+ + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + BRETTON WOODS UPDATE A bi-monthly digest of information and action on the World Bank & IMF Number 40, May/June 2004 Published by BRETTON WOODS PROJECT Working with NGOs and researchers to monitor the World Bank & IMF + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + 1. Ties that bind: possible shifts on conditionality? 2. New debt sustainability framework: too little, too subjective 3. New IMF poverty assessment unit 4. New Bank adjustment policy a step backwards 5. Lula and Kirchner want IMF to relax grip 6. Symbolic vote does nothing to change Fund leadership stitch-up 7. US lawmakers scrutinise World Bank record on corruption 8. Baku Ceyhan human rights activist arrested 9. Inside the institutions: The UK role in the WB and IMF 10. G8 governments review IFI mandates 11. Peoples' movement tackles IFI anniversary 12. Disclosure in private sector financing 13. African Executive Directors' support fund 14. Middle-income strategy threatens safeguards 15. IFI campaigners win environment prizes 16. Haitian victory 17. Gender "poorly rooted" 18. Concerns about Brazil soya project 19. The power of the vote 20. IMF Trade Integration Mechanism: Sweetening a sour deal 21. Parliamentarians' trade working group 22. Bank trade evaluation: assume the position 23. Wolfensohn discusses human rights, environment 24. New head for Bretton Woods Project 25. BWP seeks Policy and Networking Officer 26. Global parliamentarians campaign launched ===================================================================== 1. Ties that bind: possible shifts on conditionality? --------------------------------------------------------------------- On the back of sustained civil society vigilance and advocacy on the negative impacts of conditionality come IFI and donor efforts to review their attitudes towards it. The extent to which such efforts represent a desire for better implementation rather than a fundamental re-examination of the content and impact of policy conditions remains unclear. In July the World Bank is convening a meeting to discuss experiences with conditionality in policy-based lending. The forum, titled Conditionality Revisited, will take place in Paris and will bring together academics, key decision makers, and development practitioners from the IMF, the World Bank, development agencies, and civil society. The meeting is to discuss recent experiences with conditionality, and to guide future policy-based lending. DFID is preparing a policy note on the use of conditionality, and over the past few months has consulted with NGOs in the UK. The note will inform the DFID position at the Bank conference. In an attempt to broaden the limited remit of IFI and donor reviews of conditionality, CSOs have outlined some proposals. These are varied but include a call for the separation of the lending and advice functions of the IFIs, the commissioning of independent external reviews of the impact of conditionality on poverty reduction, and strengthening the democratic ownership of policy choices. A report by Harare-based AFRODAD and the UK's Christian Aid, urges an increased role for parliaments and CSOs in loan contraction processes. World Vision suggests an "outcome oriented approach to conditionality" seeing this as particularly applicable in light of the millennium development goals. Other proposals are more contentious. In March, UK-based NGO Global Witness presented a report at an IMF seminar. They proposed fiscal transparency as an element of IMF conditionality, suggesting the Fund should "issue a high-level policy statement forcing certain transparency standards on Fund missions and member countries". The Fund currently promotes fiscal transparency through the Code of Good Practices on Fiscal Transparency and the Reports on the Observance of Standards and Codes. NGOs have made other proposals on transparency (page 4). The unsuccessful application of conditionality - under donor -pressure and without a genuine commitment by recipient countries to implement reforms - highlights the importance of ownership to sustaining reform. Yet the very idea of conditionality contradicts ownership. In a speech in February, UK Secretary of State for international development, Hilary Benn, acknowledged this, saying "all of us have worked hard to establish the principle of country ownership in development. Yet there is a tension here with the conditionality that is applied to aid". ActionAid's recent research on privatisation of utilities highlights the use of conditionality to push "fundamental and often highly controversial changes in economic policy". They conclude that use of economic conditionality is "unfair, undemocratic, ineffective and inappropriate". Home-grown policies would rule out a dominant role by IFIs and donors in defining country policy agendas and priorities. Current IFI lending frameworks undermine country ownership. Donor and IFI preoccupation with 'effective use of development resources' is still cited as justification for limiting country ownership. The new Reality of Aid report 2004, a major north-south NGO initiative focusing on analysis and lobbying for poverty eradication policies, concludes that "imposed conditions are incompatible with democratic governance". It makes a bold call for the Bank to adopt a rights-based approach as an alternative to policy conditionality. Not mandatory provisions, but 'good practice' advice ---------------------------------------------------- The aim of reducing explicit conditionality does nothing to change the power relationship between countries and IFIs. IFI opinion and advice hold greater sway for countries with limited alternatives for accessing development finance. Such imbalances create room for policy imposition masquerading as best practice recommendations. Streamlining efforts illustrate the limited nature of the rethink on conditionality. Whereas new Bank and Fund policy papers suggest a commitment to reducing the burden of conditionality, evidence on the ground reveals limited progress. Analysts suggest that Fund structural conditions are being passed on to the Bank. Bilateral donors aligning with IFIs end up sanctioning conditions on recipient countries, effectively shutting out the possibility for alternative policy choices. The long-term negative effects of conditionality on accountable policy making far outweigh any perceived short-term gains around donor-defined reforms. Owning the loan, poor countries and the MDGs, Christian Aid Money talks: How aid conditions drive utility privatisation in poor countries, ActionAid ===================================================================== 2. New debt sustainability framework: too little, too subjective --------------------------------------------------------------------- The World Bank and IMF have produced a new framework for debt sustainability. It aims to guide borrowing decisions of low-income countries matching their need for funds with their ability to service debts, but does not go far towards debt justice. Civil society groups have welcomed the intention to move to a country-specific decision-making process, but expressed doubts on the detail of the proposals. They point out that the approach relies heavily on subjective World Bank analytical tools and that the Bank and Fund have often been wildly overoptimistic in their previous projections. Under the new plan the Bank and Fund would assess countries' projected debt-burden indicators, including in the face of plausible shocks, for example the recent rise in oil prices. If countries are seen to be at risk of "debt distress", then creditors would be urged to provide highly concessional loans or grants. Recognising that some shocks are inevitable, the Bank/Fund paper says "donors and creditors may also wish to develop mechanisms to ease the impact of such shocks in a timely and coordinated manner". NGOs applaud the proposal to abandon the previous standard debt-to-exports threshold and take the potential impacts of shocks more seriously. But there are concerns that the ways that these judgements will be made in practice may reinforce the power of World Bank and IMF staff to judge countries against what they see as "the right policies". Barbara Kalima, coordinator of AFRODAD, said the framework did not assess whether national parliaments were strong enough to scrutinize governments' use of foreign loans or curb irresponsible foreign borrowing. Henry Northover of CAFOD welcomed the framework's country-specific approach, its broader and more flexible set of indicators, and the prominence it gave to reaching the Millennium Development Goals. But Northover criticized the framework's reliance on the Bank's Country Policy and Institutional Assessment (CPIA). The CPIA consists of 20 criteria on which countries are judged by Bank staff, which are then aggregated to produce an overall ranking. Barry Herman, until recently a senior official of the UN Financing for Development Office, agrees in a paper for the G24 that: "there are a number of rather curious features in the current CPIA methodology that should cast doubt on the meaning of the results". At a meeting with NGOs in Washington, World Bank vice president Gobind Nankani acknowledged that the CPIA incorporated a mix of evidence-based and subjective components. A paper by Juergen Kaiser of the German Jubilee campaign commends the Bank/Fund paper for admitting the "systematic over-optimism" of previous IFI debt sustainability calculations. Growth projections have on average been five percentage points ahead of reality, leading to excessive borrowing and artificially reducing the need for debt relief. He points out that this relief "would have come at the expense of (among others) the IMF and the World Bank, i.e. the same