IT is two years since western governments, in a fit of enthusiasm for green issues, proposed a US $1.5 billion "pilot project" to find ways to protect the world's rainforests. Meeting in Houston, Texas, the "Group of Seven" rich industrial nations backed a scheme from Germany's Chancellor Kohl to test out their ideas in the largest rainforest of them all -- the Brazilian Amazon.

Today, after two years of argument between Brazil and the donors, the fate of the "G-7 Pilot Project for the Amazon" has turned into a test case for many projects -- from halting deserts and saving forests to energy conservation and pollution clean-ups -- that are likely to emerge from the Earth Summit in Rio in June. In particular, it has become the battleground for the first tug of war over who should control the purse strings for internationally-funded projects in Third World countries aimed at preserving the planet's environmental resources. The Amazon plan is also the first in which a national resource is being internationalised in the name of global commons.

Despite protests from local governors, Brazilian President Fernands Collor dem Mello agreed in 1990 to talks with the European Community and the World Bank. He submitted a shopping list of proposals and a bill for US $1.6 billion. But, suddenly, the west went cold on the idea. Vague promises of funding evaporated and it took until December of last year to assemble pledges for US $250 million to be spread over two years from the G-7 governments. The Brazilian plan was thrown out as the donors insisted on revising this programme. The new plan was drawn up by a technical mission from the European Community and the World Bank.

The World Bank proposes setting up a rainforest trust as part of the Global Environment Facility (GEF). As the GEF is controlled by the donor nations, this emphasises that the donor nations will control spending and the Bank will clear all projects. The bank sees the project as "an important example of international cooperation in support of a global objective". But from the Brazilian point of view, it looks like arm-twisting from the western-dominated GEF.

There is also the deeper debate about what kind of economic development can simultaneously benefit the present and future generations of the people of the Amazon and of Brazil, while preserving the global functions of the forest as a refuge for biodiversity and presumed regulator of world climate.

The World Bank admits that its past investments in the region have proved disastrous. But it insists it can do better this time. This time round, as well as paying for running national parks and for demarcating lands for indigenous peoples such as the Yanomami, it wants to promote rather than undermine "sustainable" ways of making a living in the forest.

It however ignores the international forces that encourage rainforest destruction. Rubber tappers could be the agents for protecting the forest in their own economic interest. But current low world prices for rubber mean they are doomed to poverty inside their extractive reserves. For some that suggests the need for a readjustment of world rubber prices, or subsidies, to allow the tappers to make a reasonable living. The bank proposes instead that the west should fund research to find new products from the forest that the residents of extractive reserves can sell to the outside world.