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encouraged to relocate as part of a multifaceted development project. The result has been the destruction of rain forests, a failed attempt to farm land unsuited for agriculture, and a displaced and impoverished population.

In light of these and other failures rooted in good intentions, the United States must ask itself what it can do as a member of the World Bank and three regional development banks to constructively influence reforms.

The key word here is "influence." The banks are multilateral institutions, and the United States is but one member. However, it is a major shareholder, and other countries do pay attention to U.S. policies that affect the banks.

A further consideration is the MDB loans are a small part of the development picture in developing nations. We need to look closely at ways to assist these nations to independently develop the expertise to evaluate projects funded through foreign enterprise. Resource exploitation can only be contained through efforts of the countries themselves.

Our colleague, Steve Symms, has proposed using the National Environmental Policy Act as a screening process for proposed MDB loans. Under this plan, a U.S. vote on loans would depend on either an environmental impact statement or an environmental assessment. That is exactly what we require of Federal projects in our own country.

Advocates say that basing our support for loan projects on the same standards we use within our borders is sound policy and that U.S. leadership will garner the support of other donor countries.

Legitimate concerns about how this proposal would affect foreign development programs have been raised. Such a policy shift would surely reach beyond development loan policy. We must closely examine the impact this proposal would have on foreign assistance specifically and U.S. foreign policy generally.

And, from a practical standpoint, we must ask whether the NEPA process can work in this context.

This morning, we have three panels who are well versed in different aspects of this matter. We are especially honored to have former U.S. Executive Director to the World Bank, Mr. James Burnham. It is important to us to have him give us his views about the implications that apply if the United States adopts more rigorous environmental review of proposed loans.

I look forward to hearing today's testimony. I believe Senator Symms has raised a very important point, and I want to thank all the witnesses who are here today to help us decide how we should best implement, and to what degree we should implement the proposal that is before us.

I see that the author of the amendment has arrived. Senator, do you have a statement to make?

OPENING STATEMENT OF HON. STEVE SYMMS, U.S. SENATOR
FROM THE STATE OF IDAHO

Senator SYMMS. Yes, I do.

Mr. Chairman, first, I want to thank you for your courtesy and cooperation in calling this hearing because it is an issue that I

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have had a long interest in, and I know that you did it as a favor to me, and I appreciate it, and I want you to know that and I say that here on the record.

I think that this issue is very, very important. The subcommittee has moved, under your leadership, to address global environmental problems such as ozone depletion. We spent hours in this Congress debating how to restrict the use or production of CFC's in the name of preserving the global environment. But we would be fooling ourselves if we confine our concern to the ozone depletion effects of the CFC's and then assume that the global environment is safe.

A warming of the earth's stratosphere caused by layers of carbon dioxide, CO2, enveloping the earth like a greenhouse can also lead to ozone depletion. The world's forests play a crucial role in the global cycling of this CO2. Historically, forests and surface vegetation have tied up large amounts of carbon, limiting the amount available to form CO2.

Since 1960, however, forest clearing has released between 90 and 180 billion tons of carbon to the atmosphere. The upper bounds of this estimate is equivalent to the total of the entire world's fossil fuel combustion in the last 28 years. Clearly, Mr. Chairman, this problem deserves the committee's attention, and I thank you for doing so.

Unlike our efforts with the Montreal protocol, however, before we can lecture the world on the threat of global deforestation, we must examine the role played by the United States Government. It would be supreme hypocrisy for us to preach against something that our own treasury is financing.

In fact, Mr. Chairman, the United States plays no small role in financing natural resource destruction_around the globe. As the largest single contributor to the World Bank Group of multilateral lending institutions, MDB's, and as a participant in a number of other regional development banks, the United States. has had a hand in the clearing of thousands of acres of tropical rain forest, the damming of critical estuaries, and the mass relocation of large numbers of indigent people.

I had considered opening this statement with a long list of environmental disasters that we have financed, but, on second thought, that list illustrates the very reason the hearing is necessary. Every environmental disaster that I would have read off to you today was brought to the world's attention by scrutiny outside the MDB loan review process. In every case, we are aware of the environmental damage because of the policing action of others and not an inherent environmental conscience within the banks or the U.S. Treasury.

So, rather than list the environmental catastrophes that we know of, I have brought a list of agricultural and mineral development loans whose environmental impact yet remains a mystery. It is these loans that worry me.

Mr. Chairman, I have over 29 pages, over 1000 loans here that we have made that there is no way to tell what the environmental impact of any one of those loans might be, let alone their cumulative impact.

There is no way for me to know, as a citizen, to see what environmental policy my tax dollars are promoting. There is no way to

distinguish between sustainable development and non-sustainable, that is, not until the damage has been done.

There is no way to give priority to less environmentally damaging loans, since we don't know which ones those are. Consequently, there is no way to revise loan portfolios so as to encourage more sustainable development.

When farmers wanted to do a $20,000 upgrade of an existing farm to market road in Hamer, Idaho, the Bureau of Land Management completed a comprehensive environmental impact statement. The result of that EIS was that a road improvement plan was approved, but a closure policy was added to protect migrating elk populations.

The committee should note that the pending $400 million loan to finance the Ita hydroelectric project on the Uruguay River in Brazil will not, under current procedures, receive as much environmental consideration.

While I have been critical of NEPA's application to small entrepreneurial activities in the United States, if ever there was a forum which could benefit from consistent, thorough, and public environmental evaluation, it is the MDB loan approval process. Such evaluation would: (1) lead financial institutions to the least environmentally disruptive method of achieving development goals, (2) provide the criteria by which one could access the sustainability of entire lending portfolios, and (3) provide the public with an assurance that their funds are not being used to finance environmental disruption.

