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Cutting corners

The International Finance Corporation (IFC), the private sector lending arm of the World Bank (WB), has been accused of disregarding its own environmental and social guidelines in the construction of a dam on the Biobio river in southern Chile. Environmental groups in the US and Chile, including Friends of the Earth, the International Rivers Network, and Action Group for the Biobio (GABB), allege that the IFC censored an independent review of the Pangue hydroelectric project, releasing only a third of the original version.

The 450 megawatt Pangue Dam was finished in 1996 but caused controversy from the start. Environmentalists argued that it would harm the river's ecosystem and intrude on the lives of the local Indians. Jay Hair, president emeritus of the National Wildife Federation and the author of the report, submitted his protest in a letter to James Wolfensohn, president of the WB.

"There are numerous deletions that appear to have been made for no other reason than to avoid embarrassing the individuals who made certain decisions regarding the Pangue project or how it was supervised by the IFC,' wrote Hair. Hair said his investigation found the IFC not to be in compliance with 80 per cent of its environmental and social directives; the report's final version says that the IFC complied with five out of eight policies and procedures applicable.

"The WB's environmental and social guidelines look good on paper, but the Pangue review proves they are not being practised,' said Juan Pablo Orrego, spokesperson of the GABB in Santiago. "There have been two independent reviews of the Pangue project; one was buried, the other censored,' he added. In June, the Chilean government approved the construction of another dam on the Biobio.

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