Argentina - Indigenous Community Development (LIL) Project

Document of The World Bank Report No: 20929-AR PROJECT APPRAISAL DOCUMENT ON A PROPOSED LEARNING AND INNOVATION LOAN IN THE AMOUNT OF US$5.00MILLION TO THE GOVERNMENT OF ARGENTINA FOR AN INDIGENOUS COMMUNITY DEVELOPMENT LIL September 19,2000 Argentina Country Management Unit Environmentally and Socially Sustainable Development Unit Latin America and Caribbean Region  CURRENCY EQUIVALENTS (Exchange Rate Effective September 2000) Currency Unit = Argentine Peso LC = US$1 US$1 = LC FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS AC Advisory Council CAS Country Assistance Strategy CMU Country Management Unit EA Environmental Assessment GEF Global Environmental Facility GOA Government of Argentina IBRD International Bank for Reconstruction and Development (World Bank) IDA International Development Association (World Bank) IDB Inter-American Development Bank IDF Institutional Development Fund INAI National Institute for Indigenous Affairs (Instituto Nacional para Asuntos Indigenas) IPA Indigenous Protected Area LCR Latin America and the Caribbean Region LCSES Environmental and Socially Sustainable Development Sector Unit of LCR LIL Learning and Innovation Loan LMU Local Management Unit NCB National Competitive Bidding NGO Non-Governmental Organization PAD Project Appraisal Document PMU Project Management Unit SA Special Account SC Subprojects Committee TG Technical Group TOR Terms of Reference UCAF Administrative and Financial Coordination Unit Vice President: David De Ferranti Country Manager/Director Myrna Alexander Sector Manager/Director John Redwood Task Team Leader/Task Manager: Jorge E. Uguillas and Sandra Cesilini  ARGENTINA INDIGENOUS COMMUNITY DEVELOPMENT LIL CONTENTS A. Project Development Objective Page 1. Project development objective 2 2. Key performance indicators 2 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 2 2. Main sector issues and Government strategy 3 3. Learning and development issues to be addressed by the project 5 4. Learning and innovation expectations 5 C. Project Description Summary 1. Project components 6 2. Institutional and implementation arrangements 7 3. Monitoring and evaluation arrangements 8 D. Project Rationale (This section is not to be completed in a LIL PAD) E. Summary Project Analysis 1. Economic 8 2. Financial 8 3. Technical 9 4. Institutional 9 5. Environmental 9 6. Social 10 7. Safeguard Policies 11 F. Sustainability and Risks 1. Sustainability 12 2. Critical risks 12 3. Possible controversial aspects 13 G. Main Loan Conditions 1. Effectiveness Condition 13 2. Other 13  H. Readiness for Implementation 13 I. Compliance with Bank Policies 13 Annexes Annex 1: Project Design Summary 14 Annex 2: Detailed Project Description 18 Annex 3: Estimated Project Costs 22 Annex 4: Cost Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary 23 Annex 5: Financial Summary for Revenue-Earning Project Entities, or Financial Summary 24 Annex 6: Procurement and Disbursement Arrangements 25 Annex 7: Project Processing Schedule 33 Annex 8: Documents in the Project File 34 Annex 9: Statement of Loans and Credits 37 Annex 10: Country at a Glance 40 Annex 11: Social Assessment 42 Annex 12: Legal Analysis 54 MAP(S)  ARGENTINA INDIGENOUS COMMUNITY DEVELOPMENT LIL Project Appraisal Document Latin America and Caribbean Region LCSES Date: September 19, 2000 Team Leader: Jorge E. Uquillas Rodas Country Manager/Director: Myrna Alexander Sector Manager/Director: John Redwood Project ID: P057473 Sector(s): SY - Other Social Sector Lending Instrument: Learning and Innovation Loan (LIL) Theme(s): Poverty Targeted Intervention: Y Project Financing Data 3 Loan B Credit B Grant O Guarantee O Other (Specify) For Loans/Credits/Others: Amount (US$m): $5.0 million Proposed Terms: Variable Spread & Rate Single Currency Loan (VSCL) Grace period (years): 5 Years to maturity: 15 Commitment fee: .75 Front end fee on Bank loan: 1.00% Financing Plan: Source LOCl Foreign Total GOVERNMENT 0.88 0.00 0.88 IBRD 5.00 0.00 5.00 Total: 5.88 0.00 5.88 Borrower: GOV. OF ARGENTINA Responsible agency: NAT'L INSTITUTE OF INDIG. AFFAIRS Address: Lavalle 547, 7o Piso Buenos Aires Contact Person: Alejandro Isla, President Tel: 43939924/4345/4304/4306 Fax: Email: Estimated disbursements ( Bank FY/US$MI_ FY 2001 2002 2003 2004 Annual 1.0 2.0 1.5 0.5 Cumulative 1.0 3.0 4.5 5.0 Project implementation period: October 2000 - June 2003 Expected effectiveness date: 10/01/2000 Expected closing date: 12/31/2003 OCS PAD fF Rev-M, ZDD  A. Project Development Objective 1. Project development objective: (see Annex 1) The project development objective is to establish the basis for community-driven development and management of natural resources on indigenous lands. This includes strengthening social organization and culture, formulating local development and natural resource management plans and testing innovative approaches to addressing key socioeconomic and environmental issues in a gender-sensitive manner. The project will develop an indigenous community-driven development model from experience in three cases, the Mapuche territory of Pulmari (Neuquen Province), the Diaguita-Calchaqui territory of Amaicha del Valle/Quilmes (Tucuman Province) and the Kolla territory of Finca Santiago (Salta Province). The project will be considered successful when local indigenous social organizations are legally recognized and functioning; mechanisms are in place and working to resolve land tenure conflicts; an Indigenous Protected Areas legal framework has been formulated; there has been a successful integration of sustainable natural resources management practices in community development plans; several successful new types of economic alternatives have been identified and tested in each targeted area; and there is an on-going process of technology adoption which would in the long run lead to increased productivity and income among project beneficiaries. The general objective of the Govemment's indigenous peoples policy, as expressed in Article 75 of the National Constitution, is to guarantee the respect for their cultural identity and their right to a bilingual and inter-cultural education, to recognize the juridical personality of their communities and the communal possession and ownership of traditionally-held lands. It also establishes the need to ensure their participation in the management of natural resources which they control and in other areas of their interest. To achieve the stated objectives, the project will support the following activities: (a) Social and Cultural Strengthening of Indigenous Communities, by supporting local indigenous organizations and indigenous cultural heritage, land regularization (including legal assistance and conflict resolution), and planning local community development and natural resource management; (b) Sustainable Use of Natural Resources, by making investments in selected activities such as water management agricultural diversification, pastures and forestry management, artisan production and market exchanges; and (c) Project Management, including implementation arrangements, monitoring and evaluation, and communications and dissemination of lessons learned. An associated project, financed by a GEF grant, will complement this LIL, supporting biodiversity conservation and promoting the creation of indigenous protected areas. 2. Key performance indicators: (see Annex 1) The main performance indicators are related to: (a) screening and selection of social and productive investments (among them cost-benefit estimates, cash flow, rating of environmental risks and remediation measures); (b) supervision of implementation of social and productive investments (among them success rate of new enterprises, number of visits per investment project, checks on environmental mitigation); (c) institutional capacity and local facilitation (among them reports of the Local Management Unit, LMU, to the community organization, adoption of sound business practices, formulation of community development plans and proposals); and (d) institutional capacity and outward linkages (including networking, regular participation in outside events, establishment of inter-community conflict resolutions mechanisms, support from provincial and federal government agencies and establishment of a legal framework for indigenous protected areas). -2 -  B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: R2000-1 16/IFC/R2000-120 Date of latest CAS discussion: 06/27/2000 Improving targeting and effectiveness of social assistance generally through innovative mechanisms for reaching the poorest is an important element of the social development strategy of the CAS for Argentina. The CAS environmental actions include promoting sustainable growth coupled with conservation of natural resources through improved protection and management. A progress benchmark for social development is establishment of community-based projects in rural areas and innovative partnerships for poverty reduction, which is matched in the case of environment by the benchmark of establishing and properly managing protected areas. The two objectives (social and environmental) will be addressed by the project. Proven practices for achieving these objectives, at least as regards indigenous peoples, are not currently available to the Government of Argentina. The project will help develop such practices and contribute to the broader CAS objectives of environmentally and socially sustainable development. According to the FY0 1-04 CAS, the focus on insuring that the poor participate in the development process and promoting equitable, sustained growth will continue. Three broad themes will be emphasized by the World Bank: i) enhancing social development, including poverty alleviation and human resource development; ii) improving the performance and institutional capacity of government, particularly sub-national governments, to deliver key, social, infrastructure, and environmental services; and iii) consolidating structural reforms, including public finance, labor markets and the financial sector. Beyond sound economic management and pro-employment growth policies, other key reforms for the rural poor, including indigenous populations, address their needs for sustainable development, income generation, access to safe water and other services, and community development. la. Global Operational strategy/Program objective addressed by the project: Not applicable 2. Main sector issues and Government strategy: Indigenous peoples are arnong the poorest of the poor in Argentina, the product of a history of exclusion and discrimination. Estimates of their population vary (in the absence of up-to-date census figures), but sources indicate that they may number about one million people or about 3 percent of the total population. They represent a high proportion, approximately 25 percent, of the rural population of the country and are over-represented among the rural poor. However, even though their financial assets are low, their social and cultural assets are high. Indigenous peoples are an important part of the social and cultural fabric of the Argentine nation, as recognized by the 1994 Constitution. Their cultural and social diversity is being increasingly recognized and valued, and efforts are being made to amend past policies that discriminated against indigenous peoples. There are several factors that demonstrate that the Government of Argentina is determined to change the exclusion and poverty conditions of indigenous peoples. Beginning with the constitutional reform of 1994, for the first time indigenous territorial rights were recognized. Shortly thereafter, the National Institute for Indigenous Affairs (INAI) was created, within the Secretariat of Social Development, with a mandate to develop the legal and administrative mechanisms for individual and collective land tenure, to identify development needs of the indigenous peoples and to coordinate public sector investment in indigenous community development. During 1998, the INAI invested significant resources ($ 3 million) in the legal creation of the three proposed Indigenous Pilot Areas. -3 -  To support these efforts, the Bank in 1996 approved an Institutional Development Fund (IDF) grant designed to strengthen indigenous organizations in their capacities for planning, administration and participation in dialogue with the governnent. The proposed project is a direct product of the dialogue initiated by the World Bank with indigenous elected representatives and government officials to launch a process that would take several years to complete. One of the main aspirations of indigenous communities is to have their territories declared as indigenous protected areas. There are several antecedents of natural protected areas containing indigenous human settlements in Argentina. Among them, there is a recent initiative in the Parque Lanin that deals with indigenous communities living within the boundaries of the Park and its buffer zone, which permits communal land titling and sustainable use of natural resources for the resident Mapuche communities. There are two other favorable antecedents in Argentina are worth mentioning. First, the official declaration made by the Administracion de Parques Naturales (APSN: 1994, p.71) according to which the administration would: (i) reach agreements with national and provincial organisms responsible for protection/development of indigenous cultures, with the purpose of coordinating community development plans; (ii) provide, through the mentioned plans, orientation and exercise control in the management of natural resources; (iii) promote the participation of communities in the elaboration and follow-up of these plans; and, (iv) promote implementation of development projects and the formation of cooperatives and other traditional communal organizations. Second, the ongoing effort made by the Argentinean Government with the support of the Global Environmental Facility (GEF) to develop norms, policies and practices in order to implement the Intemational Convention on the Protection of Biodiversity (1992), establishing priorities and action plans. For this purpose, INAI has hosted several national encounters among indigenous peoples in Argentina to assure their participation in the process and the inclusion of indigenous rights in any new legislation on protected areas. Despite these efforts, numerous issues remain to be addressed before indigenous people's protected areas can be created and made operational and sustainable. These include: (a) design of sustainable-use systems of important and scarce natural resources and protection of fragile ecosystems; (b) agro-ecological constraints associated with current resource-use practices; (c) weakness in the current managerial capacity of indigenous communities to address these problems using modem means, as well as to deal with powerful external private sector and political interests that provoke internal disputes and factionalism among indigenous leaders. The strategy of the Government of Argentina to address these issues is to build upon and strengthen the social capital of indigenous organizations by supporting community-based natural resources management systems and developing small-scale investment operations to be managed by the indigenous organizations themselves. There is very little experience in Argentina with this strategy. Therefore, the proposed project is designed as a pilot in three indigenous areas, formulating a methodology based on lessons learned in the pilots, and extending the model to additional areas/communities when it is demonstrated that the methodology is successful. -4 -  3. Learning and Development issues to be addressed by the project: The main issue to be addressed in this project is the operationalization of the concept of indigenous community-driven development. Progress in implementing Article 75 of the 1991 Constitution regarding restoration and regularization of indigenous territorial rights was initially hampered by a lack of institutional capacity on the part of the newly created 1NAI. With the support of the Bank (IDF grant of US $ 200,000) for indigenous capacity building, the Inter-American Development Bank (grant of US $ 5 million) to strengthen INAI, and government investments in land purchase and titling, substantial progress in land tenure security has been achieved. Further progress is now hampered by the absence of a model for institutional and regulatory frameworks which would permit self-determination by indigenous organizations as regards the management and utilization of natural resources in their territories. Apart from the issuance of land titles to communities, proven methodologies for formulating sustainable development alternatives (by securing resources for the provision of key social services and the financing of investment sub projects as well as establishing sustainable natural resources management systems and ensuring that indigenous organizations themselves participate directly in the design and implementation of policy for their areas) do not as yet exist. The project will build upon these initiatives by strengthening INAI in its objective of improving the well being of indigenous peoples, providing them with land security, essential social services and, in cases where it is feasible, creating indigenous protected areas that will be co-managed by local indigenous communities and the relevant government authorities. Directly engaging local indigenous organizations in the planning and implementation of indigenous community-driven sustainable development and in the creation of indigenous protected areas reflects a strategic choice on the part of INAI. An additional issue that needs careful consideration is that of gender. Indigenous peoples have demanded an end to discriminatory practices from the dominant society and are gradually receiving responses to their demands. Although gender differences are deeply embedded in some if not all indigenous cultures, the project will strive to gradually end discriminatory practices and to provide incentives and opportunities so that the gender gap is reduced. 