U.S. government and international banks may approve $275 million in loans this week for a natural-gas project in Peru that has renewed debate about whether poor countries can grow economically while preserving the environment.
Advocates say the Camisea Project — two pipelines, one for transporting natural gas about 435 miles from the Camisea fields in the southeast to Lima, and another for transporting liquids for export to a southern port — will boost the Latin American country’s economy without damaging its environment.
The project, already 70 percent complete, will significantly increase Peru’s energy output. But critics argue it has ravaged and will continue to degrade the Amazon rain forest and indigenous communities.
The Inter-American Development Bank (IADB) is expected to vote on a $75 million loan request tomorrow, and the U.S. Export-Import Bank will consider a $200 million request Thursday.
Usually, the banks approve requests by the time they have been selected for a vote. However, last week the IADB postponed a vote, apparently at the insistence of the U.S. representative to the bank, Jose Fourquet, who had concerns about the project’s environmental impact.
“It is having extremely serious impacts on indigenous peoples in the region, and the human rights, as well as the environment,” said Aaron Goldzimer, an environmental and financial analyst at the group Environmental Defense. “The project starts off in a reserve for nomadic and indigenous people. These people lack immunity to even the common cold.”
Mr. Goldzimer, who has just returned from Peru, said that large amounts of earth and vegetation have been bulldozed for the pipeline.
But business, government and bank officials say the project passes environmental muster and will be a blessing for the economy.
“It’s a crucial project for Peru’s development. It represents almost one point of [gross domestic product] per year for the  years of the project. It means clean energy. It means substantive exports for us,” said Roberto Danino, Peru’s ambassador to the United States.
“We have made sure that the project is developed in a very careful way and have taken into account all the recommendations for the past two years by the banks and the environmental [groups],” Mr. Danino said.
Robert Montgomery, head of the environmental and social unit in the private-sector department at IADB, said the project meets environmental requirements so long as it follows IADB recommendations.
“There are aspects of the project that are highly innovative and could be considered in a model framework” for other countries, he said. “We’ve spent a very significant amount of time doing the environmental due-diligence.”
Ricardo Markous, president of TGP, a Peruvian energy company developing the project, said it is in the United States’ interest to back the project. Environmental groups have lobbied U.S. lawmakers to oppose it.
“This is an area of extreme poverty in Peru, narcotics traffic and terrorism. It’s being developed in an area where the Shining Path started,” he said. “It’s going to bring economic benefits to the people of the region. It’ll be another source of energy for the West Coast of Mexico and America.”
But Mr. Markous acknowledged that the installation of the pipeline required considerable deforestation. “We’re going to restore the sites afterward. When you look at the map, you will see nothing,” he said.
Mr. Goldzimer, the environmentalist, said project officials had already failed. For example, instead of laying a small section of the pipeline then immediately restoring deforested areas, he said, project officials are waiting to finish the whole project before reforesting. Then, he said, it’ll be too late.
Environmentalists have also suggested that close ties among the Bush administration, oil executives who stand to benefit from the project, and bank officials will throw this week’s vote in the project’s favor.