+ + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + BRETTON WOODS UPDATE A digest of information and action on the World Bank and IMF Number 33, March/April 2003 Published by BRETTON WOODS PROJECT Working with NGOs and researchers to monitor the World Bank and IMF + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + 1. Water meetings everywhere and not a drop to drink 2. Bank "soul searching" on privatisation 3. Bank hypocrisy over Nestle claim 4. Public excluded from Bolivian Bechtel case 5. NGO work on trade-finance coherence 6. IMF: liberalisation may hurt poor 7. Argentinian groups challenge IMF pressure on utility prices 8. Ghana faces IMF arm-twisting 9. Arrest of IMF employee points to cover-up 10. IMF Manila rep moved after data leaks 11. Indonesians resist IMF measures 12. Bolivia riots over tax law 13. IMF debt plan controversial 14. Frustration at limited governance discussions 15. New IFI transparency campaign network 16. French government report late but detailed 17. Parliamentarians' network on WB 18. UK government pushing new finance facility 19. IMF needs internal "firewall" 20. Study challenges Bank's role in mining 21. Bank in the middle of Cambodia, PNG forestry battles 22. Extractive industries complaint 23. IFIs withhold support from Equatorial Guinea 24. Azerbaijan: IMF backs down 25. Coal India letter gets strong backing 26. Indigenous policy implementation weak 27. Inside the institutions: The World Bank and gender 28. WB's new perspective on trade unions 29. A human rights-based approach to PRSPs 30. Trade and PRSP study 31. UNDP book on Global Public Goods 32. Afghanistan reconstruction questioned 33. PRSP dangers exposed again 34. Bank/Fund spring meetings schedule 35. Video conference etiquette explained ===================================================================== 1. Water meetings everywhere and not a drop to drink --------------------------------------------------------------------- After finalising its own water strategy, the World Bank finds itself amid a storm of controversy during a series of global meetings around the future of financing water infrastructure. Conflicting signals from the Bank over the issue of public or private management remain. Despite earlier voicing harsh criticisms of a draft (see Update 27), Bank Board members approved the largely unchanged Water Resources Sector Strategy (WRSS) in late February. The most controversial elements continue to be its stated desire to "re-engage with high-reward/high-risk hydraulic infrastructure", its emphasis on the role of the private sector and its failure to embrace the recommendations of the World Commission on Dams (WCD). Patrick McCully of International Rivers Network called the Strategy "reactionary, dishonest and cynical". "The WRSS shows that the Bank is seeking to turn back the clock on water management." White knight or white elephant? ------------------------------- Much is at stake in the debate as water-related lending has accounted for 16 per cent of Bank outlay over the past decade. Looking forward, the Bank estimates that investments in water in developing countries will need to increase from the current level of about $75 billion per year to $180 billion per year to reach the Millenium Development Goals for safe drinking water and sanitation. The recommendations of the Bank's new strategy find support from the World Panel on Financing Water Infrastructure, led by former IMF Managing Director Michel Camdessus. The panel's report, released on 5 March, argues for international financial institutions to "resume lending for dams and other large water storage and transfer schemes", and to increase guarantees and other public subsidies for private investors in water infrastructure and supply. NGOs working in the water sector have questioned the legitimacy of the twenty-member panel, most of whom are senior officials from the world's major development banks, private lenders and water companies. International Rivers Network has charged that "the Camdessus Panel's recommendations have nothing to do with solving the global crisis of water mismanagement - and everything to do with justifying more business for the bankers and corporate chiefs on the panel. This is pure pork-barrel self-interest." Ravi Narayanan, Director of UK-based WaterAid, and one of only three NGO representatives to sit on the panel, questioned the report's emphasis on large-scale schemes. "There are alternative and traditional technologies used in water storage systems that are cheaper, more easily maintained, have a longer lifespan, and are less environmentally and socially destructive than many modern dams." Both the Bank's water strategy and the Camdessus panel findings have been criticised for ignoring the recommendations of the World Commission on Dams. After its initial enthusiasm for the WCD process, the Bank has turned its back on the findings (see Update 30). The unprecedented multi-year multi-stakeholder initiative is referred to only as a "significant point of reference" in an annex to the WRSS. Similarly, the Camdessus Panel urges financial institutions not to improve their policies to prevent the repetition of past dam fiascoes as suggested in the WCD, but to "remove unnecessary internal brakes on their water lending" and "resume serious lending for all major water projects." Yet another forum failure ------------------------- The Third World Water Forum, held in Kyoto, March 16-23, ended with all participants feeling that they had failed to achieve their objectives. NGOs were unable to secure the characterisation of water as a human right in the final declaration and the Camdessus panel recommendation for a global watchdog to monitor progress towards the Millennium Goals was not adopted. Also not addressed were gender issues, the impact of climate change on sea levels and water management through poverty reduction. "I honestly don't know why I keep coming to these things," said one World Bank official on condition of anonymity. "We keep going around and around about the need to take decisive action but at the end we are no nearer to solving the problem than we were before." The fiercest debates during the Forum were over public versus private ownership. Prior to the start of the summit, a series of studies by the International Consortium for Investigative Journalists revealed a string of Bank-led water privatisation schemes in Latin America, Asia and Africa that have been plagued by contract irregularities, lack of transparency and, in some cases, an outright failure to improve services (see box). However Bank representatives at the Forum attempted to distance themselves from earlier attempts to promote privatisation in the water sector. Ian Johnson, WB Vice President for Sustainable Development, protested that "we are not religious zealots when it comes to privatisation. There is an urgent need to move beyond what has become a stale and polarized debate on public or private management. The debate is not about public or private but about sustainable access to safe water supply. Only by concerted action on the part of all parties can improvements be made." In an upcoming paper, Michael Klein, WB Vice President for Private Sector Development and Infrastructure, concedes that "private participation in infrastructure is no panacea." He urges development agencies not to walk away when governments are unable to pursue sustainable projects, either public or private. Klein argues against overselling the benefits of privatisation - "the private sector can not pay in the end. It can only help finance." He recommends better focusing of subsidy schemes to extend service coverage. This about-face has, in large part, been forced on the Bank as private sector investment in developing countries water infrastructure has dried up. After early enthusiasm, multinationals are re-assessing the risks involved in providing Southern country water contracts. According to WaterAid's Peter Sinclair, private companies were "only ever capable of filling a small percentage of the needed investment. What is needed is a renewed approach to working with the public sector." All of these debates will come to a head at the G8 summit in Evian, France in June, where the real