4. Learning and innovation expectations: 1 Economic Z21 Technical 1 Social 1 Participation 1 Financial 1 Institutional I Environmental El Other (a) Economic. The project will provide practical experience for the local authorities in assessing the economic viability of sub projects for the purpose of increasing community incomes. It is anticipated that by the end of the project, decisions would be made to finance sub projects that accounted for both the economic value of the sub project from the point of view of an internal rate of return, as well as from the point of view of its added economic value for the community. (b) Social. The project will also provide opportunities to learn about: (i) how to strengthen indigenous social organization and cultures, taking into consideration the needs and interests of men and women; (ii) how to build on their social and cultural assets in order to reduce poverty and social exclusion; (iii) how to build capacities for community-driven development and natural resource management; (iv) how to create incentives for government to provide more equitable goods and services to indigenous communities; (v) how to improve networking among indigenous communities and between those communities and outside institutions; and (vi) how to introduce ethnic and gender concerns and criteria within social programs addressed to the poor. -5 -  (c) Participation. By the end of the project, the institutional relationships within communities are expected to show a substantial level of informed participation, improved balance in the levels of community involvement by gender, and the empowering of indigenous organizations in the determination of income generating activities. Participation of non-governmental organizations and local universities with expertise and strong linkages to the indigenous pilot areas will also be a key feature of this project. Their collaboration will to improve the project's knowledge about the communities and their natural and cultural environment. They will also carry out specific field activities based on existing demand and prior agreements with the indigenous organizations. (d) Environment. By the end of the project, screening procedures for environmental issues in sub projects and community investments will have resulted in activities that are protecting the natural assets of the communities (soil, water, forest cover) and contributing to biodiversity conservation. (e) Institutional. Two sets of institutional linkages will be critical to success of the project. First, at the community level, it is expected that by the end of the project, the LMUs would be fully functional and considered to be essential parts of the community. This implies that relationships between the traditional authorities and the LMU staff will be harmonious and productive and that the community at large will identify with the LMU. Second, the project will produce replicable working relationships between the LMUs and central authorities that will provide needed links to sources of technical and financial support, market and political access, and legal protection. The assumption is that this will be INAI in the first instance, but other useful institutions may also link for the purposes of support. (]) Technical. A preliminary assessment has been made of the technical limits to introducing new income generating activities into the pilot communities. The project will explore different technological alternatives that combine traditional and modern knowledge and to provide experience and knowledge of the technical constrains and opportunities for such activities. Overall, meeting these expectations will demonstrate the feasibility of a program to scale-up the operation to include a larger number of indigenous communities and community clusters. An assessment of progress will occur approximately 18 months after the project becomes effective with a full assessment of readiness for replication made after 30 months. C. Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): Indicative Bank GEF % Componet Sector Costs % Of financing Bank financing GEF i_ (USSM) Total (US$M) financing WUSWM) financing Social and Cultural Other Social Sector 1.60 27.2 1.40 28.0 0.00 0.0 Strengthening of Indigenous Communities Sustainable Use of Natural Natural Resources 2.20 37.4 1.87 37.4 0.00 0.0 Resources Management Project Management Institutional 1.37 23.3 1.28 25.6 0.00 0.0 Development Contingencies Natural Resources 0.66 11.2 0.40 8.0 0.00 0.0 Management -6 -  Global Components 0.00 0.0 0.0 0.0 0.00 Total Project Costs 5.83 99.1 4.95 99.0 0.00 0.0 Front-end fee 0.05 0.9 0.05 1.0 0.00 0.0 Total Financing Required 5.88 100.0 5.00 100.0 0.00 0.0 2. Institutional and implementation arrangements: 2.1 Pilot Areas of Indigenous Community Development Level: The LMU will be composed of "indigenous promoters" (technically prepared members of the indigenous community), nominated by traditional authorities (Confederaci6n Mapuche, Consejo Kolla de Finca Santiago and Consejo de Caciques y Comisiones Directivas de las comunidades Diaguita Calchaquies y Quilmes) and selected by the Project Management Unit (PMU) on the basis of previously-approved terms of reference and selection criteria. The LMU will be strengthened by a Project Coordinator/Administrator and a Secretary/Accountant, complemented on an as-needed basis by a Technical Group comprised of short-term technical professionals jointly selected by traditional authorities and INAI. The LMU will be resident in the Indigenous Pilot Area throughout the life of the project. The LMU will design and manage proposed activities at the local level, and monitor and supervise the delivery of services, works and goods. Implementation of projects will also be done by other parties (NGOs, community groups) besides the traditional community organization, but on the basis of approved plans and the prior consent of the traditional community organization. Approval of projects in amounts less than US$ 50,000 can be authorized by the LMU, after it has received the no-objection from INAI. The first three sub projects of each LMU above this level will be sent to the World Bank for no-objection. A Project Operations Manual will be finalized as a condition for project effectiveness. It will describe the required relationships between the LMU, local community-based organizations and other stakeholders at the local level, as well as the relationships between these, the PMU and INAI at the project level (including respective duties, responsibilities, clearances, procedures for administration of funds - operating a local bark account - and implementation of activities within the zone). 2.2 Project Management Level: The Director of INAI will maintain overall administrative responsibility for the project's successful implementation. INAI's Director will also chair an Advisory Council (AC), comprised of two indigenous representatives of each pilot area plus representatives of relevant secretariats and ministries, that will meet as needed. The AC function will be to facilitate the timely response and coordination of responsible public agencies to new initiatives stemming from the Indigenous Pilot Area. The content of the Project Operational Manual was agreed during appraisal. It will include, inter-alia, a description of: (a) administration arrangements and relationships; (b) financial management arrangements and resource flows (including auditing requirements); (c) procurement procedures, including a detailed description of responsibilities between the AC, PM[ and LMU; (d) standard terms-of-reference for consultants to be hired by the LMU; (e) terms-of-reference for pilot-specific environmental assessments; (f) sample letters of invitation, procedures for evaluation, samples of agreements, and sample contracts for consulting services; and (g) monitoring, evaluation and reporting requirements. Approval of the Project Operational Manual is a condition of loan effectiveness. The PMU will present to the Bank for review and approval draft annual Operating Plans and Budgets no later than November 15 of each year. A signed agreement governing the relationship between INAI and the - 7 -  communities will be a condition of disbursement for the financing of sub projects in each Indigenous Pilot Area. 3. Monitoring and evaluation arrangements: Monitoring of the project inputs and implementation progress will be the responsibility of the PMU as part of its budget management and reporting system. It will report semi-annually based on reports from the pilot areas. The monitoring reports will be prepared initially by the three LMUs which will present the results to the target communities and traditional authorities for feedback and comments, and submit them in draft to the PMU. Project outputs will be monitored as part of this process. To maximize learning for all participants, the PMU will present the evaluations of the results achieved and documented in the monitoring reports to a mid-term workshop. Broad, qualitative (efficacy of capacity-building, effectiveness of conflict-management mechanisms, etc.) and quantitative (numbers of inputs, participants, etc.) indicators for the entire project were agreed upon during project appraisal. These indicators will be described in the Operational Manual. The mid-term review workshop will provide an opportunity to draw conclusions from experience and modify practices as required. The workshop will include members of the PMIU staff, LMU staff, and other partners collaborating in the project and will be open to the communities benefiting. Monitoring reports by the PMU will reflect the findings and conclusions of this workshop. During appraisal it was agreed that the PM[J will maintain a Project Information and Monitoring System with reporting formats agreed with the Bank through the period of project implementation. The Bank will receive quarterly project management reports not later than April 30, July 31 and October 31 of each year, commencing on April 30, 2001, linking project expenditures to key monitoring indicators of activities carried out during the quarter. In addition, an Annual Progress Report on project implementation will be presented by January 31 of each year. D. Project Rationale [This section is not to be completed in a LIL PAD. Rationale should be implicit in paragraph B: 3.] E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) 1. Economic (see Annex 4): [For LIL, to the extent applicable] O Cost benefit NPV=US$ million; ERR = % (see Annex 4) O Cost effectiveness O Incremental Cost * Other (specify) Not applicable 2. Financial (see Annex 4 and Annex 5): NPV=US$ million; FRR = % (see Annex 4) [For LIL, to the extent applicable] Since the project is a pilot operation, full cost recovery is not a project objective. However, fiscal sustainability is an important consideration in the design of this LIL. Although the GOA has committed itself to improve the living conditions of indigenous peoples, the current level of expenditure on indigenous development activities is low. The planned investments in the project, such as the training of INAI staff and -8 -  the development of materials for indigenous peoples, have low recurrent costs and can be covered by current budgets. 3. Technical: [For LIL, enter data if applicable or 'Not Applicable'] During project preparation, international technical experts in collaboration with indigenous experts living in the beneficiary communities conducted a preliminary technical assessment of possibilities and constraints related to land tenure, natural, resource-use patterns and the social and cultural institutions that are relevant to the establishment of indigenous protected areas in a manner consistent with indigenous cultures and environmentally sustainable practices. Technical feasibility of each specific sub project investment will be analyzed as part of the decision-making process by the LMU and PMU. See Annex 11 for greater detail. 4. Institutional: 4.1 Executing agencies: INAI has a proven record, as demonstrated in successful land titling and social investment project activities, for management of indigenous initiatives. INAI will be assisted by UCAF (Financial Management Unit of the Ministry of Social Development and the Environment) which is successfully providing support to a major World Bank-financed project (see section 4.4). 4.2 Project management: Overall, INAI has the capacity to manage this project. At the pilot area level, there is clear evidence of the capacity of indigenous organizations to design, implement and assess small development initiatives, as expressed during the IDF Training Program. The relationship between INAI and UCAF is to be refined as part of the project. 4.3 Procurement issues: Procurement would be the responsibility of a Project Management Unit (PMU) established within INAI. Since the PMU does not have the capacity to carry out procurement, an action plan to strengthen the PMU's capacity was agreed on. Due to the relatively small value and large number of contracts, only a few of them would be subject to prior-review by the Bank. Thus, procurement review is expected to primarily be carried out during supervision missions, one every six months. In addition, the Bank shall commission an independent procurement audit by mid-term. 4.4 Financial management issues: The financial management assessment has indicated that UCAF can adequately manage financial matters, including accounts and budget balances (a 4B certification has been given). Nevertheless, the relationship between INAI and UCAF will have to be formally agreed as well as the TORs of the officials acting as liaisons between them. 5. Environmental: Environmental Category: B (Partial Assessment) 5.1 Summarize the steps undertaken for environmental assessment and EMN preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. Diagnostic-level environmental analyses, conducted as part of project preparation, have identified major environmental issues and opportunities. Site-specific environmental analyses will be conducted for the three areas and will provide the basis for the elaboration of a natural resources management framework as well as the establishment of environmental management plans for mitigation of adverse imnpacts of development investnents identified. The project will finance environmental studies and environmental management -9-  plans as needed as part of the preparation of specific sub projects or investments. 5.2 What are the main features of the EMP and are they adequate? Not applicable 5.3 For Category A and B projects, timeline and status of EA: Date of receipt of final draft: At the beginning of project implementation and before disbursement of sub project funds. 