institutions which have actually made the projections." As well as this ongoing conflict of interest this paper also points out that the Bank and Fund proposals only cover low-income countries outside the Heavily Indebted Poor Countries (HIPC) initiative. He points out that countries such as Bolivia are at serious risk of a new, largely multilateral debt problem because of the non-concessional loans they have recently taken on. Discussions are underway about how to incorporate the analysis into Fund work on surveillance and conditionality and into Bank lending operations. There is a need to identify where to source the grants needed to help meet the MDGs, and how to help countries deal with shocks. Bank and Fund staff will produce a paper on how to deal with countries which will not receive debt relief by the time the HIPC initiative is due to expire at the end of this year. This will be sent to the Bank and Fund boards in June, with final proposals due by the annual meetings in early October. NGOs will continue to press the point that debt deals for countries are currently at the mercy of subjective judgements and political factors. At a recent talk in London, Bank president Wolfensohn acknowledged that Iraq is being treated very differently from less strategic countries. He quipped that national leaders have been asking him if they can have an invasion to enable them to benefit from debt write-offs. Heads in the sand: The IMF discusses debt sustainability, Erlassjahr.de To lend or to grant? A critical view of the IMF and World Bank's proposed approach to debt sustainability for low-income countries, CAFOD ===================================================================== 3. New IMF poverty assessment unit --------------------------------------------------------------------- The IMF has announced the creation of a unit to work on producing Poverty and Social Impact Analysis (PSIA). This is a tool to assess in advance the likely impacts of policy reforms. According to the Fund, the four person team will work exclusively to better understand the effect of IMF programmes on vulnerable groups - especially the poor - and to improve the quality of programme design. The Fund's PSIA will assess the appropriateness, timing, and sequencing of alternative measures and, where appropriate, design and integrate compensatory measures to mitigate negative effects of reform policies. The group will establish a repository of information on existing PSIAs and analyze their relevance for the design of loan programmes. Meeting with NGOs at the Spring Meetings, Sanjeev Gupta, the head of the Fiscal Affairs Department where the group will operate, conceded that PSIA implementation had been uneven and better integration in Fund programme design was needed. A letter from Oxfam, Trocaire and other NGOs in April welcomed the decision to set up the unit, but warned that the Fund must set out transparent principles of operation, such as guaranteeing the inclusion of social development specialists; involving country authorities and civil society from the beginning of studies; and exploring policy options, not simply focusing on designing safety nets for pre-determined reforms. These steps are necessary if the Fund is to avoid "the problems encountered with the World Bank approach to PSIA which has caused considerable dissatisfaction amongst stakeholders". Much more needs to be done if PSIAs are to be mainstreamed within Bank and Fund operations. Bank vice president for infrastructure, Minouche Shafik conceded "never having come across PSIA" when asked about it at a meeting with UK NGOs in May. Making PSIA happen ===================================================================== 4. New Bank adjustment policy a step backwards --------------------------------------------------------------------- The Bank has released a revised draft of its controversial 1992 structural adjustment policy. Comments can be filed until the end of June and a final policy is to be submitted to the Board for approval soon after that. The previous policy was criticised as embodying the 'Washington consensus' giving no regard to the social and environmental impacts of adjustment operations. The new policy does not use the term 'adjustment lending', preferring 'development policy lending'. Analysis by Bank Information Center of the draft's content points out its failure to address the issue of policy conditionality. The treatment of social and environmental impacts and the need for stakeholder consultations "fall short and actually lag behind standards already in place for certain types of Bank adjustment lending". References to the need for staff to consider environmental and social impacts of programmatic lending do not make it an express requirement to avoid or mitigate negative social and environmental impacts. The operational procedures for determining negative impacts remain unclear and therefore unlikely to be effective. UK NGO Forest People's Programme sent a letter to the Bank's senior adviser on safeguard policies Steven Lintner describing the draft as "extremely disappointing". They point out that it appears to do little to protect forests, contrary to assurances given to the Board and other participants during the forest policy consultations. They have called for the policy's withdrawal and substantial revision. Adjustment policy update, BIC Rebranding adjustment: the World Bank and "development policy support lending" ===================================================================== 5. Lula and Kirchner want IMF to relax grip ---------------------------- Comment -------------------------------- Roberto Bissio, Socialwatch, Uruguay --------------------------------------------------------------------- A new initiative to rewrite the rules of engagement with the IMF could mark the biggest change in creditor-debtor relations in a generation. According to the present agreement with the IMF, Argentina would end the year with a "primary fiscal surplus" (i.e. before paying external creditors) of 3 per cent of its Gross Domestic Product, some $10.8 billion. Since the Argentine economy is growing much faster than initially expected, an additional surplus of $7.8 billion is now expected and the IMF wants that money for itself, the World Bank and private holders of Argentine bonds. But Economy Minister Lavagna announced on 20 May that the additional money has already been allocated: $5 billion will go to social expenditures, support to local firms and infrastructure investment, while $2.8 billion will be used to cancel bonds without issuing new debt. While Argentina is growing, reducing unemployment and holding tough negotiations with foreign investors, Brazil is struggling desperately to meet the 4.25 per cent fiscal surplus demanded by the IMF. The economy is being suffocated by high interest rates, unemployment is rising and growth is zero. The enormous popularity of Brazilian president Lula is declining, while his neighbour Kirchner, an unknown figure a year ago, is becoming more popular every day. Yet the two leaders have found common ground in demanding a reformulation of the rules of the international economy. First it was their common stand in the Cancun ministerial meeting of the World Trade Organization that encouraged the creation of a solid group of developing countries to confront the major powers. Now they want the IMF to rewrite the rules, and are coordinating the demand from developing countries for substantial reform of the Bretton Woods system. On 16 March in Rio de Janeiro, Lula and Kirchner signed the declaration for cooperation towards economic growth with equity, also known as the 'Copacabana Act'. In it, the presidents denounce a "contradiction in the present international financial system between sustainable development and its financing". To change that system, they agree "to negotiate with multilateral credit institutions in a way that does not jeopardize growth and ensures debt sustainability, allowing for infrastructure investment". The declaration also demands the elimination of subsidies in developed countries; the right to discriminate in government procurement in favour of national and regional investors; and the freedom to stimulate domestic and regional savings, hinting at the creation of regional funds and perhaps even a common currency. During the April meeting of the Interamerican Development Bank in Lima the demand to exempt infrastructure investment from IMF estimates of primary fiscal deficit received unanimous support from Latin American countries. For finance ministers this means being allowed to spend more in times of recession. This follows the classical Keynesian recipe of public investment in infrastructure to generate jobs and stimulate a stagnated economy. For the IDB and the Bank this might be an opportunity to increase their lending to middle income countries, now limited by debt sustainability considerations and IMF policies limiting government spending. Ultimately a bigger issue is at stake that goes to the heart of development macroeconomics: how should national accounts deal with the concept of assets? When a private corporation invests in infrastructure, the investment is treated as asset creation. Only a small percentage of the total investment is accounted for in the current year. In contrast, national accounts only register income and expenditure, therefore the entire cost of infrastructure investment is treated as expenditure in the year in which it is made. The introduction of the concept of asset creation would allow for greater government expenditure during economic downturns, since the fiscal deficit would only be increased by a portion of the investment. The remainder of the ensuing liability would be expensed in future years as - hopefully - the economy recovers. Another implication is that the sale of state assets through privatisation would be treated not simply as income but also as the loss of an asset. The same would apply for the depletion of natural resources. Health and education expenditures could be treated as investments in the same way as spending on infrastructure; many economists would argue this is an investment that pays more and faster than big conventional 'development' projects. Debate around these issues is gaining momentum in the current political climate where the failure of IMF economic orthodoxy is challenged daily by social movements in the streets and the election of reform-oriented governments to power across Latin America. ===================================================================== 6. Symbolic vote does nothing to change Fund leadership stitch-up --------------------------------------------------------------------- Unsurprisingly, former Spanish finance minister Rodrigo Rato was confirmed as managing director of the IMF in a mock voting procedure on 4 May. Disappointment was widespread that the Fund had failed to end the stitch-up that allows Europe to nominate the Fund's head. While some commentators pointed to the nomination of Egyptian Mohammed El-Erian and his official interview with the board as a sign of increased openness, the usefulness of this precedent was put in perspective by an IMF executive director: "It was not a total success in that the decision as to who was going to get the job had already been made." Rato comes from a wealthy family in the north of Spain. His father was a supporter of Franco and head of a provincial bank. When the bank collapsed, both he and his eldest son were jailed. As a result he has reportedly held a burning desire for his youngest son, Rodrigo, to become central bank governor and restore the family honour. Rato has exceeded these expectations: becoming the central bank governor's boss. Rato held the post of finance minister for the last two years of the Aznar administration. He advanced orthodox neoliberal policies, pushing through controversial privatisations which wound up in the hands of friends of the ruling Partido Popular. Rato maintains close ties with a number of Spanish business leaders with extensive interests in Latin America. He affirmed in 2000 that a central aim of economic policy was to "obtain the greatest commercial benefit from the circuit (of International Financial Institutions) for our business people." At his first IMF news conference, Rato said that "overall, the work of this institution has been very good." Countries that borrowed from the Fund and followed its advice were generally in a "much better position today." On bailout packages, Rato said that if the Fund's board was confronted with a well-reasoned recommendation from the staff to make a giant loan, "it ought to act." He did cite one instance in which the IMF had erred - its handling of the collapse of the Argentine economy. However Rato maintains the status quo at his peril. Latin American countries are increasingly banding together to demand far-reaching changes in their relations with the Fund (see Comment). In Asia, the noises being made in support of the creation of a regional monetary fund are growing louder. Financial Times' chief economics columnist Martin Wolf argued in May that Asian economies have massive reserves which would be better spent in developing Asian capital markets rather than accumulating US dollar reserves of dubious investment quality. He scolded European finance ministers, saying that "by their arrogant narrow-mindedness over the appointment of the managing director, the Europeans have demonstrated once again their determination to keep the IMF under their thumb." Was Rato the best candidate? We'll never know. Press briefing by Rodrigo Rato, IMF ===================================================================== 7. US lawmakers scrutinise World Bank record on corruption --------------------------------------------------------------------- In mid-May the US Senate Foreign Relations Committee opened a hearing on corruption in multilateral development banks. Senator Richard Lugar, an Indiana Republican who chairs the Committee, cited experts who estimate that $26 - 130 billion of World Bank lending since 1946 has been misused. The World Bank rejected this figure and mounted a vigorous defence of its anti-corruption efforts. The Committee has expressed particular interest in the Lesotho Highlands Water Project and the Yacyreta Dam on the Argentina-Paraguay border. Lugar commented "the Yacyreta Dam project was budgeted to cost $2 billion when it began in 1973, now has a debt of $10 billion - and is still not completed". Senator Lugar commented that "when developing countries lose development bank funds through corruption, the taxpayers in those poor countries are still obligated to repay the development banks." Bank President James Wolfensohn declined to give evidence before the committee, citing the established practice of Bank officials not testifying before the legislatures of their member countries. But the Bank produced a briefing setting out a series of steps taken in the last eight years. The Bank recently introduced a rule that all of its senior managers must provide an annual statement listing their financial interests and those of their immediate family. The Bank has fifty staff who have examined more than 2,100 cases of fraud and corruption since 1999. Issues examined include theft, bid-rigging, bribes, collusion or coercion by bidders, fraud and product substitutions. More than 180 companies and individuals have been debarred from doing business with the Bank, either temporarily or indefinitely. These companies are, however, almost all small firms. Larger companies have somehow escaped censure. On the Lesotho Highlands Water project Senator Lugar questioned the fact that although three international companies have been convicted of bribery, none have been placed on the World Bank's list of reprimanded or disbarred firms and may thus continue tendering for work on Bank projects. The Bank advises developing country governments on anti-corruption statutes and says it is assisting 40 countries with enforcement. It also points to its work to try to ensure that the Chadian government would only spend that country's new oil revenues on poverty-reducing projects. In testimony to the Committee, Carole Brookins, US Executive Director to the Bank, summarised that "the Bank has built a comprehensive structure that includes international advocacy, internal controls, analytical/diagnostic tools, education and training, and country operations". Nancy Zucker Boswell, Managing Director of Transparency International USA also testified. She agreed that the Bank "has made great strides" but that work on governance "has not been adequately specific". She said the Bank should condition lending on reforms including access to information legislation, asset disclosure by public officials, budget and procurement transparency and transparency of campaign finance and voting records. She pointed out that such objectives have already been agreed by many governments when signing the UN Convention on Corruption, agreed last year. She demanded that the Bank publish full details of contracts and sub-contracts paid for by its funds and require all bidders on Bank-financed projects to adopt anti-bribery compliance programmes. In his contribution to the Committee Manish Bapna, Executive Director of the Bank Information Center, also pointed to the "pressure to lend and culture of loan approval" which have inhibited accountability in the Bank. He emphasized that "corruption can undermine the development impact of these projects in countless ways. Examples include diluting the quality of cement in roads or irrigation canals; permitting illegal timber harvesting in restricted forest areas; and granting profitable public contracts to well-connected cronies of government officials". He argued that multilateral development banks should: * ensure that the host country meets a minimum standard of governance; * carry out due diligence to identify and mitigate corruption risks; and * help create an open environment for civil society and media to monitor the project throughout implementation. Bapna pointed out the dangers with privatisation deals, where "high-level government officials use borrowed funds to renovate public service enterprises and sell or concession them to 'associates' at prices well below their actual market values." He argued that the Bank should force companies that want to receive its support to adopt much broader corporate transparency and disclosure requirements. He welcomed recent steps taken by Congress to require reports on the extent to which each MDB has resources to ensure that applicable laws are obeyed. He commented, however, that "immune from lawsuits and legal challenges, the MDBs know that they will be paid back regardless of how much money is diverted or stolen. This situation provides a weak incentive to ensure that the money goes to its proper purposes." He pointed out that the UN Convention Against Corruption recommends waiving immunity of international institutions in cases of corruption and that Congress might want to review the International Organizations Immunities Act to take account of this. Dr Jeff Winters of Northwestern University has estimated that up to $100 bn of World Bank funds might have been diverted in the last sixty years, a figure the World Bank dismissed as "incomprehensible". Winters proposed establishing "an international auditing body that is independent of the MDBs and of private sector auditing firms - nearly all of which have deep conflicts of interest." Senate Foreign Relations Committee hearing Acres