Sr. Carlos Francisco Theodoro Machado de Lessa

MD. President, Banco Nacional de Desenvolvimento Econômico e Social.

BNDES

Av. República do Chile, 100 - 19º andar

Centro - Rio de Janeiro - RJ.

March, 2004.

Sr. President.

The Brazilian Environment and Development Forum of NGOs and Social Movements (FBOMS), the Rios Vivos Coalition, and other civil society organizations that have signed below are writing to you, Sir, to express our disagreement with some of the policies and programs of the National Economic and Social Development Bank related to large-scale infrastructure projects in Brazil and in other countries. Many of these projects have caused and will continue to cause irreversible environmental and social damage unless the Bank promotes significant changes in its strategies. We also are in disagreement with the Bank regarding its failure to comply with laws, recommendations, and internal norms for approval of projects presented, with the lack of transparency regarding its actions, and with its lack of response to questions raised by civil society organizations.

We are particularly concerned with the presence of the BNDES, together with the Inter-American Development Bank (IDB) and the Andean Development Corporation (CAF) in planning the program called the "South American Initiative for Regional Infrastructure Integration" (IIRSA). As you are aware, infrastructure projects are being planned for the Paraguay River, the Pantanal, and the Amazon, among other regions. In the Paraguay River and Pantanal, the program attempts to resuscitate the old proposal for construction of the Paraná-Paraguay Hidrovia industrial waterway project, which, if carried out, would provoke economic, social, and environmental alterations, with negative consequences for local economic activities which intensively generate employment and income such as tourism and fishing. Prior official environmental impact studies, prepared under the coordination of the Inter-governmental Committee on the Hidrovia were rejected by renowned specialists as inadequate. The new studies, in preparation, which aim for financial investment under IIRSA, lack the necessary civil society participation, and fail to consider, according to the information we have been able to obtain, the opinions of independent specialists.

In the Amazon region, the implementation of the IIRSA program will exert strong pressure on the best-preserved parts of the rainforest and the savanna, promoting a new and disastrous surge of predatory occupation by loggers, cattle ranchers, and soy plantations. Within this context is complex of hydroelectric dams and industrial waterway on the Madeira River, which you defended in your closing remarks of the "International Seminar for BNDES-CAF Co-financing: Prospective Projects for South American Physical Integration" held in August, 2003, saying "I do not know whether the energy from these dams (Madeira River) will go to Manaus or in the other direction, but I am absolutely certain that the 4,800 kilometers of aquavias, and the planting (with soy and other grains) of 30 million hectares in Brazil and Peru ? represent for our history ? what was the occupation of the old west of the North American continent". We are all aware of the results for indigenous peoples of the model of occupation applied in the American West. Along these same lines, BNDES´s Senior Vice President, Darc Costa, called the Andes, the Pantanal, and the Amazon regions barriers to be overcome by what he termed "the civilizatory process". These positions come into direct conflict with the environmental policies of the current Brazilian government. The public is well aware that last year an interministerial workgroup was created exactly to avoid the

deforestation that you propose for the Amazon.

It is unacceptable to finance more and more hydroelectric dams without being interested in where the energy is destined. A correct energy policy, in accord with the country´s best interests, should prioritize energy efficiency and conservation. It has been technically proven that it is possible to increase production using the same quantity of energy currently generated. Last year, following the threat of "blackouts", it was widely reported that there was a surplus of 7,000 MW available, without cuts in industrial production and in other sectors of the economy. The country has advanced greatly in terms of conservation and energy efficiency but, unfortunately, subsequent governmental actions provided incentives instead for increased energy consumption.

It is necessary to redirect part of those investments planned in energy generation toward technological development - support for adequate production systems; substitution of obsolete electric motors with more efficient motors; new lighting systems and minimizing losses in electricity transmission, considering that in this case the Brazilian indices are much higher than those accepted internationally. Part of this new policy we propose should include the retrofitting of older dams. Studies indicate that this measure would permit a 20% growth in the quantity of energy available. Another alternative worth pursuing is incentives for "new" energies through renewable sources with lesser impacts, particularly wind, solar, and biomass.

Why spend billions and billions of dollars on destructive and unnecessary dams such as Belo Monte on the Xingu River and Peixe Angical on the Tocantins River. It is worth remembering that BNDES is ignoring directives of the Environment Ministry when it decides to finance dams without carrying out prior studies to identify impacts of hydroelectric dams on the basin-wide level. In fact, a "Strategic Environmental Assessment" should be urgently carried out in the Araguaia and Tocantins basin, considering the large number of dams constructed and being planned, the advance of the agribusiness frontier, and the proposal for constructing the Araguaia-Tocantins hidrovia industrial waterway. The terms of this study should follow those proposed by the Rios Vivos Coalition and the Savanna (Cerrado) region NGO Network to the National Water Agency (ANA) and the IDB in September, 2002.

In terms of social issues, the financing of large dams has shown the Bank´s fragility in failing to apply its own guidelines, as in the case of Barra Grande and Campos Novos dams, in the Uruguay River basin. In the case of these dams, the Bank´s directive for "social inclusion", presented as the most important of the new directives announced in May, 2003, appears to have not considered the conflicts provoked by the intransigence of the companies building the dams regarding the demands of the affected populations. In these cases, thousands of families are facing a precarious future following the loss of their homes and rural lands.

Internationally, BNDES has financed projects of enormous economic, social, and environmental impacts without being concerned with the Bank´s lack of capacity to evaluate and monitor the projects´ consequences. Among these problem projects are the Bolivia - Brazil Gas Pipeline, San Francisco dam in Ecuador and Three Gorges dam in China. Three Gorges is an obvious example - more than one million people forcibly removed from their lands and homes without any right to question the authoritarian Chinese regime, and the Bank´s failure, as financier, to guarantee even minimal rights for the affected populations. In January, 2003, dozens of organizations from Brazil and various other countries sent you a letter regarding this situation. Unfortunately, more than a year later, they are still awaiting your response. In order that we not witness the repetition of what happened in China, we would hope that the Bank abandon negotiations for financing Son La dam in Vietnam, which, if constructed, would displace about 100,000 people.

In terms of transparency and governability, we observe that rules and norms for BNDES, established by the National Congress, by Executive Decrees, and by the Bank´s own Directors appear to generally guarantee transparency and responsibility in the decision making process on loans. However, the reality is that these requirements are not being followed by BNDES, particularly as regards large-scale infrastructure projects. Concerns have increased following your recent declarations regarding the reduction of the timeframe for Project approval, a clear sign that analyses of proposals may further lose rigor and depth, fundamental conditions for identifying and establishing mechanisms for minimal economic, social, and environmental conditionality, including those in the "Green Protocol" document, which is intended to orient the Bank´s actions, but which has been largely ignored by the Bank.

Under the curtain of "bank confidentiality", BNDES has failed to provide clear information on the results of its operations, beyond their financial aspects. Beyond this, the Bank has refused to provide information on its participation in specific projects when questioned. An example is the Bank´s failure to respond to letters from civil society groups, as in the case of Three Gorges.

As a financial institution operating with public resources, BNDES should, as a first step, furnish complete and readily accessible information to society regarding projects already funded or considered for funding by the institution. This procedure is followed by international institutions such as the Inter-American Development Bank and the World Bank and should be seen as a minimal requirement for promoting transparency in the institution.

The organizations signing this document intend to promote a broad and democratic debate with BNDES, opening channels for the presence of society in its evaluations and decisions. We understand that it is necessary to re-orient actions so that the Bank may strategically attend other logics of interest to Brazil and other countries where it operates, and so that it may be transformed into a supporter of socially, economically, and environmentally sustainable development.

As a basic agenda for discussion, we propose that BNDES re-evaluate:

•its support for South American integration through infrastructure works in the IIRSA program and that it seek other possibilities for developing actions to integrate the countries.

•its financing for large-scale projects in the Amazon and Savanna region, and the resulting social, economic, and environmental impacts, and that it analyze other possibilities for increasing production in already-deforested areas.

•its policies for financing initiatives and projects in energy, including hydroelectric dams, and that it consider increased funding for efficiency, conservation, and renewable resources.

•its mechanisms for consultation with populations affected by projects financed by the Bank and the role of companies which refuse to negotiate with organizations that represent these populations.

•the need for increased specialized in order to permit a broader analysis of the impacts of its financing.

• its guidelines for external financing, considering the right to free expression and access to information by populations affected by BNDES-financed projects, as well as their basic human rights.

As an important step, and trusting in your understanding and in the commitments made by the current Brazilian government, as well as the urgency that a solution be found for the themes presented, we ask for a meeting with you as soon as possible. We propose that six civil society representatives chosen by the Brazilian NGO and Social Movements Forum and the Rios Vivos Coalition take part.

Sincerely,

Fórum Brasileiro de ONGs e Movimentos Sociais para o Meio Ambiente e o Desenvolvimento (FBOMS)

Temístocles Marcelos

Secretário Executivo

Rua General Jardim, 660 - 8°andar, sala 81
Vila Buarque
01223-010 São Paulo - SP
Fone: (11) 3159-5071

Coalizão Rios Vivos

Alcides Faria

Secretário Executivo

Rua 14 de Julho 3169

79002 – 333 - Campo Grande MS

(67) 324 3230.

Rede Brasil sobre Instituições Financeiras Multilaterais
Marcus Faro - Secretario Executivo

Fone: (61) 321-61-08

Grupo de Trabalho Energia do FBOMS**

Lúcia Schild Ortiz

Coordenadora

APEDEMA-RJ - Assembléia Permanente de Entidades de Defesa do Meio Ambiente do Estado do Rio de Janeiro

Ivan Marcelo Neves

Secretaria Executiva Estadual

Rede Pantanal

Alessandro Menezes

Secretario Executivo

Rede Cerrado

Rosane Bastos

Rede Mata Atlantica

Miriam Prochnow

Instituto Vitae Civilis

Délcio Rodrigues

SAPÊ - Sociedade Angrense de Proteção Ecológica

José Antônio dos Remédios

Grupo Ambientalista da Bahia - Gambá

Renato Cunha

Instituto de Estudos Sócio-econômicos – INESC

Ricardo Verdum.

Instituto Terrazul

Fernando Avelino

Esplar- Centro de Pesquisa e Assesssoria

Magnólia Azevedo Said

Núcleo Amigos da Terra / Brasil

Elisangela Paim

GESTA - Grupo de Estudos em Temáticas Ambientais (UFMG)

Andrea Zhouri

A Comissão Pastoral da Terra - CPT XINGU

Tarcísio Feitosa da Silva

Movimento Pelo Desenvolvimento da Transamazônica e Xingu – MDTX

Tarcísio Feitosa da Silva

Fórum de Debates sobre Energia de Rondônia – FOREN

Artur Moret

Instituto Sociedade, População e Natureza (ISPN)

Donald Sawyer.

Instituto Ambiental Vidágua

Rodrigo Antonio de Agostinho Mendonça

4 Cantos do Mundo

André Teixeira Sampaio

FASE- Programa Amazônia Sustentável e Democrática.
Maria Emília L.Pacheco

Fundação Cebrac

Mauricio Galinkin

Ecoa – Ecologia e Ação

Alessandro Menezes.

Sindicato dos Eletricitários do Ceará - SINDELETRO

Fernando Avelino

Terrazul Ceará e Sindeletro

Amigos da Terra Amazonia

Roberto Smeraldi

FASE - Espirito Santo

Marcelo Calazans

Fórum Carajás

Mayron Régis

Urgewald – Alemanha

Bárbara Happe.

International Rivers Network - EUA - Programa América Latina

Glenn Switkes

W E E D - World Economy, Ecology & Development - Germany

Carole Werner

Campagna per la riforma della Banca mondiale - Italia
Antonio Tricarico

Proyecto Gato - Belgica

Jan Cappelle

Foro Ecologista Del Paraná - Argentina

Jorge Daneri

Sustainable Energy and Economy Network (SEEN)

Institute for Policy Studies

Nadia Martinez

International Program Environmental Defense

Bruce Rich

Director

Friends of the Earth - US

Jon Sohn

Friends of the Earth - Japan

Ikuko Matsumoto

Director of Development Finance and Environment Program

Friends of the Earth - Canada

Beatrice Olivastri

Chief Executive Officer

Amigos de la Tierra Internacional - Holanda

Janneke Bruil

Coordinadora Programa Instituciones Financieras Internacionales

COECOCeiba - Amigos de la Tierra Costa Rica

Isaac Rojas

Friends of the Earth - Slovakia

Stefan Janco

Coordinator

Bund für Umwelt und Naturschutz Deutschland e. V.

Amigos da Terra - Alemanha

Klemens Laschefski

Center for International Environmental Law (CIEL)

Marcos A. Orellana

Senior Attorney

Sustainable Energy & Economy Network

Daphne Wysham

Director

Mineral Policy Institute - Australia

Techa Beaumont

AID/WATCH - Monitoring the development dollar

Kate Walsh

Campaigner

EURONATURA - Portugal

Renato Roldao

BankTrack

Johan Frijns

Coordinator

REGENWALD

László Maraz

Director

The Corner House

Nicholas Hildyard

Halifax Initiative Coalition - CANADA

Fraser Reilly-King

Coordinator

CEADES Bolivia

Jorge Cortés

Doug Norlen

Policy Director

Pacific Environment

ARA (Working Group on Rainforests and Biodiversity)

Wolfgang Kuhlmann

Berne Declaration - Private Finance Program

Andreas Missbach

KoBra - Kooperation Brasilien e.V.

Bundesweiter Zusammenschluß der Brasiliensolidaritätsgruppen

União Nacional de Grupos de Solidariedade ao Brasil

Kirsten Bredenbeck

Society for the peoples of the rainforest

John Kunzli

secretary

MANDACARU

Menschen leisten Widerstand - O povo resiste

Heinz Peter Vetten

BanglaPraxis - Bangladesh

Zakir Kibria

Executive Director

Rettet den Regenwald e. V.

Reinhard Behrend

Forests.org, Inc.

Glen Barry

President

ILSA - Instituto Latinoamericano de Sevicios Legales Alterantivos - Colombia

Margarita Flores

Grupo Semillas - Colombia

Margarita Flores

Center for Environmental Law and Community Rights Inc

Ruth Pune

Adocacy/Campaign Coordinator

Center for Environmental and Public Advocacy - Slovakia

Juraj Zamkovsky

Executive Director

Za Zemiata (For the Earth)

Anelia Stefanova

Rainforest Foundation - UK

Simon Counsell

Executive Director

Rainforest Foundation - USA

Christine Halvorson

Interim Executive Director

Bund fuer Naturvoelker e.V. - Germany

Michael Kreuzberg

Alianza Aisén Reserva de Vida

Juan Pablo Orrego

Campañista Internacional

Global Village Cameroon

Akong Charles Ndika

Both ENDS

Sjef Langeveld

Director

Netherlands

Instituto de Ecologìa Polìtica

Manuel Baquedano

Presidente

Kurdish Human Rights Project

Kerim Yildiz

Executive Director

Univ Metropolitana - Mexico

Depto Antropologia

Scott S. Robinson

COECOCeiba - Amigos de la Tierra Costa Rica

Isaac Rojas

Nicaragua Center for Community Action (NICCA)

Diana Bohn

Co-Coordinator

Jubilee Treasurer

Natabuk Federation, Inc. - Philippines

Wilmar Ampuan

Chairperson

Foundation HELP - Tanzania

Benedict Chacha

Southeast Asia Rivers Networks

Chainarong Sretthachau

Directot

* O Fórum Brasileiro de ONGs e Movimentos Sociais para o Meio Ambiente e o Desenvolvimento (FBOMS) foi criado em 1990 por ocasião do início do ciclo de conferências da ONU sobre desenvolvimento sustentável. Por mais de uma década tem articulado ONGs ambientalistas, sindicatos e movimentos sociais na formulação de modelos alternativos a serem incorporados nas políticas públicas para um Brasil sustentável.

A Coalizão Rios Vivos reúne mais de 400 organizações do Brasil, América Latina e Estados Unidos. Tem como temas centrais: Água, Energia, Agricultura e Financiamento para o Desenvolvimento

**Compõe o GT Energia do FBOMS as seguintes organizações: AGAPAN (RS), Amigos da Terra – Amazônia Brasileira (SP), Assembléia Permanente de Entidades de Defesa do Meio Ambiente do Estado do Rio de Janeiro - APEDEMA/RJ (RJ), CEIPAC (SC), CEPEPO/FAOR (PA), Coalizão Rios Vivos, Comissão de Meio Ambiente da CUT/RJ (RJ), CPI (SP), Ecoa – Ecologia e Ação (MS), Federação dos Órgãos para Assistência Social e Educacional – FASE/PA (PA), Federação dos Órgãos para Assistência Social e Educacional – FASE/RJ (RJ), Fórum Carajás (MA), Fórum da Amazônia Oriental - FAOR (PA), Fórum de Debates de Energia de Rondônia – FOREN (RO), Fundação SOS Mata Atlântica (SP), GESTA – UFMG (MG), Greenpeace, Grupo Ambientalista da Bahia – GAMBA (BA), Grupo de Recomposição Ambiental – GERMEN/BA (BA), Ingá (RS), Instituto Ambiental Vidágua (SP), Instituto Ipanema (RJ), Instituto Terrazul (CE), Instituto Vitae Civilis (SP), International Rivers Network - IRN, Instituto Socioambiental - ISA (SP), Movimento Contra Termelétricas (SP), Movimento de Ecologia Social - Os Verdes (RJ), Movimento Nacional dos Atingidos por Barragens – MAB, Movimento pelo Desenvolvimento na Transamazônica e Xingu - MDTX (PA), Núcleo Amigos da Terra / Brasil (RS), Pangea/Agirazul (RS), Projeto Brasil Sustentável e Democrático – PBSD, Rede Brasil sobre Instituições Financeiras Multilaterais (DF), Sindicato dos Trabalhadores na Eletricidade - SINDELETRO/CE (CE), Sindicato dos Trabalhadores Petroleiros – SINDIPETROS/SP (SP), Sociedade Angrense de Proteção Ecológica –SAPÊ  (RJ), Sócios da Natureza / FEEC (SC), WWF Brasil (DF).