5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EA report on the environmental impacts and proposed environment management plan? Describe mechanisms of consultation that were used and which groups were consulted? Not applicable 5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environment? Do the indicators reflect the objectives and results of the EMP? A project screening mechanism will be created and operational at the beginning of the project so as to avoid, minimize or mitigate possible adverse impacts. Particular attention will be paid to activities which may lead to extensive harvesting of existing forests, the introduction of exotic plant or animal species, the use of agrochemical inputs in agriculture, etc. 6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes. A comprehensive social assessment was conducted as part of project preparation, which identified major socioeconomic, cultural, political and other aspects that characterize the targeted indigenous groups. One of the most innovative elements of the project approach is derived from the social assessment process: the direct participation of local community-based organizations in the identification, design and implementation of development investments and resource-management decisions. The diagnostic phase of this work included not only indigenous communities, but also non-indigenous stakeholders with interest in the pilot areas. It also identified main current and potential conflicts and tentative strategies for conflict management. Social analysis and participatory planning have already produced a list of possible community-driven, income-earning sub projects in each indigenous pilot area; each project component, with guidance criteria for the selection of sub project organization of investments at the local level; consensus mechanisms and institutional arrangements; and, the selection of performance indicators, monitoring and evaluation procedures. See Annex 11 for greater detail. 6.2 Participatory Approach: How are key stakeholders participating in the project? The project has benefited from a series of workshops supported by the IDF grant over the period 1996-1998 which brought together more than 1200 indigenous leaders pertaining to 14 ethnic groups in Argentina. Some 22 local and regional workshops were held in 6 provinces characterized by the largest concentrations of indigenous population. These leaders represented more than 20 indigenous organizations. The workshops took 3-4 days and involved the participation of government officials from the federal and provincial levels. From these encounters, the idea of indigenous pilot areas was presented by indigenous organizations themselves, and accepted by INAI as an alternative development strategy worth exploring. In the process of project preparation, planning meetings were held by INAI with the following community-based organizations, NGOs, academic and government institutions active in each of the - 10-  proposed pilot areas: (a) in Neuquen: the Mapuche Confederation de Neuquen, the Mapuche Coordinating Council, the Interstate Corporation of Pulmari , the University of Comahue, the Planning and Development Action Council for Neuquen Province and the Nuequen Development Corporation; (b) in Tucumakn: the Center for Investigation and Indigenous Training, the Technological University, the National Institute of Agricultural Technology, the National University of Tucuman and the Provincial Social Council, and (c) in Salta: the Ecological Research Laboratory of the Yungas, the Integral Promotion Association, the International Foundation for Science; the World Wildlife Fund; INTA; the German Technical Cooperation Agency; and the Agricultural Social Program of Salta. Each of these organizations or agencies has an operational field presence in the proposed pilot area, and all the community-based organizations are indigenous peoples organizations based in the communities that comprise the proposed pilot areas. These organizations will be potential partners to achieve project success. Six indigenous professionals, two from each pilot area, nominated by community assemblies and selected by INAI, were hired by the Bank to help prepare the project for their respective groups. These indigenous consultants worked closely with INAI officials and international experts in gathering baseline social, environmental and economic information, designing preliminary strategies for indigenous protected areas, and ensuring that project operational arrangements are compatible with indigenous culture and expectations 6.3 How does the project involve consultations or collaboration with NGOs or other civil society organizations? See above. 6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes? See Section on Institutional Arrangements. 6.5 How will the project monitor performance in terms of social development outcomes? See Section on Monitoring and Evaluation. 7. Safeguard Policies: 7.1 Do any of the following safeguard policies a ly to the project? Policy Applicability Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) 0 Yes 0 No Natural habitats (OP 4.04, BP 4.04, GP 4.04) 0 Yes 0 No Forestry (OP 4.36, GP 4.36) * Yes 0 No Pest Management (OP 4.09) * Yes O No Cultural Property (OPN 11.03) * Yes O No Indigenous Peoples (OD 4.20) * Yes O No Involuntary Resettlement (OD 4.30) 0 Yes 0 No Safety of Dams (OP 4.37, BP 4.37) O Yes * No Projects in International Waters (OP 7.50, BP 7.50, GP 7.50) 0 Yes 0 No - 11 -  D Projects in Disputed Areas (OP 7.60. BP 7.60. GP 7.60) D Yes Z No 7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies. The Governrent of Argentina has conducted a Social Assessment illustrating the readiness of indigenous communities to proceed with the project. Compliance with additional safeguard policies will be assured through screening of sub projects to be financed during project implementation. The project itself fulfills OD 4.20 requirements since indigenous peoples are the direct beneficiaries and participants. F. Sustainability and Risks 1. Sustainability: This section is not to be completed in LIL PAD. 2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1): Risk Risk Rating Risk Mitigation Measure From Outputs to Objective The targeted areas do not benefit from M INAI will coordinate with other government infrastructure and the provision of social agencies and donors in order to improve services from other development indigenous communities access to programs and institutions in a complementary goods and services, such as complementary way. water and sanitation, health and education. Economic conditions do not permit the N Emphasis is on investments on micro-enterprises establishment of new enterprises. which largely respond to local demand. From Components to Outputs Indigenous leaders and N Besides strengthening indigenous communities GOA will not remain committed to project and the implementation capacity of INAI, the as a learning process. project will dedicate all efforts necessary to foster positive interaction patterns between them, thus ensuring their interest in the project. Key studies, consultation processes, and M Key studies such as the social assessment and pilot activities are not executed on time. consultation processes have advanced during project preparation. Indicative plans for each indigenous community, with a preliminary identification and prioritization of pilot activities, have also been prepared. Delays in procurement of goods and M INAI will create the conditions for effective services. procurement. In addition, the presence of the Co-Task Team leader in the Argentina Resident Office will allow for a close supervision to ensure that these actions are done in a timely manner. Overall Risk Rating M Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk) 3. Possible Controversial Aspects: - 12 -  3. Possible Controversial Aspects: Resolving land tenure issues is likely to produce controversy in at least some cases. At present both federal and state authorities have constitutional rights vis-a-vis land holdings so that tensions beyond those normally expected between indigenous people and "government" may be expected. The project would not become involved in these disputes. INAI, however, is expected to continue its active support for the regularization of indigenous community lands. G. Main Loan Conditions 1. Effectiveness Condition Establishment of appropriate accounting procedures for INAI and the LMUs to receive and manage project finances. Issuance of a Project Operational Manual. 2. Other. Disbursement of sub project funds for each LMU to begin when collaboration agreement between INAI and the indigenous community is reached. H. Readiness for Implementation OI 1. a) The engineering design documents for the furst year's activities are complete and ready for the start of project implementation. Z 1. b) Not applicable. C1 2. The procurement documents for the first six months' activities are complete and ready for the start of project implementation; and a framework has been established for agreement on standard bidding documents that will be used for ongoing procurement throughout the life of LIL Z 3. The LIL's Implementation Plan has been appraised and found to be realistic and of satisfactory quality. LJ 4. The following items are lacking and are discussed under loan conditions (Section G): 1. Compliance with Bank Policies 1 1. This project complies with all applicable Bank policies. C 2. The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies. Jorge E. Uquillas Rodas John Redwood Myra Alexander TeaM Leader Sector Manager/Director Country Manager/Director -13-  Annex 1: Project Design Summary ARGENTINA: INDIGENOUS COMMUNITY DEVELOPMENT LIL Key Performance Hierarchy of Objectives Indicators Monitoring & Evaluation Critical Assumptions Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission) Rural development and Acknowledgment by Project sponsored Improved management of poverty reduction as well as independent evaluators that assessments natural resources and the protection and management knowledge and practices environment would enhance of natural resources. (conditions generating sustainable community adoption of technology) for development through the sustainable use of improvement in the natural resources have productivity of improved in targeted areas resource-based activities. Follow-on Development Objective: The well being of Acknowledgment by Project sponsored No outside factors like Argentina's indigenous indigenous communities that self-evaluations natural disasters and/or peoples is improved by living conditions are economic crisis have implementing community improving, including a intervened to affect living driven approaches to better gender balance, since conditions of indigenous community development and project started communities. environmental protection. implementation. Objective measures of Independent survey of quality of life indicators. conditions GEF Operational Program: - 14 -  Key Performance Hierarchy of Objectives Indicators Monitoring & Evaluation Critical Assumptions Project Development Outcome I Impact Project reports: (from Objective to Goal) Objective: Indicators: Establish the basis for -Local indigenous social Project-sponsored GOA commitment to community -driven organizations legally participatory monitoring and indigenous community development and the recognized and functioning impact evaluations (with development remains strong. protection and management by the end of project. baseline and follow-up of natural resources on -Indigenous communities studies) to be undertaken Key legal/fiscal/institutional indigenous community participating in capacity with results incorporated reforms will be adopted by lands. This includes building activities. into community Provincial and/or national strengthening social -Mechanisms for solving development and natural Congress as well as by organization and culture and land tenure conflicts in resource management plans. institutions involved in building indigenous communities developed and social sector issues and capacities for sustainable tested by end of project. indigenous affairs. development in a - A legal framework for the gender-sensitive manner, as creation of Indigenous Stakeholders agree to a well as improving the Protected Areas has been process of land delivery of government developed by first year of regularization and services to indigenous project. co-management of natural peoples, reinforcing the -Five year community resources with indigenous links between government sustainable development organizations. agencies and indigenous plans designed by year 1. communities. -At least 2 successful new Political interference from types of economic government and traditional alternatives identified and conflicts among indigenous tested in each targeted area peoples are kept at a (including activities led by minimum level. women) by year 2 of project. -Adoption rates for sustainable production activities have increased by end of project. -National Plan of Indigenous Communities Development formulated by year 2 of project. Global Objective: - 15 -  Key Performance Hierarchy of Objectives Indicators Monitoring & Evaluation Critical Assumptbons Output from each Output Indicators: Project reports: (from Outputs to Objective) Component: (i) Key social and cultural -3 participatory diagnostic Results of semi-annual The targeted areas benefit factors of community driven studies by year I monitoring and evaluation from infrastructure and the development identified -3 community organizations (with pilot activities provision of social services strengthened in development evaluated on completion) from other development skills by end of project reported to PM`U ensures programs and institutions in results properly a complementary way. incorporated into community development plans. (ii) Improved local -3 integrated plans of Economic conditions permit development and natural community development and the establishment of new resource management plans natural resources enterprises. formulated management by year I - process to achieve land tenure security initiated in 3 communities of target areas by end of project (iii) Innovative approaches -6 pilot community sub to community development projects in agroforestry and and sustainable use of "eco" and "ethno" tourism natural resources tested implemented by year 2 - 15 community sub projects of basic infrastructure for production implemented by end of project (iv) Coherent and effective -environmental screening of institutional arrangements sub projects in place by year identified at the central and 1 local levels, including an -I Project Management Unit efficient project monitoring and 3 Local Management and evaluation system Units created and operational by end of project -I Monitoring and Evaluation System created and operating efficiently by end of project (v) Possible follow-up -I APL proposal designed investments identified by year 2 of project -16 -  Key Performance Hierarchy of Objectives Indicators Monitoring & Evaluation Critical Assumptions Project Components / Inputs: (budget for each Project reports: (from Components to Sub-components: component) Outputs) (1) Social and Cultural (1) US$1.6 million Results of participatory Indigenous leaders and Strengthening of Indigenous monitoring and evaluation GOA remain committed to Communities reported to the PMU; PMU project as a learning * Support to local ensures results properly process. indigenous organizations incorporated into plans and Timely execution of key * Support to indigenous prepares regular reports. studies, consultation cultural heritage process, and pilot activities. * Land regularization Timely procurement of (including legal assistance goods and services and conflict resolution) * Planning Local Community Development and Natural Resource Management * Cultural exchange and gender workshops * Learning events (2) Sustainable Use of (2) US$2.2 million Natural Resources * Water management * Agricultural diversification * Pasture management * Forestry * Artisan production * Market exchanges Tourism (3) Project Management (3) US$1.4 million * Implementation arrangements * Monitoring and evaluation * Dissemination of lessons learned (4) Unallocated (4) US$0.6 million -17 -  Annex 2: Detailed Project Description ARGENTINA: INDIGENOUS COMMUNITY DEVELOPMENT LIL By Component: Project Component I - US$1.60 million Social and Cultural Strengthening of Indigenous Communities The social and cultural strengthening of indigenous communities will be supported through capacity building for self-development and the promotion of activities closely related to their traditional knowledge and culture, including handicrafts, ethno or cultural tourism strategic planning and cultural exchanges and networking. An activity of special interest to the project is the provision technical assistance in legal and conflict resolution issues related to the establishment of Indigenous Pilot Areas. Special technical support will be given to strengthen the capacity of INAI and indigenous organizations