Planafloro/Insp.Panel - 1 of 3 (fwd)

Robert Johnson (johnsorl@COLORADO.EDU)
Sat, 29 Jul 1995 16:25:01 -0600

---------- Forwarded message ----------
Date: Thu, 27 Jul 1995 00:20:23 -0700
From: C Soren Ambrose <soren@igc.apc.org>
To: johnsorl@colorado.edu
Subject: Planafloro/Insp.Panel - 1 of 3

/* Written 10:42 AM Jun 21, 1995 by ax:foeamazonia in igc:rainfor.worldb */
/* ---------- "Planafloro/Insp.Panel - 1 of 3" ---------- */
English Translation

To: The Inspection Panel
World Bank, 1818 "H" Street, N.W. Washington, D.C. 20433,
USA

Dear Sirs:

We, the representatives of non-profit organizations of
civil society, including small farmers, rubber-tappers and
indigenous communities, together with environmentalists,
educators, researchers, supporters of popular movements
and defenders of human rights, would like to take this
opportunity to solicit inspection by this Panel of the
aspects described below of the Rondtnia Agricultural,
Livestock and Forestry Project (PLANAFLORO)1 In this
regard, we present the following preliminary observations:

1. With an initial budget of US$228.9 million, including a
US$167 million loan from the World Bank (Loan Number 3444-BR), the
PLANAFLORO project intends to correct mistakes that occurred
during the implementation of its predecessor: the Northwest Brazil
Integrated Development Program (POLONOROESTE).

2. Financed by the World Bank during the 1980s through
various loans totalling approximately US$500 million, the
POLONOROESTE project had as its principal objective the paving of
a 1,500 km stretch of the BR-364 highway, between the capital
cities of Cuiaba (Mato Grosso) and Porto Velho (Rondtnia). In
addition, POLONOROESTE included various provisions for supporting
small farmer settlements, protection of the environment and
support for indigenous communities.

3. During the 1980s, POLONOROESTE became internationally
known as a result of serious problems that accompanied its
implementation, including: i) a major increase in the flux of
incoming migrants to the state, ii) an alarming rise in
deforestation rates and the expansion of cattle pasture as the
predominant land use, iii) high rates of abandonment among
migrants settled in colonization projects, and iv) invasions of
indigenous areas and other conservation units, principally by
logging companies and land speculators.

4. The basic objective of the PLANAFLORO project is to
promote a new model of "sustainable development" in the State of
Rondtnia, through a series of initiatives for the protection and
management of natural resources, such as: socio-economic and
ecological zoning, promotion of agroforestry systems, recovery of
degraded lands, environmental protection and enforcement,
creation and management of Extractive Reserves and other
conservation units, sustained forest management, environmental
education, and support to indigenous communities.

5. The main intended beneficiaries of PLANAFLORO include
small farmers, rubber-tappers, and indigenous communities. The
major organizations representing these populations in Rondtnia are
signatories of this document and participants in the Forum of
Non-Governmental Organizations and Social Movements of Rondtnia,
headquartered in Porto Velho (capital of Rondtnia).2 The Forum
was created in 1991 with the principal objective of democratizing
access to information and ensuring participation of organized
civil society in the definition and monitoring of public policies.
It also seeks to enhance the cooperation and coordination of its
members in joint activities. Since it was created, one of the main
activities of the Forum has been to monitor the PLANAFLORO
project.

6. The loan agreement for PLANAFLORO was approved by the
Executive Directors of the World Bank in March 1992. The
contractual agreements (Loan Agreement and Project Agreement) were
signed in September 1992 and became effective in January 1993.
The World Bank's disbursements of funds for PLANAFLORO were
initiated in June 1993.

7. Notwithstanding the importance of PLANAFLORO's general
objectives, the actual implementation of the project, since the
first disbursements by the Bank in June 1993, has been hindered by
a series of impediments. As will be shown, these problems have
been largely caused by omissions of the World Bank, associated
with failures to enforce the contractual agreements of PLANAFLORO
and to implement the following operational policies and procedures
of the Bank:

a) Project Supervision (OD 13.05)
b) Forestry Policy (OP 4.36)
c) Wildlands Policy (OP 11.02)
d) Indigenous Peoples (OD 4.20)
e) Involvement of NGOs in Bank-Supported Activities
(OD 14.70)
f) Project Monitoring and Evaluation (OD 10.70)
g) Procurement (OD 11.00)
h) Use of Consultants (OD 11.10)
i) Investment Lending: Identification to Board
Presentation (BP 10.00)
j) Suspension of Disbursements (OD 13.40)

8. As described in this document, the problems associated
with the Bank's omissions and failures to comply with its own
policies and procedures during the preparation and initial
execution of PLANAFLORO have had adverse impacts on the principal
beneficiaries of the project (small farmers, extractive
populations and indigenous communities) as well as civil society
in general, as a result of environmental damage to ecosystems of
inestimable value.3

9. This document has been organized according to the
principal themes relevant to the implementation of PLANAFLORO,
including the following chapters: i) Public Policy and
Institutional Reforms in PLANAFLORO: Initial Considerations, ii)
Land Tenure Policy, iii) Zoning and State Conservation Units, iv)
Environmental Licensing and Protection, v) Investment
Programs/Media Program, vi) Support to Indigenous Communities,
vii) Project Administration and viii) Conclusions.

In chapters II through VII, the text includes the
following sections:

o Planned Actions in PLANAFLORO, according to official
project documents (Staff Appraisal Report,4 Project
Agreement, Loan Agreement);

o Evidence of Deviations, describing instances of the lack
of implementation of PLANAFLORO's contractual agreements
and/or the sectoral policies of the World Bank;

o Attempts to Alert the World Bank through initiatives of
non-governmental organizations (NGOs) and/or leaders of
popular movements, generally through documents sent to the
World Bank;

o Omissions of the World Bank, referring to the Bank's
failure to undertake corrective measures to resolve the
problems described;

o Adverse Impacts on Local Populations, in terms of their
rights and/or interests, resulting from the Bank's failure
to adopt corrective measures.