debarment: Litmus test for Bank on corruption Inside the institutions: How the World Bank deals with corruption ===================================================================== 8. Baku Ceyhan human rights activist arrested --------------------------------------------------------------------- Activist Ferhat Kaya was arrested by the Turkish authorities in early May following his work to protect the rights of Turkish citizens affected by the Baku-Tbilisi-Ceyhan oil pipeline. Allegations quickly surfaced that he had been tortured. Campaigners outside Turkey who had worked with Kaya rapidly mobilized to send letters of support. As the project is funded by international financial institutions they urge people to write to officials at export credit agencies, the World Bank and European Bank for Reconstruction and Development as well as to the private banks backing the scheme. He was humiliated and very badly beaten up during his detention. An officer pointed a gun at his head and verbally abused him. Witnesses and relatives observed blood on his clothes and deep cuts on his arms and elsewhere. A medical report is consistent with allegations of torture or ill-treatment. Kaya has been involved for some time in mitigating the impacts of the BTC project by ensuring that local people obtain the compensation to which they are entitled and that their rights are respected. He has this year assisted people affected by the pipeline in bringing complaints to the European Court of Human Rights and the European Court of Justice. Witnesses, human rights and environmental groups believe this is Kaya's second detention in connection with his work to highlight concerns over the pipeline. At the time of his arrest he had just been promised a meeting by BOTAS, the Turkish parastatal company building the pipeline under contract to BP, a meeting he was then unable to attend. After many protest letters were written, Kaya was released on payment of a large bail. Supporters are still demanding an investigation into the circumstances of his detention and alleged torture and a guarantee that his human rights are respected. In the UK write to Hilary Benn, Secretary of State for International Development Baku-Tbilisi-Ceyhan pipeline Groups condemn UK support for pipeline To contribute to recoup the bail payment or join a list for solidarity actions ===================================================================== 9. Inside the institutions: The UK role in the WB and IMF --------------------------------------------------------------------- The top UK representatives at the IMF and World Bank are the Chancellor of the Exchequer Gordon Brown and Secretary of State for international development Hilary Benn. They are known as UK governors to the Fund and Bank, sitting on the ministerial committees which meet in Washington twice a year to decide on overall strategic direction for the institutions. Brown is the Chair of his committee. The UK is the fourth-largest shareholder in the Bank, holding 4.3 per cent of votes (the US is by far the largest shareholder with a 16.4 per cent vote share). On a day-to-day basis the governors delegate power to an Executive Director (ED), a Treasury civil servant seconded to Washington for two or three years (currently Tom Scholar). In other countries separate EDs to the Bank and Fund may be political appointees. Scholar holds regular meetings with NGOs in advance of the spring and autumn meetings of the Bank and Fund. The ED heads the UK delegation to the Bank and Fund. Based in an office in the IMF, the team comprises approximately eight staff from the UK, including an alternate ED for the IMF from the Bank of England (Andrew Hauser), an alternate ED for the World Bank from the Department for International Development (DFID) (Caroline Sergeant) and several advisers. Either Scholar, his alternates or advisers attend the regular meetings of the World Bank and IMF boards. The policy lines taken at Bank and Fund board meetings are formally decided in London by the Treasury or DFID which then instruct the UK Delegation. Since the Boards operate on the principle of consensus, there is no official record kept of the positions taken by EDs and no way for citizens to hold their representatives accountable. Limited information is given on the positions taken by the UK ED in the annual report to parliament on the UK in the IMF. DFID has the International Financial Institutions Department (IFID), headed by Kevin Sparkhall, with Alice Mann as the World Bank desk officer. IFID seek analytical support from country offices or policy division teams (such as the education for all or extractive industries teams). Out of total DFID spending of UKP3.6 billion in 2002 - 3, 10 per cent was spent directly on the IFIs. An unspecified additional amount is spent on country-level work, policy programmes and technical cooperation conducted jointly with the BWIs. Within the Treasury the Macroeconomic and Finance Directorate is responsible for preparing advice on the policy issues and specific country programmes brought before the board. Within the directorate the key units are the Global Policy and Institutions Team, headed by John Ockenden and the International Poverty Reduction Team, headed by Beverly Warmington. Parliamentary oversight of the UK's role in the BWIs is provided ad-hoc through parliamentary questions, and more formally through select committees which oversee both DFID and Treasury. A select committee inquiry may last for several months and give rise to a report to the House; other inquiries may simply consist of a single day's oral evidence which the Committee may publish without making a report. Evidence from non-UK civil society sources is actively encouraged by the development committee for their hearings held each November. The political make-up of the committees roughly reflects the strength of the various parties in the House. The International Development Select Committee (IDSC) holds hearings on a range of development issues, as well as an annual hearing on the outcomes of the autumn meetings of the WB and IMF. The Committee usually calls on the Secretary of State for International Development to give evidence. Tony Baldry, Conservative MP, is chair of the IDSC. The Treasury Select Committee analyses UK policy in the Fund, holding evidence sessions in the past with the IMF's managing director, the UK ED and NGOs. Since 2001 it has requested the Treasury to produce an annual report. It is chaired by John McFall, Labour MP. Key Documents ============= World Bank Institutional Strategy Paper --------------------------------------- DFID produces Institutional Strategy Papers (ISPs) about every three years to identify how to achieve its objectives via the multilateral institutions. The World Bank ISP is currently being re-drafted and will be finalised by the autumn - UK NGOs have been invited to comment on the draft. It will include sections on: focusing on results, joint working at the country level and achieving the Monterrey goals. Objective notes for the spring and annual meetings of the Bankand Fund ---------------------------------------------- Innovative - if limited - joint briefing from DFID and Treasury laying out UK objectives for the main points of discussion on the agenda of the meetings. Annual reports on the UK in the IMF ----------------------------------- Following pressure from NGOs and MPs the UK Treasury now produces an annual report setting out the main policy debates in the IMF and the UK government's role therein. Other key documents include ministerial statements at the spring and autumn meetings of the Bank and Fund; DFID departmental reports and the 2000 Globalisation White Paper which sets out the policy priorities of the entire British government on international policies and institutions. The UK Executive Director, Alternate Executive Director and Delegation staff IMF (Room 11 - 120) 700 19th Street, NW Washington DC 20431 USA Tel: +1 (0) 202-623-4560 Fax: +1 (0) 202-623-4965 Tony Baldry Chair, International Development Select Committee House of Commons 7 Millbank London SW1P 3JA Tel: 020 7219 1223 Fax: 020 7219 2891 John McFall Chair, Treasury Select Committee House of Commons 7 Millbank, London SW1P 3JA Tel: 020 7219 5769 Fax: 020 7219 2782 2000 UK Government Globalisation White Paper, DFID Growth for all: Towards a stable and fairer world: The UK and the IMF 2003, HM Treasury ===================================================================== 10. G8 governments review IFI mandates --------------------------------------------------------------------- As part of chairing the G8, the US government initiated a review of the international financial institutions. The review is shrouded in secrecy but is said to include improving IMF assessments of economic policies and potential crisis risks, and refocusing the IMF and World Bank on their core mandates. G8 finance ministers said in May "the institutions must reform further on the basis of principles of accountability, good governance, transparency, clarity of objectives and effective working with markets." While examining the IFIs' mandates is always welcome, the G8 is not the appropriate forum to be doing it. ===================================================================== 11. Peoples' movement tackles IFI anniversary --------------------------------------------------------------------- The National Alliance of People's Movements, India, has produced a special issue of its publication to examine the international financial institutions on their sixtieth anniversary. Entitled the Noose Of Global Lenders it features contributions from well-known activists on a range of impacts and problems. Among the articles are: 60 Years And No More, Medha Patkar; Resisting Appropriation and Distortion of