The Global Environment Project Institute based in Ketchum, Idaho strongly supports the concept of such an environmental assessment requirement. To quote their testimony:

Multilateral development banks, funded in part by U.S. tax dollars, have been responsible for tragic environmental and human consequences in the Third World in spite of the fact that the projects . . . were supposed to increase incomes, provide jobs, and raise the standard of living in poor countries. . . . The performance of the MDB's would be greatly improved if they had to prepare environmental assessments similar to those required of all Federal agencies under the National Environmental Policy Act, NEPA.

Mr. Chairman, I request the Global Environment Project Institute's full statement be included in the record at the end of my remarks.

Senator BAUCUS. Without objection.

Senator SYMMS. And please note that my constituents advocate an environmental assessment process similar-and I stress the word “similar”-to the National Environmental Policy Act, NEPA. I believe that there has been some confusion in this area.

NEPA is not a prescriptive statute. It does not prescribe the duties or responsibilities of any particular agency of government. Rather, it is an informational statute requiring that agencies carry out their otherwise prescribed duties in the most environmentally sound and informed manner possible.

Instructing the U.S. Executive Directors how to vote on certain lending proposals, for example, is not within this committee's jurisdiction, at least according to our Senate Parliamentarian. Deciding how informed they should be on the environmental impacts of their decisions, however, is a legitimate duty of this committee as

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an extension of our NEPA oversight, again, according to the Parliamentarian.

This informational aspect of NEPA is important. It is my belief that NEPA becomes internalized within bureaucracies only because it requires openness and accessibility to the public. I agree with Patricia Adams, the Director of the Canadian Probe International, quoted in Sierra Magazine. She said:

The environmental record of the United States yields the inescapable conclusion that information is an important source of power. Armed with information, the public could challenge the value of proposed projects and might be able to prevent environmental disasters before they begin.

Over a month ago, I circulated a proposal to extend NEPA or a NEPA-like evaluation to the United States' decisionmaking process on MDB loans. Since then, there has been considerable speculation as to my motives in making such a suggestion.

Actually, my motives are very clear. I simply suggest that when the United States intends to support a multi-million dollar loan to develop natural resources, it should do so in the presence of information on the environmental effect of that loan. That is all I have advocated, that we act from a position of information.

It has been suggested that such a proposal will require awkward or inappropriate procedures, burdensome paperwork, and impossible deadlines.

It has been suggested that this will violate our international agreements or offend the autonomy of the MDB's.

It has been suggested that such a requirement would detract from the development of the Third World.

It has even been argued that this would somehow convey an imperial attitude on the part of the United States.

Frankly, none of these arguments necessarily proceeds from my suggestion that the United States might want to cast its vote in an informed light. No one has suggested that the World Bank be tasked with the same assessment procedure as is required of the Bureau of Land Management.

Even within our domestic NEPA policy, NEPA applications vary with the agency and the function. The Federal Home Loan Mortgage Bank applied NEPA to its own unique activities which, by the way, are very similar to Treasury's role in the MDB's. Its application is quite different from that of, say, the Federal Highway Administration.

Certainly, a provision can be drafted that sets in motion a NEPA or NEPA-like process within the banks or at Treasury without imposing inapplicable or unworkable requirements. Consider the inverse of my suggestion, that the United States continue to approve loans without information on their environmental impact, even though that impact may include threatening thousands of unique forms of life, deforesting areas the size of Oregon, or cumulatively degrading the entire global environment.

Ševeral executive agencies which already live and work with NEPA have been very helpful in fleshing out this concept. The President's Council on Environmental Quality, the Environmental Protection Agency, and even the State Department have at least given me the courtesy of contacting my office and inquiring about the proposal before expounding on it. In each case, I have received

constructive and beneficial criticism which has been very helpful and which definitely should be incorporated into any eventual committee proposal.

The Treasury Department, however, Mr. Chairman, has obviously made up its mind which is its right to do. They have not provided suggestions. They did not contact my office even before pronouncing strong opposition to this yet non-existent amendment.

I did have the courtesy of a call from Assistant Secretary Meagher, and we had a very open and constructive dialogue on the issue. He volunteered to try to keep a liaison between my office and the Treasury, and for that I am indebted to him.

However, it is obvious to me from what I read in the paper and from what I hear coming from Treasury that Treasury has made up its mind. They are closeminded on the issue at this point, and I hope to be able to open a dialogue with them to assure myself that Treasury will work on this issue in good faith as we are trying to do here in this committee.

While I would much prefer to propose an environmental assessment process that meets with Treasury's approval, I will not postpone action on this pressing issue because of the obstinacy of an agency that is unwilling to discuss the issue in good faith.

I would also like to thank the many interests within the environmental community that have provided positive and constructive suggestions. Nevertheless, there are some who have approached this idea somewhat timidly if not outright antagonistically.

I suppose I shouldn't expect otherwise. These environmental interests will argue that the committee should proceed with caution, addressing MDB lending problems pragmatically, paying due attention to economic necessities and crediting current progress in the area. It will be a pleasure to me, Mr. Chairman, to be on the receiving end of these arguments for once.

However, considering the global environmental stakes at issue now, I will personally see to it that such arguments may return to haunt their authors when this committee debates less pressing environmental issues such as air quality that comes from bakeries in this country.

I thank you very much for your indulgence in allowing me to make this statement. We will look forward to hearing the witnesses, and I would like to say up front I would like to thank all the witnesses for sharing their time and views on this with the committee.

[The statement from the Global Environment Project Institute previously referred to by Senator Symms follows:]

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