money to address financing water infrastructure may be on the table. It remains to be seen if progress will be held up by the albatross of privatisation. WRSS, World Bank IRN press release on WRSS Report of the World Panel on Financing Water Infrastructure Response to the panel, WaterAid ********************************************************************* During negotiations for the revised Buenos Aires water contract, a senior World Bank water manager joined the staff of Aguas Argentinas [owned by French water multinationals Vivendi and Suez]. Under the World Bank's Staff Exchange Program, Ventura Bengoechea went to work for Aguas Argentinas in 1997 and continued until a new contract was signed in 2000. His job was negotiating rate increases or, as the Bank says, "preparation of proposals for modifications to existing tariff regimes and for their negotiation with the regulatory entity." The World Bank continued to pay his salary. After returning to the bank, Bengoechea became senior water and sanitation specialist for Latin America and was team leader on a $30 million loan made to Argentina in 1999. A spokesperson for the World Bank said that such arrangements were fully consistent with Bank rules. From The Aguas Tango, Water Barons, ICIJ ********************************************************************* ===================================================================== 2. Bank "soul searching" on privatisation --------------------------------------------------------------------- In February, the World Bank's Latin America and Caribbean (LAC) department's Finance, Private Sector and Infrastructure section staged a seminar called 'Rethinking Privatization: A soul searching exercise'. The seminar provided an opportunity for three critics of public services privatisation in Latin America to explain their concerns to sixty Bank officials, including US executive board member Carol Brookings. The critics were Brendan Martin, director of Public World; Ariel Caplan, legal counsel to the Argentine Consumers' Association; and Peter Gleick, of the Pacific Institute. Focusing mainly on water, electricity and railways, they pointed to the economic and social impact of privatisations, such as on access to services by the poor, jobs and terms of employment, and small and medium-sized enterprise development. Regulatory arrangements, even when designed to improve and expand services, were proving incapable of doing so effectively. Increasingly, tensions between the interests of transnational service providers and poor people were forcing, as the seminar demonstrated, a rethink. Responses to the critics acknowledged the lack of popular support for public services privatisation in Latin America, and contrasted that with evidence of welfare economics research that privatisation had led to net benefits. Discussion at the seminar was dominated by consideration of various ways to design and communicate about privatisation more effectively, rather than the development of alternatives. There was consensus, however, that the Bank's focus in the region might need to return to restructuring state-owned enterprises and supporting service delivery through small enterprises, including non-profits, because of the retreat from LAC utilities markets of transnational businesses. Full account of the seminar, Public World ********************************************************************* e-conference on Bank services report ------------------------------------ The World Bank is sponsoring an e-conference on the World Development Report 2004: 'Making Services Work for the Poor' (see Update 31). The conference will begin 14 April and continue until the end of May despite a delay of nearly a month in releasing the first draft of the report. There are concerns that some target audiences will not have received a hard copy - let alone a translation if needed - of the draft by the time the conference begins. Brendan Martin of Public World in London will moderate the six-week long global discussion. "The Bank sees the discussion not only as a last chance to influence the WDR but also as a way to learn for the future," says Martin. "For civil society, I think it is also an opportunity to develop and enrich our understanding and debates about these issues, and so improve our work." After revisions, the WDR draft will go to the Board for consideration 27 May. More details and information No pain, no gain: WDR 2004 on services ********************************************************************* ===================================================================== 3. Bank hypocrisy over Nestle claim --------------------------------------------------------------------- Controversy over a $6 million claim against the Ethiopian government by food giant Nestle continues. The World Bank, which is mediating on behalf of the Ethiopian government, has called Nestle's charges "laughable when you consider who the debtor is". However, a Nestle spokesperson said that the claim was only taken up as a result of the Bank's requirement that the government pay all outstanding claims against it. "According to WB's internal regulation, a country, which had not cleared existing claims against it would not have access to loans and other facilities provided by the Bank." WB insisting on Addis payment, Addis Tribune ===================================================================== 4. Public excluded from Bolivian Bechtel case --------------------------------------------------------------------- ICSID, the investment dispute tribunal of the World Bank, ruled that it would not allow the public or media to participate in proceedings in which Bechtel is suing the people of Bolivia for $25 million. The company is suing South America's poorest nation over its failed effort to take over the public water system of Bolivia's third largest city, Cochabamba. Oscar Olivera, a leader of the coalition of Bolivian peasants which filed a petition requesting public access, charged that the World Bank was "preventing the people affected from participating in a case that directly affects their lives. This is profoundly undemocratic." ===================================================================== 5. NGO work on trade-finance coherence --------------------------------------------------------------------- A coalition of NGOs working on finance, trade and development have, in conjunction with the South Centre, drafted a proposed work agenda for the WTO working group on trade, debt and finance. The issues raised, which include the relationship of debt and trade, the interaction of loan conditionalities and trade agreements, international financial stability and capacity building, will be the key points of debate for a series of upcoming meetings on trade-finance coherence, including a WTO General Council session on 13 May where Bank President Wolfensohn and IMF Managing Director Koehler will be invited to speak. Contact Aldo Caliari, Center of Concern ===================================================================== 6. IMF: liberalisation may hurt poor --------------------------------------------------------------------- An IMF paper co-authored by its Chief Economist Ken Rogoff warns of the effects of financial liberalisation for poor countries. There is no proof that financial liberalisation has benefited growth and it seems linked to "increased vulnerability to crises", says the report. In 1997 the IMF considered modifying its articles of agreements to include financial liberalisation but claims to have adopted a more nuanced approach in the past few years. Despite "sobering" conclusions, the report says the IMF's role is crucial to increase the benefits of globalisation. IMF paper ===================================================================== 7. Argentinian groups challenge IMF pressure on utility prices ---------------------------- Comment -------------------------------- By Jimena Garrote, CELS*, and Ezequiel Nino, legal adviser to the consumer representative in the renegotiation commission --------------------------------------------------------------------- Argentina has gone through very rough times in the last few years. Many of the severe problems faced by the country were caused by the