FROM THE OFFICE OF PUBLIC AFFAIRS

The US is abstaining on IDB financing of the Camisea gas project. We wanted to be able to vote in favor of this project, and went to unprecedented lengths to work with the IDB, the project sponsors, and the Government of Peru to strengthen its environmental and social protections. We greatly appreciate the efforts and patience of IDB Management and staff, the project sponsors, and the Government of Peru to work with us to address these risks. We are encouraged by recent actions by the Government of Peru, project sponsors, and the IDB to improve the project. We applaud the government’s commitment to improve the marine reserve area.

The United States strongly supports President Toledo and his goals for increasing Peru’s economic growth and improving the standard of living for Peru’s people. The Camisea project offers profound economic benefits for Peru, forecast to boost Peru’s economic growth by nearly 1% per year over its thirty-year expected operation. Regardless of our vote, our expectation is that the Camisea project, now 70% constructed, will be completed soon, bringing these benefits to the people of Peru. We look forward to continuing to work with Peru in the sound development of its hydrocarbon industry.

Our decision is based in part on indications that private financing may be available on favorable terms. In addition, unfortunately, the IDB’s involvement was constrained because it was unable to formally apply its environmental policies to the upstream component of the project, and was able to begin serious engagement with the downstream sponsors only after the project’s design was completed. We are also concerned that tight completion deadlines became a serious obstacle to mitigating environmental risks and encouraged the sponsors to expedite construction sometimes in advance of receiving government approvals. Finally, we have not been able to allay doubts about the adequacy of the environmental assessment conducted for the project.

We will continue to work diligently with the international community to improve environmental processes and standards that apply to projects supported by official financing. Looking ahead, this project highlights the pressing need for the IDB to establish a policy to improve consultation with and address the needs of indigenous peoples. We want to work with the IDB on the application of its environmental oversight to facilities that are closely related to projects being funded.

In closing, I want to reiterate my government’s profound gratitude for the hard work done by IDB management and staff, the Government of Peru, and project sponsors to improve the Camisea project. We applaud commitments made and are prepared to help bilaterally with Peru’s efforts to improve the quality of the natural environment in Paracas Bay. In fact, the United States is committed to provide roughly $2 million over the coming two years to help with these efforts. We will continue to support wherever possible, well-designed initiatives to increase Peru’s economic growth, including in the IDB.