to carry out legal and regulatory actions related to the irmplementation of this project. Actions expected in this component will cover: assistance to complete the registration and regularization of property rights in the three pilot areas; preparation of subsidiary legal instruments related to the establishment of the IPA; legal instruments to guarantee the management of natural resources by indigenous peoples; mechanisms to assure active involvement and participation of indigenous authorities in the new legal and regulatory framework; custom-tailored solutions to legal conflict in protected areas. This will require the close collaboration of INAI with the indigenous communities and their traditional authorities in order to advance/consolidate the land regularization process and secure indigenous rights over land and natural resources. This component comprises the following sub-components: 1. Capacity building and studies 2. Technical assistance in legal matters and conflict resolution 3. Local planning 4. Cultural exchange and gender workshops 5. Learning events 6. Improving basic social services The design of specific sub projects will be based on key concepts which have been analyzed and reached full agreement during project preparation, namely: self-development, co-management and consensus-building. (1) Self-development consists in the right and capacity of indigenous peoples to decide on an autonomous manner the contents and methods of development programs to be carried out in their communities and lands. Specifically, these programs should be compatible with traditional cultural values and strengthen the culture of indigenous peoples. (2) Co-management is understood as a process of negotiation and consensus building between the different public and private social actors that intervene in the administration of land and natural resources as well as in the implementation of economic activities that affect indigenous peoples. Co-management requires of an active process of conflict resolution and networking. (3) Consensus-building is closely related to the previous concept. Consensus is a necessary condition for the strengthening of indigenous communities and their organizations so that they can administer efficiently their lands and natural resources and build partnerships with other social actors in order to secure their land rights and cultural identity. Project Component 2 - US$2.20 million - 18 -  Sustainable Use of Natural Resources In each Indigenous Pilot Area the project will formulate a community-based natural resources management plan, which delineates priority resources for conservation, areas for sustainable development investments, and specific development sub projects Proposed sub projects will each require further elaboration of specific environmental mitigation mechanisms. The Bank loan will finance environmental analysis, resources assessments, applied research, extension services, soil/water/forest management planning, marketing studies for selected sub projects (to be financed on a demand-driven basis, including, among others, soil and pasture improvement, community forestry, watershed management, micro-irrigation, spot improvement of rural roads, marketing, post-harvest community infrastructure, and technical assistance for agriculture, livestock, management of archeological sites, eco-tourism etc.). A gender approach will be adopted, so as to ensure that both men and women have access to the goods and services offered by the project. In sum, this component comprises the following sub-components: 1. Pilot water management and agricultural diversification projects 2. Pilot pastures and livestock management 3. Pilot forestry and agroforestry sub projects 4. Artisan production ,. Pilot eco- and ethno-tourism projects 6. Basic infrastructure for production Detailed sub project eligibility criteria would be included in a Project Operational Manual acceptable to the Bank. The tentative strategy for protection and development in each pilot area is briefly outlined below (see Annex 11 for greater details). For the Mapuche pilot area (Hacienda Pulmari, Neuquen Province), the expected specific benefits will be the strengthening of traditional institutions and practices to facilitate integration of dispersed populations and consensus mechanisms among the six communities that currently occupy the Pulmari area and other stakeholders to manage communal pastures, forests, and alternative opportunities such as eco-tourism Evidence that the project propitiated better living conditions for Mapuche communities, stronger cohesion and control on decisions that affect their lives, territory and culture and environmental protection of the existing biodiversity and endangered species (e.g. the Pehuen Tree), is expected in the project evaluation results. For the Kolla pilot area (Finca Santiago, Salta Province), the expected specific benefits will entail the consolidation of internal economic exchange system between the Kolla communities located in the high and low areas, consensus mechanisms to manage communal pastures, forests, irrigation water and profits resulting from the value-added processes to forest resources and other market oriented economic opportunities. Evidence that the project improved current living conditions for the poorest communities of the highlands (Puna), initiated of market-production activities, generated stronger cohesion among the Kollas, and better integration between the Kolla traditional institutions and local government is expected in the project evaluation results. For the DiaguitalCalchaqui/Quilmes pilot area (Amaicha del Valle, Tucuman Province) the expected results will be a self-developed, integrated cultural and natural resource strategy based on the management of pre-Hispanic archaeological places for cultural tourism purposes, for the purposes of generation of income and the rescue of traditional cultural identity, combined with services and rational use of communal water resources and subsistence productive activities. - 19-  A participatory social assessment process started during preparation will continue during implementation. It will be conducted by community-based organizations to identify social issues, conflict management mechanisms and potentially equitable solutions. Major social issues already identified center on equity among factions of the community and enhancing the opportunities for women and youth to reverse current out-migration pattems and consolidate communities around shared development activities. The transparent allocation of project development resources in relation to the solutions agreed through consensus by beneficiaries regarding equity, women and youth is expected to contribute significantly to building solidarity, mutual trust and social capital in each indigenous groups. Project Component 3 - US$ 1.43 million Project Management This component will have the following sub-components: 1. Project administration 2. Monitoring and evaluation 3. Communications and dissemination Project administration support includes incremental costs of a Project Management Unit (PMU) to be created in INAI consisting of the Director of INAI, three INAI technicians, and necessary administrative personnel. A Sub projects Committee to review and approve expenditures above a threshold will be established on an as needed basis. The PMU will be responsible for overall coordination, monitoring, mid-term review, evaluation and reporting. Local Management Units (LMU) will be created in each of the three pilot areas by INAI, consisting of a Project Manager/Administrator and a Secretary/Accountant. In addition, a series of Technical Advisers will be hired for short-term assignments to work with the Technical Group (TG) in the LMU on project implementation as well as supporting the monitoring and reporting functions of the LMU to PMU. Terms of Reference for the LMU and the Technical Advisers will be specified in the operations manual for each Indigenous Community Pilot Area. The project will also finance the incremental equipment needs for the LMU function, including vehicles, computers, and accounting and planning software for each of the three areas. As needed INAI will provide administrative support from counterpart resources from its headquarters staff under the administrative responsibility of the Director. Each pilot zone LMU will contract short-term consultants to serve as a Technical Group (TG) to support the design, implementation and evaluation of specific development sub projects The project will finance equipment for the TG function, including computers, telephone, fax, photocopier, etc. The TG will also generate primary data for the monitoring and reporting requirements of INAI, as well as for capacity building of community leaders and representatives in carrying out these functions. The project will foster training workshops, encounters among stakeholders, meetings among clusters of beneficiaries to incorporate them in program activities as well as open community meetings at which LMU quarterly monitoring reports are presented and discussed prior to their submission to the PMU. The project will also finance a mid-term review among all stakeholders to identify lessons learned and make adjustments to the strategies of each protected area as needed Independent contractors will carry out an end-of-project Development Impact Assessment. While the project management (monitoring) function will focus mainly on performance indicators, the concurrent evaluation will be designed to focus upon results on the ground as measured by outcome indicators and reviewed with the community. The indicators may include accumulation of assets, rising social cohesion, initiation of new credit relationships by producers, purchase agreements with private sector buyers, innovation of productive activities, adoption of conflict management and consensus building mechanisms, - 20 -  etc. The evaluation will assess the viability of the models established for the three pilot indigenous areas for the purpose of scaling up by INAI to other regions and indigenous communities. An active communications and dissemination program will be supported as part of this component. Using the appropriate media (radio, printed materials, audiovisuals), the program will keep the indigenous communities and other stakeholders informed about the project. It will reproduce and distribute results of the studies undertaken during the life of the project, the lessons leamed, and the advances made in the implementation process. - 21 -  Annex 3: Estimated Project Costs ARGENTINA: INDIGENOUS COMMUNITY DEVELOPMENT LIL Local Foreign Total Project Cost By Component US $million US $million US $million 1. Social and Cultural Strengthening of Indigenous 1.20 0.40 1.60 Communities 0.00 2. Sustainable Use of Natural Resources 1.40 0.80 2.20 0.00 0.00 3. Project Management 1.10 0.33 1.43 Total Baseline Cost 3.70 1.53 5.23 Physical Contingencies 0.00 0.00 0.00 Price Contingencies 0.60 0.00 0.60 Total Project Costs 4.30 1.53 5.83 Front-end fee 0.05 0.05 Total Financing Required 4.30 1.58 5.88 -22 -  Annex 4: Cost Benefit Analysis Summary ARGENTINA: INDIGENOUS COMMUNITY DEVELOPMENT LIL NA Summary of Benefits and Costs: NA Main Assumptions: NA Sensitivity analysis / Switching values of critical items: NA -23 -  Annex 5: Financial Summary ARGENTINA: INDIGENOUS COMMUNITY DEVELOPMENT LIL Not applicable -24 -  Annex 6: Procurement and Disbursement Arrangements ARGENTINA: INDIGENOUS COMMUNITY DEVELOPMENT LIL Procurement A. General All procurement of goods under the Project would be carried out in accordance with the "Guidelines, Procurement under IBRD Loans and IDA Credits " dated January 1995 and revised in January and August 1996, September 1997, and January 1999. Consultants would be employed in accordance with the Guidelines, Selection and Employment of Consultants by World Bank Borrowers, dated January 1997 and revised in September 1997 and January 1999, and the provisions stipulated in the Loan Agreement Procurement methods: The methods to be used for procurement are described below and the estimated amounts for each method, are summarized in Table A. The thresholds contract values for the use of each method are established in Table B. B. Procurement Responsibilities and Capacity Procurement for the Project would be the responsibility of a Project Management Unit (PMU) established within National Institute for Indigenous Affairs (INAI-Instituto Nacional de Asuntos Indigenas). The PMU will receive financial and procurement management support from Financial Management Unit of the Ministry of Social Development and the Environment (UCAF), which is currently handling another Bank-financed project (AR 4398 - Social Protection IV). A procurement capacity assessment of UCAF was carried out by Andres Mac Gaul, Procurement Specialist, LCOPR, and was approved by the Regional Procurement Advisor's Office on June 2, 2000. The "Overall Procurement Risk" was assessed as "high". The assessment determined that the UCAF's capacity to carry out procurement is not adequate due to its lack of experience on Bank procurement, particularly in respect of goods and consulting services. On the other hand, UCAF's information and office equipment, support staff, and record keeping system are overall adequate, although the latter should be improved. To handle the risks and to strengthen the PMU's capacity the action plan that follows was agreed on: 1 . Before October 31, 2000, a Procurement Specialist acceptable to the Bank should be appointed by the PMU. This consultant will help draft the project OM (Operational Manual) and carry out procurement work on an "on call" basis. At least, the consultant should assist the PMU -preferably within UCAF- in preparing standard documents and in handling all the procurement subject to prior review by the Bank, with exception of the contracts to be used for the hiring of individuals. In this case, the model of contract in use in the Social Protection IV Project can be used, since the Bank has already reviewed it. 2. Before LIL effectiveness the OM of the Project should be approved by the Bank and adopted by the Borrower. The OM should detail -inter alia- procedures on record keeping, including specifics on logging and filing correspondence. Local communities, which will be beneficiaries of the grants, are represented by Indigenous Organizations -25 -  with legal personality, and basic political and administrative structures. Most of these organizations have participated in previous development projects sponsored by Provincial Governments and NGOs and jointly administered grants ranging from US$ 30,000 to 40,000. However, these Indigenous Organizations have only recently been established as structured communities. Consequently, they have little experience in financial and administrative matters, including procurement. Most of them have only very basic accounting notions and systems. Only one of the organizations currently holds a checking account and only few have any office equipment or adequate space where to establish administrative offices. The communities' participation in the process would be facilitated by Local Management Units (LMIJs) reporting to the PMU. LMUs would comprise elected representatives of the communities and technical/administrative staff whose appointment would be cleared by the PMU to ensure that they are qualified and the selection process is transparent. The LMUs would be responsible for making procurement decisions, maintaining accurate procurement records for the sub projects administering the contracts jointly with the beneficiary communities, and monitoring implementation. Consequently, grant beneficiaries, officially represented by the Indigenous Organizations, would be actively involved in procurement for the sub projects by participating in procurement planning, selection of supplier/contractors through shopping procedures, and selection of individual consultants, where these methods are appropriate. Contracts to be awarded on the basis of NCB and contracts with consulting firms, if any, would be procured by UCAF. The LMUs would carry out their responsibilities under the supervision of and with technical assistance from the PMU. The PMU, with financial management support from UCAF would be solely responsible for managing the project account and making payments in tranches at the beneficiary's request and based on work completed. The details of this assistance would be included in the Project Operational Manual. T'he last CPAR for Argentina indicates that some of the requirements of domestic procurement legislation are not in accordance with Bank procurement policy and procedures. Consequently, the following Special Provisions should be included in the Loan Agreement: 1. The results of bid evaluations shall remain confidential until award of contracts. After award, the PMU/UCAF may disclose upon request to a bidder information relating to its own bid, and upon request by any bidder, a summary of the evaluation and comparison of bids may be disclosed. 2. Time for bid preparation shall not be less than 10 days in the case of shopping, and 30 days in the case of NCB, respectively. 3. Promissory notes issued by bidders or checks issued by local banks shall not be an acceptable form of bid or performance securities. 4. The price of bidding documents shall reflect the cost of reproducing and mailing the documents and not be related to the estimated cost of the contract. 5. The standard technical specifications for office technology issued by the Secretariat of the Public Function shall not be used for the purchase of office equipment financed by the loan. C. Procurement Arrangements 1. Procurement of Works No procurement of Works is anticipated under the project. - 26 -  2. Procurement of Goods The Project would finance several small contract packages for the purchase of vehicles, computers and software, and miscellaneous office equipment for the operational needs of the PMU and the LMUs estimated to cost a total amount of US$280,000 equivalent. Contracts estimated to cost less than US$100,000 equivalent up to an aggregate amount of US$280,000 equivalent, may be procured following shopping procedures in accordance with paragraphs 3.5 and 3.6 of the Guidelines. Shopping procedures, including a standard invitation to submit quotations, would be agreed before the first invitation is issued. 3. Consultant Services The loan would finance technical assistance, studies and capacity building. Consulting services would be required to strengthen the capacity of INAI and indigenous organizations to carry out legal and regulatory actions related to the project, including conflict resolution related to the establishment of the Indigenous Protected Areas and assistance to complete the registration of property rights. Capacity building would include self-development and promotion of activities related to the indigenous communities' traditional culture. Firms Contracts with firms, if any, would be awarded following a Quality and Cost Based Selection process, in accordance with Section II of the Consultant Guidelines. For contracts costing $ 100,000 or less selection may be on the basis of Least Cost Selection method. Contracts for specialized advisory services for indigenous communities costing $ 50,000 or less may be awarded on the basis of Consultant's Qualifications. Individuals Specialized advisory services for project administration and monitoring that do not require of a team effort may be contracted with individuals up to an aggregate amount of $420,000. The Individual consultants would be selected on a competitive basis in accordance Section V of the Consultants Guidelines. As a minimum, individuals would be recruited by comparison of qualifications of at least three qualified candidates. The process followed to select individual consultants shall be described in detail in the Operational Manual. 4. Sub projects Grants for an aggregate amount of US$2,430,000 equivalent would be awarded for the social and cultural strengthening of indigenous communities. Sub-project eligibility and selection criteria agreed with the Bank would be detailed in the Operational Manual. Procurement of goods and contracting of consulting services by the communities shall be carried out on the basis of competitive procedures similar to those used for procurement by UCAF. The OM shall detail those procedures. In addition to their participation in the LMUs, communities would be involved in making decisions affecting the Project through their representatives in the Advisory Council responsible for ensuring the active participation of the communities in the process and supervising the overall progress in meeting - 27 -  Project objectives. The Project would also finance technical assistance to further assess internal decisional processes, organizational and administrative/financial capacity of the Indigenous Organization, analyze lessons learned from their previous and current involvement in implementing sub projects and develop simple standard contracting and conflict resolution methodologies, technical specifications, manuals and procedures for transportation and maintenance of basic goods and equipment. Technical assistance and training for capacity building would aim at strengthening the indigenous organizations' procurement and financial management capacity to make sure that by the end of the Project they are capable to carry out procurement independently and have adequate financial management and reporting capabilities. A specific joint action plan to build the organizations' and the communities' administrative capacity would be also included in the agreements concluded by the PMU and each of the Provinces in which these are located. 5. Prior Review The review of procurement actions by the Bank is presented in Table B. Due to their relatively small value and large number, only a few contracts would be subject to prior-review by the Bank. Thus, procurement review is expected to primarily be carried out during supervision, as described below. An OM would be prepared and adopted by the PMU prior to loan effectiveness to ensure acceptable procedures for procurement, accounting, disbursement and auditing, as agreed for all IBRD operations, and provide proper guidance for the project specific operations, including relations with the LMUJs, the Provincial Governments and beneficiaries of the grants. The OM will also be updated to include specific operating and control mechanisms agreed under the financial and physical monitoring system. 6. Procurement Supervision Procurement supervision missions should be carried out every six months by a Procurement Specialist (PS) or Procurement Accredited Staff (PAS) and include a review of: (i) the PMU's capacity; (ii) the procurement plan for the project, including a timetable for procurement actions anticipated during the next 12 months; (iii) the PMU's monitoring system; and (iv) complete records for one in every five contracts (for goods, works, and consulting services, respectively). The PS or PAS should perform selected physical inspections of the goods received and meet with selected suppliers/contractors, whenever possible. During the mission the PS or PAS will discuss with PMIJ staff procurement for the project as well as under the grants, including the respective procurement plans prepared by the LMUs. In addition, the PS or PAS will visit at least one LMU each time to review their capacity and examine the files of selected contracts for each type of procurement. In addition, the Bank shall commission an independent procurement audit by mid-term. - 28 -  Procurement methods (Table A) Table A: Project Costs by Procurement Arrangements (US$ million equivalent) Procurement Method Expenditure Category ICB NCB Other2 N.B.F. Total Cost 1. Works 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 2. Goods 0.00 0.00 0.28 0.00 0.28 (0.00) (0.00) (0.20) (0.00) (0.20) 3. Services 0.00 0.00 0.82 0.00 0.82 (Consulting Services) (0.00) (0.00) (0.80) (0.00) (0.80) 4. Community Sub Projects 0.00 0.00 2.93 0.00 2.93 (0.00) (0.00) (2.43) (0.00) (2.43) 5. Front-end fee 0.00 0.00 0.05 0.00 0.05 (0.00) (0.00) (0.05) (0.00) (0.05) Training 0.00 0.00 0.77 0.00 0.77 (0.00) (0.00) (0.71) (0.00) (0.71) Operating and Unallocated 0.00 0.00 1.03 0.00 1.03 Costs 31 (0.00) (0.00) (0.81) (0.00) (0.81) Total 0.00 0.00 5.88 0.00 5.88 ___________________________ (0.00) (0.00) (5.00) (0.00) (5.00) " Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies Includes shopping, consulting services, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) on-lending to communities. 3/ Operating $370 (250) and Unallocated Costs $660 (560) have been added in the table due to format limitations. -29 -  Table Al: Consultant Selection Arrangements (optional) (US$ million equivalent) Consultant Selection Method Services Expenditure QCBS QBS SFB LCS CQ Other N.B.F. Total Cost Category A. Firms 0.10 0.00 0.00 0.30 0.00 0.00 0.00 0.40 (0. 1 0) (0.00) (0.00) (0.30) (0.00) (0.00) (0.00) (0.40) B. Individuals 0.00 0.00 0.00 0.00 0.42 0.00 0.00 0.42 (0.00) (0.00) (0.00) (0.00) (0.40) (0.00) (0.00) (0.40) Total 0.10 0.00 0.00 0.30 0.42 0.00 0.00 0.82 (0.10) (0.00) (0.00) (0.30) (0.40) (0.00) (0.00) (0.80) 1\ Including contingencies Note: QCBS = Quality- and Cost-Based Selection QBS Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultants Guidelines), Commercial Practices, etc. N.B.F. = Not Bank-financed Figures in parenthesis are the amounts to be financed by the Bank Loan. - 30 -  Prior review thresholds (Table B) Table B: Thresholds for Procurement Methods and Prior Review' Contract Value Contracts Subject to Threshold Procurement Prior Review Expenditure Category (US$ thousands) Method (US$ millions) 1. Works 2. Goods <100,000 Shopping First 3 contracts; approx. $75,000 3. Services Firms >100,000 QCBS All >50,000 LCS First three <50,000 CQ Nil Individuals >50,000 Guidelines, Section V All Total value of contracts subject to prior review: $ 1,000,000 Overall Procurement Risk Assessment High Frequency of procurement supervision missions proposed: One every 6 months (includes special procurement supervision for post-review/audits) A procurement audit shall be carried out at mid term. 1Thresholds generally differ by country and project. Consult OD 11.04 "Review of Procurement Documentation" and contact the Regional Procurement Adviser for guidance. - 31 -  Disbursement Allocation of loan proceeds (Table C) A financial management assessment was carried out by Susana Cirigliano (LCCOA) in May 2000 and found that the implementing agency currently satisfies the Bank's minimum financial requirements and meets the conditions stated in Annex 4-B of the LACI Implementation Handbook. An action plan and timetable has been agreed to remedy some inadequacies identified and is enclosed to the certificate. Table C: Allocation of Loan Proceeds Expenditure Category Amount in US$million Financing Percentage Goods 0.20 70% Consulting Services 0.80 100% Sub-projects 2.43 80% Training 0.71 90% Operating Costs 0.25 100% the first $125,000, 60% the next $80,000 and 40% the rest. Unallocated 0.56 Total Project Costs 4.95 Front-end fee 0.05 100% Total 5.00 - 32 -  Annex 7: Project Processing Schedule ARGENTINA: INDIGENOUS COMMUNITY DEVELOPMENT LIL Project Schedule Planned Actual Time taken to prepare the project (months) 5 16 First Bank mission (identification) 11/16/98 11/16/98 Appraisal mission departure 04/10/2000 04/24/2000 Negotiations 04/15/2000 05/05/2000 Planned Date of Effectiveness 10/01/2000 Prepared by: Jorge E. Uquillas Preparation assistance: Karen Ravenelle Bank staff who worked on the project included: Name Speciality Jorge E. Uquillas, Task Manager Senior Sociologist, LCSES Sandra Cesilini, Co-Task Manager Civil Society/Social Development, LCC7C Maria Clara Mejia Social Scientist William Partridge Principal Anthropologist Susana Cirigliano Country Financial Management, LCC7C David Varela Counsel, LEGLA Andres Mac Gaul Country Procurement, LCC7C Soren Gigler Consultant, LCSES Karen Ravenelle Project Assistant, LCSES Kevin Healy Peer Reviewer Robert Crown Project Design Filemon Torres Natural Resource Management Enzo de Laurentis Procurement, LCSES Teresa Genta-Font Counsel, LEGLA Jorge Nahuel Indigenous Consultant (Mapuche) Manuel Galvarino Cafulqueo Indigenous Consultant (Mapuche) Luis Alberto Pastrana Indigenous Consultant (Diaguita) Juan Santiago Santos Indigenous Consultant (Quilmes) Egidios Ramos Indigenous Consultant (Kolla) Ruben Vargas Indigenous Consultant (Kolla) - 33 -  Annex 8: Documents in the Project File* ARGENTINA: INDIGENOUS COMMUNITY DEVELOPMENT LIL A. Project Implementation Plan 1. Draft Project Implementation Plan. Submitted in March 2000. B. Bank Staff Assessments 1. Problemas y Oportunidades para el Fortalecimiento y Desarrollo de Aspectos de Comunidades Diaguitas de los Valles Calchaquies Tucumanos. Aspectos Ambientales y Sociales. Filemon Torres, Beatriz Cachero. Enero 1999. (Spanish) 2. Problemas y Oportunidades para el Fortalecimiento y Desarrollo de Aspectos de Comunidades Kolla en Yungas/Pre-Puna de Finca Santiago en Salta. Aspectos Ambientales y Sociales. Filemon Torres, Beatriz Cachero. Febrero 1999. (Spanish) 3. Problemas y Oportunidades para el Fortalecimiento y Desarrollo de Aspectos de Comunidades Mapuche en los Bosques Andino-Patagonicos. Aspectos Ambientales y Sociales. Filemon Torres, Beatriz Cachero. Marzo 1999. (Spanish) 4. Evaluaci6n Social. Maria Clara Mejia. Marzo 2000. (Spanish with an English Executive Summary) 5. Assessment of the Agency's Capacity to Implement Project Procurement; Setting of Prior Review Thresholds; Procurement Supervision Plan. Andres Mac Gaul. June 2000. C. Other 1. INAI: Concepto Legal: Posibilidad de establecer Areas Indigenas Protegidas en las Provincias donde habitan las Comunidades: Salta, Tucumdn y Neuquen y la situaci6n de las Comunidades en relaci6n a la propiedad de las Tierras. Viviana Canet / Luis Zapiola. Subdirecci6n Area de Personeria Juridica y Tierras. Agosto de 1999. 2. INAI: Proyecto de Desarrollo Sustentable de las Comunidades Indigenas. Mayo 2000. (Spanish) 2. Technical Documents 1. API/PSA, 1999. Asociaci6n para la Promoci6n Integral y Programa Social Agropecuario: C. Redin y M. Ezcurra, Comunicacion personal. 2. Bendini, M. Y P. Tsakoumagos, 1993. Campesinadoy Ganaderia Transhumante en Neuquen. Universidad Nacional del Coma/ue - La Cohlnena 3. Bianchi, A. R. Y C. Yaniez, 1992. Las precipitaciones en el noroeste Argentino. INTA. 4. Brown, A. D. 1995. Las Selvas de Montana del Noroeste Argentino: problemas ambientales e importancia de su conservaci6n. En Investigaci6n, Conservaci6n y Desarrollo en Selvas Subtropicales de Montania, Ed. por Brown, A.D. y H.R. Grau, Laboratorio de Investigaciones Ecol6gicas de las Yungas - 34 -  (LIEY), Facultad de Ciencias Naturales e Instituto Miguel Lillo. Universidad Nacional de Tucuman. 5. Brown, A. D., y H. R. Grau, 1993. La Naturaleza y el Hombre en las Selvas de Montana. Colecci6n Nuestros Sistemas. Proyecto GTZ - Desarrollo Agroforestal en Comunidades Rurales del Noroeste Argentino. 6. Burkart, R. et. al., 1994. El Sistema Nacional de Areas Naturales Protegidas de la Argentina: diagn6stico de supatrimonio naturaly su desarrollo institucional. Administraci6n de Parques Nacionales. Enero. 7. CIP, 1998. Pulmari y su estrategia de desarrollo de cara al nuevo milenio. Espacio de Publicidad en el Diario Rio Negro del 29/6/1998 8. Chauky, F., 1999. Comunicaci6n personal (Dirigente CK-FS) 9. COM-N, 1997. Pulmari - Territorio Indigena Protegido. Coordinaci6n de Organizaciones Mapuche - Nequen. Mimeo. 10. COPADE, 1985. Propuesta para el Desarrollo del Establecimiento Pulmari y su Area de Influencia. Consejo Provincial de Planificaci6n y Acci6n para el Desarrollo. Documento Interno. 11. CMN, 1996. Pulmari - Demanda de Reparaci6n TerritoriaL Confederaci6n Mapuche Neuquina. Documento. 12. Corcuera, J., La Selva Misteriosa Buenos Aires, 1997. 13. DGT, 1997. Origen y Situaci6n Actual de la Corporaci6n Interestadual Pulmari. Direcci6n General de Tierras de la Secretaria de Estado de Producci6n y Turismo. Documento del 5/2/97 14. EEAOC, 1996. Desarrollo Agricola de los Valles Calchaquies Tucumanos, Etapa I. Estaci6n Experimental Agropecuaria Obispo, Colombres. Septiembre. 15. Frites, E., 1999. Comunicacion Personal (Abogado, CK-FS) 16. Grau, A. y Gonzales Lelong, A., 1997. Desarrollo Agricola de los Valles Calchaquies Tucumanos, Etapa 1. EEAOC, Septiembre. 17. Grupo Bristol, 1992. Relevamiento Forestal y Biol6gico del Area de Pulmari. Septiembre. 18. INAI, 1994-99. Relevamientos e Informes realizados por las Areas de Proyectos de Desarrollo y Asuntos Juridicos del INAI en las Comunidades del.Area de Alumine. Instituto Nacional de Asuntos Indigenas. 19. INTA, Evaluacion de los Recursos Naturales Renovables del Area Pulmari y Recomendaciones Orientativas para su Aprovechamiento Sustentable. Bariloche, Julio 1999. 20. Isla, A. R., 1996. Identidady Estructura Social en los Valles Calchaquies, Tucumanos: el Caso de Amaicha del Valle. Tesis de Disertaci6n para el Grado de Doctor. Facultad de Filosofia y Letras, - 35 -  Universidad de Buenos Aires. 21. Martinez Sarasola, C., 1992. Nuestros Paisanos Los Indios. EMECE. 