Knowledge, Anil Sadgopal; Boomerang Hits World Bank, Souparna Lahiri. The People's Movement c/o NAPM, Haji Habib Bld, A Wing Dadar (E) Mumbai - 400 014 India Tel: (022) 24150529 ===================================================================== 12. Disclosure in private sector financing --------------------------------------------------------------------- The World Bank's private sector arm, the International Finance Corporation, is conducting a review of its policy on information disclosure. A two-week e-discussion took place in May. A coalition of 26 NGOs sent a letter to the IFC with a series of recommendations on the review process. Five regional consultations are to be scheduled for August to December, and the IFC has promised release of an approach paper at least 30 days before the first consultation. The final policy is due to go to the Board in early 2005. NGO letter, JACSES IFC disclosure policy review 2004 ===================================================================== 13. African Executive Directors' support fund --------------------------------------------------------------------- The Nairobi-based African Economic Research Consortium (AERC) has been awarded the contract by the sub-saharan African Executive Directors at the Bank and Fund to act as the commissioning agent for the Analytical Trust Fund (ATF). The ATF is a UKP660,000 initiative to support the analytical capacity of African EDs by funding research and policy dialogues. It will be administered by DFID on behalf of donors France, Netherlands, Norway, Sweden and the UK. AERC will be responsible for coming up with a roster of experts by country and issue specialisation to respond to the requests of African EDs. William Lyakurwa, AERC ===================================================================== 14. Middle-income strategy threatens safeguards --------------------------------------------------------------------- A coalition of NGOs led by International Rivers Network has raised alarm bells that a proposed World Bank middle income country (MIC) strategy will seriously weaken policies meant to protect vulnerable groups and the environment. The strategy proposes accelerating the shift to reliance on national social and environmental policies "where such systems are found satisfactory to the Bank." A note on the operationalisation of the strategy has been described by a coalition of NGOs as "particularly disturbing". It suggests that the Bank consider relying on national safeguard systems in countries that are "in the process of developing them." National systems will be analysed not by independent experts, but by the Bank or the government itself. Differences between Bank safeguards and national systems do not need to be addressed before projects are approved, but can be examined during the implementation of the projects. Unclear is what the strategy would mean for the purview of the Inspection Panel. The strategy suggests that national systems become the reference point for Panel investigations, significantly weakening the accountability of the Bank to its own policies. The MIC strategy was drawn up by a task force made up of Bank staff. The only external consultation on the strategy was with a "panel of experts from middle income client countries." The draft strategy and resulting management action plan were discussed by the World Bank Board in an informal meeting in early March, where they seem to have raised strong concerns. Transferring responsibility for safeguard compliance to national governments has been driven by a 2001 study which said that the cost of compliance was an obstacle to increased lending. Emphasis has since been placed on reducing safeguard costs despite the finding that compliance with fiduciary policies costs three times as much. No counterbalancing estimate of the development value of observance of environmental and social safeguards was made. The impetus for the strategy re-think has come from two areas. First, pending re-evaluations of middle-income strategies by a number of bilateral donors, including the UK; and second, the realization that borrowing countries are turning away from Bank loans despite lower interest rates. From the latter, the task force concluded that "Bank-internal factors" are hurting competitiveness: retreat from infrastructure lending, excessive conditionality, cost of fiduciary and safeguard policies, complexity and rigidity in lending instruments and the inability to integrate public and private sector support are amongst those factors mentioned. Several other contentious issues are raised in the strategy paper: The Bank intends to take a leadership role in coordinating support for middle-income countries similar to that which it enjoys in low-income countries. This will involve the renaming of the Country Assistance Strategy (CAS) to the Country Partnership Strategy (CPS). On conditionality, the strategy charges the Bank with pursuing "excessive" and "infeasible" policy reforms, particularly those requiring private sector participation in infrastructure provision. It recommends that projects should not carry sector policy conditions "unless these are explicitly shown to be essential for success." The task force recommends investigation into "stronger Bank group collaboration, including IBRD/IFC/MIGA country offices". NGOs have written letters to Executive Directors urging them to reject the strategy: the Board "should support processes to strengthen national safeguard systems, but should not weaken the Bank's own responsibilities". Discussion at the Board of a project in Mexico piloting the use of national safeguards was re-scheduled for early June. It was unclear whether a management note on national safeguards would be approved by that time, putting in doubt a July rollout of the MIC strategy. World Bank recommends weakening of environmental standards, IRN ===================================================================== 15. IFI campaigners win environment prizes --------------------------------------------------------------------- This year's Goldman Environmental Prize honoured two activists who have been tackling World Bank projects and policies. Awards went to Manana Kochladze, a founder of Green Alternative, Georgia and Rudolf Amenga-Etego of Integrated Social Development Centre, Ghana. They have been challenging the Baku-Tbilisi-Ceyhan pipeline and water privatisation respectively. The Goldman Prize awards annually $750,000 to environmental champions from six continents. The award gives recognition, visibility, and credibility for efforts usually undertaken under grave personal risks. Kochladze is a regional coordinator for the Central and Eastern Europe Bankwatch Network. She has been in the frontline of the campaign on the Baku-Tbilisi-Ceyhan pipeline, which is financed by the IFC (the private-sector arm of the World Bank). Kochladze won critical concessions to protect the health of local villagers and the environment. Her tenacity in the face of widespread government corruption and powerful oil company interests forced a thorough examination of the destructive project. Amenga-Etego, has led Ghana's National Coalition Against the Privatisation of Water. This challenges a World Bank-backed reform that threatens to price water out of reach of Ghana's poor. A public interest lawyer and head of the Globalization Response Program for the Integrated Social Development Centre, his activism compelled Bank officials to confront their critics. In early 2003 the Ghanaian government agreed to suspend the project. Goldman Prize website ===================================================================== 16. Haitian victory --------------------------------------------------------------------- Thirty-four union members at a free-trade zone plant financed by the IFC - laid off for over six weeks - were reinstated 14 April. Management further agreed to provide medical treatment to those who were beaten; to pay back-salaries for the time of the dispute; and to recognise the right to unionise inside the factory. The layoffs vindicated fears of labour and NGO monitors who had pushed the IFC into commissioning an independent investigation into prior alleged labour violations against the plant's owners, Grupo M. Quanaminthe free trade zone project, Haiti Support Group ===================================================================== 17. Gender "poorly rooted" --------------------------------------------------------------------- The Bank's 2001 Gender Mainstreaming Strategy was criticised in a report by the NGO Gender Action which concluded that 'engendering' has occurred within the framework of standard macroeconomic and sector policies. Shortcomings are particularly evident in countries where adjustment loans are moving countries towards a market economy without a strong welfare system. Interviews revealed ignorance of the gender strategy within the Bank. Structural adjustment's gendered impacts: the case of Serbia and Montenegro, AWID ===================================================================== 18. Concerns about Brazil soya project --------------------------------------------------------------------- Brazilian NGOs have criticised a planned new IFC loan to a major soya producer in the Amazon region. They point out in particular that a meeting they held with representatives of the soya producing company - Amaggi - is being misleadingly used as evidence of NGO collaboration with the company as part of its application for further funding. They contest the loan which they believe would lead to further deforestation and social conflict. IFC studies US$30m loan for Amaggi group ===================================================================== 19. The power of the vote --------------------------------------------------------------------- Voters in India's Andhra Pradesh have confirmed that insensitive and socially irresponsible governments can be censured through the ballot. Chandrababu Naidu, ex-chief minister, towed the preferred policy line to get generous funding from the Bank and the British government for the contentious Vision 2020 plan. Indian writer Palagummi Sainath says the election "was a mandate against Naidu's policies and style of governance". Louise Richards of UK NGO War on Want says the "world's largest democracy has delivered a resounding vote of no confidence in the IMF, World Bank and DFID". World Bank loans to Andhra Pradesh ===================================================================== 20. IMF Trade Integration Mechanism: Sweetening a sour deal --------------------------------------------------------------------- With much fanfare, the Board of the IMF approved the Trade Integration Mechanism (TIM) in April, a new "insurance policy" to entice developing countries back to the multilateral trade table. But it may never be used. The mechanism marks a concession by the Fund that trade liberalisation is not beneficial for all countries all of the time, and that funds should be made available to the losers. Importantly however, the TIM makes funds available only for countries which suffer damages as a result of others' liberalisation; offers no new money; and may require applicants to undergo additional structural adjustment. Qualification for TIM funds would be limited to countries that are hurt when other countries increase market access or remove trade subsidies. This would, for example, include countries which lose preferential market access, or food-importing countries which lose the benefit of subsidised agricultural products. The Fund says that countries are unlikely to suffer from their own liberalisation but if they do they are covered by existing Fund programmes. A further qualification restricts the mechanism's use to damages inflicted by changes in the multilateral regime only. Reflecting the Fund's bias against sub-international agreements, changes in regional or south-south agreements do not qualify for the TIM. TIM funds are only available as loans, coming as part of a conventional arrangement with the Fund. Recipients will add to their existing debt load for damages caused by a restructuring in the global trade system beyond their control. The time given to repay the debt and the interest rate charged will depend on which arrangement a country holds with the Fund. Low-income countries will be charged concessional rates while middle-income countries will pay market rates. Disbursement of the TIM will depend on countries implementing at least the same number of conditions that are demanded by the larger programme: "In some cases, however, conditionality specifically related to the adjustments that the TIM is designed to support may be called for." There is some question of whether countries will ever receive any money under the TIM at all, or indeed if this was ever the intention. Critics point to the experience with the Fund's Compensatory Financing Facility (CFF), a programme established in the 1960s to assist countries hurt by fluctuating world commodity prices. The CFF has remained virtually unused because countries have not wanted to go into debt for damages incurred as a result of an unfair global trading system. Timeliness and inflexibility have also restricted the CFF in practice. The TIM may suffer from the same problems. An additional concern lies in the methodology used to calculate the damages caused to a country by others' liberalisation. Based on the Fund's enthusiastic support for all forms of trade liberalisation, Fund economists are prone to seeing any negative impacts of liberalisation as symptoms of poor or incomplete policy implementation. Witness Acting Managing Director Anne Krueger's recent comments: "The clear evidence is that only a very small number of countries will ever find themselves needing the assistance that the TIM offers. But if its existence helps provide policymakers in those countries with the assurance they need, it should make it much easier for them to embrace the Doha Development Agenda". A number of developing country members, including Mauritius, Bangladesh, Jamaica and Colombia, reacted negatively to the presentation of the TIM to the WTO General Council 18 May, noting that its focus on balance of payment problems was too limited. The Kenyan representative feared that the TIM might be a diversion from the more important issue of market access: "if such contradictions are left unresolved swift solutions that are prescribed will make matters worse for developing countries." Fund Support for Trade-Related Balance of Payments Adjustments, IMF Willful Ignorance: The Struggle to Convince the Free Trade Skeptics, Anne Krueger ===================================================================== 21. Parliamentarians' trade working group --------------------------------------------------------------------- On 20 April, the Parliamentary Network on the World Bank launched a working group on trade. The group was decided upon during a meeting, involving parliamentarians from several regions, as well as World Bank representatives. The official goal of the group is to "promote dialogue on trade, both within national parliaments and between parliamentarians from North and South." British MP Hugh Bayley (Labour), has agreed to co-chair the group. A co-chair is to be selected from the south. The World Bank task manager for the group, Jonathan Murphy, has indicated that the group is likely to put pressure on developed country negotiating positions "so that there is real movement on ensuring access to northern markets." Murphy agreed however that it would also be appropriate for the group to scrutinise the Bank's work in trade. "That would be up to the working group members and I expect will be discussed in the development of an action plan." The working group will be open to any interested MP, with attempts made "to ensure geographic balance" and a "representation of different perspectives." Murphy stressed the group's openness to differing viewpoints on trade: "Multilateral trade and financial organisations tend to promote unqualified trade openness. However there are many experts, even within these organizations, who believe that infant industry protection is the best and a proven way to a modern economic base. Parliamentary debates on trade should include consideration of both these, and other perspectives." The working group's first step will be to "determine desired activities, what resources are needed and where to get them." A date for the next meeting has not been set. PNoWB trade working group ===================================================================== 22. Bank trade evaluation: assume the position --------------------------------------------------------------------- The World Bank Operations Evaluation Department's plan for an evaluation of Bank assistance on trade shies away from many of the key issues according to ChristianAid. The evaluation framework is premised on the assumption that trade liberalisation leads to growth which will in turn, in the long run, lead to poverty reduction. The link between trade liberalisation, growth and poverty reduction, says Claire Melamed, is "assumed to be sufficiently strong that poverty measures are rarely mentioned as an indicator of the success or failure of Bank trade assistance." Instead it is assumed that indicators such as export performance and trade balance are sufficient. The evaluation sets itself five specific questions: What was the impact of Bank assistance on specific outcomes such as import liberalisation? Was the Bank's advised speed and sequencing of reforms appropriate? Did the Bank advice take key external factors into account? Was the Bank's support accompanied by appropriate policy and institutional reforms? Did the Bank's assistance on trade focus on poverty and distributional outcomes? Missed is the opportunity to address more fundamental questions about the political economy of trade policy choices. Was the choice of trade liberalisation itself appropriate - did the Bank allow sufficient space for the consideration of alternative trade policy options? And has Bank influence weakened the domestic capacity for trade policy analysis or diminished the role of other international agencies? After over a year spent off-track, a scoping workshop was finally held last December in Tanzania, leading to the release of an approach paper in mid-March. A series of regional consultations are now underway. The evaluation itself will involve case studies in Brazil, Indonesia, India, Kyrgyz Republic, Mozambique, Senegal and Zambia. The final evaluation is to be presented to the board in mid 2005. OED trade evaluation approach paper Talking Trade: Communities making trade policy in Ghana, ChristianAid ===================================================================== 23. Wolfensohn discusses human rights, environment at Greenpeace lecture --------------------------------------------------------------------- Bank president James Wolfensohn spoke in mid-May at a Greenpeace Business event in London. He made interesting points on issues from climate change to human rights and appealed to civil society groups to work with the Bank not against it. He undermined this diplomacy, however, by asserting arrogantly that no Bank project has harmed indigenous peoples while he has been in charge. Wolfensohn began by reminding the audience that Greenpeace ten years ago executed a major action to embarrass the Bank at its 50th anniversary conference in Madrid. He said the Bank had improved and urged CSOs to turn their attention to key governments which do not care about environment and development. He also emphasised that his son was making a film on climate change issues, so he did not need to hear from campaign groups about this serious global problem. Along these lines he called the Extractive Industries Review "very difficult to disagree with". He did, however, then claim that it was not a consensus document and that he had many letters from government ministers and companies arguing against implementation of the report. On the substance of the issues he said, without being specific, that the Bank would be able to provide significant funding for renewables. He also said, however, that unmet energy needs could not be met solely through renewables. And that as coal and oil extraction and combustion are inevitable, the Bank should continue regulating and reducing the impacts. On human rights he said he was doing what he could to push the debate in his institution, but did not want to bring the issue to the board and lose. He said "if I talk about a rights-based approach, I get letters [from board members] saying I have exceeded my authority because we are a financial institution. Many countries on our board have signed the declaration of human rights but say this is not the job of a financial institution". He mentioned in passing that "debates at the board are different" from when he arrived at the Bank in 1995, mainly because middle-income countries such as China are now taken much more seriously. A number of times in the evening it appeared that Wolfensohn was more interested in preaching about general development topics than discussing the details of what his institution was up to. This was clearly the impression many gained when Wolfensohn made the far-fetched claim that "on my watch there has been no project that has damaged indigenous peoples". Such claims are absolutely the wrong way for Wolfensohn to encourage Bank-watchers to relax their guard and begin collaborating with him. Forest People's Programme has responded with a detailed letter pointing out the damage to indigenous groups in one country alone. They produce "substantial evidence to show that indigenous Bakola, Bagyeli and Baka communities in Cameroon have suffered as a direct result of the World Bank's failure to ensure proper application of its indigenous peoples policy in the Chad-Cameroon oil pipeline, the Campo Ma'an Environmental Offset Project and the establishment of the Boumba Bek-Nki and Lobeke National Parks". Steve Kretzmann, one of the Greenpeace team who organised the action in 1994 and now with the Sustainable Energy and Economy Network, commented: "Wolfensohn was lovely on atmospherics, but gave an extended defense of business-as-usual on the specifics. He has got a report he commissioned that agrees with many CSO positions and really we're only hearing excuses for why they can't accept them. If they want CSOs to continue to engage, the Bank has got to be willing to take on board different perspectives. If not the coming period will be marked by much more protest". Wolfensohn himself admitted that despite hiring 120 civil society liaison officers and aiming to get human values recognised alongside economic ones during project planning, there are still problems aligning staff incentives with his high ambitions for the institution. Many believe this is partly because he is constantly travelling to make speeches rather than overseeing the implementation of the vast range of initiatives his institution has signed up to. World Bank faces lobbies on human rights, climate change The Energy Tug of War: The Winners and Losers of WB Fossil Fuel Finance, SEEN ===================================================================== 24. New head for Bretton Woods Project --------------------------------------------------------------------- Jeff Powell has been selected from a strong field of candidates to be the new Bretton Woods Project Coordinator. He took up this new role in early June. Jeff has been at the Project for over two years and has demonstrated an exceptional ability to work with different people, to clarifying and galvanising action on complex work areas, and to encouraging the strengthening of networks of diverse groups in the UK and beyond. Jeff commented: "I'm excited by the opportunity to build upon the strong reputation which the Bretton Woods Project has established. 2005 is set to be a key year in the UK for raising the profile of development issues; the team is looking forward to supporting its partners in pressing demands for justice and equity." Since joining the Project Jeff has written and edited briefings and articles, in particular on trade issues. He has also facilitated meetings with the UK Executive Director and other officials, given talks at meetings of activists, and organised campaign letters and actions, for example on the selection of the IMF head. He has also taken responsibility for developing the IFIwatchnet collaborative internet initiative which involves 60 organisations worldwide. Before joining BWP Jeff got a Masters in Development Studies from the Institute for Social Studies, majoring in the Politics of Alternative Development Strategies. Before that he worked for over 5 years in Thailand as an advisor to a rural weaving cooperative, then co-directing the Thai Community Currency Systems Project. This scheme, new to Thailand, facilitated learning between people's organisations about the role of community currencies in strengthening local economies. After setting up BWP in 1995 and directing it since then, Alex Wilks has left to run the European Network on Debt and Development based in Brussels. Tel: +44 (0)20 7561 7610 Tel: +32 2 543 90 64 ===================================================================== 25. BWP seeks Policy and Networking Officer --------------------------------------------------------------------- The Project has a vacancy for a unique new position. The main tasks are to research and produce materials on a number of key policy areas and strengthen the UK network on the Bretton Woods Institutions. Applicants need knowledge of the World Bank and IMF, experience in writing on global policy issues and to have worked with UK-based NGO networks. Location: London; starting salary: UKP26,000; application deadline: 27 June 2004 ===================================================================== 26. Global parliamentarians campaign launched --------------------------------------------------------------------- The ineffective involvement of legislatures in country dealings with IFIs is broadly acknowledged. Questioning IFI legitimacy and their dominant role in defining national development and economic policies, a global campaign led by CSOs and parliamentarians has been launched. A global parliamentarians' petition advocating legislative sovereignty over IFIs' operations is to be endorsed by legislators in countries worldwide for presentation to the Bank and Fund management in October. The campaign hopes to move parliaments towards better oversight in the design and implementation of national development policies. Parliaments: the missing link in democratising national policy making ===================================================================== 27. The World Bank�s knowledge roles: dominating development debates --------------------------------------------------------------------- Since 1996 the World Bank's President has emphasised his institution's roles as a "knowledge bank". Producing and deploying knowledge is clearly important. But just as one person's terrorist is another's freedom fighter, what some see as knowledge is viewed by others as propaganda for a particular world view. There is a strong tension between the World Bank's messages that it is keen to move away from blueprint approaches, and its many documents, speeches and indicators which claim to set out and measure "the right policies". As a huge bureaucracy dominated by rich countries, it struggles to be trusted as a neutral judge of development policies. A recent assessment of the Bank's knowledge strategy found many problems with its approach and impact. The evaluation report demon- strated some of the black arts of bureaucratic knowledge filtering, burying some of the most important critical evidence in Annex G at the end of the document. The officials managing the Development Gateway - a controversial World Bank internet initiative - have also demonstrated such skills, burying the documentation which outlined its original aims and objectives. And authors of successive World Development Reports (WDRs) - the Bank's annual flagship publication - have complained that they cannot be specific about the negative activities of any government because a Bank board member may call for it to be removed. Senior Bank research staff have complained that "thought police" operate in the institution, setting limits on what is researched and disseminated. The Knowledge Bank The Knowledge Bank consists of: - knowledge-sharing among Bank staff; - regional and country external knowledge sharing; - global knowledge initiatives. The Bank states that between 1997 and 2002 $283 million was spent on reorganising the Bank to be a knowledge institution. Far more was spent on actual activities such as training and reports. The Bank's research is widely disseminated and highly respected among many important audiences. A Swedish government study in 2000 concluded that "the World Bank continues to be dominant as the main purveyor of development ideas". These findings indicate that the Bank's analytical approaches influence policy-making across the world even if the Bank is not involved directly. The International NGO Forum on Indonesian Development stated: "the World Bank has enormous influence over the shape and pace of Indonesia's policies and reform in its own right, but it also wields great influence through its production of the economic analysis that serves as the information base on which other creditors and donors rely to make decisions". A recent study by the World Bank's Operations Evaluation Department (OED) found significant problems with the Bank's self-appointed role as guardian and disseminator of the world's development knowledge. The study combines desk reviews of the Bank's knowledge outputs with a five-country survey of 120 people from government, NGOs, the media, and the private sector. The evaluation notes: "the majority of respondents said the Bank presents 'ready-made' solutions that are not adapted to individual country circumstances. They argue that the Bank is reluctant to consider alternative models and solutions". A government representative from Brazil stated: "these 'best practices' come to us as norms; they become guidelines. They could bring a very positive effect, but also a negative one. If I'm in Brazil and I observe that there's not a correct vision of the situation, then I begin to question this best practice". The OED notes that "for a majority of respondents, this insistence that the Bank's way is the only way underlies most [Bank] reports, strategic models, and policy analyses". But the evaluators fail to analyse this properly, almost certainly because the OED is itself a part of the Bank's global knowledge bureaucracy. Structural difficulties ----------------------- Comments from Bank staff in the World Bank staff association newsletter two years ago revealed severe dissatisfaction with how the Bank treated its own researchers. One questioned whether the Bank's "public image matters more than germane research findings", pointing out that staff guidelines on getting press articles approved before publishing "come perilously close to saying that staff members must not publicly suggest changes in the institution's practice". Senior Bank researcher David Ellerman complained of "bureaucratic conformity", with public relations staff acting as "thought police to the black sheep in the organization who are not 'on message'". Researchers who might want to publish radical views (such as Branko Milanovic on trade and globalisation) have their draft publications re- turned for rewriting. They face a choice either to learn to draft reports which do not deviate too far from the party line, or to depart early, as have Ravi Kanbur, Joseph Stiglitz and William Easterly for example, all very senior Bank researchers. "Just as operations people are rewarded for giving out loans, Bank researchers are rewarded for bolstering the 'intellectual' basis for further Bank lending" concludes Robin Broad, a professor at American University, in a paper delivered this March at the International Studies Association conference, after numerous interviews with current and former World Bank research staff. There have been some scathing external analyses of the Knowledge Bank. Morten Boas and Desmond McNeill argue that in the Bank and IMF "ideas that challenge the conventional wisdom become distorted as a result of depoliticization and 'economization'". Helge Ole Bergesen and Leiv Lunde concluded "the Bank's two ambitions - to be a premier development institution helping to forge common agendas on major issues and a large-scale funder of projects are not compatible [as] they require qualitatively different governing structures, the one emphasizing equal participation and open, time-consuming processes, the other requiring hierarchical order and effective decision-making." It is often remarked that the Bank tends to hire researchers with doctorates in economics from a narrow range of US and UK universities. But what is the role of other non-economics researchers in the Bank, of whom there are many? Michael Horowitz, Professor of Anthropology at Birhampton University, argues that social scientists are marginalised in the Bank, working on fringe issues rather than "the structure of power and wealth which controls access to resources". Conflicts of interest: in-country research ------------------------------------------ In every country where it lends the Bank conducts or commissions a large range of studies on current issues. These range from public spending to tariff reduction, from primary schooling to natural resource protection. The studies make recommendations which are often taken very seriously by borrower government officials negotiating funding with the Bank and other aid agencies. Since the introduction of the PRSP process - which was supposed to devolve policy-making to developing countries - the Bank is paradoxically increasing its output of such studies, meaning that countries are flooded with expatriate consultants telling them how to make policy. Civil society groups and some officials have, however, demanded that the Bank carry out some of this research in a new way. The Bank, under pressure from NGOs and some governments, has agreed to help produce Poverty and Social Impact Analysis (PSIA). This claims to make available further analysis of the likely impact of proposed policies to help foster an informed national debate. Around 70 PSIA studies are said to be underway at present. Ministers in the HIPC Finance Ministers Network (which brings together ministers from 33 indebted countries) agree with the intentions of PSIA but urged the World Bank and IMF to "equip countries with the tools to conduct their own PSIAs rather than depending on outside assistance. These tools should have input from the Bretton Woods Institutions and donors, but be administered and disseminated by independent capacity-building sources, to avoid conflict of interest for partners in the negotiation process". Pride and prejudice: the Gateway -------------------------------- The World Bank established the Development Gateway, one of several global knowledge-sharing initiatives in 2000. This claimed to be a means to use the Internet as "a tool to address development issues and increase the effectiveness of development assistance", and to be a partnership with civil society groups. But from the beginning the Bretton Woods Project and others argued that it demonstrated the Bank's inability to listen to critical views, and failure to understand that people have fundamentally different approaches to development questions. A forthcoming study commissioned by Bretton Woods Project finds that the Gateway remains closely linked to the World Bank at both operational and strategic levels, that the information is predominantly from northern sources, that its operations are not transparent or accountable to civil society, and that there is no clear identification of who the beneficiaries are and how they might benefit. The information on the Gateway's topic and country pages is poorly organised, narrow in its origin and presentation (see table) and has a strong bias towards technological topics at the expense of social and political ones. Its cost-effectiveness is very poor compared with other Internet portals. Analysis of 100 most recent entries to Development Gateway topic sections, March 2004. (Jha, Seymour and Simms for Bretton Woods Project, 2004) Diverse critical voices ----------------------- It is by no means just radical civil society voices who urge the Bank to think again on its knowledge roles. The former director of the Bank's research department, Nancy Birdsall, urged an end to "the analytic near-monopoly of the World Bank on the details of pension reform, privatisation, the ideal bank deposit insurance system, and so many of the other issues of economic and social reform." Robert Wade, Professor of Political Economy at the London School of Economics, asks "whether the world is served by having as the principle provider of development statistics an organisation exposed to arm-twisting by its member states and needing to defend itself against constant criticism. We would not want Philip Morris research labs to be the only source of data on the effects of smoking even if the research met professional standards." A further problem is that the Bank has positioned itself as a major funder and trainer of other research organisations. In a consultation meeting on a World Development Report Mohamed Suleiman, director of the Institute for African Alternatives, spoke alarmingly of the Bank's ability to "spread a grey cloud of conformity" over the outputs of many organisations which either receive funding from the Bank or may want to in future. The African Economic Research Consortium, for example, which has just been awarded the contract to provide advice to African Executive Directors to the Bank and Fund, has received significant Bank support. The Bank's roles in this area are significantly reinforced by bilateral donors which provide additional funding to the Bank to encourage it to take an interest in policy issues they see as important. The Danish government, for example, promoted the concept of social capital in this way. But a flurry of Bank activity on this issue in the late 1990s has left little more trace than an outdated web database. Internal reviews are clearly not going to reign in the Bank's knowledge activities which provide it so much income, prestige and intellectual justification for its policies. This means the challenge will have to come from outside. A growing number of activists are realising the importance of the Bank's 'soft power' and are challenging it at country and global levels. For more on the knowledge bank: + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + 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 7610 Fax: +44 (0)20 7272 0899 Subscribe at or An independent non-governmental organisation supported by a network of UK NGOs and by the C.S. Mott Foundation. + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + END