The Forest Peoples Programme (FPP) appreciates the opportunity to make comments on the CAO review of the IFC’s safeguard policies. We welcome the commitment of the CAO to transparency and full public participation in this review process. The following includes general and specific comments on the CAO’s draft review document.

General Comments:

Overall, the CAO’s IFC Safeguard Policy review contains some useful observations and some frank admissions concerning problems in the implementation the IFC’s of safeguard policies. We feel, however, that the focus of the review is overly skewed towards the perspectives and priorities of IFC staff and sponsors and does not adequately capture the concerns of citizens and local communities affected by IFC loan operations. This apparent bias is evident by the number of references made to a staff survey in the review (paragraphs 4.26, 4.17, 4.31, 4.32), whilst there is no corresponding survey or evaluation based on civil society and affected communities’ perspectives. As a result, as it stands, the draft review report does not adequately reflect the concerns of external rights holders and civil society organisations.

It is very disappointing, for example, that the draft review does not capture or refer to the multiple recommendations made in recent years by NGOs and civil society on how to strengthen and improve implementation of the World Bank’s safeguard policies (i.e. general observations and those recommendations made on specific safeguard policies as part of the lengthy conversion and policy revision processes undertaken by the IBRD and IDA – in relation to their operational policies on Forestry, Environmental Assessment, Pest Management, Involuntary Resettlement and Indigenous Peoples, among others).

To improve the final draft review, there is a need to include a more comprehensive discussion of civil society recommendations for improved safeguard policies. The report should also acknowledge and emphasise the essential need for clear-cut binding requirements and standards in the provisions of operational policies in order to ensure any new safeguard policy framework for the IFC establishes effective accountability and quality control mechanisms.

A.   Some Positive Elements in the Review:

Positive points in the review include its recognition that:

·       the IFC needs to accommodate larger project preparation costs and longer lead times in order to ensure that SP benchmarks and requirements are complied with (Page 6.para.2);

·       a stronger social component is required within the environmental assessment policy (Page 6, para.5);

·       the IFC should adopt a strengthened and “clear SP framework” that ensures that management can be held accountable at all levels (Page 6, para.8; Page 7, para.3; Page 45, Para 10.3) – and that this new system should include a new social assessment policy (Page 31, para 5.27; Page 47, para 10.17);

·       the supervision and monitoring of IFC projects and programmes is weak and supervision of SP implementation needs to be improved (Page 6, para.6, Page 20, para 4.15) with adequate staffing arrangements to ensure standards are maintained (Page 47, paras 10.17 and 10.18);

·       vague goals of mainstreaming social and environmental values into IFC institutions and operations must be backed by more specific targets and goals set out in SPs and loan agreements to “demonstrate accountability” (Page 7, para1; Page 19, para 4.5, Page 43, para 9.19);

·       the inclusion of reference to international standards such as those established by the ILO in the provisions of IFC’s policy statement on “Forced Labour and Harmful Child Labour” creates clear and useful benchmarks to be met by IFC staff and sponsors (Page 32, para.5.35);

·       “where sponsors are unclear as to the relation between IFC policies and national regulations, international standards may give helpful context and reference points” (Page 33, para.6.7).

·       a new system is necessary to continually assess and update safeguard standards so that SPs keep pace with advancing “technical, scientific and professional standards” and these standards should be placed in the public domain so that it is clear what standards apply (Page 41, para 9.6; Page 46, para 10.12; Page 47, para. 10.15).

B.   Weaknesses in the CAO’s Draft Review document:

Notwithstanding the above positive elements in the draft report, the document contains a number of serious deficiencies which limit the usefulness of its discussion and final recommendations.

Insufficient treatment of international standards:

The review’s comments on the utility of international standards in SP provisions in its draft report are welcome. However, in line with our previous comments submitted to the IFC,[1] the Forest Peoples Programme urges the CAO review team to take this analysis further by recognising that effective safeguard policies must have provisions that are consistent with relevant international standards on human rights, environment and development (see below). Failure to make this explicit conclusion seriously undermines the value of the draft report, which presently only makes incidental reference to international standards. More seriously, international legal scholars, UN expert bodies, indigenous peoples and NGOs like FPP maintain that a failure to ensure that SPs are consistent with international human rights standards violates the IFC’s obligations under international law.[2] This serious omission also risks causing the IFC’s private sector and governmental partners to contravene their obligations under international law.

On pages 32 (para 5.35) and 33 (para 6.7) the authors are not correct in their observation that: “Child labour is the only policy that relates specifically to agreed international norms and standards”. The IFC Policy on Environmental Assessment (OP4.01) states in paragraph 3 that:

“The EA considers...(the) obligations of the country...under relevant international environmental treaties and agreements...The Bank does not finance project activities that would contravene such country obligations, as identified during the EA.”[3]

UN agencies and expert bodies as well as NGOs have been urging World Bank policy makers to extend this clear and powerful precondition for Bank engagement to include consideration of a country’s obligations under international human rights agreements. We call on the CAO review team to show leadership by recommending that all its revised safeguard policies should include this expanded safeguard provision that makes explicit reference for the need to respect and uphold human rights and prohibits any investment that would risk causing a country or sponsor to violate its obligations under international human rights agreements. In the same way that SPs should be updated to keep pace with technical and professional standards (Page 46, para 10.12), their mandatory provisions should also be revised to ensure their requirements meet existing and emerging international standards on human rights, sustainable development and environmental protection and conservation.

No discussion of participatory monitoring and need for new accountability mechanisms:

Recognition that there is a need for improved supervision of SP coverage and implementation is a constructive finding in the review report (Page 26, paras 4.48-4.53; Page 47, paras. 10.18, 10.19, 10.20 and 10.21). Nevertheless, a serious shortcoming of the review is that this observation does not acknowledge the value of engaging local communities and their representative organisations in project and programme monitoring and evaluation where these communities have given their free and prior informed consent to a development operation and have expressed interest in project monitoring. An increasing number of studies show that a bottom-up framework for monitoring and supervision increases development effectiveness.[4] The review report mentions several very recent internal IFC initiatives to improve implementation, including the Quality Portfolio Management System (QPM), the Environmental and Social Review of Projects (ESRP) procedures and the Environmental and Social Risk Rating (ESRR) system (Page 19, paras 4.6, 4.7 and 4.8). However, these internal systems need to be reinforced and complemented by external participatory quality control and accountability mechanisms at the project and programme level.

Early evidence suggests that, like the Inspection Panel process, the IFC’s centralised complaints procedure run by the Compliance Ombudsman Office is cumbersome for grassroots communities and has so far shown limited capacity to stimulate adequate corrective actions to address local grievances due to its very technical approach, its distant base in Washington and its reliance on periodic and infrequent field missions.

There is an increasing amount of information from the World Bank’s own development operations, which confirms that local independent ombudsman procedures and other local-level complaints procedures can help improve development effectiveness on the ground and strengthen SP implementation.[5] The Forest Peoples Programme therefore urges the CAO review team to improve their final report by acknowledging the value of participatory monitoring and by recommending the need for new and more agile field-level accountability mechanisms that are more accessible to local communities affected by its loan operations.

Loose observations and defective premises:

The observation made by the policy team on page 5, para.3 that: “the majority of the SPs contain only vague assertions as to their goals” is of questionable accuracy. While goals may be understandably general, many of the World Bank’s safeguard policies and its other operational policies contain very specific requirements and procedures which staff must follow. For example, this is the case for the Indigenous Peoples’ Policy (OD 4.20) and the Involuntary Resettlement Policy (OP/BP 4.12), where participatory baseline studies and the participatory preparation of development and action plans must be completed prior to project approval and implementation. Regrettably, these requirements are often not met due to institutional and financial obstacles and to inappropriate attitudes which cause project managers and Borrowers alike to disregard such policy requirements.[6] We are disturbed that one premise underlying the review seems to be that SPs are at worst “difficult and sometimes meaningless as applied” (p.41) and at best incomprehensible. Although SPs may be challenging to implement and may include some provisions that need clarifying, the assertion that SPs are generally so vague as to be more or less useless is not valid and cannot be supported by the facts.

Likewise, the review team’s premise that SPs are obsolete and not fitted to present day circumstances needs to be challenged. While it is true that the Bank has shifted towards policy-based and programmatic lending and some of its agencies like IFC work with the private sector and financial intermediaries, these institutions, intermediaries and sponsors still engage in large-scale infrastructure projects, which were the original basis for the development of SPs by the World Bank Group (WBG). Such projects continue to form a significant part of the IFC’s portfolio e.g., the Chad-Cameroon Oil Pipeline and the Yanacocha Gold Mine in Peru. While policies need to adapt to new lending practices, this does not mean that their existing useful elements based on actual lessons in the field should be jettisoned simply because some commentators say they are somehow obsolete or difficult to implement. NGOs and Civil Society Organisations (CSOs) maintain that most SP policy requirements stem from concrete historical lessons drawn from past mistakes and successes in World Bank development operations, and as such are they part and parcel of effective poverty reduction. If there are problems with implementation, the answer is not to remove or dilute these provisions but to actually strengthen them if necessary, and also make institutional reforms to enable proper compliance and to ensure more effective SP implementation.[7]

Vague wording and partial comments:

FPP welcomes observations that SPs need to be integrated at all stages in project preparation and implementation. However, the use of the term “early stages” (Page 7, para.3; Page 45, para 10.4) is vague and needs to be more precisely specified as a specific point in IFC project and programme cycle. If such clarification is not made, the IFC will itself fall into the trap of instituting unclear and ambiguous SPs for its operations.

In several places the review asserts that safeguard policies should be clarified for the private sector and should be specifically tailored for industrial sponsors in IFC operations and “adapted to private sector realities” (Page 8, paras 2 and 8; Page 41, para 9.3; Page 46, para 10.13). Other than a brief and questionable comment on land acquisition on page 30 (para. 5.22), the report’s authors regrettably fail to expand upon this point. How, for example, does the IFC view the private sector as being different from government agencies in relation to the social and environmental issues in IFC projects? Does the IFC consider that their duties and responsibilities are different? In what ways? The review should be more explicit as to the significance of these alleged differences and how exactly SPs might be “tailored” to the private sector. Without such information and explanation, external commentators are unable to properly scrutinise and comment on the review team’s recommendations.

Unclear methodology and lack of information:

The review states that the 25 case studies were the “anchor of the review” (Page 15, para.3.7). Other than the fact that the case study projects involved “several SPs”, the review fails to explain how the project selected the case studies in each region. Was it a random selection by region of all projects involving more than one SP? Why, for example, did the IFC review of SP application in the “oil and gas production” sector not use the Chad-Cameroon Oil Pipeline in its sub-Saharan Africa region as one case study? This project is particularly relevant to the review not only because of the many lessons it holds for the IFC (see annex 1), but also because it is a project the IFC embarked upon after formally adopting the SPs.

The table on page 16 is of limited value to external reviewers because it does not permit external rights holders and other interested parties to identify which specific projects have been assessed by the CAO review team. In the interests of transparency and public scrutiny, we strongly recommend the final report specifies the actual identities of the case study projects.

The draft report mentions four “regional stakeholder workshops” that formed part of the review process (Page 16, para.3.9). However, scrutiny of the workshop reports on the CAO web site reveals that there is no information on which CSOs and NGOs took part in these workshops, nor which IFC projects they were affected by. In addition, although we recognise the need for brevity, the workshop documents on the website only give a very superficial account of the discussion, rendering the workshop reports of little use for critical scrutiny and comment by civil society. For example, they contain no detail of discussions on actual IFC projects and do not clarify which NGOs and CSOs were involved in the discussions. We strongly recommend that the final review report contains a comprehensive list of participants in all four regional workshops, clarifying which individual participants were representing different organisations, to enable other organisations tracking IFC policies and projects to contact them and request further information on the IFC and its SP review process.

Superficial and substantially inadequate discussion of individual SPs:

One of the most disappointing aspects of the draft review document is its entirely inadequate analysis of individual safeguard policies. The discussion on pages 28-32 is superficial and of limited use. In addition, a number of the observations are arguably inaccurate. Worse still, the treatment of particular policies is unbalanced and skewed towards the perspectives of Bank staff and sponsors with almost no account being taken of the views and recommendations of external rights holders and civil society organisations. For example, the brief comments on the Forestry Policy on page 29 fail to acknowledge the legitimate concerns of external rightsholders, forest peoples’ organisations, environmental NGOs and other CSOs, all of which had submitted multiple and repeated resolutions, petitions and letters to the World Bank during its lengthy Forest Policy Implementation Review and Strategy (FPIRS) process undertaken from 1997 to 2002. The manifold and detailed comments submitted to the World Bank during this review are fully applicable to the IFC and should be considered by the CAO review team.[8]

Likewise, the review’s discussion of the IFC’s Involuntary Resettlement policy is wholly inadequate (Pages 30-31). The whole section contains a very confusing discussion of the varying lines of responsibility and accountability for implementation, without achieving any clear and authoritative conclusions or recommendations. The discussion of “squatters” is offensive and fails entirely to grasp the whole question of legal land title and customary land rights – a topic that caused lengthy and heated debate during the Bank’s conversion of its resettlement policy. It is very disturbing that the CAO review has failed to make explicit reference to the multiple comments and constructive suggestions submitted by rights holders and civil society organisations to the World Bank during its long conversion process. The review should take into account the fact that external rights holders, including indigenous peoples’ organisations, have condemned the Bank’s newly adopted and revised resettlement policy (OP/BP 4.12) as a violation of internationally agreed human rights standards, and they reject it accordingly. We urge the IFC to take a leadership role within the World Bank Group by recommending the adoption of a more progressive Resettlement policy, which fully recognises the right of free, prior and informed consent for affected communities, makes explicit reference to human rights standards and adopts progressive standards such as those established under the World Commission on Dams.

The discussion of the Indigenous Peoples Policy on page 32 is so short that it is of limited use. Once again, there has been a huge amount of debate and written comments on the controversial revision of the Bank’s Indigenous Peoples Policy.[9] To fail to even make reference to key issues raised during this debate over the last few years is a serious oversight by the CAO review team. The Bank’s own summary of its 2001/02 consultations on Draft OP/BP4.10 contains multiple references to the concerns of indigenous peoples and civil society regarding this policy revision, yet not one of these documents is cited in the CAO report.[10]

The IFC should acknowledge that so-called clarification and streamlining of the Bank’s Indigenous Peoples Policy has drawn severe criticism from the very people it is supposed to benefit: indigenous peoples themselves. The CAO review team should carefully review the objections of indigenous peoples’ organisations before it makes any attempt whatsoever to revise its SP on indigenous peoples.[11] The IFC should also commit to a fully participatory discussion with indigenous peoples organisations and indigenous experts about any revision of its Indigenous Peoples Policy – any such discussion should learn from the mistakes made in the Bank’s recent flawed consultations.[12]

On page 19, the CAO review team states that: “To date, IFC has held in abeyance its revision of individual policies, pending the results of the Bank’s review”. We take the CAO review team at their word and urge them to fully consider the views and proposals made by rights holders, NGOs and community-based organisations on general safeguard issues and specific SPs as part of the Bank’s lengthy conversion and revision of its operational policies over the last seven years.

Contradictory conclusions:

On the one hand the CAO review concludes that SPs have improved development effectiveness where they have been applied properly (Page 41, para 9.2), but, on the other hand, a central thrust of the conclusion is that SPs are “conceived and written” for a different audience and different circumstances (Page 41, para 9.3) and that their contents “contribute to confusion”.

The CAO review team rightly exposes the wide scope for differing professional judgement that leaves room for “enormous variance” in the quality of implementation and undermines the usefulness of SPs as standard benchmarks for development (Page 42, para 9.13). However, the conclusion proceeds to argue for retention of this flexibility and “creativity” provided this is matched by transparency in decision-making (Page 42, para 9.14). The report must be tightened up by expanding the brief comments made in para. 9.5 on page 41 to include recommendations that SPs must contain minimum and mandatory benchmarks and preconditions that must be met in all operations which trigger the SP both before project approval and, if approved, during implementation.

C.   Recommendations

To improve the utility of the review document and its recommendations, its analysis should include an in-depth discussion of individual SPs making full reference to debates and lessons learned from the wider Bank’s policy conversion process. This expanded discussion should take proper account of the views and perspectives of external rights holders and civil society and acknowledge the merits of their positions. In particular, it should recognise the widespread call for any revisions to safeguard policies to:

·       be developed in a fully participatory way with all relevant rights holders, civil society organisations, sponsors and other interested parties;

·       be based on implementation reviews of existing and comparable policies undertaken by OEG and OED;

·       be fully consistent with current international standards on human rights, sustainable development and environmental protection and conservation;

·       recognise the rights, and safeguard the interests of, affected communities and rights holders;

·       strengthen the SP by inclusion of clear benchmarks and unambiguous mandatory rules and preconditions that should be complied with before the IFC will loan money for a development project or programme;

·       be backed up by adequate resources and new incentive measures and new participatory monitoring, accountability and quality control mechanisms at the project level through which local people can hold the IFC and its sponsors accountable;

We hope the CAO review team find the proposals embedded throughout our comments and these final recommendations useful in finalising their final review report.

Yours sincerely,

Thomas Griffiths
IFI Programme Co-ordinator

Emily Caruso
Campaigns Officer
Forest Peoples Programme

Encs.

Annex I

Social and Environmental Predictions and Outcomes of the Chad-Cameroon Pipeline

NGO Predictions (before WB Board approval, May 2000)

Outcomes (2001/2002)

·       Crowding out of programmes directly benefiting social sector, health, education and environmental protection ·       Undermining efforts and struggles for democracy and freedom in both countries – the pipeline will exacerbate corruption ·       May reignite civil war, repression and violence in the south of Chad ·       Increased human rights abuses by people in positions of power faithful to the military regime of N’Djamena in Chad. ·       Lack of institutional capacity to set out efficient and well-directed use of World Bank loans. ·       Contribution for Cameroon is negligible, and will result in further impoverishment of the people, since there is no specified plan for regional sustainable development (the loans will be used to service foreign debt) ·       Loss of livelihood (land, trees, productive assets, access to water) and resettlement of the rural poor in both countries – thus endangering food security ·       Uncontrolled immigration of workforce – resulting in spread of venereal disease, alcohol abuse, prostitution – all along the pipeline. ·       Loss of biodiversity –pollution from construction camps, pump stations, roads, domestic waste; and ·       Enhanced illegal bushmeat trade and illegal logging. ·       Leaking pipelines (much can occur undetected) – contamination of groundwater and streams of heavy metals. ·       Inadequate IPDP – the Bagyéli will be severely affected by: ·       Losing access to their forest-based subsistence – especially since the IPDP does not contain measures for establishing legal recognition of land and territorial rights. ·       Increased discrimination and repression by the local Bantu ·       Threat to Cameroon’s coastal ecology and economy ·       The national parks which will be set up as a part of the environmental compensation plan, will further affect the plight of the indigenous peoples living in those areas. ·       Break-up of social and cultural structures of local communities, indigenous and other.

·       According to US State Department’s country report on Human Rights Practices in Chad: “ state security forces committed extrajudicial killings, disappearances and tortured, beat, abused and raped persons.” ·       Chad government spent US$ 10 million received from oil companies to buy arms to fight rebel movement in Tibesti ·       Land has been taken from Bagyéli pygmies by the Bantu, who have claimed financial compensation for it from the pipeline consortium – conflict between the communities has been exacerbated by the pipeline. ·       In March 2001, the Bagyéli were still unaware that an IPDP had been developed (despite a World Bank promise of full participation and consultation with the Bagyéli) ·       Many villagers are severely impoverished all along the pipeline ·       Chad’s Revenue Management Law allows the president to change revenue allocation rules five years after adoption of the law… ·       Pollution and water depletion are fundamental problems and have not been adequately addressed. Dust pollution along the pipeline is a threat to public health and wildlife. ·       Additional loss of land due to increasing work needs and crop damage are further reducing subsistence potential for the local communities. ·       The inadequate IPDP and the environmental mitigation plans have not been implemented or even initiated yet. ·       No protection measures for the Bagyéli exist as such, and the pipeline is being laid down through their ancestral homeland ·       Food security is very serious, with inflation and demand putting the prices of staple foods beyond the means of the villagers – malnutrition is widespread ·       The public health situation is catastrophic: AIDS and other venereal diseases has spread, as has malaria, water-borne diseases, respiratory diseases are almost epidemic: bronchospasm and bronchitis ·       There is severe exploitation of workers through lack of implementation of labour legislation ·       A logging company is threatening to move into Campo Ma’an national park and Bagyéli people are being pushed off their land. ·       The capacity Building project has not followed the pace of the pipeline construction – field monitoring is minimal and most governmental obligations are not being fulfilled ·       Prostitution among young female minors as well as adults has increased, with the predicted effects of disease spread ·       Several schools have been abandoned because of teacher and student attraction to temporary jobs with the pipeline