due diligence procedure and public consultation by independent consultants,” said the BNDES representative. The bank also told Mongabay that BNDES had stipulated that the financing of the central section of road had always been seen as contingent on the completion of an environmental assessment and the compliance with legal requirements, including risk mitigation.

The three civil society groups raised further concerns that the environmental assessments of the road’s impact were inadequate. In their complaint, they argued that, like the indigenous consultation, the environmental assessment for the central section should have taken place prior to opening up bidding for the contract.

The NGOs also point out deficits in the environmental assessments that took place for the other two portions of the highway outside the park, including the failure to estimate future rates of deforestation. The building of roadways that provide access to Latin American rainforests historically open such forests to increased rates of legal and illegal logging.

Bolivian government officials speak about the TIPNIS conflict at a meeting of the Inter-American Commission on Human Rights (CIDH). Photo by Eddie Arrossi on flickr

The bank’s representative denied that there were problems in the due diligence conducted for the northern and southern sections of the road: “In the analysis conducted by the technical team of BNDES, they verified that the northern and southern sections already had studies of environmental impact and environmental licenses issued by the competent Bolivian authorities.” BNDES also says that it sought independent analysis of the social and environmental impact of these road sections (including consultation with the population), which found no “inconformities.”

Another issue raised in the complaint related to a 2010 report by the Bolivian Comptroller that noted irregularities in the financing of the project. According to this report, the Brazilian construction company OAS — currently filing for bankruptcy after being implicated in a number of corruption cases — overestimated the price of the road. In Brazil, federal investigators have found that big infrastructure project estimates are often padded to allow for graft by company and government officials.

While BNDES is not responsible for the contracting of the third-party construction company, the complaint argues that the development bank should have been more transparent in considering the comptroller’s report in their risk assessment. BNDES told Mongabay that an independent consultation did not identify irregularities in the project and that the comptroller’s report fell outside the scope of the risk assessment.

Future improvements

The complainants disagreed: “When you have a lack of consultation, a lack of dialogue between the government and different actors — [including] the bank financing the project, the construction company, [and] local communities; when you have a lack of information, and lack a process to hear complaints, [then] conflict emerges,” said Caio Borges, of CONECTAS a Brazilian nonprofit and co-writer of the complaint. CONECTAS has studied the bank’s investments outside Brazil.

Borges recommended a number of key changes to provide better bank oversight and project management in the future. He said that BNDES should work to increase transparency and clarify social and environmental criteria, and should create a process to hear complaints from people who may be directly impacted by major infrastructure projects.

He noted that BNDES has made progress in addressing concerns regarding transparency in recent years, but that the development bank still needed to embark on serious reforms in order to prevent situations like the TIPNIS highway — with its human and environmental rights violations — from happening again in the future.