Bush, the rainforest and a gas pipeline to enrich his friends

President George Bush is seeking funds for a controversial project to drive gas pipelines from pristine rainforests in the Peruvian Amazon to the coast.

The plan will enrich some of Mr Bush's closest corporate campaign contributors while risking the destruction of rainforest, threatening its indigenous peoples and endangering rare species on the coast.

Among the beneficiaries would be two Texas energy companies with close ties to the White House, Hunt Oil and Kellogg Brown & Root (KBR), a subsidiary of Vice-President Dick Cheney's old company, Haliburton, which is rebuilding Iraq's oil infrastructure.

The pipeline slices through some of the most biologically diverse places on earth. Their remoteness has preserved an extraordinarily rich ecosystem in the coastal Paracas reserve, which is home to such rare species as Humboldt penguins, sea lions and green sea turtles.

The Camisea natural gas project - with reserves of 13,000 billion cubic feet of gas - has already scared off two big investors, Citigroup and the Overseas Private Investment Corporation. According to an internal report by the US Export Import Bank, obtained by the lobby group Amazon Watch, proposals to mitigate the environmental impact of the project are "woefully inadequate" and will lead to mudslides, destroy habitats and spread diseases among indigenous peoples.

Friends of the Earth describes one threatened area as "one of the world's most pristine tropical rainforests", home to the Nahua, Kirineri, Nanti, Machiguenga and Yine indigenous groups. Past contact between indigenous peoples and loggers has proven disastrous - 42 per cent of the Nahua died from diseases contracted from outsiders in the 1980s.

Already, the project, which is 60 per cent complete, has run into difficulties, including the kidnapping of 60 pipeline workers last week. They were freed later by the Peruvian military.

Nevertheless, the Bush administration plans to approve financial support for the project, possibly as early as this week, via both the US Export Import Bank and the Inter-American Development Bank (IDB). The two institutions, which are due to make their own final decisions in the next couple of weeks, are expected to put up about $300m (£185m) in loans and guarantees, which would in turn pave the way for financing the rest of the $1.6bn project.

Ray Hunt, chairman of Hunt Oil, was a so-called "pioneer" who raised more than $100,000 for Mr Bush in 2000. He and his wife recently gave the maximum personal contribution to Mr Bush's re-election campaign.

Kellogg Brown & Root would not be involved in the pipeline but are well placed to build a $1bn natural gas plant on the Peruvian coast if it goes ahead. The ties linking KBR to Mr Cheney have prompted the same charges of favouritism that surrounded the choice of Haliburton to oversee Iraq's oil fields. The president of the Export Import Bank, Philip Merrill, is a close associate of Mr Cheney. And the chief US representative at the IDB, Jose Fourquet, is also a Bush "pioneer" who helped mobilise Hispanic support in 2000.

The Camisea project has raised eyebrows in Washington as well as among campaigners in the Amazon, not least because banks and governments usually consider environmental impacts very carefully before approving such ventures.

The US Agency for International Development is against the project and several senior congressional leaders have urged the US Treasury to delay a final decision until further reviews have taken place.

The Export Impact Bank's report conceded that key decisions were made for economic reasons, that massive erosion had already occurred on the pipeline route and that unique biodiversity faced "significant, long-term and largely irreversible" deterioration. Three lobby groups - Amazon Watch, Amazon Alliance and Environmental Defence - said last week that the project was causing food shortages and disease in the Urubamba valley.

The Bush administration is reticent about its plans but is keen to exploit new sources of energy to reduce dependence on Middle Eastern oil. Its ambition to open up the Alaskan reserve proved controversial, and has so far been blocked by the US Congress.