22. Mejia, Maria Clara, 2000. Argentina: Proyecto de Desarrollo Indigena y Proteccidn de la Biodiversidad--Comunidades Mapuche, Diaguita/Calchaqui- Quilmes, Kolla. 23. Moscatelli, G. et. al., 1990. Atlas de Suelos de la Repuzblica Argentina; escalas 1:500.000 y 1:1.000.000 - INTA. 24. Perea, M. C., 1995. Mapa de Vegetaci6n del Valle del Santa Maria, sector Oriental (TucumAn, Argentina). Lilloa, XXXVIII (2): 121-132. 25. Proyecto ARG/G31/96. Estrategia Nacional de Biodiversidad. Taller Nacional: Documento base para la discusi6n. Marzo 1998. 26. Rabinovich, J., 1999. Environment and Economics from the Perspective of the South. In Managing Human-Dominated Ecosystems, (Ed) by P.H. Raven and G. Chichilnisky. Island Press (sent for publication) 27. Radovich, J.C. y A. Balazote, 1992. La Problematica Indigena: estudios antropol6gicos sobre pueblos indigenas de las Argentina CEAL - Buenos Aires 28. Reboratti, C. 1998. El Alto Bermejo: Realidades y Conflictos. La Colmena. 29. Redin. C., 1999. Comunicaci6n Personal (API, Tilcara) 30. Soriano, A. y J.M. Paruelo, 1990. El Pastoreo Ovino: principios ecol6gicos para el manejo de campos. Ciencia Hoy (2): 44-53 31. Tiscornia, L., 1998. Propuesta para el Uso, Aprovechamiento y Manejo Integral de los Campos de Pulmariy Comunidades Indigenas Aigo, Salazar, Puel, Catalan, Norquinco y Currumil. Informe preliminar. 32. Tiscornia, L., 1999. Comunicaci6n personal. 33. Tres Puntos, 1999. Patagonia en blancoy negro. En la revista del 27/1/99. 34. UNIR, 1994. Investigaci6n Demografica y Socioecon6mica en Comunidades del Valle Calchaqui que Integran el Proyecto UNIR: Partes I y II. Proyecto UNIR, Universidad Nacional de Tucuman. Septiembre. 35. Universidad Nacional del Comahue, Facultad de Ciencias Agrarias. Informe Final. Propuesta para el Uso, Aprovechamiento y Manejo Integral de los Campos de Pulmari y Comunidades Indigenas, Aigo, Salazar, Currumil, Cataldn, Puel y Norquinco. Volumenes I & 2. Rio Negro, Agosto 1999. *Including electronic files - 36 -  Annex 9: Statement of Loans and Credits ARGENTINA: INDIGENOUS COMMUNITY DEVELOPMENT LIL Difference between expected and actual Original Amount in US$ Millions disbursements Project ID FY Borrower Purpose IBRD IDA Cancel. Undisb. Orig Frm Rev'd P043418 1997 Argentina AR-AIDSANDSTDCONTROL 15.00 0.00 000 3.50 2.77 0.00 P058526 1999 Argentina AR-DRUG PREVENTION (LIL) 4.75 0.00 0 00 4 70 2.21 0.00 P063388 2000 Argentina AR-HEALTH INSURANCE FOR THE UNINSURED 4.90 0.00 0.00 4.90 1.40 0.00 P045687 1996 Argentina AR-HEALTH INSURANCE TA 25.00 0.00 0.00 0.85 0.85 0.00 P034091 1996 Argentina AR-HIGHER ED. REFORM 165.00 0.00 0 00 76.54 76 54 2.20 P006059 1997 Argentina AR-MATERNAL & CHILD HLTH & NUTRITION 2 100.00 0.00 0.00 59.08 0.08 0.00 P006030 1996 Argentina AR-PROV. HEALTH SECTOR DEVELOPMENT 101.40 0.00 0.00 47.98 45.68 0.00 P055482 2000 Argentina AR-PUB. HLTH. SURV. & DISEASE CONTROL 52.50 0.00 0.00 52.50 6.83 0.00 P005992 1995 Argentina AR-SECONDARY ED 1 190.00 0.00 21.31 31.02 52.32 32 32 P006057 1996 Argentina AR-SECONDARY ED.2 115.50 0.00 0.00 68.17 6011 0.00 P050714 1998 Argentina AR-SECONDARYEDUCATION3 119.00 0.00 0.00 31.08 2942 000 P049269 1998 Argentina AR-SOCIAL PROTECTION 3 284.00 0.00 0.00 72.28 72.28 0.00 P006058 1999 Argentina AR-SOCIALPROTECTION4 9075 0.00 0.00 75.51 10.54 0.00 P057449 . 1999 Argentina ARG YEAR 2000 30.30 0.00 0.00 26.61 21.61 0.00 P03958i4 1997 Argentina B.A.URB.TSP 200.00 0.00 0.00 141.49 69.83 0.00 P055935 1998 Argentna ELNINOEMERGENCY 42.00 0.00 0.00 32.88 32.88 1555 P006052 1997 Argentina FLOOD PROTECTION 200.00 0.00 0.00 165.33 98.67 35.00 P006040 1996 Argentina FORESTRYIDV 16.00 0.00 0.00 8.57 3.81 0 00 P006055 1996 Argentina MINING SCTR DEVT 30.00 0.00 0.00 1.82 0.52 0 00 P055477 1998 Argentina MININGTA 39.50 0.00 0.00 13.84 13.84 0.00 P050713 1998 Argentina MODEL COURT DEV. 5.00 0.00 0.00 4.15 345 0.00 P006060 1995 Argentina MUNIC DEVT 11 210.00 0.00 0.00 69.92 -51.40 0.00 P040808 1997 Argentina N.FORESTIPROTC 19.50 0.00 0.00 13.46 -1.20 0.00 P052590 1998 Argentina NAT HWY REHAB&MAINT 450.00 000 0.00 271.66 165.92 0.00 P046821 1997 Argentina PENSION TA 20.00 0.00 0.00 8.81 7.97 0.00 P006050 1998 Argentina POLLUTION MGT. 18.00 0.00 0.00 17.58 10.05 0.98 P006010 1997 Argentina PROVAGDEVTI 125.00 0.00 0.00 116.21 30.89 6.27 P006018 1995 Argentina PROV DEVT 11 225.00 0.00 0.00 85.22 -1.12 0.00 P005980 1997 Argentina PROV ROADS 300.00 0.00 0.00 265.05 166.39 0.00 P037049 1996 Argentina PUB.INV.STRENGTHG 16.00 0.00 5.50 7.25 12.75 0.00 P006043 1999 Argentina RENEWENERGYR.MKTS 30.00 0.00 0.00 29.10 3.30 000 P005968 1987 Argentina SEGBAV 276.00 0.00 0.00 32.24 32.24 0.00 P006041 1998 Argentina SMALL FARMER DV. 75.00 0.00 000 42.21 22.19 1788 P055461 1999 Argentina SOC&FISC NTL ID SYS 10.00 0.00 0.00 7.25 4.25 0.00 P062992 1999 Argentina SPEC REPURCHASE 505.05 0.00 0.00 500.00 0.00 0.00 P006046 1999 Argentina WATER SCTR RFRM 30.00 0.00 0.00 30.00 8.34 0.00 P062992 1999 Argentina SPECIAL SAL (SSAL) 2525.30 0.00 250.00 500.00 750.00 500.00 Total: 6665.40 0.00 276.80 2940.70 1752.70 -785.10 - 37 -  ARGENTINA STATEMENT OF IFC's Held and Disbursed Portfolio In Millions US Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1998 AUTCL 6.00 0.00 0.00 0.00 6.00 0.00 0.00 0.00 1994 Aceitera Chabas 0.00 0.00 3.10 0.00 0.00 0.00 3.10 0.00 1994 Aceitera General 7.50 0.00 6.90 0.00 7.50 0.00 6.90 0.00 1960/95/97/99 Acindar 50.00 0.00 0.00 0.00 50.00 0.00 0.00 0.00 1994/95/96 Aguas 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1977/84/86/88/94/96 Alpargatas 10.00 0.00 0.00 40.50 10.00 0.00 0.00 40.50 1999 American Plast 10.00 0.00 0.00 0.00 10.00 0.00 0.00 0.00 1993 Arg Equity Inv. 0.00 2.84 0.00 0.00 0.00 2.84 0.00 0.00 2000 Argentina SMMC 0.00 12.50 0.00 0.00 0.00 0.00 0.00 0.00 1994/99 BGN 0.00 0.00 33.00 0.00 0.00 0.00 33.00 0.00 1989/91/96 Banco Frances 4.10 0.00 0.00 0.00 4.10 0.00 0.00 0.00 1996/99 Banco Galicia 50.00 0.00 0.00 245.00 50.00 0.00 0.00 245.00 1995/97 Banco Roberts 30.00 0.00 0.00 0.00 30.00 0.00 0.00 0.00 1996 Bansud 3.39 0.00 0.00 0.00 3.39 0.00 0.00 0.00 2000 Bco Hipotecario 25.00 0.00 0.00 102.50 25.00 0.00 0.00 102.50 1996 Brahma - ARG 14.93 0.00 0.00 16.50 14.93 0.00 0.00 16.50 1988/93 Bunge y Born 0.53 0.00 0.00 4.01 0.53 0.00 0.00 4.01 1996 CAPSA 9.82 0.00 5.00 27.00 9.82 0.00 5.00 27.00 1999 CCI 0.00 20.00 20.00 0.00 0.00 20.00 6.00 0.00 1995 CEPA 6.67 0.00 3.00 1.20 6.67 0.00 3.00 1.20 2000 Cefas 10.00 0.00 5.00 0.00 0.00 0.00 0.00 0.00 1999 Correo Argentino 63.00 0.00 12.00 0.00 63.00 0.00 12.00 0.00 1994/95 EDENOR 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1998 F.V. S.A. 11.25 0.00 4.00 0.00 11.25 0.00 4.00 0.00 1998 FAID 0.00 2.75 0.00 0.00 0.00 2.75 0.00 0.00 2000 FAPLAC 10.00 0.00 5.00 0.00 10.00 0.00 5.00 0.00 1992 FEPSA 2.75 0.00 2.00 0.00 2.75 0.00 2.00 0.00 1997 FRIAR 10.00 0.00 2.50 7.00 10.00 0.00 2.50 7.00 1996 Grunbaum 6.00 0.00 2.00 3.33 6.00 0.00 2.00 3.33 1997 Guipeba 13.93 0.00 5.00 0.00 13.93 0.00 5.00 0.00 1998 Hospital Privado 9.60 0.00 0.00 0.00 6.50 0.00 0.00 0.00 Huantraico 0.00 17.00 0.00 0.00 0.00 0.00 0.00 0.00 1992 Kleppe/Caldero 6.00 0.00 0.00 0.00 6.00 0.00 0.00 0.00 1995/97 MBA 0.00 0.16 0.00 0.00 0.00 0.16 0.00 0.00 1996 Malteria Pampa 3.50 0.00 1.00 0.00 3.50 0.00 1.00 0.00 1992/93/96 Mastellone 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1995 Milkaut 7.50 0.00 10.00 3.00 7.50 0.00 10.00 3.00 0/97 Minetti 30.00 0.00 14.00 100.00 30.00 0.00 14.00 100.00 1978/81/86/87/91/93/9 Molinos 0.00 1.24 0.00 0.00 0.00 1.24 0.00 0.00 6/99 Nahuelsat 17.50 5.00 0.00 0.00 17.50 5.00 0.00 0.00 1993/94 Nuevo Central 3.13 3.00 0.00 3.75 3.13 3.00 0.00 3.75 1995 Oleaginosa Oeste 2.29 0.00 3.75 0.92 2.29 0.00 3.75 0.92 1993 PAE - Argentine 9.09 0.00 0.00 18.18 9.09 0.00 0.00 18.18 1992 Patagonia 5.00 0.00 1.00 0.00 5.00 0.00 1.00 0.00 1992/95 1998 Total Portfolio: 652.48 117.64 189.25 888.81 632.38 67.72 170.25 888.81 - 38 -  Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic 2000 ALEF 25000.00 0.00 0.00 150000.00 2000 APSF 20000.00 0.00 5000.00 30000.00 1999 American Plast 0.00 0.00 350.00 0.00 2000 Argentina SMMC 100000.00 0.00 0.00 450000.00 1999 Biopork 5200.00 2000.00 0.00 5000.00 2000 CAG Fund 0.00 0.00 10000.00 0.00 1999 DI TELLA 9000.00 0.00 0.00 0.00 1999 Galicia BLINC 0.00 0.00 0.00 75000.00 1998 U.Belgrano 15000.00 0.00 0.00 0.00 1999 Unisoy 5000.00 2000.00 0.00 4000.00 Total Pending Commitment: 179200.00 4000.00 15350.00 714000.00 - 39 -  Annex 10: Country at a Glance ARGENTINA: INDIGENOUS COMMUNITY DEVELOPMENT LIL Latin Upper- POVERTY and SOCIAL America middle- Araentina 8 Carib. income Development diamond 1999 Population, mid-vear (millions) 36.6 509 573 Life expectancy GNP per capita (Atlas method, US$) 7,600 3,840 4.900 GNP (Atlas method, USS billions) 277.9 1,955 2.811 Average annual growth, 1993-99 Population (%) 1.3 1.6 1.4 Labor force (%) 21 2.5 2.1 GNP Gross Most recent estimate (latest year available, 1993-99) capita enrollment Poverty (% of population below national poverty line) 18 Urban population (% of total population) 90 75 76 Life expectancy at birth (years) 73 70 70 Infant mortality (per 1,000 live births) 19 31 27 Child malnutrition (% of children under 5) 2 8 7 Access to safe water Access to improved water source (% of population) 65 75 78 Illiteracv (% of population age 15+) 3 12 10 _ et Gross primary enrollment (% of school-aae population) 111 113 109 Argentia Male 111 .. .. ---Upper-middle-income group Female 111 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1979 1989 1998 1999 Economic ratios' GDP (US$ billions) 69.3 76.6 298.1 282.8 Gross domestic investment/GDP 25.9 15.5 19.9 19.1 Exports of aoods and services/GDP 6.5 13.1 10.4 9.8 Trade Gross domestic savinas/GDP 26.0 22.0 17.4 17.4 Gross national savinas/GDP 25.2 13.6 15.1 14.8 Current account balance/GDP -0.8 -1.7 -4.8 -4.3 'I Interest payments/GDP 1.4 2.0 2.4 2.8 Domestic ment Total debt/GDP 30.2 85.6 47.1 51.2 Savings I Total debt servicelexports 22.7 36.4 52.8 69.6 Present value of debt/GDP .. .. 50.5 .. Present value of debt/exworts .. .. 410.1 Indebtedness 1979-89 1989-99 1998 1999 1999-03 (average annual growth) GDP -0.4 5.0 3.9 -3.1 3.8 -Argentina GNP Per capita -2.4 4.1 2.4 -4.1 2.9 Upper-middle-income group ExPorts of aoods and services 2.5 8.9 10.1 -1.1 4.1 STRUCTURE of the ECONOMY 1979 1989 1998 1999 Growth of investment and GDP %) (% of GOP) 20 Aariculture 7.8 9.6 5.7 4.6 Industr" 44.0 42.3 28.7 28.3 10 Manufacturino 32.7 30.9 19.1 18.2 Services 48.2 48.0 65.6 67.1 1 94 96 97 98 IR Private consumption 63.0 73.5 70.7 69.7 -20 General povernment consumption 11.0 4.5 11.9 12.9 -GDI W GDP Imports of qoods and services 6.3 6.6 12.9 11.5 1979-89 1989-99 1998 1999 Growth of exports and imports (%) (average annual growth) Agriculture 0.5 4.0 10.3 -0.5 30 Industry -1.2 4.6 3.2 -5.1 20 Manufacturino -0.9 3.6 1.6 -6.9 Services 0.5 5.0 4.7 -1.4 1C Private consumption 3.8 12.1 -4.2 oe Ie General aovernment consumption .. 1.3 -1.1 1.2 9496 97 Gross domestic investment -4.6 9.3 6.6 -7.6 -1C -Ex Imports of aoods and services -5.4 19.6 8.4 -11.2 Exports - Imports Gross national product -1.0 5.4 3.5 -3.3 Note: 1999 data are preliminary estimates. The diamonds show four kev indicators in the countrv (in bold) compared with its income-proup averaae. If data are missina. the diamond will be incomplete. -40 -  Argentina PRICES and GOVERNMENT FINANCE 1979 1989 1998 1999 Inflation (%) Domestic pnlces (% change) 15 Consumer prices 159.5 3,066.3 0.9 -2.2 1i Implicit GDP deflator 147.4 3,057.6 -2.0 -2.2 Government finance (% of GDP, includes current grants) 9 9 Current revenue 8.0 15.5 18.8 19.3 -5 Current budget balance 3.7 -3.5 -0.3 -1.5 -GDP deflator -CPI Overall surplus/deficit -1.4 -6.3 -1.4 -1.7 TRADE (US$ millions) 11979 1989 1998 1999 Export and Import levels (USS mill.) Total exports (fob) .. 9,656 26,441 23,315 35000 Food .. 1,016 3,056 2,428 . . Meat .. 716 836 653 Manufactures .. 3,186 17,387 15,082 21.000 Total imports (cif) 4,230 31,404 25,538 4.1) Food .. . . 466 Fuel and energy .. 389 852 674 Capital goods .. 1,450 15,649 11,909 0 Export price index (1995=100) .. .. 92 8o Import price index (1995=100) .. .. 92 85 U Exports * Imports Terms of trade (1995=100) .. .. 101 94 BALANCE of PAYMENTS (USS millions) 1979 1989 1998 1999 Current account balance to GDP (%) Exportsofgoodsandservices 9,176 11,759 31,123 27,758 0 Imports of goods and services 8,773 6,254 38,568 32,557 Resource balance 403 5,505 -7,445 -4,799 - Net income -973 -6,818 -7,335 -7,847 Net current transfers 26 8 388 394 Current account balance -544 -1,305 -14,392 -12,252 t Financing items (net) .. 107 10,954 11,051 Changes in net reserves .. 1,198 3,438 1,201 41 Memo: Reserves including gold (US$ millions) . 10,814 24,906 26,407 Conversion rate (DEC, locallUS$) 2.79E-8 4.23E-2 1.0 1.0 EXTERNAL DEBT and RESOURCE FLOWS 1979 1989 1998 1999 (US$ millions) Composition of 1998 debt (USS mill.) Total debt outstanding and disbursed 20,942 65,618 140,489 144,657 IBRD 367 2,281 7,417 8,591 A: 7,417 IDA 0 0 0 0 c 5,442 G: 30,956 D0:1.705 Total debt service 2,251 4,385 19,690 23,571 | : 0,ss6 E:7,400 IBRD 59 417 725 998 IDA 0 0 0 0 Composition of net resource flows Official grants -2 54 31 6 Official creditors 233 660 2,072 1,538 Private creditors 4,334 -732 9,527 2,882 Foreign direct investment 206 1,028 6,150 11,120 Portfolio equity 0 8 50 -2,093 F: 87.569 World Bank program Commitments 96 35 3,815 132 |A-IBRD E-Bilateral Disbursements 39 316 2,029 1,573 | B-IDA D - Other mulbilateral F - Pnvate Prncipal repayments 24 221 350 445 c - IMF G - Short4enem Netflows 15 96 1,678 1,128 Interest payments 36 196 375 553 Net transfers -21 -101 1,304 575 Development Economics 9/12100 -41 -  Additional Annex No.: 11 Social Assessment Introduction In 1997 the World Bank approved an Institutional Development Fund (IDF) grant requested by the Government of Argentina (GoA) to strengthen the participation of indigenous community organizations in the identification, design and implementation of socioeconomic development processes compatible with indigenous cultures. Through a series of local, regional and national capacity building workshops, which engaged indigenous communities, local government institutions, non-governmental organizations and national institutions such as the Secretariat of Social Development and Environment (SSDE) the National Institute for Indigenous Affairs (INAI), the present proposed project was identified. The development priorities that emerged from this exercise, proposed by the indigenous communities and endorsed by the GoA, are focused upon the creation of Indigenous Pilot Areas (IPA). The concept, which is an important innovation for Argentina, entails several key principles: * improve the quality of life of indigenous communities by promoting traditional cultural knowledge and practices of sustainable use of natural resources; * foster socioeconomic development investments that resolve present constraints and lessen human pressure on natural resources; * empower local indigenous communities to participate in the co-management of the resources upon which they depend for survival. Due to the fact that the current legal framework for establishing Indigenous Pilot Areas requires new developments, high level negotiations and reforms, in 1999, the World Bank decided to modify the approach and formulate a more traditional indigenous development project aimed at both supporting local development initiatives and biodiversity protection in three selected indigenous areas. However, the establishment of TPA was kept as an strategic objective which first steps are to be achieved during implementation of the current project. Indigenous leaders (especially Mapuches) expect that the project will take the necessary stands to make possible the establishment and operation of IPA. Both indigenous and non-indigenous organizations and institutions agree that a Learning and Innovation Loan (LIL) is the most appropriate instrument for Bank support of this new approach to indigenous community development and biodiversity protection. This is because all of the parties feel the need to learn from the experience of testing a promising but unfamiliar development strategy. The GoA has requested this LIL to pilot the new approach in three regions of the country before attempting to scale it up to the broader Argentine context. The proposed project will support three pilot operations in regions where indigenous communities have obtained collective title to their lands or are in the final stage of securing State recognition of their ancestral tenure rights. The three indigenous territories are * Mapuche territory of Pulmari in Neuquen Province; * Daiguita-Calchaqui and Quilmes territory of Amaicha del Valle in Tucumain Province; - 42 -  * Kolla territory of Finca Santiago in Salta Province. 