The following briefing compiled by the Forest Peoples Programme (FPP) is a preliminary analysis of the Inter-American Development Bank’s (“IDB” or the “Bank”) Operational Policy on Indigenous Peoples (OP-765) as recently adopted by the Bank’s Board on February 22, 2006 (“Policy”). Throughout the analysis there are also several commentaries regarding the recently adopted IDB Strategy for Indigenous Development (“Strategy”). [1]

The Policy itself deviates very little from the earlier September 2005 Draft (“September Draft”). There are several positive elements in the policy document, including notable (though sometimes vague) incorporation of some indigenous peoples’ concerns, that relate to:

· clear recognition of indigenous peoples’ collective rights;

· attention to the Bank’s role in protecting indigenous peoples’ human rights;

· certain circumstances where consent and agreement from indigenous peoples is required;

· recognition of the rights of indigenous peoples affirmed by the jurisprudence of the Inter-American Court of Human Rights and other similar bodies;

· a prohibition on forcible resettlement of indigenous peoples; and

· an affirmation that the Policy applies to all Bank-supported operations and activities, not just specific country projects as is the case with the World Bank and International Financial Corporation policies.

That said, several problems remain in the Policy. These include:

· limited recognition of indigenous juridical systems and customary laws;

· absence of express public disclosure requirements;

· the omission of independent verification mechanisms, particularly for consultation, negotiation and consent processes;

· failure to require indigenous consent whenever a Bank-funded activity affects their lands, territories and resources;

· loss of important safeguards contained in earlier drafts (discussed below);

· reliance on ambiguous terms, phrases, and standards; and

· the absence of language providing clear guidelines, procedures and mechanisms to ensure full Policy compliance and implementation by Borrowers and IDB staff.

This last weakness of the policy is a serious one. As written, Bank staff and the Borrower (referred to in the Policy as the “Project Proponent”) are likely to find it difficult to understand how to implement the new IDB Policy on Indigenous Peoples. This is because the policy contains so many nuanced definitions, qualifications, and standards -- particularly for consultation, negotiation, and consent processes as well as evaluation and assessment phases. These are then coupled with only commitments to later provide guiding procedures and mechanisms to assist in the implementation of the Policy. For these reasons, it is not easy to determine what actions, assessments, and safeguards are triggered nor how they should be carried out in practice.

It is thus likely that the effectiveness of the new Policy will largely be determined by the manner in which the Bank staff and its Borrowers interpret its provisions and implement the same based on various guidelines, procedures and mechanisms that have still not been drafted by the Bank.

The Bank does have plans to finalize at least three documents by the time the Policy goes into effect at the end of August 2006. These documents include: 1) a source book of best practices, 2) internal IDB Guidelines, and 3) an internal Implementation Plan. Together with the World Bank and the Asian Development Bank, the IDB has already begun writing the joint source book. It is anticipated that the internal IDB Guidelines will clarify terminology used in the Policy and Strategy, focus on the different mandates, and help to further operationalize the procedures required by the Bank. Presumably, the internal Implementation Plan will look at the Bank’s own internal resources, staffing, internal coordination, and capacity to carry out the safeguards and implement the Policy’s provisions.

The Bank has not yet made any public statements or overtures indicating if and how indigenous peoples will be asked to participate in the drafting of these important documents. Both the content and spirit of the Policy and Strategy would seem to contain a mandate requiring the Bank to include indigenous peoples in these efforts. Indigenous peoples will now have to decide what role they wish to play in the drafting of these critical documents and whether they wish to work with the Bank to ensure this collaboration. That said, the following highlights some of the key concerns that indigenous peoples may have about the newly adopted Policy.[2]

Definitions of indigenous peoples

The definition of indigenous peoples is no different than the definition that appeared in the September 2005 Draft. The final Policy still applies to peoples that are “descendants from populations inhabiting Latin America and the Caribbean at the time of the conquest or colonization”: retain some or all of their “own social, economic, cultural, and political institutions and practices”; and recognize themselves as “indigenous or precolonial cultures or peoples.” (I.1.1). The definition thus appears sufficiently inclusive for purposes of the Americas, but its implementation will have to be monitored.

Definition of Applicable legal norms

Throughout the policy, reference is made to “applicable legal norms”. For example, see section IV.B.4.4.c which provides that the “Bank will take into account respect for the rights of indigenous peoples and individuals established in the applicable legal norms according to their relevance to Bank operations.” Section IV.B.4.3.c also states that the Bank “will seek to address, as far as is feasible and appropriate, the various facets of development with identity” which include “recognition, articulation, and implementation of indigenous rights in accordance with the applicable legal norms…” At first glance the definition of "applicable legal norms" seems mostly positive because it includes “indigenous juridical systems”, national laws, international norms (including the American Convention on Human Rights and other specified international human rights treaties), the jurisprudence of the Inter-American Court of Human Rights, and even acknowledges the emerging aspirational principles being articulated in the UN and OAS draft declarations on the rights of indigenous peoples. (I.1.2 & FN 4).

Further inspection, however, reveals that the Policy’s application of "indigenous juridical systems” can be quite limited because it states that such systems will only be “taken into account according to the rules for their recognition established in the legislation of each country." When these rules do not exist, theses systems will only be recognized when they are “consistent with national legislation and do not contradict fundamental rights established in national legislation and in international norms.” (I.1.2). One possible reading of this language is that despite independent recognition of these indigenous juridical systems and customary laws under international law – the Policy places its emphasis on how and if national laws recognize these systems and whether they are consistent with national legislation.[3]

Territories, land and natural resources in general

· Safeguards now applied consistent with “applicable legal framework”: In the September 2005 Draft the safeguards for lands, territories and resources were to be applied “consistent with national legislation on indigenous rights, the obligations of applicable international treaties, indigenous juridical systems and norms regarding ecosystem and land protection.” (Draft IV.IB.4.4.b). The new Policy now applies those safeguards “consistent with the applicable legal framework regarding ecosystem and land protection.” (IV.B.4.4.b). This is the same as saying “consistent with…applicable legal norms.”[4] As discussed above, the phrase “applicable legal norms” contains a number of positive elements, but it also contains a narrower application of indigenous juridical systems and customary laws.

·Participation vs. Co-management: In the September 2005 Draft, safeguards in projects for natural resource extraction and management and protected areas management expressly included “co-management mechanisms.” The new Policy’s safeguards no longer refer to “co-management”, but rather “mechanisms for the participation of indigenous peoples in the utilization, administration and conservation of these resources.” This new language could be implemented progressively to allow for co-management and even singular indigenous management. However, it can also be implemented narrowly to allow for little more than consultation and participation. This will need to be monitored.

· Benefit sharing “whenever possible”: As to the receipt of project benefits, the September 2005 Draft required “participation in project benefits” by affected indigenous peoples “whenever feasible” (Draft, IV.B.4.4.b.ii.3). The new Policy requires benefit sharing “whenever possible”. (IV.B.4.4.b.4). It is not clear what significance this change will have given that the Policy has never defined the criteria for determining what is “feasible” or “possible”. The determination is largely left to the discretion of the Borrower and Bank staff. Consequently, the application of this provision will need to be monitored.

Protected Areas

Nowhere in the Policy does it speak of indigenous peoples’ participation or control of decisions to create or designate protected areas let alone their right to give or withold their consent to the establishment of such proteced areas. The Policy only refers to their participation in the context of managing protected areas. (See IV.B.4.4.b.ii).

Free, prior and informed consent (FPIC)

FPIC still does not appear in the Policy as such, but one can see the substance of FPIC appearing in certain circumstances where consent or agreement is required. Unfortunately, however, the issue of consultation, good faith negotiation and consent is made confusing by the Policy’s use of various combinations of these terms and standards with little explanation of how they differ from one another or how they are realized. For instance, in Section IV of the Policy one can see references to: “socioculturally appropriate process of consultation”, “prior consultation”, “appropriate consultations”, “preliminary consultations”, “good faith negotiations”, sometimes “consultation and good faith negotiations”, sometimes good faith negotiations with a requirement to obtain agreements, and in the case of the commercial development of indigenous cultural and knowledge resources, simply a requirement for “prior agreement.” Consequently, the questions that the Borrower, Bank and indigenous peoples are left with at the end of the day are: how do each of these standards differ from one another, which one applies in a given circumstance, and what does the implementation of each standard actually require the Bank and Borrower to do? Equally important is the fact that only sometimes does the Policy actually state that a particular standard must be applied by Bank staff and/or the Borrower and that it is required. In many cases, the Policy provisions only calls on the Bank to support or promote implementation of a particular standard. This weakens the policy as in these cases, where a mandatory obligation does not exist, it will be harder for indigenous peoples to bring a complaint against the Bank for failure to satisfy a particular safeguard.

· The consent requirement: A close read of the Policy indicates that the requirement to reach an agreement with indigenous peoples seems only expressly provided for in two contexts: “cases of significant potential adverse impacts” (IV.B.4.4.a.iii)[5] and where there is commercial development of “indigenous culture and knowledge resources” (IV.B.4.4.e). It can be implied, however, that there is also a mandatory obligation whenever “socioculturally appropriate consultation” is required and not merely supported or promoted. This is because this form of consultation is defined by the Policy as “consultations …carried out in a manner appropriate to the circumstances, with a view to reaching agreement or obtaining consent”) (IV.A.4.2.a).[6] The only place where this form of consultation is required where “operations specifically target[] indigenous beneficiaries” (IV.A.4.2.a). Also, the Policy’s provision on resettlement (Art. VI.6.3) indicates that consent is required where displacement occurs. (See discussion below).

· Vagueness in methods of verification and operationalization: Unfortunately, the Policy is largely void of any guidance as to what these consultation, negotiation, and consent standards require, how they are operationalized, and how they are verified. The Policy and Strategy merely promise the future elaboration and adoption of guidelines, procedures and monitoring, evaluation and verification mechanisms. In fact, as to the guidelines specifically, the Policy promises that they will include “verifiable indicators” to determine both the compliance and effectiveness of the Policy. (VII.7.1). Indigenous peoples now need to decide to what extent they want to become involved in these drafting these important documents.

· The consultation loophole: Footnote 16 of the final Policy is identical to that which appeared earlier in footnote 11 of the September 2005 Draft. The footnote continues to be disturbing. The footnote provides that the Borrower can be considered to have satisfied its applicable consultations and good faith negotiation requirements if it presents evidence to the Bank that “the potentially affected indigenous peoples show[ed] no interest in taking part in the consultation project.” Footnote 16 further says that the Project Proponent can do this by simply providing evidence that they made “good faith efforts to consult” the affected indigenous peoples, that there were “no enabling conditions to carry out the consultation”, and that the proponent utilized some kind of “alternative measures” to identify “necessary and socioculturally appropriate mitigation measures.” If this footnote is applied loosely and creatively, it can be an opportunity allowing Borrowers to circumvent their consultation and consent responsibilities. This will need to be monitored closely.

This loophole seems further widened by the fact that footnote 18 of the Policy also allows the Project Proponent to submit evidence of the agreements with indigenous peoples after the project is already approved by the Board and under way. As written, the footnote seems to permit the Project Proponent to simply “demonstrate” that it has reached an accord with indigenous peoples that more negotiations and agreements are needed in the future. The Borrower can then continue with the project without having fully resolved matters with the indigenous community in question. Some projects may be amenable to a process by which agreements could be reached on an ongoing basis. This provision, however, if applied incorrectly and in bad faith can present problems. In the past, Borrowers have often mischaracterized their consultations with indigenous peoples as well as the outcomes and “agreements” that arose from them.

· No Independent verification of consultations, negotiations, agreements: There is still no requirement of third-party verification of the Borrower’s compliance with the Policy’s safeguards – including the consultation, good faith negotiations, consent and agreement processes. Under the Policy, only the Bank has this responsibility. (V.5.1 & V.5.3).

· Financial support for consultation, good faith negotiation, and agreement or consent mechanisms: As a positive element, the non-binding Strategy, not the Policy, provides that “Proponents as well as affected indigenous peoples may request logistic, financial, or other Bank support” to assist them in carrying out these processes. (Strategy, 7.8). In this context, the Bank specifically states that it “will take into account the need to eliminate power and resource imbalances among the parties.”

Uncontacted people

The Policy states that because of the “impossibility of applying prior consultation and good faith negotiation mechanisms” in these situations, “the Bank will only finance projects that respect the rights of these peoples to remain in said condition and to live freely according to their culture.” Doing this requires the use of “appropriate measures to recognize, respect and protect their lands and territories, environment, health and culture, and to avoid contact with them as a consequence of the project.” (IV.B.4.4.g). The final Policy does not expressly forbid the contact, but rather seeks to avoid it and invests the Bank staff with a great deal of discretion to decide when rights may be in jeopardy, when “respect” for rights is sufficiently provided for, and what mitigation measures must be taken.[7] The implementing guidelines being produced by the Bank will be critical to ensuring the positive implementation of this provision.

Resettlement

The Policy does not extensively address the resettlement issue. It merely states that the Bank’s application of the Policy will be applied consistent with all other Bank policies -- including its policy on involuntary resettlement (OP-710). It clarifies that the Bank policy that provides a “higher degree of protection of indigenous peoples and their rights will govern.” (VI.6.3). Based on this, the Policy would require consent before resettlement can occur because Section IV of the OP-710 provides that indigenous peoples will only be displaced if “the people affected have given their informed consent to the resettlement and compensation measures.” Moreover, notwithstanding the provisions of OP-710, a forced resettlement would likely be considered a “significant potential adverse impact” which triggers section IV.B.4.4.a.ii of the Policy and requires the agreement of the affected community.

Public Disclosures and Access to information

There is nowhere in the Policy where the disclosure of documents is discussed. The terms “informed consultation” do not appear in the Policy, however, in footnote 10 it is stated that agreement and consent has to be based on “proper information.” Presumably, the Bank’s existing policies – including its 2003 Information Disclosure Policy will still operate. Indigenous peoples may wish to examine these other policies closely.   

Knowledge of rights and training

The Bank staff and Borrower are not required to inform affected indigenous peoples of their rights under national or international laws except in the context of a project that excludes indigenous peoples on the basis of ethnicity. In this limited circumstance, indigenous peoples must be informed of their labor social, and financial rights. (IV.B.4.4.d). The Strategy, however, does provide that the Bank will do training of indigenous peoples “for dialogue and negotiations” (Strategy, 7.5.a).[8]

Reviews, assessments, monitoring and verifications

On these issues the Policy spends a lot of time speaking about “diagnostic studies”, “specific guidelines and procedures”, “necessary measures”, “supervision and evaluation measures”, social, cultural and environmental “assessments”, etc.. The Strategy also refers to these terms and further talks about the Bank’s preparation of “methodological tools, operational guides, and good practices.” (Strategy, 7.4) Unfortunately, neither document offers much in terms of a description as to the content of these processes, procedures, guidelines and mechanisms.

For instance, the Policy requires the carrying out of “participatory diagnostic studies” with respect to the “design of projects, programs, and technical cooperation operations” (IV.A.4.2.a). Under the heading of “Adverse impacts” there is also a requirement that “an evaluation” be conducted “to determine the seriousness of potential adverse impacts on physical and food security, lands, territories, resources, society, rights, traditional economy, way of life and identity or cultural integrity of indigenous peoples, and to identify the indigenous peoples affected and their legitimate representatives and internal decision-making procedures.” (IV.B.4.4.a.i). The Policy also provides that the Bank “will adopt the necessary measures to implement or verify the implementation of the safeguards established in the policy” and that these measures “will be described in detail in specific guidelines regarding procedural and technical matters.” (V.5.1).

· Determination of consent requirements prior to sociocultural and environmental assessments: Notably, the Policy provides that, “taking into account the perspectives of indigenous peoples”, the “responsible Bank division” will perform a “technical review” during the early stages of programming and identification. (V.5.3.a).[9] At this time, the Bank, not the Borrower, determines whether indigenous peoples might be affected, what impacts and benefits might occur, and as a result of these findings, what “level of analysis [is] needed to address indigenous issues, including sociocultural analyses and consultation and good faith negotiation processes.” While early technical reviews are commendable, this provision is troubling if it means that, prior to carrying out comprehensive “sociocultural evaluations” or “environmental and social reviews” that are likely to count with significant indigenous involvement and input, the Bank will make the final determination as to whether the consent of indigenous peoples is required, or merely consultation and good faith negotiations. These social and environmental evaluations and reviews are presumably required only after the Bank concludes its technical review and decides to proceed with a project involving “potential adverse impacts”. The Bank then provides “guidance” for verifying if the Borrower has complied with the requirements of: preparing the “sociocultural evaluations” and “environmental and social review[s]”, implementing the “socioculturally appropriate and duly document consultations and good faith negotiation processes”, and detailing “plans for mitigation, compensation, restoration and indigenous protections.” (V.5.3.b.ii & iii).  

· Mitigation and Compensation vs. Suspension or Cancellation: The Bank says that it will “adopt supervision and evaluation measures” to verify the fulfillment of the Policy requirements. If the requirements are not met the Bank will take the “corrective measures necessary for the project proponent to correct the problems identified within an acceptable timeframe.” (V.5.3.d). The Policy never specifies the scope of these corrective measures. Do they include, if warranted, possible suspension of Bank payments or of the project/activity itself? The Policy’s objectives are to “prevent or minimize exclusion and adverse impacts” (IV.4.1). The question will be whether the Policy is implemented to stress avoidance of adverse impacts, or implemented to merely mitigation, restoration and compensation for such impacts. Notably, the only time when the Policy expressly states that the “Bank will not finance” a project is when it “exclude[s] indigenous peoples on the basis of ethnicity.” (IV.B.4.4.d).[10]

Lastly, the Policy ends with a welcome provision requiring the periodic evaluation of its implementation “through independent reviews that will include consultations with national governments, indigenous peoples, the private sector and civil society.” (VII.7.2) The first evaluation will take place no later than five years from the Policy’s entry into force (which is six months after it is approved by the Board of Executive Directors (i.e. August 2006) (VII.7.2 and VIII.8.1).

*  As amended, December 2006