inefficiency of its own public officials. But others stem from economic policies designed in Washington DC. On 22 January 2003, Argentine consumer associations and a human rights organisation** filed a complaint with the IMF's Independent Evaluation Office (IEO), denouncing the pressure exerted by IMF representatives in negotiations with the Argentine government. The IMF does not have a body designed to deal with citizens' complaints about its actions. The organisations therefore decided to submit their complaint to the IEO, which was created to evaluate the performance and policies of the IMF. During the 2002 negotiations with the government, the Fund imposed several conditions as part of the agreement which materialised in early 2003. One of these was a swift rise in the rates charged by privatised public utilities (water, gas, electricity, telephone). After the January 2002 currency devaluation the Congress passed an emergency law authorizing the government to renegotiate contracts with the public utility companies which had been privatised in the 1990s by President Menem. This law specifies that an increase in public service prices could only take place as part of a re-negotiation process, whereby the whole contracts are analysed and all interested parties (including consumers) are involved. Negotiations must be based on the following criteria: 1) the impact of rates on the economy and the distribution of income; 2) quality of services and investment plans, when they were included contractually; 3) the interests of consumers and the accessibility of services; 4) the security of the systems and 5) profitability of companies. All national consumer associations, the National Ombudsman and the City of Buenos Aires Ombudsman agree that in the last ten years public utility companies have received more preferential treatment than any other sector. For example, many of the companies raised rates in line with US inflation, although this was prohibited by law. During the 1990s, inflation in Argentina was close to zero while in the US it averaged three per cent. Economists estimate that this three per cent margin yielded profits of $9 billion. This and other factors which brought the companies huge profits, more than in any part of the world, must be part of the discussion, as was made clear by consumers' organisations to an IMF delegation to Buenos Aires. IMF representatives have pushed the government to increase rates without discussing other criteria. They have emphasized losses incurred by companies because of the devaluation, and insisted that swift compensation should have happened. This was to protect the interests of the mainly European companies, regardless of whether or not this would violate Argentine law. The Argentine Executive tried to introduce the increase on four occasions in order to bow to IMF pressure. But each time courts halted the rise, and three federal judges stated that the renegotiation has to cover all aspects specified by the Congress. The IMF's attitude on this matter during the whole negotiation process is in open contradiction with its own statutory purpose, and therefore illegitimate. It also seems that the pressure was initiated by representatives of countries where the companies are from, such as France and Spain, which violates the impartiality duty embedded in the ethical rules that supposedly govern IMF employees' behaviour. The non-negotiable obligation to increase public services prices violated domestic law, and reduced the government's capacity to re-negotiate the contracts with the privatised companies. Using conditionality to force price rises would turn the re-negotiation process into a parody. There has been no response from the IMF's Independent Evaluation Office up to this point. Although the IEO has announced that the Fund's operations in Argentina would be part of its 2003-2004 work programme, plans are only to examine events for the period ending December 2001. *The Center for Legal and Social Studies (CELS) is a non-governmental organisation founded in 1979 to foster and protect human rights and to strengthen the democratic system and the state of law in Argentina. ** Consumidores Libres Cooperativa Limitada de Provision de Accion Comunitaria, Union de Usuarios y Consumidores de la Republica Argentina, Centro de Estudios Legales y Sociales (CELS) and Ariel Caplan, the consumers representative in the commission formed to renegotiate public utilities contracts. Argentina court halts IMF-demanded utility hikes IMF's Independent Evaluation Office work programme Submissions for forthcoming Comment pieces should be sent to Bretton Woods Project. Preference will be given to Southern organisations. ===================================================================== 8. Ghana faces IMF arm-twisting --------------------------------------------------------------------- After the IMF intensified retaliatory measures on Ghana for failing to comply with its requirements, the country appears eager to appease the Washington institution, probably at a high social cost. Having been portrayed as an adjustment success story in the 1990s, Ghana was denied renewal of IMF financial assistance at the end of 2002 after failing to implement conditions in its Poverty Reduction and Growth Facility agreement with the Fund. Now, to get the funding renewed, the government is implementing conditions for which Ghanaian people will have to pay a high price. IMF director Horst Koehler often says that borrowing governments use the IMF as a scapegoat for reforms that they want to implement but refuse to take responsiblity for. However the government of Ghana seemed reluctant to implement conditions that included increasing petrol prices and the value-added tax (VAT) rate. President Kufuor apparently wrote to Horst Koehler to request waivers of these measures, but the IMF's response in November 2002 made clear this was not acceptable. Since the IMF's response the government has made new efforts to comply, and a resumption of IMF lending by the time of the Bank/Fund Spring Meetings mid-April seems increasingly likely. Petrol prices in Ghana almost doubled overnight when the government announced it could not finance the debt of the national refinery and had to put an end to fuel subsidies. Discussions around the 2003 budget, and around increases in utility prices and value-added taxes send similar signals of goodwill to the IMF. However it is unclear how the government will manage to accommodate the different measures with other Fund requirements to limit inflation and the wage bill. Ghanaian NGO ISODEC commented that "there is no reprieve for the ordinary Ghanaian, be she a farmer, a fishmonger, or a salaried worker ... No assessment has been done on the potential impact of these increases on industry, on economic growth or on poverty and inequality". While acknowledging the need to raise national revenue to avoid excessive dependency on external aid, ISODEC has urged the government to consider alternative measures such as improving tax collection. ISODEC warned that a VAT increase could lead Ghanaians to take to the streets in 'IMF riots'. IMF letter to President Kufuor ISODEC comments on the 2003 budget ===================================================================== 9. Arrest of IMF employee points to cover-up --------------------------------------------------------------------- An IMF technical adviser arrested in Argentina is likely to be extradited to Peru in the coming months. According to his own declarations to an Argentine court, reported by the newspaper Clarin, the IMF knew about the charges against its employee and the international warrant that finally led to his capture, but chose to ignore them. Interpol arrested Jorge Baca Campodonico in February on his way to the Sheraton hotel in Buenos Aires, the base of the IMF delegation. He was part of an IMF technical mission visiting the country to examine aspects of the new Fund programme. Baca, a former Finance Minister of Peru, has been charged in his country on various accounts of high-level corruption. In June 2001 a parliamentary investigation concluded Baca had illegally countersigned decrees authorising weapons purchases with revenues from state enterprise