1. Methodology of the Social Assessment The Social Assessment carried out during project preparation was the vehicle through which the three indigenous communities participated directly in defining project objectives, designing components, formulating implementation arrangements and structuring management procedures. Additionally, the technical content of the Social Assessment, including historical information, socioeconomic analysis, environmental analysis, and institutional analysis, are the product of this participatory approach. (The extended Spanish version of the Social Assessment is listed in the project files.) Eight indigenous consultants were responsible for assisting INAI professional staff and the Bank in the major aspects of project preparation. The indigenous consultants convened community meetings to discuss sustainable development options, collected data, recommended courses of action, participated in decision making and served as liaisons between the indigenous communities and the INAI-Bank team. All project documents, including Terms of Reference, Reports, Aide Memoires, and the Project Appraisal Document (PAD) in draft, were translated into Spanish (the common language spoken by the consultants) and made available for discussion in the three pilot communities. In addition to the eight indigenous consultants, the World Bank hired an international and two national consultants, specialists on social and indigenous development and on agriculture and natural resources management. The information and results presented in this document are the result of the interdisciplinary and inter-ethnic group. While the project idea was originally presented to the GoA and the Bank by indigenous organizations, the approval and active support of traditional leaders of the communities is a vital element. Consultations were held with traditional authorities in each community, including the six Lonkos (maximum authority) and the Werken (religious leaders) of the Mapuche settlements of Pulmari; the leaders of the Confederation of Mapuche Organizations in Neuqudn; the Kolla Council of Finca Santiago (maximum authority) representing the four Ayllus (clans/settlements) of Finca Santiago; the Executive Community Council of Amaicha del Valle, maximum authority of the Diaguita/Calchaqui, and the Council of the Indigenous Community of Quilmes. While these institutions have approved the PAD in draft, final consultations regarding technical details and operational arrangements with indigenous leaders are still to be sought during project appraisal. 2. Beneficiary Communities: Historical Context and Situation Today Mapuche Community of Pulmari There are six communities settled in a territory of 112,900 hectares administered by the Pulmari Interstate Corporation based in the Municipality of Alumine, Neuquen Province. Several centuries ago, the region was home to the Pehuenches (pehuen: pine tree; che: people) whose staple was seasonal harvest of pine nuts (Pinion Araucaria). The Mapuche (people of the plains) are related descendants of Araucanian people of southern Chile, pushed in 15th and 16th centuries into southern Patagonia by the Spanish invasion, together with Tehuelche people who occupied the plains previously. At the end of the 19th century, the Mapuche, Tehuelche and Pehuenche occupying Pulmari were the object of the "Desert Campaign" of the Argentine Army, resulting in military defeat of the indigenous groups and the annexation of the territory into large estates of the wealthy families that paid for the military campaign. Today's Mapuche communities are the remnants of the three peoples who assimilated themselves as rural landless laborers employed on the great livestock estates that took over their lands. In 1948, hacienda Pulnari was sold by its owner to the nation, which divided it between the Army and the Provincial government of -43-  Nuequen with no recognition of the rights of the Mapuche settlements on the estate. Mapuche demands for restitution of their land rights dates from that period. The Pulmari Interstate Corporation formed by the Province and the federal government owns the portion of Pulmari, 110,000 hectares, not ceded to the Army. Its stated purpose when created was to promote the development of the region and its indigenous population. Usufruct right to 23,505 hectares (23%) was granted to four Mapuche communities (creating conflict with the others) but usufruct right to the remaining lands (those located at both sides of the river, with enough water for cattle ranching and industrial agriculture) were given in concession to non-indigenous outsiders for grazing livestock (46%) and for tourism facilities (31%). The latter two occupy the prime pasture lands of the region. The Mapuche of Pulmari, having been pushed to use grazing lands with environmental and water restrictions: they live in poverty and had to invest enormous amount of effort for their survival and the survival of their animals. The Mapuches have fought as much as they can for restitution of their rights to the pine nuts, pastures and waters of Pulmari (wajmapu, roughly, the biosphere) during several generations with little success until now. Sorting out the ancestral land rights and territorial control of the Mapuche people vs. those superimposed by.the Nation State and other outsiders is a major challenge. Diaguita/Calchaqui and Quilmes Communities of Amaicha del Valle The communities occupy the Valley of the Calchaquies, in the Department of Tafi in the Province of TucumAn. The Diaguita, once widespread in northeastern Argentina, responded to Spanish conquest by strong resistance lead by hereditary hierarchies while others assimilated with the conquerors to form the mixed population dominating the region until European immigration overwhelmed them in the l9th century. The Quilmes occupied the valley since at least the year 1,000. Ruins and ancestral remains of the Amaicha and Quilmes populations are scattered throughout the valley, including the largest pre-hispanic city in Argentina named Quilmes, and today's settlements are built on the archeological sites of their ancestors. Ironically both communities are not the owners and not even the managers of the pre-hispanic sites located in their ancestral territory. A Royal Decree dated 1716 (discovered in the middle of the 20th century) grants the Diaguita/Calchaqui of Amaicha ownership of the valley, land which they have successfully occupied and defended from invasion and annexation over the years. In 1976 and 1986, the GoA recognized the collective rights of the Amaicha community to 117,000 hectares on the eastern shore of the Santa Maria River (Tucuman Province). The Quilmes were less successful, for while they too are covered by the Royal Decree, their lands (about 60,000 hectares on the western bank of the Santa Maria River) are occupied by a handful of non-indigenous colonists and large hacienda owners who claim to have titles. Sorting out the ancestral land rights of the Quilmes people vs. those superimposed by outsiders is a major challenge to be faced by the project. Kolla Community of the Finca Santiago The people of Finca Santiago, located at several altitudes in the Bermejo River Basin (Salta Province), are known in Argentina as Kolla, meaning descendants of a mixture of Quechua-Aymara people of the altiplano and remnants of lower-altitude groups that they assimilated during the conquest and subsequent colonization. This identity stems from the 17th century, when the indigenous resistance in northeast Argentina was defeated and there followed a period of uprooting, displacement, migration and resettlement of indigenous groups, annexation of communal lands, transformation of farmers into landless wage laborers and inter-ethnic mixing. This process continued during the next centuries. -44 -  The Finca Santiago dates from 1930, when a sugar factory bought the land along the Bermejo River and imposed "rent" on the Kolla for the use of their own land. This ensured the migration from the highlands of a steady supply of indebted laborers for the cane harvest. At some point, the rents are no longer needed, as the impoverished Kolla must migrate to sell their labor in order to survive. Four communities comprise Finca Santiago: Calazuli in the altiplano, Volcan Higueras in the middle altitude slopes, and Isla de Cafias and Rio Cortaderas in the lowlands. The lowland settlements date from three decades ago, in response to migration closer to sources of wage labor combined with the expansion of cattle raising on the slopes. Beginning in the 1 940s with marches on the capital, the Kolla pressed for recognition of their ancestral land rights. In 1994, GoA expropriated Finca Santiago from its non-indigenous owners, granting collective title to the Kolla Council of Finca Santiago in 1999. Establishing an integrated, self-managed and culturally adequate pattern for sustainable use of natural resources in Finca Santiago is a main challenge. Demographic Aspects of the Indigenous Communities Since the indigenous territories selected for the pilot project do not correspond to European administrative units (municipalities and departments) and indigenous identity has never been reflected in national census figures, official sources do not provide precise demographic data. The data given below (see Figure 1) are approximate and stem from various sources. Migration is a common phenomenon in all three areas, which is perceived as a threat to cultural survival by the indigenous communities. In the Mapuche case, increasingly restricted access to grazing lands and other resources, tenure insecurity, and growing disparity between life styles of their communities and the society around them have stimulated out-migration of young people aged 14 to 24 years. For the Diaguita-Calchaqui and Quilmes, the population pyramid reflects a preponderance of older people having returned to retire at home, and emigration of young people 10-13 (girls) or after 18 year (boys). Similarly, the Kolla community looses about 17% of its population to emigration between the ages of 14 and 50 years. These facts explain why indigenous families often have between 5 and 11 children, but household size at any given point in time averages 4-5 persons. Changing the current migration pattern is with no doubt one of the most difficult and important challenges of the current project and an revealing indicator of success. Figure I Beneficiary Communities _ Community Population Settlements Location/Area Mapuche 1,517 Aigo Pulmari Puel 1 12,900 has Currimil Catalan Norquinco Salazar Diaguita/Calchaqui 2,739 Amaicha Amaicha del Valle Los Sazos 117,000 has -45 -  Quilmes 1,582 Collado del Valle Fuente Quemado Quilmes El Bafiado Anjuana Talapazo El Pichao El Arbolar Ancillos El Paso Chaniares Las Canias La Vaqueria Kolla 2,628 Isla de Cafias Finca Santiago Rio Cortaderas 125,458 has Volcan Higueras Colazuli 3. Social, Cultural and Economic Organization See the Social Assessment Final Report for details on indigenious communities organizations. Figures 2, 3 and 6 Mapuche of Pulmari. The community of Mapuches depends upon grazing lands and the forests of Pulmari. The former support the raising of goats, sheep, cattle and horses which constitutes a principle economic activity and providing food security and social prestige (particularly cattle and horses). The forest provides firewood, medicinal and food plants and the staple pine nuts from which flour is made for bread. While livestock appear at first glance to be most important, it is clear that forest products are at the core of the economy. Agriculture occupies a secondary activity and is mainly dedicated to provide family food. The Mapuche settlements have around 60,500 head of livestock. They practice a itinerant production regime, moving animals between winter and summer pastures. While all depend on livestock to some degree, the fact that 16% of households own no livestock reflects significant socioeconomic stratification. Due to lack of access to pastures and consequent overstocking, livestock rearing is a low-yield activity. Experts estimate that winter pastures are 7 times overstocked and livestock exceed summer pasture carrying capacity by 70%. Herein lies the rationale for sub projects of fodder production and cancellation of grazing concessions to non-residents of Pulmari. The potential for forestry development in Pulmari has long been observed. Unfortunately, Mapuche involvement in forestry development has been minimal, and most areas of greatest potential value have been given in concession to large non-resident investors by the Pulmari Interstate Corporation. Only in Puel and Currumil does one encounter incipient re-forestation programs stimulated by the provincial Forestry and Parks Directorate. The other communities reject this program, because it is based on introduction of exotic -46 -  species, and prefer improvement of production of native species. In any case, it is clear that a key to sustainable natural resource management in expanding Mapuche access to and control over the native mixed forests, and, most important, the endangered Pehuen tree. Ecological tourism services and traditional crafts have a potential to contribute to socioeconomic development and relieve pressure on natural resources. Production and sale of crafts represent a potential benefit for women ( 190 households represent 66% of production) that with technical assistance can be improved. This potential is related to tourism development, which the young see as perhaps the only alternative to migration. All six settlements have tourism projects planned, but a real change in earning patterns much depends on reversing the 80 tourism concessions granted by the Corporation to non-residents. A study by the University of Comahue found that 72% of the Mapuche live below the poverty line (US$ 148 per capita/month) and 41% below the line labeled indigent (US$ 78 per capita/month). Unemployment accordingly ranges between 10% and 24% of the economically active population of each community. The communities are clearly stratified socially, with those owning less than 50 head of livestock, those depending entirely on farm income and those with no off-farm income. In contrast, the better-off families have more than 50 head of livestock and/or a diversified household production, including off-farm income from tourism services or employment, processing of Pehuen pine seeds, and production and sales of crafts. The Mapuche cultural cosmology centers on the concept of Wajmapu-ixofimogen. Wajmapu refers to a multidimensional environment composed of what in occidental cultures are called space, soil and subsoil, wherein the Mapuche trace their origin and existence in the cosmos. The second concept, ixifijmogen, refers to the integral concept of biodiversity in which nature does not belong to humans, but humans belong to nature. Sustainable development for the Mapuche means achieving harnony among the "natural," "social" and "cultural" which are seen as mutually interdependent, as expressed in the bi-annual Naguillatun ceremony. While land tenure is collective, land use is organized along family lines. The Lonko or maximum civil authority in each settlement is distribution of usufruct rights to the families, was previous hereditary but is today elected for a two-year term. Each settlement also has an elected Executive Council through which relations with institutions of local government are managed. In contrast, the Werkenes are the maximum spiritual authority, who are today concentrated on recuperating and revaluing Mapuche culture. While solidarity at the settlement level is tangible, there are continuing conflicts between settlements due to successive decisions of the Corporation, Provincial authorities and GoA which deprive some of access to resources and reward others. For this reason, second-tier indigenous organizations are important to consensus building, conflict resolution and building social capital. These include the Mapuche Confederation of Neuquen representing 42 Mapuche settlements in the rural areas of the Province and the Mapuche Coordinating Organization which is an executive function of the Confederation. Diaguita/Calchaquies/Quilmes, Amaicha del Valle. The social, cultural and economic organization of Amaicha del Valle is founded upon collective land ownership by the community, within which are distinguished two types of hereditary usufruct rights: property of a family and the natural resources in its vicinity and communal property to which all families have access/use rights such as pasture and water. However, with the passage of time and the impacts of migration and penetration of the dominant society, there have emerged two patterns of living in the valley. First, about 20% of the people of Amaicha del Valle live exclusively off of the land, the majority located in small settlement at some distance from more populous centers. Here one finds the traditional gardens and agroforestry production system -47 -  and the ancient practice of the "minga" or collective labor in planting and harvest typical of the Andean civilizations. The majority, however, operate a mixed economic production system, depending upon farm income to supplement off-farm employment or income and to permit traditional gift exchanges with neighbors and family. The latter generally means less efficient use of natural resources and increasingly reliance on employment in commerce and delivery of public services. Studies indicate arable soils (provided that there is irrigation) in Amaicha del Valle of about 15,000 hectares, of which a bout 600 presently have permanent irrigation and 200 have seasonal irrigation. However, only about 1,000 are under cultivation, characterized by poor irrigation delivery and management practices due to the imposition of inappropriate regulations by the Provincial government resulting in poor yields. Studies also indicate there is great potential for intensified productivity due to the presence of abundant groundwater. However, under present conditions, any development strategy based on field crops alone holds limited potential. Livestock on the other hand are almost universally present in Amaicha and Quilmes households, with a range of 100 to 200 head per household of goats (and a few sheep and cows). Animals serve as both food source (milk, cheese, meat) and "walking banks" wherein savings are invested. In sum, irrigated cropping and livestock are the twin pillars of the rural economy. For these reasons, improvement of irrigation (impermeable channels to cut loss and drip delivery) combined with reforms and improvements in the organization and administration of water rights to achieve equity are viewed by the indigenous community as essential. Similarly, rationalization of livestock rearing through fodder production on irrigated land is essential. The socioeconomic stratification of the community reflects the low productivity of those families who depend on agriculture who rank lowest. Those who combine agriculture and off-farm employment constitute a middle segment. Families who have one member working in high positions in pubic administration, families that receive remittances from members working in cities outside the valley, and families of merchants enjoy the highest ranking. Some 15% of the population have completed schooling through 4th grade, and 37% through 7th grade. A minority have obtained secondary school diplomas and fewer still have graduated from university. The cosmology of the people of Amaicha del Valle center on the divinity of the Pachamama or mother earth, a belief system shared with groups throughout the Andes. Catholicism dates from the time of colonization, but the ritual cycle is that of the agricultural cycle of ancient times culminating in the August festival of Pachamama represented by the "election" of the oldest female of the community in celebration of the mother earth. Civil authority is embodied in the Cacique, who traditionally was selected along hereditary lines for life but today is elected as President for life. Nevertheless, a President can be removed by decision of the community. Each community President is backed by a Community Directorate or Commission formed by elected delegates of the different settlements. Kolla of Finca Santiago. The community utilizes three ecological zones that comprise the territory: the high-altitude soils for pasture combined with marginal agriculture, the middle-altitude slopes for pasture, and the low-altitude zone for agriculture, grazing and forest products gathering. Settlements are located in the three zones, with a corresponding tendency to specialization required by the micro-environment of the zone, and are linked together in the ancient Andean "vertical economy." Production is distributed over several ecological zones and products from one zone are exchanged for products from the other, following long-standing family, fictive kinship and patron-client relationships that link settlements. The Kolla community is almost auto-sufficient, producing the bulk of what they consume. Livestock production is predominant, including sheep, goats, llamas, burros, mules and horses in the middle -48 -  and upper zones, from which meat and wool are derived for consumption, trade and sale. Some irrigated agriculture is practiced in the high-altitude zone, although its revenues are affected by wind erosion and loss of water and soil nutrients. The forests of the lower zone were devastated by logging companies (commercial species high-grading) and the sugar industry (fuel) in the middle of the 20th century, and only remnants of the original forests remain. Today the Kolla use the areas cleared by loggers for agriculture, including field crops and citrus orchards, and cattle grazing. Firewood is gathered from the non-commercial species cut and left to rot by the loggers. The Kolla have initiated a reforestation program, protecting naturally regenerating valuable species as well as planting high-value species (expected to mature in 15-20 years). The majority of families in the four settlements depend entirely on agriculture and livestock rearing, but in the lower altitude area as much as 18% of the people derived some off-farm income as well (e.g. migration for the sugar cane harvest). Despite the rich cultural heritage, abundant natural resources and productive capacities of the Kolla of Finca Santiago, one finds that 75% of the inhabitants are living in poverty (basic needs unsatisfied, reflected in short life expectancy, high rates of infant mortality, substandard housing and lower coverage of schooling and public health services). These for the most part cultivate small plots and maintain small herds of goats and sheep. Other families which operate production systems at several different altitudes and are able to supplement that with non-farm income are better off. Cattle raising is concentrated in these families. Families with members who are merchants or public sector employees (politicians, teachers, health workers) constitute the upper strata of the community, and they increasingly invest their surplus in cattle ranching in the lower altitudes. Women are less involved in agriculture, but play important roles in keeping domestic animals, livestock rearing, trade and commerce and manufacturing in addition to child rearing. The community is organized in four ayllus or territorially-based lineage, corresponding to the four settlements of Isla de Cafias, Rio Cortaderas, Volcan Higueras, and Colanzuli. These kin-based groups are incorporated into the Kolla Council of Finca Santiago through 12 delegates, three from each of the ayllus, which at the settlement level function as a Local Council. Representatives serve for two years, but can be re-elected depending upon their performance, their moral qualities and their "altruistic actions" in helping others. The charter of the Council specifies its obligations to defend the territory and reaffirm traditional cultural identity, the latter defined in large measure as promoting sustainable use of natural resources through communal management. The Assembly of the Kolla of Finca Santiago is the maximum authority of which the Council is the executive body. All household heads 16 years or older have voice and vote in the Assembly, 50% of which are required to be present to constitute a quorum. The Kolla of Finca Santiago are nominally catholic (there is a chapel in Isla de las Canas), but fundamentally believe in the cult of Pachamama (earth mother) present throughout the Andes. Their concepts of sustainable development derive from obligations to the ayllu and its descent from (kinship with) earth mother. 4. Management Capacity of Indigenous Organizations The indigenous organizations of the Mapuche, the Amaicha and Quilmes, and the Kolla, so far as their structure, internal processes, management experience and recuperation of cultural values and identity, are in a formative stage. They require additional capacity formation and technical assistance compatible with their culture and stage of development. The proposed project involves populations governed by oral traditions, and, therefore, cannot attempt to subject all activity to written agreements. On the other hand, all of the indigenous organizations have participated in development projects offered by Provincial Governments and NGOs They are accustomed to shared-management responsibilities in small-scale projects that entail resources from US$ 30,000 to 40,000. Each has only rudimentary - 49 -  familiarity with accounting, but require additional training. Each has been established legally as a civil society organization (personeriajuridica), which specifies statutes under which they operate, needed to manage bank accounts, loans and debts. But only the Amaicha del Valle organization has already established a bank account. With regard to physical facilities, only the Kolla Council of Finca Santiago has a local office staffed with personnel and equipment needed for participation in the project. For this reason, the project should provide resources to strengthen the facilities of the Mapuche and the Amaicha/Quilmes and for strengthening the managerial capacities of all groups involved. This is with no doubt a condition for project success. Apart from formal organization, which in large measure will be strengthened by the proposed project, it is important to note that in each community one can identify important human resources. These include professionals and technicians with profound knowledge of the natural resources of their region and the traditional cultures of their people, some of them with experience in local university, other educational institutions and local government services programs (e.g. agricultural extension). Historically, such skilled individuals found little opportunity for personal growth and achievement within their communities, who, for several generations, were prohibited from managing their own lands and natural resources. The proposed project will draw upon these untapped human resources. Finally, the strength and resilience of indigenous organizations and the oral culture which they transmit should not be underestimated. What must be kept in mind is that they have survived generations of efforts to extinguish them, ranging from theft of their natural resources base to the persecution of their leaders. Far from being weak, the indigenous organizations involved in the proposed project have succeeded remarkably in winning recognition of their people's human rights and their ancestral territories against enormous odds. It is upon these demonstrable achievements, capabilities and skills that the proposed project will build. 5. Other Social Actors Involved See the Social Assessment Final Report for detailed information on actors involved at the national, provincial level as well as potential associates and project allies. Charts 9 to 12. In addition to those directly involved in the project design and execution, there are other important social actors who will be involved indirectly. These include local, provincial and national institutions of governrment, non-governmental organizations and the private sector, with which the pilot indigenous communities will establish collaborative agreements, obtain support and assistance and work with to implement a diversity of a activities and actions entailed in the project. National Level Several entities have statutory responsibility with regard to the management of the resources to be provided by the World Bank loan, counterpart resources provide by the GoA, quality review and control, auditing, etc. The Ministry of Environment and Social Development is the GoA agency responsible for the project, through its Secretary of Social Promotion which will have responsibility for ensuring coordination among all GoA agencies involved. INAI is the project Executing Agency, under the Secretary of Social Promotion, responsible for all activities required for project execution including indigenous policy, relations with indigenous partner organizations, legalization of territorial issues, organizational aspects, etc. The Directorate of the Cabinet, Ministry of Foreign Relations, is responsible for making resources of the loan available in a timely manner to the project Executive Agency as well as for management of audits, provision of counterpart resources and compliance with legal agreements with the Bank. The Agriculture - 50 -  Secretariat, through its National Institute for Agricultural Technology, will support activities relating to use of soils and agricultural technology. The Secretariat of Natural Resources, through its Forestry Directorate, will provide support activities related to environmental protection, environmental clearances and management of forest resources. The Ministry of Defense will manage issues surrounding management of lands which are property of the State in Pulmari Neuquen Province Organizational and institutional support for project implementation will be provided by the Neuquen Mapuche Confederation, the Coordinator of Mapuche Organizations of Neuquen, the Directorate for Indigenous Affairs of the Province of Neuquen and the Planning and Action Council for the Development of the Province, Government of Neuquen. The latter will have a special importance with respect to the proposed creation of the Bi-national Park Los Pehuenes (an joint ecological reserve among Argentina and Chile now under discussion) within which the Pulmari pilot zone may or may not be included. Scientific and technical support in Neuquen can be provided by the University of Comahue, the Social Agriculture Program of GoA, the National Institute of Agricultural Technology of GoA, the Forest Corporation of the Province of Neuquen and the Provincial Wildlife and Parks Secretariat and Forestry Directorate. In addition, NGOs such as the Civil Association Pro-Patagonia and the Civil Association for Lands of Pehuen are important sources of capacity strengthening, technical assistance and social capital building, and each is already involved in assisting the Mapuche. Tucuman Province Organizational, institutional and technical support will be provided by the Social Agriculture Program of the Secretariat of Agriculture, Livestock, Fishing and Food, the Programs Pro-Huerta, Encalilla Experimental Farm and Rural Change of the National Institute of Agricultural Technology, the Yungas Laboratory of Ecology Investigation, the National Technical University, the National University of Tucuman, the University of Buenos Aires, and the Andean Center for Development Investigation. NGOs such as Formaci6n, Waters of Aconquija, the Miguel Lillo Foundation and the Highlands Foundation are active locally and are important sources of capacity strengthening, technical assistance and social capital building. Salta Province In the high-altitude zone, two entities will be the source of organizational, institutional and technical support to the project. The Social Agriculture Program of the Ministry of Agriculture and the NGO Integrate Promotion Association will provide scientific and technical knowledge and skills with specific reference to their experience in this zone. In the low-altitude zone, the Yungas Laboratory for Ecological Investigation has the specialized knowledge and experience to assist the project. This laboratory has the institutional support of the GoA Secretariat of Agriculture and Livestock, Secretariat of Social Development, and the National Council of Investigation together with international organizations such as the German Agency for Technical Cooperation, World Wildlife Fund and the International Foundation for Science. 6. Strategies and Action Plans Agreed See the Social Assessment Final Report for details on the strategy and action plans agreed upon per each of the beneficiary communities. Figures 7 to 9 and Charts 13 to 15. - 51 -  In each pilot community, INAI and Bank professionals discussed jointly with the indigenous organizations concerned and the maximum authorities of the communities the actions and activities proposed to achieve the objectives of indigenous development and protection of biodiversity. The following overarching principles were agreed in each case to organize the execution strategy: