Bretton Woods Project - Critical voices on the World Bank and IMF

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Human rights


Despite recognition of human rights by some individuals within its doors, the World Bank as an institution has used its focus on an economic framework along with claims of being apolitical to insulate itself from rights obligations. In 2003, Roberto Danino,the World Bank's legal council, argued that the Bank should begin to consider non-economic issues, such as human rights, as long as it is related to projects the Bank intends to support and is done in a non-partisan manner. Danino set up a working group on human rights within the legal vice presidency and challenged the Bank's claims of immunity as a non-government entity. However, since his departure from the Bank, the gap between the rhetoric and implementation of rights has grown wider.

The Bank now houses a Nordic Trust for funding human rights projects in developing countries, which is just beginning operation after a delayed start. Given its track record and economic and political power there are fears that the Bank may continue to fund projects which violate rights and burden countries with an additional set of loan conditionalities, that force privatisation of public services and goods, among other measures. The International Finance Corporations's (IFC) financing of extractive industries has also been rife with rights violations. In light of this, civil society organisations argue that the Bank must acknowledge its rights obligations by integrating a human rights approach into its own policies and programmes with transparency and public participation.

Compliance mechanisms and international accountability

In 1998, the World Bank group established a set of social and environmental safeguard policies which provide minimal protections to the environment and vulrnerable groups. However, human rights protections are noticeably absent with a few provisions of rights for indigenous peoples. Complaints about violations of these safeguards are heard by the Bank's Inspection Panel.The IFC, the Bank's private sector lending arm, has its own set of performance standards, which includes some rights provisions related to labour and indigenous rights. However, they remain vague. For example, instead of using the legal rights language of free, prior and informed consent of indigenous people on projects they refer to free prior and informed consultation. Because both the Inspection Panel and the CAO investigate whether the Bank and the IFC have violated their own policies, their scope for investigating human rights violations is limited.

To reinforce international accountability practices, the UN Special Representative on business and human rights, John Ruggie held a consultation in February 2007 that included representatives from civil society, the IFC, private banks and export-credit agencies to examine the protection of human rights in the activities and decision making of financial institutions. Although this was a positive stepped that pushed the boundaries of the focus of Ruggie's mandate on transnational corporations, many are concerned about placing faith in voluntary standards and the role of market mechanisms to establish accountability practices.

Economic and social rights

The Bank effects a range of economic and social rights, including through policies and projects aimed at improving poor people's access to health, education, food and water and promoting the participation of indigenous peoples in decision-making. However, the failure to take into account the relationship between the state's political and financial context and its citizens undermines the effectiveness of Bank poverty reduction programmes. Corruption is another obstacle. It took the World Bank several years to temporarily suspend from its projects two international dam-building companies in Lesotho, despite being convicted in Lesotho courts. Vulnerable groups living in Lesotho lost homes, agricultural and grazing lands and sources of fresh water. The World Bank has proven it is more rhetoric than substance when it comes to championing economic and social rights. Indigenous People have had their rights infringed upon by a number of Bank projects, including numerous cases of involuntary displacement, lost livelihoods and lack of access to health. Meanwhile their rights are alluded to, but not acknowledged within a legal framework by Bank safeguards.

Private finance and corporate social responsibility

The IFC includes some labour and indigenous rights in its performance standards. However, overall the IFC's rights provisions remain vague and are seen as instrumental in advancing corporate goals and measuring risk. IFC funded projects tend to be one of the most problematic areas of lending with respect to rights violations. The Chad-Cameroon oil and pipeline project is an unfortunate example. Despite the fact that the governments of both Chad and Cameroon were known for severe human rights abuses, in 2000 the Bank agreed to co-finance the ExxonMobil-led consortium project. The Bank argued that oil revenues would be used for poverty reduction and put in place unusual measures to create such an end. However, these were overturned by the government and Chad has been made worse off as a result of the project, leading to conflict over oil revenues and a backsliding of the country on the UN Human Development Index. Furthermore, contracts for the project guarantee that Exxon and others did not hold legal responsibility and that commercial interests of the project are protected even when human rights are not.

Extractive Industry

Investments in the extractive sector represent one area where the World Bank Group is often complicit in human rights violations. Due to public pressure the Bank commissioned an independent report in 2001, the Extractive Industries Review (EIR), with the goal of improving understanding of how support for extractive industries can contribute to environmentally sustainable and socially equitable development. The EIR recommends that the World Bank adopts a transparent position on human rights and that it finance extractive projects only in countries where a basic measure of the rule of law and good governance is in place. The World Bank Group has rejected these recommendations.

Published: Friday 26th May 2006, last edited: Monday 20th July 2009

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