privatisations that were intended for poverty reduction. Clarin reports that in 1999 Baca joined the Inter-American Development Bank after leaving the government, and that he was then hired by the IMF in April 2001 to work as an adviser on fiscal issues, for a $10,000 monthly salary. In September of that year he had to testify in a Peruvian court about his links with former President Fujimori's spy chief Vladimir Montesinos, recently sentenced to five years in prison for human rights abuses, money laundering, embezzlement and arms deals. Baca was then prohibited to leave the country but fled to the US. In December 2001 he was found guilty of contempt of court. An international warrant was issued on 5 February 2002 and in May 2002 he was arrested in Miami, but extradition efforts failed. The IMF provided legal assistance to Baca after his arrest in Argentina and expressed "concern". The judge in charge of the case questioned whether IMF concerns had to do with the fact that "[she had] made effective an international warrant or because they are employing a person wanted by Interpol". Baca had a UN passport and the immunity normally granted to IMF staffers, but this only applies to acts performed by employees in their official capacity. The judge said it would be juridical nonsense if "[the IMF] could deny one of its member states the possibility to exercise its rights as a sovereign state on one of its citizens". Baca was released after a $10,000 bail was paid, but he cannot leave the country. A federal court will rule on the UN immunity claimed by Baca's lawyers. Peru expressed "strong discontent" with the IMF's legal and financial support for Baca's defence. The question remains why the IMF hired Baca despite the dubious nature of Fujimori's regime - but above all why he was retained once his situation became clear. Embarrassed IMF external relations chief, Tom Dawson, said "we do extensive reference checks on individuals when they are hired. It's not quite clear that he was on any kind of list at the time that he was hired at the Fund". This seems to be - strictly speaking - correct, if indeed Baca was hired in April 2001. But it is a selective account of events. Baca says he later informed the Fund that he was a fugitive and that an international warrant had been issued for his arrest. According to Baca the Fund asked the FBI to send agents to Peru to investigate the charges; their assessment was that they were unfounded and that Baca was being persecuted by the new government. Apparently the Fund decided to retain Baca and ignore the international warrant. A request to the IMF's external relations department for more information remain unanswered. What was the nature of the IMF's assistance to Baca? Did the IMF bail him out? And has Baca remained on the IMF's payroll in Argentina since his arrest? Clarin reports Baca is still at the Sheraton and enjoys the swimming pool, judging from the tan he displays in court. This serious incident is a blow to the IMF's credibility, especially to its increasing tendency to lecture borrowing countries about a 'good governance' agenda. In a recent speech on "the way forward for Latin America" IMF Director Horst Koehler stated that "combating corruption will yield significant benefits for economic growth by boosting investor confidence, but will also address social equity issues directly, as it is small businesses and the poor who often bear the brunt of the burden of corruption". The IMF's reaction contradicts the recent acknowledgement by the institution's Executive Board that "the IMF's public image and accountability can only benefit from the institution's willingness to learn lessons from its experience and to openly acknowledge mistakes when they do happen". Further IMF failure to address pending questions can only increase suspicion that Baca has high-ranking friends at the Fund. The IMF should not be free to use public money to pay salaries to people charged with serious corruption, ignore international warrants placed on them and cover their legal costs if they get arrested. The Fund knew of a warrant on its advisor (in Spanish) Peru preparing extradition request IMF press briefing transcript IMF wants to get some respect, Reuters ********************************************************************* Down by law ----------- "Ask yourself these questions: * Is it legal? * Does it feel right? * Will it reflect negatively or positively on me or the IMF? * What would a reasonable person think about my action? * Would I be embarrassed if others knew I took this action? * Is there an alternative action that does not pose an ethical conflict?" IMF staff code of conduct, "All Governors, Executive Directors, Alternates, members of committees, ... advisors of any of the foregoing persons, officers, and employees of the Fund shall be immune from legal process with respect to acts performed by them in their official capacity except when the Fund waives this immunity". Article IX, Section 8 of the IMF's Articles of Agreement ********************************************************************* ===================================================================== 10. IMF Manila rep moved after data leaks --------------------------------------------------------------------- The IMF is replacing the head of its Manila mission, Joshua Felman, after he was linked to leaks of confidential information. The Philippine central bank last month barred UBS Warburg from managing funds after the investment bank issued a report saying official current-account data were overstated. The report seriously hampered the sale of $500 million of government bonds. UBS apologised in a letter that identifies the IMF as the source of the data. The Fund denied that Felman's impending job change was linked to the dispute. IMF to replace its chief in Manila Rd btwn the txt ===================================================================== 11. Indonesians resist IMF measures --------------------------------------------------------------------- In Indonesia a government decision to raise fuel and electricity prices as part of its current IMF programme sparked riots early January. The government backed down, despite threats by donors (led by the World Bank) that this might jeopardise financial support. Donors did not carry out their threats, as unrest risked derailing the entire adjustment programme and because of concerns about disturbances in the world's largest Muslim country. The crisis has increased pressure from legislators not to continue borrowing from the Fund. In January the government announced it would not seek to extend the arrangement which expires at the end of 2003. Indonesia's battle of will with the IMF ===================================================================== 12. Bolivia riots over tax law --------------------------------------------------------------------- In Bolivia riots continued into February over measures taken to resume IMF assistance. The country was declared 'off-track' last year for failing to pass a tax code. An income tax rise announced as part of a package to reduce the public deficit was met by clashes which left more than thirty dead. The government then backed down and the IMF stated they had reached an agreement on "a balanced set of fiscal measures, a phased reduction in the government deficit, and greater social safety net support", while the government announced a social dialogue to design a "participative budget". IMF at source of riots say activists ===================================================================== 13. IMF debt plan controversial --------------------------------------------------------------------- The IMF is still hoping to rally various interested parties to its proposal of a mechanism to restructure poor countries debt (see Update 32). After a conference held in Washington DC to discuss the latest proposal, some civil society representatives said in its current state the mechanism "would not return poor, indebted nations to viability/sustainability" and would "enshrine an increased role for the IMF in international law". Opposition from the private sector and some Northern and Southern countries had previously led the Fund to water down the plan - leading