Attached as annexes are various letters from NGOs and
leaders of popular movements that exemplify attempts to
inform the World Bank about the problems identified, along
with other relevant documents. At various points,
reference is made to the first report of the Independent
Evaluation Committee (IEC), an official body of PLANAFLORO
that included NGO representatives.

10. From this analysis, we conclude that during a long period
of preparation and initial implementation of PLANAFLORO, the World
Bank was negligent in its fulfillment of the contractual
agreements for PLANAFLORO and its own operational directives and
procedures. The Bank only assumed a firmer attitude when
pressured by public opinion, following receipt of a letter from
the Rondtnia NGO Forum dated June 15, 1994, addressed to the
President and Executive Directors of the Bank (ANNEX 3.D).

11. We believe that the omissions of the World Bank identified
in this document should be investigated by this Panel as soon as
possible, rather than be left for an "ex-post" evaluation of the
project, since the lessons from a study of this nature can serve
to both resolve problems that persist in the implementation of
PLANAFLORO and prevent similar problems from occurring within
other World Bank supported projects.

I. Public Policies and Institutional Reforms in
PLANAFLORO: Initial Considerations

According to the World Bank's staff appraisal report, one
of the principal objectives of PLANAFLORO is to:

institute a series of changes in policies, regulations and public
and private investment programs, in order to create a coherent
base of incentives for the sustainable development of Rondtnia
(IBRD 1992:01).

With this purpose, the contractual agreements of
PLANAFLORO anticipate the implementation of an
institutional reform program, aimed at ensuring the
compatibility of federal and state policies and investment
programs with the guidelines of the socio-economic and
ecological zoning and the principles of sustainable
resource management (Section 3.04, Loan Agreement; Section
2.14, Project Agreement).

According to the staff appraisal report (IBRD 1992:46),
the institutional reform program in Rondtnia should
include among its measures:

a) the institutionalization of the state zoning plan;

b) the elimination of deforestation as a criterion for
obtaining land title, as well as the adoption of suitable
land tenure regularization practices and policies; and the
structuring of ITERON to develop and administer state land
tenure policy in accordance with the zoning legislation;

c) the elimination of economic and fiscal incentives
which encourage the inefficient use of natural resources,
non-sustainable private investment and environmental
degradation;

d) the revision of the investment programs of state and
federal agencies; in order to bring land-use capacities
and other environmental concerns into consideration, and
to make the socio-economic and ecological zoning the basis
for all future government investment decisions in the
State of Rondtnia.

During negotiations for the World Bank's loan for
PLANAFLORO, the Federal Government and the State of
Rondtnia ensured that above reforms would be implemented
during the implementation of the program; and that by
September 30 of each year, the state would submit any
modifications foreseen in the following year's investment
programs to the World Bank for analysis and commentary
(Section 2.14, Project Agreement; Section 3.04, Loan
Agreement).

In recent years, the Government of Rondtnia has taken some
initiatives to institutionalize the state's socio-economic
and ecological zoning, initially through State Decree
3.782 of June 19, 1988 and subsequently through
Complementary Law no. 52 of December 20, 1991.5

However, as will be demonstrated, the above-described
program of institutional reforms was never implemented in
the manner stipulated in the contractual agreements of
PLANAFLORO. This fact is due, in large part, to the
Bank's unwillingness to enforce compliance of governmental
agencies with the contractual agreements of the program.

II. Land Tenure Policy

2.1 Planned Actions in PLANAFLORO

According to Section 2.12 (a) of the Project Agreement and
Section 6.01 (b) of the Loan Agreement, one of the
conditions for effectiveness of the World Bank's loan for
PLANAFLORO was the signing of an agreement between INCRA
(National Institute for Colonization and Land Reform) and
the Government of Rondtnia that would establish "land
tenure regularization policies and practices to be
observed in the State, which shall be consistent with the
objectives of sound forest protection and management, on
terms and conditions satisfactory to the Bank."

In the staff appraisal report for PLANAFLORO, it was
asserted that INCRA should suspend plans for the creation
of new settlement projects in inappropriate areas, ensure
that its agrarian reform program in zone 01 favors
land-use patterns appropriate for sustainable agriculture,
and support the Government of Rondtnia in the
establishment of Extractive Reserves and in other critical
land-related activities (IBRD 1992: 48-49). 6

2.2 Evidence of Deviations

As described below, the most significant provisions of
PLANAFLORO's contractual agreements related to the land
tenure policies and institutional role of INCRA have not
yet been implemented. Most disturbing is the fact that to
date, the agreement between INCRA and the Government of
Rondtnia, outlined in the contractual agreements of
PLANAFLORO as a condition for loan effectiveness, has not
yet been signed.

To date, the only documents signed by INCRA and the
Government of Rondtnia have been a "Protocol of
Intentions" in June 1991 and a "Terms of Agreement" in
November 1992, instead of a legally-binding "convjnio".
Among other deficiencies, the "Terms of Agreement" fails
to address the compatibilization of land regularization
activities with directives regarding the state zoning plan
and the sustainable management of natural resources, as
required in the PLANAFLORO loan agreements.

Meanwhile, INCRA's land tenure policies in activities of
land expropriation, creation of settlement projects and
land tenure regularization have demonstrated major
incompatibilities with the state zoning plan and other
environmental legislation. A few examples of such
problems are described below:

2.2.1 Land Expropriations and Creation of Settlement Projects

In the last several years, the actions of INCRA's regional
office in Rondtnia associated with land expropriation and
creation of settlement projects have demonstrated serious
problems of incompatibility with the state's
socio-economic and ecological zoning plan. For example,
we draw attention to the following facts:

1. In March 1992, INCRA created three Settlement Projects
(Projetos de Assentamento - PAs) denominated PA Curupira, PA Rio
do Conto and PA Agua Azul, covering a total area of approximately
215,000 hectares. All of these projects were to be located in
zone 04, reserved for non-timber forest extraction under the state
zoning plan. 7. After a series of denunciations by the Forum,
INCRA announced that these projects would be suspended, and that
no new settlements would be carried out in these areas. However,
the Regional Superintendency of INCRA is currently granting land
titles, including new ownership claims, within the areas of the
above-mentioned settlement projects.

2. On December 21, 1993, a presidential decree signed on
12/20/93 was published in the Diario Oficial da Unico (Federal
Official Gazette) authorizing expropriation, for purposes of
agrarian reform, of a landholding named "Fazenda Roncauto",
covering an area of 1,500 hectares in the municipality of Colorado
d'Oeste. A resulting settlement project would be located within
the Rio Mequens State Forest (Floresta Estadual de Rendimento
Sustentado - FERS) created by State Decree no. 4.573 on 3/23/90 in
an area designated as zone 05 (sustained forest management)
according to the state zoning legislation.8 On April 10, 1994,
INCRA filed the compensatory action for this expropriation in a
federal court in Rondtnia.

3. On April 26, 1994, a presidential decree signed on 4/25/94
was published in the Diario Oficial da Unico , authorizing
expropriation, for purposes of agrarian reform, of a landholding
named "Sco Sebastico", covering an area of 44,611 hectares in the
municipalities of Campo Novo and Porto Velho. This property is
also located within zone 04 (non-timber forest extraction) .

4. On July 25, 1994, a presidential decree signed on 7/22/94
was published in the Diario Oficial da Unico, authorizing
expropriation, for purposes of agrarian reform, of four adjacent
properties named "Rio Branco", "Pedra do Abismo", "Nova Vida" and
"Oriente", covering a total area of 66,793 hectares in the
municipality of Campo Novo. The settlement projects foreseen for
establishment in this area would also be located within zone 04
(non-timber forest extraction) .

5. In addition to its disrespect for state legislation on
zoning and conservation units in the creation of settlement
projects in Rondtnia, INCRA has not abided by federal legislation
with regard to environmental impact studies (Estudos de Impacto
Ambiental - EIA) and their respective environmental impact reports
(Relatsrios de Impacto Ambiental - RIMA) (Resolution no. 001 of
January 23, 1986 of the National Environmental Council -
CONAMA).9

6. On July 18, 1994, a federal judge in Rondtnia issued a
restraining order that requires INCRA to respect the state zoning
plan and federal legislation regarding environmental impact
assessments in land expropriation actions for the creation of
settlement projects . The decision of the judge was based on a
Public Civil Action initiated by the Ministirio Pzblico Federal
(Federal Prosecutor's Office) based on denouncements by the Forum
of NGOs and Social Movements of Rondtnia. The ruling of the
federal judge directly affected various land expropriations,
including the properties known as Rio Branco, Pedra do Abismo,
Oriente and Nova Vida (mentioned above).

Even after the issuance of the federal restraining order,
the administrative actions for several land expropriations
continued normally within INCRA. On December 16, 1994,
INCRA filed compensatory actions in a Rondtnia federal
court for the expropriations of the Rio Branco, Pedra do
Abismo, Oriente, Nova Vida and Sco Sebastico landholdings.

7. INCRA has ignored warnings from the Presidency of FUNAI
(National Indian Foundation) regarding the presence of isolated
indigenous groups on various landholdings proposed for
expropriation. For example, this clearly occurred in the action
involving the expropriation of the Rio Branco, Pedra do Abismo,
Nova Vida and Oriente landholdings.

8. On March 25, 1995, a presidential decree was published in
the Diario Oficial da Unico, authorizing expropriation, for
purposes of agrarian reform, of the landholdings known as
"Seringal Salvador", "Cabeceira" and "Seringal Novo Mundo",
covering 49,731 hectares in the municipalities of Machadinho
d'Oeste and Rio Crespo. These properties are located within the
boundaries of the Rio Preto-Jacunda State Extractivist Forest
(Floresta Estadual Extrativista - FEE) created by Decree no. 4,245
of 7/17/89. 10

2.2.2 Alienation of Public Lands and Land Tenure Regularization

As described above, in accordance with Section 2.12 (a) of
the Project Agreement and Section 6.01 (b) of the Loan
Agreement, the agreement between INCRA and the Government
of Rondtnia was to address:

land tenure regularization policies and practices to be observed
in the State, which shall be consistent with the objectives of
sound forest protection and management, on terms and conditions
satisfactory to the Bank.

Among other measures, the institutional reform program
outlined in the contractual agreements of PLANAFLORO
should include:

the elimination of forest clearing as a form of obtaining land
title, as well as the adoption of adequate land tenure
regularization policies and practices (IBRD 1992:46).

In the absence of such an agreement, as originally defined
as pre-condition for loan effectiveness in PLANAFLORO, the
land regularization policies of INCRA have blatantly
disregarded the socio-economic and ecological zoning plan
and state conservation units.

It should be noted that, in accordance with Normative
Instruction no. 03 of September 8, 1992 (Instrugco
Normativa no. 03 de 08/09/92) signed by the President of
INCRA, this agency continues to recognize forest clearing,
associated with the introduction of artificial cattle
pasture, as an "improvement" for the purpose of
legitimizing land claims on public lands.11

On the basis of such internal regulations, INCRA has
issued documents legitimizing land claims by speculators
and cattle ranchers within various state conservation
units (the establishment of which was included within the
loan agreements for PLANAFLORO), as well as in other areas
designated for restricted use, according to the state
zoning plan. A few examples of such practices are
described below:

1. In the Corumbiara State Park, created by Decree no. 4,576
on March 23, 1990, INCRA granted various land titles known as
CPCVs (Contratos de Promessa de Compra e Venda) at least until
1992, catering to the interests of land speculators and large
cattle ranchers.

2. In the Serras do Parecis State Park, created by Decree
4,570 on March 23, 1990, INCRA has granted land titles (CPCVs) for
medium and large landholdings, especially during 1991.

3. In the Rio Sco Domingos, Rio Mequens and Abunc State
Forests (FERS), created by state decrees in March 1990, INCRA has
granted land titles (CPCVs) that have served to legitimize the
establishment of medium and large properties for cattle ranching.

4. INCRA has utilized the same practice of granting land
titles to land speculators, cattle ranchers and logging companies
within the area designated in the loan agreements for creation of
the Rio Guapori State Forest (in the southern part of an area
previously demarcated along highway BR-429) as well as in areas
designated for the creation of the Rio Cautario and Rio Sco Miguel
Extractive Reserves.

In summary, the actions of INCRA in Rondtnia, in
activities of land expropriations for agrarian reform,
creation of settlement projects and land tenure
regularization, have entered into direct confrontation
with Rondtnia's socio-economic and ecological zoning plan,
state conservation units and federal environmental
legislation. This posture on the part of INCRA has
seriously impaired the implementation of PLANAFLORO as a
whole, and has rendered practically unviable the
establishment of several state conservation units
contemplated in PLANAFLORO's contractual agreements.12

We stress the fact that the actions of INCRA in Rondtnia
have served as a catalyst for a chain of interventions by
other government agencies that ultimately serve to
legitimize and encourage disorderly land occupations and
the indiscriminate use of natural resources (see Section
1.3: Environmental Licensing).

2.3 Attempts to Alert the World Bank

The problems involving INCRA's land tenure policies,
associated with failures to comply with the contractual
agreements of PLANAFLORO, were communicated to the World
Bank through a series of documents elaborated by
individuals and organizations associated with the Forum.
It should be emphasized that various documents were
presented to the Bank prior to the signing of the loan
agreements (September 1992) and the Bank's declaration of
the loan effectiveness (January 1993). The following are
examples of such initiatives:

1. In a letter dated December 11, 1989, signed by Osmarino
Ambncio Rodrigues (Secretary of the National Council of Rubber
Tappers) and Ailton Krenak (National Coordinator of the Union of
Indigenous Nations), sent to Mr. Shahid Hussain (Vice President
for Latin America and the Caribbean) and Mr. Armeane Choksi
(Director, Brasil Department) of the World Bank (ANNEX 1.B), a
series of demands were made, especially in relation to the
participation of local communities in PLANAFLORO. Among these, it
was stated that:

Before the approval of a loan, the Bank clarify what guarantees it
will have to ensure the implementation of the agro-ecological
zoning, given current reports and information about plans for
agricultural colonization in areas supposedly to be reserved for
extractive activities...

2. A letter dated January 9, 1990, signed by 35 Brazilian and
international NGOs, sent to Mr. E. Patrick Coady, Executive
Director at the World Bank (ANNEX 1.C), brought attention to a
series of critical problems that had not been adequately
considered in the elaboration of PLANAFLORO. The letter solicited
that various issues be addressed as a pre-condition for loan
negotiations. Among these, the letter cited that:

Critical legal and policy uncertainties concerning the criteria
under which land titling and land reform can take place must be
resolved before negotiations.

In this regard, the letter emphasizes that:

...the National Institute for Colonization and Agrarian Reform
(INCRA) has not modified the statues that maintain deforestation
as a basis for land titling;

...the project does not analyze nor address the need for land
redistribution in agro-ecological zones 01 and 02.13

3. In a document signed by 19 NGOs from Rondtnia, sent on
February 22, 1990 to Mr. Shahid Hussain (Vice President for Latin
America and the Caribbean) of the World Bank (ANNEX 1.D), demands
were once again made regarding the participation of local
communities in PLANAFLORO. The same document presented a series
of facts that brought into question the viability of PLANAFLORO.
The letter included the following remarks:

In the area of the Jacm and Mutum-Parana Extractive Reserve, a
settlement project was established by INCRA (PA Buritm) and a road
opened which crosses the Rio Candeias...

Rio Cautario -- this extractive area runs the risk of being
rapidly destroyed because of delays in its demarcation, as it is
already being invaded by a colonization front from BR-429, which
is close to and parallels the river. The invasions are occurring
with the collusion of INCRA-Rondtnia, which has generated the
expectation that land titles will be granted...

4. In a letter dated April 25, 1990, signed by Mr. Raimundo
Ramos Leitco, President of the Association of Soldiers of Rubber
and Rubber Tappers of Ariquemes, addressed to Mr. Barber Conable,
President of the World Bank (ANNEX 1.F), the following alert was
made:

We take this opportunity to register our concerns with the present
situation of several areas to be included in Zone 04 (Extractive
Reserves) of PLANAFLORO. For example, the region of the upper
Candeias river presently faces constant invasions of loggers and
land speculators. In this area, INCRA recently created the Buriti
I and II settlement projects, thus causing even more devastation
of the forests of the region. Given this, we would like to know
what measures will be taken by the authorities to avoid invasions
of extractive reserves by loggers, ranchers, placer mines, and
colonization projects, as well as to stop the exploitation of
rubber tappers by rubber patrons (seringalistas) and
intermediaries who still remain in these regions.

5. In a document entitled "Open Letter" of the Forum of NGOs
of Rondtnia (ANNEX 3.A), sent on March 12, 1992 to the Executive
Directors of the World Bank (approximately six months prior to the
signing of the contractual agreements of PLANAFLORO) the following
alert was made:

A lack of harmony can be observed between the state and federal
governments, particularly in the case of agencies such as the
National Institute of Colonization and Land Reform (INCRA) which
has acted contrary to the proposals of PLANAFLORO, disregarding
Rondtnia's socio-economic and ecological zoning. Recently, INCRA
has announced new settlement projects in regions of zone IV
(extractivism) and zone V (sustained forest management).

6. In a memorandum dated May 12, 1992, presented by the Rondtnia
NGO Forum to Mr. Luis Coirolo of the World Bank (ANNEX 3.B),
warnings were made about:

...the lack of respect for the socio-economic and ecological
zoning of Rondtnia on the part of INCRA.

Specifically, the letter emphasized such problems as: i)
the creation by INCRA, in March 1992, of the Curupira,
Agua Azul and Rio do Conto settlement projects within zone
04 (non-timber forest extraction), in disregard for the
state zoning legislation, and ii) INCRA's policy of
recognizing forest clearing, associated with the
introduction of artificial cattle pasture, as an
"improvement" for the purpose of legitimizing claims on
public lands.

7. In a document entitled "Report on Conditions of
Effectiveness of the Contractual Documents of PLANAFLORO",
produced by the Institute for Amazonian and Environmental Studies
(IEA) in September 1992, it was alerted that the agreement between
INCRA and the Government of Rondtnia had not yet been signed and
that:

INCRA's current land tenure policies, especially with regard to
the creation of new settlement projects and the alienation of
public lands, appears to not be taking into consideration the
contractual agreements of PLANAFLORO.14

The same document warned that:

...there are various examples of environmental degradation and
more generally, conflicts between the first approximation of the
socio-economic and ecological zoning and the current utilization
of natural resources. In many cases, these problems are
aggravated by the lack of recognition of zoning and other
legislation, as in the case of the land tenure policies of INCRA.

8. The serious problems involving INCRA's land tenure
policies in Rondtnia, including violations of the contractual
agreements of PLANAFLORO, were addressed in a series of
correspondences sent by the Forum of NGOs of Rondtnia to the
President of Brazil and the President of INCRA, with copies to the
World Bank.

These documents, which can be found in ANNEX 05, include:
a) letter to the President of Brazil on 5/28/92, b) letter to the
President of INCRA on 8/14/92, c) letter to the President of INCRA
on 9/8/92, and d) letter to the President of INCRA on 4/15/93.

9. On March 9, 1993, the non-governmental organization
ECOPORI (Agco Ecolsgica Vale do Guapori or "Ecological Action of
the Guapori Valley" one of the founding members of the Rondtnia
NGO Forum) in a letter addressed to various state and federal
authorities, with a copy to the World Bank (ANNEX 4.A), denounced
the process of environmental devastation taking place in the
Guapori Valley, asserting that:

The current State Superintendency of INCRA and the organ's
representative in Costa Marques constitute one of the greatest
threats to the state's zoning plan while promoting the
expropriation of lands traditionally occupied by extractive
communities, benefitting principally land speculators and
ranchers. The representative of the agency in Costa Marques
asserts emphatically that he does not respect the state zoning
plan nor the State Constitution, and that he only follows the
orders of his boss.

10. On April 27, 1993, ECOPORI sent an Official Letter (Ofmcio)
to the President of INCRA, with a copy to the World Bank (ANNEX
4.C), which presented:

...elements of proof regarding the destructive actions of
INCRA-Rondtnia, aiding groups in the occupation of areas
traditionally inhabited by extractive populations and in conscious
disregard of the state zoning plan...

11. In the document entitled "Record of the Meeting on
Preliminary Impressions Pertinent to the Implementation of
PLANAFLORO", realized on September 27, 1993, with the
participation of members of the Independent Evaluation Committee
(IEC) and a World Bank representative, some observations were made
regarding the land tenure policies and zoning, including the
following:

The urgent necessity of guaranteeing solutions to land tenure
problems and to the actions of INCRA which have disregarded the
state zoning plan and environmental legislation was discussed. In
the new agreement which should be entered into by INCRA and the
Government of Rondtnia, special importance should be given to the
aspects of alienation of public lands and land tenure
regularization...

12. In February 1994, a preliminary version of the first
report of the Independent Evaluation Committee (IEC) was submitted
to the World Bank. On March 16, 1994, the Bank received the final
version of the IEC's Executive Summary, which emphasized:

...the lack of recognition, on the part of INCRA's regional office
in Rondtnia, of the state's socio-economic and ecological zoning,
state conservation units, and other environmental legislation, in
its implementation of colonization projects and the distribution
of land titles on public lands. As a result, INCRA has
continually pursued practices that may undermine the objectives of
the zoning plan and PLANAFLORO, including: i) proposals for land
acquisitions and the creation of colonization projects, without
regard to the state zoning plan and other environmental
legislation and ii) the granting of titles on public lands in
disregard for the zoning legislation and state conservation units

...the persistence of other INCRA policies that encourage the
indiscriminate use of natural resources, such as the recognition
of forest clearing and the introduction of artificial cattle
pasture as a land "improvement" for purposes of granting private
land titles on public lands. In so doing, INCRA fails to consider
the long-term sustainability of such activities, as well as the
potential social conflicts affecting existing populations (rubber
tappers, indigenous peoples, etc.).

The IEC report further emphasized that:

...the "Terms of Agreement" signed by INCRA and the Government of
Rondtnia in November 1992 did not include arrangements for
reconciling procedures of land tenure regularization with the
guidelines of the state zoning legislation and the sustainable
management of natural resources, as required by Section 2.12 (a)
of the Project Agreement and Section 6.01 (b) of the Loan
Agreement.

The principal recommendations of the IEC's report included
the following:

Formalized guarantees of the effective cooperation of INCRA in
PLANAFLORO, as well as the definition of guidelines and
institutional responsibilities for governmental action on land
issues (e.g. criteria for acquisition of private lands and
creation of colonization projects, strategies for land tenure
policies within zones 01 and 02, granting of private titles on
public lands, establishment of conservation units)

Re-evaluation of Normative Instruction no. 03 of September 8, 1992
(Instrugco Normativa no. 03 de 08/09/92) that permits recognition
by INCRA of forest clearing and the introduction of artificial
cattle pasture as an "improvement" to land, for the purpose of
granting land titles on public lands (while failing to consider
sustainable forest management, such as that of rubber tappers, as
a productive activity)

13. In a correspondence sent to the Central Forestry Unit of
the World Bank on May 16, 1994 (ANNEX 3.C) during an internal Bank
review of forestry policies, the Forum denounced that:

...the problems of environmental degradation in the forest
ecosystems of Rondtnia have been encouraged by the behavior of
government agencies that operate in the State. Unfortunately,
these problems have been neglected by the managers of PLANAFLORO
and World Bank staff, even though they imply non-compliance with
the contractual agreements of PLANAFLORO.

In this correspondence, the Forum emphasized the
contradictions between INCRA's land tenure policies and
the guidelines of conservation and sustainable management
of forests.

14. On June 15, 1994, in a correspondence addressed to the
President and Executive Directors of the Bank (ANNEX 3.D), the
Forum again questioned the failure of INCRA and the Government of
Rondtnia to sign the agreement required by the PLANAFLORO loan
agreements, and cited new examples of how:

the Regional Superintendency of INCRA in Rondtnia has blatantly
disregarded the state's socio-economic and ecological zoning and
other environmental legislation, in the activities of
expropriation, creation of settlement projects and land tenure
regularization.

In the demands made in this letter, emphasis was given to
the need to:

formalize the effective cooperation of INCRA in land related
activities, as stipulated in the contractual agreements for
PLANAFLORO

2.4 Omissions of the World Bank

The above-mentioned problems are largely attributable to
the non-existence of a signed agreement between INCRA and
the Government of Rondtnia, foreseen in the contractual
agreements of PLANAFLORO as a pre-condition for loan
effectiveness. Despite the above-mentioned alerts, the
World Bank remained negligent during a significant period,
in terms of soliciting and monitoring compliance with the
contractual agreements, especially Section 6.01 (b) of the
Loan Agreement and Section 2.12 (a) of the Project
Agreement for PLANAFLORO. In this regard, we would like to
point out the following facts:

1. From the first "accompaniment" mission (missco de
acompanhamento) for PLANAFLORO, carried out by the World
Bank/MIR/SEAIN/UNDP in November 1992, there is no evidence in the
Aide Memoire of demands from the Bank regarding the signing of an
agreement between INCRA and the Government of Rondtnia, as
required in the contractual agreements.

As mentioned above, the "Terms of Agreement" signed
between INCRA and the Government of Rondtnia in November
1992 were not sufficient from a legal or technical point
of view to meet the conditions of Section 2.12 (a) of the
Project Agreement and Section 6.01(b) of the Loan
Agreement.

2. In January 1993, contradicting the conditions stipulated
in the contractual documents for PLANAFLORO, regarding the need
for a signed agreement between INCRA and the Government of
Rondtnia, the World Bank declared effectiveness for the PLANAFLORO
loan.

3. In September 1993, the Bank carried out its first
supervision mission after the initiation of loan disbursements (in
June 1993). The Aide Memoire from this mission (ANNEX 6.B) also
contains no record of commitments regarding the signing of a
formal agreement between INCRA and the Government of Rondtnia.

There is only a vague reference to a "Work Plan" to be
signed by INCRA and the Government of Rondtnia by October
7, 1993, "for the solution of land tenure problems in
areas 4, 5 and 6 and land consolidation activities in
areas 1 and 2".15

The above-mentioned "Work Plan" was never signed or put
into practice.

4. On March 25, 1994, an internal report entitled Brazil:
Rondtnia and Mato Grosso Natural Resource Management Projects
(Loans 3444-BR and 3492-BR) Status of Implementation, signed by
Mr. Shahid-Javed Burki, Vice President of Operations for Latin
America and the Caribbean (ANNEX 7.B) was sent to the Executive
Directors of the World Bank.

In this internal World Bank report, the only citation of
problems involving INCRA and land tenure policies in
Rondtnia appears in the section about the Independent
Evaluation Committee (IEC). First, the report timidly
states that the IEC identified:

possible inconsistencies between INCRA's land regularization
policies and project objectives (p.10).

Later, the report limits itself to the following:

As to INCRA land regularization activities, there have been some
discrepancies in pronouncements by representatives, which have
raised concerns within the State about possible settlement plans
for environmentally fragile areas, which should remain under
permanent forest cover according to the agro-ecological zoning.
However, the Bank has received firm assurances from INCRA
management that it will abide by the zoning, and an operating
agreement has recently been signed between INCRA and the State of
Rondtnia which should reinforce this understanding.

In a critical analysis, it becomes evident that there was
a deliberate attempt in this document to distort the
contents of the Independent Evaluation Committee's report
with the apparent objective of downplaying problems
identified and, at the same time, creating an excessively
optimistic impression among the Executive Directors with
regard to the measures taken by the Bank's operational
staff and governmental agencies.16

It is unclear what is the "operating agreement" that was
"recently signed between INCRA and the Government of
Rondtnia", as cited in the report. As previously
mentioned, it is important to note that:

a) the "Terms of Agreement" between INCRA and the
Government of Rondtnia, signed in November 1992 did not
include arrangements for reconciling procedures of land
tenure regularization with the guidelines of the state
zoning legislation and the sustainable management of
natural resources, as required by Section 2.12 (a) of the
Project Agreement and Section 6.01 of the Loan Agreement.

b) In the Aide Memoire from the Bank supervision mission
of September 1993 (ANNEX 6.B), representatives of the
federal and state governments only committed themselves to
signing a "Work Plan" by October 7, 1993, "for the
solution of land tenure problems in areas 4, 5 and 6 and
land consolidation activities in areas 1 and 2". The
scope of this "Work Plan", which was never signed or
implemented, would have been insufficient in terms of
fulfilling the contractual agreements of PLANAFLORO.

5. During the World Bank's supervision mission in August 1994
to discuss the Rondtnia NGO Forum's June letter to the Bank, some
advances were made in discussions about land tenure policy in
Rondtnia (despite the fact that INCRA did not participate in the
meetings).

The Aide Memoires from this mission (ANNEX 6.C and 6.D)
determined that an agreement between INCRA and the
Government of Rondtnia should be signed by September 30,
1994. However, this measure was never implemented.

In the Aide Memoire from the Bank latest supervision
mission (March-April 1995) for PLANAFLORO (ANNEX 6.E),
mention is given to:

the concerns of the IBRD with the apparent lack of collaboration
of INCRA in project activities aimed at reaching an orderly
occupation of the State of Rondtnia, a basic condition for the
sustainable development of the State...The State Government and
the Bank mission hope that an agreement can be signed by April 10,
prior to the departure of the mission from Brasmlia.

In spite of these expectations, the above-mentioned
agreement between INCRA and the Government of Rondtnia has
not been signed to date .

6. The Staff Appraisal Report for PLANAFLORO includes an
annex with a "Matrix of Environmental Policies, Measures and
Actions" (ANNEX 7.A) that constitute the basis of the
institutional reform program outlined in the loan agreements (IBRD
1992:51-52). Regarding land tenure issues within the
institutional matrix, it is worth noting the following points:

a) Item 02 of the matrix of institutional reforms includes
as a "monitorable action" the prohibition of new
settlements and granting of land titles in areas without
sustainable development potential, in accordance with the
state zoning legislation. It emphasized that such actions
would be "monitored continuously." However, the facts
described above clearly demonstrate that INCRA never
respected such a proposition, nor were the actions of
INCRA regarding settlement and land regularization
"monitored continuously", either by the PLANAFLORO
authorities at the governmental level or by the World
Bank.

b) Item 02 of the matrix of institutional reforms also
includes as an action to be taken the "development of land
tenure legislation and regulations, in conjunction with
INCRA, to ensure that all land tenure activities in the
State will be consistent with zoning legislation." As
described above, such measures were never taken, and the
World Bank, together with governmental agencies, was
remiss in their failure to enforce their implementation.

c) In Item 04 of the matrix of institutional reforms, the
Bank asserts that forest clearing was no longer considered
by INCRA as an "improvement" for the purposes of granting
private title to public land. However, the Bank ignored
the existence, at the time, of INCRA's administrative
rules (Portarias no.839 of 6/10/88, as well as Portarias
811, 812 and 813 of 8/26/91) that permitted the agency to
recognize forest clearing, including that associated with
the introduction of artificial cattle pasture, as a means
of establishing titles on public lands. As described
above, these administrative rules were later revoked by
INCRA's Normative Instruction no. 03 of 9/8/92, which
represented a step backwards from a socio-environmental
point of view.

2.5 Adverse Impacts on Local Populations

The absence of demands on the part of the World Bank
regarding the existence of a formal agreement between
INCRA and the Government of Rondtnia, as a pre-condition
for loan effectiveness in PLANAFLORO, as stipulated in
Section 2.12 (a) of the Project Agreement and Section 6.01
(b) of the Loan Agreement, is directly related to the
continuation of INCRA's aforementioned settlement and land
tenure regularization policies, which have stimulated
disorderly land occupations and the indiscriminate use of
natural resources in Rondtnia.

As such, we argue that these omissions of the World Bank
have adversely affected various local populations in
Rondtnia, especially rubber tappers, riverine populations
and indigenous populations who inhabit areas where the
process of disorderly frontier expansion has occurred,
encouraged by the policies of government agencies such as
INCRA.

For small farmers and landless rural workers, the current
land policies of INCRA, associated with the lack of the
above-mentioned agreement with the Government of Rondtnia,
have caused significant harm. On the one hand, mechanisms
have not been created to resolve land tenure problems
within zones 01 and 02, that could promote agricultural
intensification and agroforestry systems among small
farmers on higher potential soils that are currently
abandoned or underused.

At the same time, INCRA's actions in land expropriation,
creation of settlement projects and titling of public
lands have promoted the disorderly occupation of zones 04,
05 and 06, in a process that mainly benefits land
speculators and logging companies. In such areas,
squatters and small farmers settled by INCRA have
confronted major difficulties, including a predominance of
poor soils and a lack of infrastructure and basic
services. In these situations, one encounters high rates
of attrition among settlers, along with the
reconcentration of land among large cattle ranchers and
speculators. As an example, we draw attention to the
Gleba Buritm (municipality of Campo Novo) where the
practices of INCRA have had adverse impacts on small
farmers, extractive populations and indigenous
communities.

We reiterate that the persistence of the problems
described above are related to the lack of demands by the
World Bank concerning the signing of a formal agreement
between INCRA and the Government of Rondtnia to define
reforms in land tenure policies in the state, as
anticipated within the loan agreements for PLANAFLORO.

1 At the World Bank, PLANAFLORO received the English name of
"Rondonia Natural Resources Management Project".

2 In this document, the name "Forum" is used to refer to the
"Forum of Non-Governmental Organizations and Social Movements of
Rondonia".

3 Regarding the collective interests of society in relation to
environmental quality, it is worth noting that Article 225 of
Chapter VI (Environment) of the Brazilian Constitution
determines:

All have the right to an environment in ecological equilibrium, a
common good of the people that is essential to a healthy quality
of life; it is incumbent upon the Government and collective
society to assume the duty of its defense and protection for
present and future generations (emphasis ours)

The same article in the Brazilian Constitution also
mentions:

The Brazilian Amazon Forest, the Atlantic Forest, the Serra do
Mar, the Pantanal of Mato Grosso and the Coastal Zone are a
national heritage, and their utilization will take place, in the
form of the law, under conditions that assure the preservation of
the environment, including in the use of natural resources.

4 Staff Appraisal Report, Brazil: Rondonia Natural Resources
Management Project, Report No. 8073-BR, February 27, 1992, The
World Bank, Agriculture Operations Division, Country Department I,
Latin America and Caribbean Region, Washington, D.C.

5 According to State Decree no. 3782 of June 14, 1988, the
socio-economic and ecological zoning is designed to be a "basic
instrument for regional planning that permits the establishment of
balanced development strategies and the definition of coordinated
criteria for public and private investments, in order to orient
actions that promote the harmonization of human activities and the
maintenance of the ecological balance". The main "zones"
(relatively homogeneous areas in terms of their environmental and
socio-economic characteristics, based on existing knowledge)
mentioned in the text are summarized in footnotes below.

6 According to the state legislation on the socio-economic and
ecological zoning, zone 01 covers approximately 6,195,000 hectares
in areas of intense occupation, mainly along the BR-364 highway in
central Rondtnia, where official colonization projects and other
forms of settlement are concentrated. In this zone, sustainable
agriculture should be promoted in soils of medium to high
agricultural potential, based on intercropping of perennial crops
and agroforestry systems. In areas of low agricultural potential,
new settlements should not be permitted, with special measures in
soil management and recovery of degraded lands.

7 According to the state legislation on the socio-economic and
ecological zoning of Rondonia, zone 04 covers an area of around
3,500,000 hectares and is characterized by "areas with a
predominance of native rubber trees, associated or not with brazil
nut trees and other forest species that produce exploitable
resins, oils, fruits or roots. These are fragile environments,
where the extracted benefits should be taken through sustained
forest management of forest resources, without alteration to
ecosystems". In zone 04, the creation of Extractive Reserves
and/or "State Extractive Forests (FEEs)" was foreseen.

8 According to the state legislation on the socio-economic and
ecological zoning of Rondonia, zone 05 covers approximately
2,435,000 hectares, designated for "forest management of
commercial species". In this zone, the creation of "State
Sustained Yield Forests (FERS)" was foreseen.

9 According to article 3, paragraph XVII of Resolution
no.001/86/CONAMA, the prior elaboration of EIA/RIMA is required
for "agricultural and livestock projects in areas greater than
1,000 hectares, or less when concerning significant areas of
ecological importance, including areas of environmental
protection".

10 As mentioned below, the maintenance of Rio Preto-Jacunda State
Extractive Forest was included in Section 2.10 of the Project
Agreement.

In the same region, the Regional Superintendent of INCRA
is currently conducting preliminary surveys of the
landholding named "Belo Horizonte" and "Urupa" (Process
no. 0.820/89), from the property of ex-federal deputy
Pascoal Novaes, as part of the preparation of decrees of
expropriation.

11 INCRA's Normative Instruction no. 03 of September 8, 1992
revoked previous internal administrative rules (Portarias no. 839,
840, 812 and 813) while defining new procedures for the alienation
of federal public lands. From a socio-environmental point of
view, this resolution represents a step backwards, as it excludes
provisions of article 18 of Portaria no. 839, that excluded from
land titling areas subject to periodic flooding, improper for
agricultural use, covered by natural grasslands destined for
extensive grazing and those used for forest extraction.
Currently, INCRA permits the titling of up to 500 hectares per
interested party by its Regional Superintendency in Rondonia.

12 On several occasions, the Regional Superintendency of INCRA in
Rondtnia has questioned the validity of the state legislation on
zoning and conservation units in areas of federal public lands and
private properties. For example, in a correspondence dated March
17, 1994, addressed to the President of INCRA (Ofmcio
INCRA/SR-17/G/No.133/94), the Superintendent of INCRA in Rondtnia
argued that "the State Government is legislating on federal lands,
which in unconstitutional".

In this regard, it is worth observing that article 23 of
the Brazilian Constitution determines that:

It is a common obligation of the Union, the States, the Federal
District and Municipalities...to protect the environment and
combat pollution in any of its forms (inciso IV) and...to preserve
forests, fauna and flora (inciso VII).

In addition, the actions of INCRA in Rondtnia have
disregarded article 225, inciso III of the Brazilian
Constitution, which determines that:

"the Government (Poder Pzblico) will define in all federal units,
territorial spaces and their components to be especially
protected, with their alteration or suppression permitted only by
law; any use that compromises the integrity of the attributes that
justify their protection is prohibited".

13 According to the legislation regarding the socio-economic and
ecological zoning of Rondtnia, zone 02 covers approximately
3,015,000 hectares in areas of medium to low agricultural
potential, where priority should be given to encouraging
mixed-crop agroforestry systems among communities of small farmers
that reside outside the limits of official colonization projects.
Also within this zone are located medium to large properties, in
areas destined for medium to large-scale cattle ranching.

14 This report was a contribution to the "Commission for the
Examination of Compliance with the Conditions of Effectiveness of
PLANAFLORO's Contractual Documents" created on May 29, 1992 by
Resolution no. 006 of the State Deliberative Council of
PLANAFLORO. The Commission was established with the following
members: General Secretariat of PLANAFLORO, State Secretariat for
Agriculture, Industry and Commerce (SEAGRI), State Secretariat for
Environmental Development (SEDAM), Institute for Amazonian and
Environmental Studies (IEA) and Articulation of the Indigenous
Peoples of Rondonia (APIR). A copy of IEA's report was submitted
to the World Bank in September 1992.

15 According to the state zoning legislation, zone 6 covers
approximately 6,400,000 hectares, including a variety of fragile
ecosystems, with unknown potential for sustainable use, indigenous
and biological reserves and other areas for permanent protection.
In this zone, PLANAFLORO anticipates actions in demarcation,
protection and management of conservation units (state parks,
biological reserves, ecological stations and indigenous
reserves).

16 In this regard, the World Bank's behavior in the
implementation of PLANAFLORO is reminiscent of the Sardar-Sarovar
(Narmada) project in India (see: SARDAR SAROVAR, The Report of the
Independent Review, Morse Commission, Resource Futures
International, 1992).