The World Bank undermined the rights of indigenous peoples and the environment with its approval on July 12, 2012, of a US$684 million loan, Human Rights Watch, Friends of Lake Turkana, International Rivers, Survival International, and the Bank Information Center said today. The loan is for a 1000-kilometer transmission line that would supply power to Kenya from Ethiopia's controversial Gibe III dam.

The World Bank's board of directors approved the loan without applying the Bank's social and environmental standards to the Gibe III dam, a power source for the transmission line. Gibe III, under construction in southern Ethiopia, has been linked to serious human rights abuses and environmental concerns, the organizations said.

"The World Bank stood by its principles in 2010 when it refused to fund the Gibe III dam in the absence of concrete measures to uphold the rights of indigenous peoples and address serious environmental concerns," said Ikal Angelei from Friends of Lake Turkana."Now it has stamped on those same principles by funding Gibe III through the back door."

Gibe III could devastate ecosystems that support 500,000 indigenous peoples in the Lower Omo Valley in Ethiopia and around Kenya's Lake Turkana. In 2011, the United Nations Educational, Scientific and Cultural Organization (UNESCO)'s World Heritage Committee called on the Ethiopian government to immediately halt all construction on the dam, which will impact several sites of universal cultural and ecological value. In August 2011, the Kenyan parliament passed a resolution asking for the suspension of dam construction pending further studies.

"The World Bank's actions show that Ethiopia is not alone in ignoring the huge impacts of this destructive dam," said Lori Pottinger, Africa campaigner at International Rivers. "The people of the Omo Valley and Lake Turkana are going to be left high and dry by this scheme. It seems to be a very misguided way to do poverty alleviation."

Downstream from Gibe III, the Ethiopian government has plans for 245,000 hectares of state-run irrigated sugar plantations, which are already having serious consequences for the 200,000 indigenous residents of the Lower Omo Valley. These include the loss of grazing land and cultivation sites, and forced relocation into villages that often lack basic services. These residents, from eight groups, rely on the 760-kilometer-long Omo River for growing crops and replenishing grazing lands during annual flooding. Ethiopian state security forces have used intimidation, assaults, and arbitrary arrests when people questioned the relocations or refused to move.

"Indigenous communities in the Omo Valley are paying a terrible price for the Gibe III dam and agricultural development that runs roughshod over their rights," said Jessica Evans, senior international financial institutions advocate at Human Rights Watch. "The World Bank should be standing firmly behind its social and environmental policies rather than pretending that the dam is unconnected to this project."

The World Bank requires that projects it funds follow its safeguard policies to assess and mitigate adverse environmental and social impacts. If a project results in the loss of livelihood, the Bank requires effective consultation with the affected people, adequate compensation for their losses, and sufficient measures so that they can at least maintain their previous living standards under the new circumstances. When indigenous peoples are involved, the Bank's policy requires additional procedures to ensure that the consultation, compensation, and relocation process respects the cultural and physical needs of the affected community.

Neither the World Bank nor the Ethiopian government has sufficiently analyzed the negative impacts of the Gibe III dam, the organizations said. Combined with the plans to increase irrigated agriculture, these projects will dramatically decrease water supply for downstream areas including Lake Turkana, which receives 90 percent of its water from the Omo River. This will further increase competition over scarce resources for the additional 300,000 indigenous peoples who live around Lake Turkana.

"The World Bank is lowering its standards and assuming serious reputational risk by taking on this project," said Joshua Klemm, Africa manager of the Bank Information Center. "Financing the transmission line sends a signal to Ethiopia that it can ignore massive impacts of damming its rivers, and still get rewarded."