October 2002

Introduction

This briefing intends to:

1. highlight the importance of World Bank social and environmental policies and the need for clear, strong and unambiguous mandatory safeguard provisions in such internal guidelines;
2. note the shortfalls of the existing World Bank accountability and complaints processes that are available to affected communities when development interventions fail;
3. summarise indigenous and NGO proposals for improved mechanisms for accountability and development quality in the Bank’s projects and programmes;

Importance of safeguard policies:

1. The World Bank has ten so-called “safeguard” policies that are supposed to protect the environment and vulnerable social groups from the adverse impacts of Bank-financed operations. These include the Bank’s existing policies on Indigenous Peoples (OD 4.20), Involuntary Resettlement (OP/BP4.12), Forestry (OP4.36), Environmental Assessment (OP/BP4.01), Natural Habitats (OP/BP4.04) and Cultural Property (OPN 11.03) among others. [1] It is important to remember that many of these progressive standards were established as a direct result of long campaigns for improvements in World Bank social and environmental performance run by Southern and Northern NGOs - often in partnership with indigenous peoples’ organisations. [2] The World Bank recognises these safeguard policies as a set of ‘minimum standards that all Bank-supported operations must meet’ [3] (emphasis added). Such policies are of crucial potential importance to people affected by World-Bank assisted projects because they fulfil a number of critical functions:

(a)    They aim to deal with environmental issues and mitigate the negative impacts of development, and provide mechanisms to address the interests and concerns of indigenous peoples and women – all of which are easily sidelined by large-scale development; [4]

(b)    They provide the only basis for the external accountability of the Bank to local communities and civil society groups as a basis to raise concerns with project managers and agencies and, if problems are not resolved, as a means of complaint through the Inspection Panel or Compliance/Advisor Ombudsman (see below).

(c)    They are a set of rules for staff to follow – staff who are very often not trained in dealing with the issues of concern;

(d)    They provide an agreed basis for negotiating loans with borrowers and clients;

(e)    They provide a basis on which operational staff can seek extra funds for project design, Economic and Sector Work and the development of Country Assistance Strategies (CAS) to deal with complex issues – crucial in a situation in which there is pressure to reduce ‘transaction costs’;

(f)     They provide a yardstick for assessing “development effectiveness” or “ development quality”;

Two essential preconditions for effective safeguards:

2. Safeguard policies must meet at least two fundamental preconditions to be effective.

·         First, they must contain clear benchmarks and unambiguous rules and preconditions that should be complied with before the Bank will loan money for a development project or programme.

·         Second, there must be adequate resources and appropriate institutions to implement the actions and activities required by a policy.

Problems with implementation:

3. Unfortunately, although some of the Bank’s social and environmental policies containuseful rules and guidelines, the World Bank and its borrowers still find difficulty complying with these rules. In the case of its existing Indigenous Peoples Policy, independent studies by indigenous organisations and NGOs and by the Bank’s own evaluation teams have found that common problems include:

- Baseline studies superficial or absent in project preparation

- lack of effective participation in project design

- Required legal reforms omitted

- Procedural oversights in appraisal

- Indigenous peoples’ land and resource rights not secured

- Required ‘Indigenous Peoples Development Plan’ omitted or inadequate

- Ineffective supervision

- Disinclination to enforce loan agreements. [5]

4. Poor compliance means that indigenous peoples still sometimes find themselves worse off after Bank projects. Even apparently “harmless” loans and so called “do good” projects targetting indigenous peoples can cause harm where social and environmental policies are not applied properly. For example, if land titling projects are not designed from the outset with indigenous organizations, there is a risk that the project may not properly secure the full extent of traditional territories. Likewise, conservation projects that fund the establishment of Protected Areas can curtail the traditional resources rights of indigenous communities. [6]

Bank efforts to improve implementation and accounability:

5. The World Bank acknowledges that there is a need to improve the quality of implementation of its safeguard policies, but has so far sought mainly internal solutions with technical screening and quality control units (such measures include the Quality Assurance and Compliance Unit – QACT and plans for a new Bank-wide internal compliance monitoring system). In the mid 1990s the Bank established its semi-independent Inspection Panel to receive citizens’ complaints regarding the violation of Bank policies. In 1999, its private sector loan windows – known as the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) established a similar complaints mechanism known as the Compliance/Advisor Ombudsman (CAO) office. [7]

Improving performance by diluting standards?

6. Since the mid-1990s, Bank operational policies including its safeguard policies, have been undergoing revision as part of a Bank-wide “conversion” process that intends to standardise and clarify guidelines for staff and borrowers. Bank policy makers assert that conversion is based on the premise that clearer and more flexible guidelines will raise the standard of policy implementation and so improve development effectiveness. At the same time, the revision programme intends to make policies less rigid and more amenable to decentralisation, country “ownership” and the Bank’s new “learning approach” to development. [8] The Bank is quite open about the fact that its decentralisation process aims to shift responsibility for social and environmental safeguard work away from the Bank to the borrower government. [9]

7. However, people outside the Bank who track its policies and programmes point to worrying evidence that the Bank is seeking to dilute its policies to minimise the number of clear requirements for staff and borrowers to follow. Under the guise of “streamlining” their policies to clarify the minimum standards, Bank policy makers are making once mandatory provisions optional. Issues once considered minimum standards are now optional “good practice” provisions for staff and borrowers. Critics have labelled this retrograde process as “Panel proofing” of the Bank’s policies whereby clear benchmarks and preconditions for Bank involvement in a specific loan operation are being removed. This deprives affected people of the opportunity to claim safeguard rules have been violated.

8. NGOs point out that devolving all the responsibility for safeguard work to the borrower is a recipe for disaster and more failed projects because many borrowers lack the necessary policies, laws and institutional capacity to achieve these social and environmental standards without special efforts. They also stress that the World Bank itself has obligations andduties under international law to uphold human rights and environmental standards in its internal and external policies and its development projects and programmes (see briefing on the World Bank and Human Rights).

Ineffective accountability and complaints procedures:

9. Independent evaluations of the usefulness of the Inspection Panel has shown that while its has proved relatively successful in highlighting compliance problems, its centralised complaints procedure is cumbersome for grassroots communities and has so far shown limited capacity to stimulate adequate corrective actions to address local grievances. Early evidence also suggests that the IFC and MIGA’s Compliance Ombudsman Office suffers similar problems given its very technical approach, its distant base in Washington and its reliance on periodic and infrequent field “missions”.

Lack of accountability in policy-based loans and adjustment lending:

10. An increasing amount of Bank lending is now made through structural and sectoral adjustment loans that account for between one third and one fifth of the institution’s total annual lending. Indigenous peoples’ organisations complain that these macroeconomic and technical-assistance loans promote increased levels of foreign-direct investment and commercial resource extraction as well as legislative reforms relating to land and natural resources that disregard their rights and have direct consequences for their territories. They point out that these operations lack transparency and are largely unaccountable to the public. In some countries such as Ecuador, for example, indigenous organisations argue that the few benefits provided by the Bank’s poverty reduction projects are undermined by the Bank’s structural adjustment loans that have deepened poverty and intensified commercial pressures on indigenous lands and natural resource base. [10] Faced with trends towards increased adjustment and programmatic lending, indigenous peoples and civil society groups have in recent years called on the Bank to modify its safeguards to cover these operations to ensure effective involvement in macro-economic policy-making and respect for indigenous rights.

Recommendations for improving accountability and development effectiveness:

11. In both rounds of the Bank’s external consultations on the revision of its Indigenous Peoples Policy in 1998 and in 2001, indigenous organizations have called on the Bank to develop and adopt stronger provisions that are consistent with the priorities of indigenous peoples themselves and respect their human rights. Indigenous organizations have likewise consistently recommended that any policy revision should be informed by a fully participatory review of the implementation of the Bank’s existing policy in order to incorporate in the policy revision any key practical lessons on how to achieve effective development (see accompanying briefing on the Revision of the World Bank’s Indigenous Peoples Policy). In order to improve participation and accountability in World Bank loan operations indigenous peoples’ organisations have also called for:

·         Maintenance of strong and clear safeguard policies. Throughout the Bank’s consultation meetings on the revision of its Indigenous Peoples Policy and its other related policies, indigenous peoples have called for safeguard policies to include clear provisions that are consistent with the international human rights of indigenous peoples. They have likewise demanded that such provisions should incorporate new progressive standards on indigenous peoples and development e.g., like those recommended by the World Commission on Dams;

·         More accessible and responsive accountability mechanisms on the ground. Suchnew and agile mechanisms could involve local project or programme-level institutions or bodies to monitor enforceable legal agreements or contracts binding on all parties including the Bank, borrower government, private sector and affected indigenous peoples. The agreements would be established through a process of participatory negotiation based on the rights and priorities of rights holders and other interested parties (along the lines of methodologies already established under the World Commission on Dams); Such new mechanisms would have to be backed up by an independent project ombudsperson or a local tribunal to hear grievances and sanction violations of agreements and make requirements for remedial action;

·         Participatory monitoring of World Bank policies, projects and programmes. Since 1992, for example, the International Alliance of Indigenous-Tribal Peoples of the Tropical Forests has advocated the establishment of tripartite commissions - including funders, government agencies and indigenous representatives - to design, implement, monitor and evaluate development projects affecting indigenous peoples. [11] The same call for indigenous involvement in tracking Bank policies and projects was voiced during the Bank’s 1998 and 2001 consultations (in Brazil, Mexico, Philippines, India and Bangladesh). Grassroots communities have also pushed for local monitoring in specific projects – such as the Colombian Natural Resources Management Project. [12]

·        Improved participation and involvement of indigenous peoples in project and programme governance: The call for improved mechanisms for participation during all stages of the development process was made repeatedly by indigenous participants in almost all the Bank’s consultations in both 1998 and 2001. [13] In some Bank-assisted projects, such as the Bolivia-Brazil Gas pipeline, affected indigenous communities have demanded involvement in the administration of projects that impact their communities with clear guarantees that their representatives have equal executive decision-making powers and can actually influence the design and implementation of projects. Calls for involvement in project governance were made during the Bank’s regional consultations in 2001 in Russia, the Philippines, Mexico and Peru. [14]

·         Permanent spaces for dialogue with the World Bank Group: As well as proposals for direct and active indigenous participation in projects and programmes that affect them, several proposals have been made for a permanent and ongoing dialogue with the World Bank regarding its internal and external policies and programmes and how these affect indigenous peoples and their territories. This proposal was made during the Bank’s first consultations on the revision of OD4.20 in the Philippines in 1998, and again in the Bank’s consultations in Russia in 2001. It was also proposed by indigenous participants during a meeting with Vice President Ian Johnson at the World Bank regarding concerns about the Bank’s policy revision process in July 2002. [15] There is still a need for more discussion among indigenous peoples’ organisations to develop consensus proposals for establishing permanent dialogue with the World Bank Group.