some observers to pronounce it 'dead in the water'. Report of the meeting ===================================================================== 14. Frustration at limited governance discussions --------------------------------------------------------------------- In mid February high-level meetings were held in Washington DC to examine proposals to reform the governance of the World Bank and IMF (see Update 32). The next major discussions will be at the Bank/Fund Spring Meetings in Washington on 12-13 April. Some limited capacity-building measures for Southern Executive Directors may be announced, but there has been no progress on more significant reforms. Providing more funding and personnel to Southern country representatives at the Bank and Fund is welcome but certainly not sufficient to address the democratic deficit. A serious effort to improve Southern country voice at the institutions would require going far beyond capacity-building to change the composition, voting shares and transparency of the Bank/Fund Boards. Unless this is done many civil society groups will complain that this is just a typical donor exercise of throwing money at a problem rather than tackling the underlying issues. Civil society groups are circulating a joint sign-on statement which sets out seven demands for rebalancing board composition and voting power, making governing bodies transparent, opening leadership selection, and reversing the extension of World Bank/IMF mandates into areas covered by other UN agencies. Such points are also being raised by civil society groups preparing for the meeting of the UN Economic and Social Council on 14 April where the World Bank, IMF and WTO have to report. Governments have expressed some interest in adding one or two extra Executive Directors to the Bank/Fund boards, but minimal appetite for improving Southern countries' voting shares or renegotiating the functioning of the constituency system. The US and a number of European governments have indicated that they are not ready to consider change in these areas. Issues of transparency and leadership selection are also being given minimal official attention. The Bank/Fund staff discussion paper produced in February claimed "the principle underlying the distribution of quotas, shares and voting rights - that these should in large measure reflect the relative importance of member countries in the global economy - remains appropriate". Most possible reforms to enhance the ability of developing countries to form and put across their views are described in pessimistic language implying that no progress is likely. Increased developing country representation on the Development Committee and International Monetary and Finance Committee was, however, suggested. These ministerial committees convene at Bank/Fund Spring and Annual Meetings to determine strategy. The paper also envisaged establishing a trust fund to support Southern countries' ability to analyse issues coming to the Board. This capacity could be established in Washington or in the countries or regions being represented. Large multi-country constituencies might be offered more advisers/assistants, an additional Alternate Executive Director, or additional access to outside technical and research support. Without significant outside pressure combined with leadership by some key Northern and Southern governments, this window of opportunity to reshape the governance of the Bank and Fund for the 21st century will close with minimal results. Discussions may, however, continue until the Annual Meetings in September, giving more time to build pressure for real change. Voice and Participation of Developing Countries in Decision-Making at the World Bank and IMF. A Technical Note by Bank/Fund Staff for the Development Committee (5 February 2003). Available on request from the Bretton Woods Project. Sign the joint civil society statement Options for Democratising the World Bank and IMF, Christian Aid, February 2003 Update 32 links to statements and publications Send insights or views on Bank/Fund governance reforms to: ===================================================================== 15. New IFI transparency campaign network --------------------------------------------------------------------- A new informal network of civil society organisations has begun working together to overcome the secrecy surrounding the operations of International Financial and Trade Institutions. In February a group of 23 activists from five continents held a conference to discuss access to information at the IFIs. About half of the participants came from civil society organisations that work on IFI-related issues. The other half represented groups focusing on freedom of information at the national level, such as freedominfo.org, Article 19, the Open Democracy Advice Center in South Africa and the Philippine Center for Investigative Journalism. Buried treasure --------------- The participants identified a range of issues around which coordinated action can be developed to support the struggles of different civil society groups. Freedom of information specialists may be able to use their expertise and clout to persuade governments and/or institutions to make available information that they would normally prefer to bury. Examples of such documents are Power Purchase Agreements, something that the Bank currently refuses to make available. Also, the positions of member governments on the Boards of the IFIs which are rarely made public. For transparency network information, Jen Kalafut, Bank Information Center Freedominfo Open Democracy Advice Centre ===================================================================== 16. French government report late but detailed --------------------------------------------------------------------- The French government's annual report to parliament on its interventions in the Bank and IMF has arrived seven months late but is more explicit than previous versions. The report indicates the French position - including some votes - on key issues, strategies and country-specific loans. It provides useful information on the coordination of European interventions and Executive Directors. The third annual UK Treasury report on the IMF, due out soon, is not expected to be so detailed. French NGO Agir ici is planning to map the practices of European governments in reporting to parliaments and the public on the IFIs. ===================================================================== 17. Parliamentarians' network on WB --------------------------------------------------------------------- The fourth annual conference of the Parliamentary Network on the World Bank in Athens in early March gathered 140 Members of Parliament from 67 countries. Speakers at the meeting included the heads of the Bank and Fund. Wolfensohn put in a plea for additional development assistance funding. He stated that as the Parliamentary Network is now constituted independently from the Bank, participants "have a hunting license to criticize the Bank at all times because we are not paying the bill". The meeting was described in The Observer as "a refreshingly candid exchange of views". ===================================================================== 18. UK government pushing new finance facility --------------------------------------------------------------------- The British government has issued more detailed plans for a mechanism to increase the amount of money spent on development assistance. The International Finance Facility would allow money to be raised from the bond markets against government pledges, effectively bringing forward spending towards the Millenium Development Goals. The money would be spent through existing channels such as the World Bank. And as the British government has just initiated a war which may cost four times the annual aid flow to developing countries, enthusiasm may be limited. ===================================================================== 19. IMF needs internal "firewall" --------------------------------------------------------------------- A senior British official has made proposals for a greater separation between the surveillance and lending functions at the IMF, in order to strengthen crisis prevention. Citing recent failures in Argentina and Turkey, Chief economic adviser Ed Balls argues the IMF should be "as credible and independent from political influence in its surveillance ... as an independent central bank". This would suppose building an "institutional firewall" between the different functions of the Fund to avoid conflicting incentives. The idea is likely to be tabled at the IMF Finance Ministers' meeting mid-April, chaired by UK Chancellor Gordon Brown. ===================================================================== 20. Study challenges Bank's role in mining --------------------------------------------------------------------- A new study from Canadian researchers led by Dr Bonnie Campbell examines the World Bank's influence in establishing mining codes in Southern countries. It finds that the Bank's assessment of what was needed to attract foreign investment did not consider broader development objectives. Companies were granted low royalty rates and tax exemptions and allowed to retain much of their foreign exchange earnings in foreign accounts. Provisions for local procurement of goods and services have been removed, for instance from the 1998 Mining Act in Tanzania. The study comments: "given that provisions to build backward and forward linkages (such as value-added processing of minerals) to resource extraction within the economy would normally be considered important development objectives, it appears that the Tanzanian government has abandoned, or been obliged to abandon, these development objectives." The study concludes by questioning whether "a country which deregulates and liberalises in order to be fully competitive... can indeed ensure the enforcement of environmental norms, [and] pursue development objectives that build backward and forward linkages to resource extraction... The answer appears to be more than uncertain." This conclusion matches that of African civil society groups who gathered in Mozambique in January this year as part of the Bank's Extractive Industry Review process. They commented: "during the past two decades the World Bank Group and the IMF have promoted the liberalization of the extractive sector through reforms that compel mineral-rich African countries to relinquish ownership and control of extractive industries to foreign mining and petroleum companies". The Challenges of Development, Mining Codes in Africa and Corporate Responsibility, GRAMA, 2003. International and Comparative Mineral Law and Policy Maputo declaration ===================================================================== 21. Bank in the middle of Cambodia, PNG forestry battles --------------------------------------------------------------------- For several months the Bank has been considering withholding the second payment of a structural adjustment credit to the Royal Cambodian Government in reaction to the failure of the government to comply with the terms of the credit and its threats to expel an independent monitor of the forestry sector (see Update 32). Encouragingly, charges against the Global Witness country representative in Cambodia have been dropped, and reports are that the UK-based NGO may be allowed to continue as a monitor past the original three-month deadline set by the government in January. According to Bank spokesperson Melissa Fossberg, "there is a specific set of actions the Government has agreed to take before we would consider releasing the money." These conditions include maintaining an independent forest crime monitor and continuing a donor-led review of forestry management plans and unsatisfactory impact assessments. In Papua New Guinea a network of NGOs working on forest issues has called on the Bank to use its influence to convince the government to intervene in an agreement allowing illegal logging. The agreement was signed between the Malaysian company Concord Pacific, the National Forest Board Chair and a controversial landowning company. According to CELCOR, an NGO based in Port Moresby, the construction of the Kiunga Aiambak logging road by Concord Pacific is the latest chapter in a saga which has seen a "complete breakdown in forestry management in the last 12 months." The project has repeatedly been brought to the World Bank's attention. In October 2000, an independent forestry review team appointed by the Bank released a damning audit of the project. A year later, CELCOR lodged a complaint with the Bank's Inspection Panel on behalf of landowners adversely affected by the project. The complaint was rejected by the Panel, finding that the "harm suffered by the requesters was not related to the actions/omissions of the Bank and the harm was caused by private entities which have no relation to the Bank's programme". Cambodia Forest Crime Monitoring Project, Global Witness Kiunga Aiambak, Greenpeace UK-based Forest Peoples Programme is working on an NGO guide to the World Bank's new Forest Policy. The guide, in question and answer format, is designed to help NGOs, forest peoples and indigenous peoples make sense of the new policy. It will be available in April. ===================================================================== 22. Extractive industries complaint --------------------------------------------------------------------- Civil society groups have reacted angrily to a document circulated by the Extractive Industries Review (EIR), the initiative established by the World Bank to make recommendations about its future roles in supporting oil, gas and mining. The Compilation of Consultation Inputs recently released by the EIR "fails to reflect the full spectrum of views presented at the regional workshops and wholly ignores civil society positions clearly articulated at each of the consultations to date". The finding that the World Bank's extractive industries activities are an effective tool for poverty alleviation "reflects a bias toward industry and the World Bank and contradicts inputs repeatedly asserted by civil society". The groups recommend establishing a Joint Commission of Stakeholders (JCS) comprised of four civil society representatives, two industry representatives (one petroleum sector and one minerals sector), and two government representatives, to co-author the final EIR report with the Eminent Person whom the Bank appointed to run the Review. The final report is due in September. EIR official site EIR mid-term assessment, Friends of the Earth Indigenous peoples have produced a set of case studies of World Bank oil, gas and mining projects. These will be presented at a workshop in Oxford in April which the EIR Eminent Person will attend. ===================================================================== 23. IFIs withhold support from Equatorial Guinea --------------------------------------------------------------------- While offshore oil fields generate hundreds of millions of dollars for Equatorial Guinea, most of the population continues to live on about $1 a day. A recent report by the Los Angeles Times indicates that President Obiang maintains sole control over the $300-500 million of the country's oil revenues in a US account which allegedly funds his private real estate ventures. The IMF and the WB will withhold assistance from the country until Obiang accounts for the use of oil revenues and transfers them to the treasury. ===================================================================== 24. Azerbaijan: IMF backs down --------------------------------------------------------------------- In January 2003 the IMF suspended loan payments to Azerbaijan because of concerns that the government was to use the State Oil Fund to invest in the Baku Ceyhan oil pipeline. This was reversed in February 2003, apparently under US pressure. Whilst allowing $118 million to be spent on the pipeline - against the principles for which the fund was established - the IFIs are pressing for new legislation governing oil fund expenditure. This would replace the present system under which the president's office spends the money directly. The World Bank has also demanded an audit of the state oil company. ===================================================================== 25. Coal India letter gets strong backing --------------------------------------------------------------------- 115 civil society groups backed a letter urging the World Bank Board to endorse an action plan for remedial measures on the Coal India project. The local NGO, which brought a successful claim to the Bank's Inspection Panel, has demanded that action be taken to compensate people who have lost their land and livelihoods. The Bank's management took a surprisingly long time to file its response to the Panel report, and as the Panel has no ability to enforce action by the Bank, civil society groups decided to turn up the pressure. Letter and action plan Panel report ===================================================================== 26. Indigenous policy implementation weak --------------------------------------------------------------------- An official assessment of the Bank's compliance with its indigenous peoples (IP) operational directive confirms criticisms by indigenous peoples' organisations that the Bank's record is deficient. The Bank's IP directive was applied in just 62 percent of the 89 projects that affected IPs. The Operations Evaluation Department report said "the process of determining which groups are covered by the Bank's IP policy is in urgent need of clarification". The Bank will soon release another draft of its revised directive, at the same time as a more in-depth evaluation. Finalisation of the directive is now expected in October. ===================================================================== 27. Inside the institutions: The World Bank and gender --------------------------------------------------------------------- Gender is one of the World Bank's 14 "corporate advocacy priorities". Yet a 2001 report from the Bank's Operations Evaluation Department echoed the views of many independent commentators, finding that the Bank had not established processes for institutionalising and operationalising its gender policy and had not organized systematic gender training for its staff. The Bank has recently introduced further steps to ensure that the gender dimension is increasingly integrated into its work. In September 2001 the Bank approved a strategy calling for mainstreaming gender issues into its work but with flexibility to do so differently in various sectors, regions or countries. The first step is to prepare country gender assessments that examine gender-related barriers to poverty reduction and economic development, such as property ownership, access to financing, civic involvement and educational opportunities. They also identify "gender-responsive actions" important for poverty reduction, economic growth and human well-being. Bank Country Directors have the option to commission a specific study on gender, ensure that country gender analysis is conducted as part of other World Bank country analytic work, or adopt assessments produced by others (i.e., government agencies, UN agencies or civil society groups). Country gender assessments should identify and guide priority policy and operational interventions as part of the Bank's Country Assistance Strategy (CAS). The Bank's CASs are expected to state why they do or do not include gender-related actions, and how they plan to implement and monitor them. Similarly, the Joint Staff Assessment exercise in which Bank and Fund staff validate the quality of Poverty Reduction Strategy Papers (PRSPs) is expected to cover how the gender dimension was addressed. To ensure that gender is "treated as a cross-cutting issue potentially relevant in all countries and sectors, rather than as a distinct sector", the Bank has created horizontal structures. These include the Gender and Development Board, composed of representatives from each of the Bank's regions and networks. The Board develops guidelines and procedures, conducts research and training and oversees the integration of gender issues into Bank operations. The Gender and Development Group, which is part of the Bank's Poverty Reduction and Economic Management Network (PREM), coordinates the work programme outlined by the Board. The Bank's Operational Policy on the gender dimension of development (OP 4.20) dating from 1994 has just been revised and updated, and a new Bank procedure on gender provides more specific guidance on implementation. The Bank's first annual monitoring report on progress in gender mainstreaming found that there was substantial progress in integrating a gender dimension into policy instruments such as PRSPs, economic and sector work, and lending operations. The report concluded, however, that there are still areas for improvement. It implicitly concluded that attention to gender issues in lending operations was mainly restricted to human development sectors, not for example infrastructure or structural adjustment. Suggested steps include increasing the ability of regional and country teams to complete country-level gender analysis and integrate this into policy dialogue; working more closely with civil society organisations and other donors and increased capacity building plus knowledge sharing among staff and clients. However, Ann Whitehead, an academic at the University of Sussex who has written extensively on gender issues, commented: "the mechanisms for making different parts of the Bank accountable for working on gender issues have no bite, no sanctions; it is all a matter of staff members' individual interests. Gender specialists rarely go on the main technical missions around PRSPs. And Joint Staff Assessments, such as that conducted for Tanzania, may not mention gender. When they do, the comments are of poor quality. Yemen is a recent example." Official resources ------------------ World Bank Gender Mainstreaming Strategy Online database with sex-disaggregated national statistics Operational Policy and Bank Procedure Cecilia Valdivieso, Sector Manager, Gender and Development, World Bank Telephone +1 202 4731981 Civil society resources ----------------------- How to Challenge a Colossus: Engaging with the World Bank and the International Monetary Fund, Gender and Development Network Forthcoming Gender and Development Group report on PRSPs New Bank report on gender policies, Update 22 World Bank to rate all projects for gender impact, Women's E-news, April 2002 ===================================================================== 28. WB's new perspective on trade unions --------------------------------------------------------------------- The positive impact of trade unions on economic development, and evidence indicating their ability to reduce discrimination and inequality, are among the findings of a new World Bank report: 'Unions and Collective Bargaining'. ICFTU General Secretary Guy Ryder cautioned however, "the Bank must now translate these important findings into policy, which may involve a significant shift in its organisational culture. In contrast to worker-friendly statements at the global level, country-level Bank staff still routinely advise governments to, in effect, violate core labour standards by making access to unionisation and collective bargaining more difficult." ===================================================================== 29. A human rights-based approach to PRSPs --------------------------------------------------------------------- A new report by the UN High Commission for Human Rights provides guidelines for the implementation of a human rights-based approach to PRSPs. The report is intended to assist development practitioners in incorporating human rights standards and principles into the formulation, implementation, and monitoring of poverty reduction strategies. At the national level, the report argues the importance of implementing initiatives and strategies with an active and informed participation by the poor. At the international level, it emphasises the right to assistance and co-operation. The final chapters emphasise the accountability of states and global actors. ===================================================================== 30. Trade and PRSP study --------------------------------------------------------------------- UK-based Christian Aid has commissioned the Overseas Development Institute to analyse the trade content of PRSPs. The report will examine the adequacy of trade-related impact assessment, the need for country-specific consideration of demand and supply constraints to trade, the justification for trade conditionality and the efficacy of capacity building efforts such as the Integrated Framework. The full report is to be made available in April on the Christian Aid website. Cornering the market: The World Bank and trade capacity building ===================================================================== 31. UNDP book on Global Public Goods --------------------------------------------------------------------- The book addresses how to adjust the concept of public goods to today's economic and political realities. It examines managerial and political challenges to the design and implementation of global public goods provision. Suggestions are presented on a number of policy reforms and recommendations are made on how to move in a more feasible and systematic way towards a fairer process of globalisation that works in the interests of all. Contents include governance of the IMF and the multilateral trade regime. An electronic discussion on water as a public good has been started as part of the follow up. ===================================================================== 32. Afghanistan reconstruction questioned --------------------------------------------------------------------- In late March international donors pledged further finance towards the reconstruction of Afghanistan. However civil society groups are complaining that the policy approach being promoted by donors is not appropriate. Bijay Kumar, ActionAid Country Director in Afghanistan, commented: "The national development framework, drafted by a few people who were influenced by an ideology of market principles, was presented in April 2002 but did not go through an adequate consultation process. Even the first attempt to translate it into the local language was only done as late as October. The claims that it represents the needs and aspirations of Afghan society cannot therefore be founded. But it is already being used as a 'bible' by donors to effect their investments. In the absence of the skills and capacities adversely affected by 24 years of war, handing over the economy to a multinational-led privatisation process is bound to hurt poor, marginalised and unemployed people." The World Bank stated that its approach to post-conflict reconstruction in East Timor was a model which could be followed in Afghanistan. However Kumar said "Afghanistan is unique, its situation is completely different from the context of East Timor". National Development Framework civil society research project report ===================================================================== 33. PRSP dangers exposed again --------------------------------------------------------------------- As in Bangladesh and Pakistan (see Update 32), civil society groups in Sri Lanka have rejected the current Poverty Reduction Strategy Paper (PRSP). This is because, as stated by the Alliance for the Protection of Natural Resources and Human Rights, the PRSP has been drafted without any consultation of civil society and differs very little from previous IMF recommendations. The Alliance gathers more than a hundred groups including peasants and fisheries workers, trade unions, religious groups and people threatened with displacement. The government unveiled its PRSP last June at the Development Forum, saying it had been prepared after a comprehensive consultation process. Members of the Alliance have attempted to find out the identities of the groups consulted, but with no success. Trade unions, for example, were not made aware of the PRSP until the ILO held a workshop about it in July. Last summer the government also attempted to pass a series of laws reflecting the priorities highlighted in the PRSP and aiming at securing new IMF and Bank loans by the end of 2002 (see Update 30). The timeline has since been pushed back and the executive boards of the Fund and Bank will now meet in April to endorse the PRSP. The Alliance has issued a statement seeking international support and asking donors to halt approval and implementation of the PRSP until it can be redrafted based upon full civil society participation. While most donors have broadly endorsed the PRSP approach, critics are more sceptical than ever about its capacity to achieve its stated objectives. A new report by Focus on the Global South argues that "poverty is used as window-dressing to peddle more or less the same adjustment programmes to low income countries that led them into a state of chronic economic crisis to begin with". Donor coherence around the PRSP is perceived as a danger-Focus warns that "if bilateral donors put all their eggs in the PRSP basket, they must then take equal responsibility for the impacts of bad policy advice, faulty assessments and failed programmes". In an attempt to assess the IFIs' involvement in the PRSP approach, the IMF's evaluation office (IEO) and the Bank's evaluation department (OED) are carrying out a joint evaluation of the PRSP process to date. While the OED will focus on the Bank's role, the IEO will also look at the first concrete outcomes in terms of poverty reduction. Country visits, some of them joint, will include Tanzania, Mozambique, Nicaragua, Guinea, Tajikistan and Vietnam. Bretton Woods Project has produced an updated version of its "ABC to PRSPs" - the "PRSP Rough Guide" Endorse the Alliance's statement Sri Lanka PRSP A Poor Package for Poverty Reduction, Focus on the Global South OED and IEO evaluations Heaven or Hubris: Reflections on the 'New Poverty Agenda' ===================================================================== 34. Bank/Fund spring meetings schedule --------------------------------------------------------------------- Official Meetings ----------------- Tentative Agendas International and Monetary Finance Committee: 12 April * World Economic Outlook * Crisis prevention and crisis resolution (Sovereign Debt Restructuring Mechanism) * Low income countries, PRGF, PRSPs, HIPC Development Committee Meeting: April 13 * Monitoring of Policies and Actions for Achieving the MDGs * Voice and Participation of Developing Countries in Bank/Fund governance * Progress Reports: Education for All, HIV/AIDS, Water and Sanitation Civil society meetings ---------------------- A wide range of NGO events are also planned for the week. Topics will include: * citizen complaint mechanisms * governance reform * trade-finance coherence * Latin-American solidarity * safeguards * harmonisation * WDR 2004 on services * HIPC, LICUS For full details, visit the IFIwatchers calendar at ===================================================================== 35. Video conference etiquette explained --------------------------------------------------------------------- World Bank organisers of a video conference in the run-up to the World Summit on the Information Society, were clearly worried about NGO representatives' manners. Tips given to participants included: "Express your personality but avoid using slang" "When beginning to speak or pose a question, state your name, location and school [sic]" "Ask thoughtful questions and express your opinions in a positive manner" "Nod or smile to express interest, attentiveness and participation" "Avoid wearing bright, fluorescent colours, patterns, shiny fabrics, or white, yellow, or red as these cause glare" NGO types who participate in Bank video conferences are requested to keep their eyeballs peeled for wild gesticulation, frowning and Hawaiian leisurewear. Report any violations of the code to us More vital videoconference tips: + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + Published by Bretton Woods Project Critical voices on the World Bank and IMF No permission needed to reproduce articles. Please pass to colleagues interested in the Bank and Fund, and let us know of other groups interested in getting the Update. The Update is available in print, on the web and by e-mail. Bretton Woods Project c/o Action Aid, Hamlyn House, Macdonald Road, London N19 5PG, UK Tel: +44 (0)20 7561 7546 / 7 Fax: +44 (0)20 7272 0899 Subscribe at or Supported by NGOs in the Development and Environment Group and by the CS Mott Foundation + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + END