BY HAND

The Rt. Hon Hilary Benn MP,
Secretary of State for International Development,
Department for International Development
1 Palace Street
London, SW1E 5HE

Dear Secretary of State,

We, the undersigned NGOs and civil society organisations, write to convey our ongoing concerns about multiple revisions to the Bank’s safeguard and accountability framework. At the same time, we request an update on the UK government position in regard to each safeguard and accountability issue. We would like to receive clarification of the following issues.

Consistent with the White Paper, DfID’s own rights-based approach to development and your own statements to Parliament on the Extractive Industries Review, UK DEL and the UK Government representative on the Bank’s Board of Governors should be insisting that the World Bank requires staff and borrowers (and clients) to observe human rights in accordance with countries’ obligations under international law.  We look forward to receiving details of how DfID now plans to deal with this issue, particularly in relation to the current IFC Safeguard Policy Update process (see below).

UKDEL should also be at the forefront of voices insisting that the whole of the World Bank Group (IBRD, IDA, IFC and MIGA) should be maintaining and applying the safeguard policies as policies that are binding on Bank staff. This is especially important today as there is a discernible trend for the Bank to get back into what it refers to as ‘High Risk, High Gain’ projects, like roads, dams and mines. Particular attention also needs to be paid to how safeguards are applied in sectoral, programmatic and adjustment lending, where the impacts on vulnerable groups and environments may not be self-evident. Previous DfID staff in the IFI Department have been unclear about the extent to which they really seek to uphold safeguards. We look forward to receiving reassurances that the safeguard policies really are to be upheld by UKDEL.

In view of the consistent failure of Bank staff to apply safeguards, as revealed by many independent and OED/OEG reviews, a failure which has, ever since the 1994 Wapenhans study, been consistently traced back to a lack of real incentives for staff to apply these policies, UKDEL should be insisting on meaningful reforms at the whole of the WBG to incentivise staff to make sure they apply them. This means rewarding staff for due diligence beyond token compliance (ie beyond check-list ticking) and penalising staff for failure to do such.

Achieving sustainable development and poverty alleviation – real ‘development effectiveness’ requires protecting vulnerable habitats and social groups: that is the point of the safeguards.  The UK contributes to the Bank as part of its ‘development assistance’ (‘aid’) budget [not just as a contribution to an investment bank like any other]. Notwithstanding misinformed discussions about the ‘Costs of Doing Business’, DfID needs to accept that ensuring that World Bank loans, investments and guarantees are effective will require more time and resources than commercial lending: the triple bottom line – social, environmental and financial – is harder to achieve than the single bottom line of profitable investment. This means accepting that there are likely to be higher transaction costs for development assistance than for commercial lending and investment. If it is thought imprudent to burden borrowers with these costs then additional grant assistance should be made available to ensure due diligence and development effectiveness.

The Inspection Panel (and the Compliance Adviser and Ombudsman in the IFC) offer an important mechanism of last recourse for communities negatively impacted by World Bank projects. In most cases the existing mechanisms have vindicated complaints and highlighted serious implementation problems. They do, however, suffer a number of limitations: they only examine the performance of Bank staff and not that of borrowers/clients; they require very extensive documentation often beyond the capacity of most poor communities to generate; they are retroactive, only being put into effect once major problems or procedural flaws are discernible; they are distant from aggrieved communities; and they are limited in their capacity to deliver effective redress and have not been able to generate corrective actions acceptable to the affected communities.

DfID and UKDEL should be advocating the development of additional, much more agile and accessible grievance and redress procedures, which will allow ‘beneficiaries’ and impacted groups to raise concerns about projects and programmes that will affect them, at the project and country level.

Further consultations and finalisation of the current draft of the Indigenous Peoples Policy (OP 4.10) should be delayed until the draft Bank Procedures (BP) document is made available for a due period of public appraisal and comment. Without this document and time to analyse it, it is very hard to discern the practical implications of the provisions in the draft OP. We are alarmed to learn that for the first time since it adopted the new OP/BP format, the Bank does not intend to request Board approval of these vital procedural standards. Indeed, we wonder if you and your Department are even aware that Bank management now plans to demote the status of ‘Bank Procedure’ policies to non-Board documents in the future?

UKDEL should be seeking full clarification and public explanations about what is going on with the long-delayed Social Assessment OP which has been nearly eight years in the pipeline without being made available for public comments or discussion. The fact that the World Bank has had a policy on environment assessment since the early 1990s but still does not have a stand-alone policy for social assessment is surely a matter of concern. It is also anomalous because other Bank policies refer to ‘social assessment’ when in fact this mechanism and agreed standards for such assessments do not yet exist.

The revised Forests Policy adopted in 2002 was a great disappointment to many as, after exhaustive reviews of the Bank’s prior forest policy and strategy, instead of incorporating meaningful safeguards on forests and forest peoples into the new Forests Policy, for the large part the new policy merely invoked the existing policy on Natural Habitats and the upcoming policy on Indigenous Peoples. This is despite the fact that the effectiveness of the Natural Habitats Policy has never been assessed. DfID and UKDEL should be insisting that a review of the Natural Habitats Policy is carried out urgently: this will also have major implications for the World Bank’s handling of the GEF portfolio. 

The IFC is also currently updating its safeguards policies. The consultation process on this review has been deficient and UKDEL needs to insist that the next phases of public discussion ensure an ample good faith public consultation (at least 90 days) on the second draft of the proposed new IFC performance standards. We also look to DfID and UKDEL to take a lead steering the IFC into adopting a rights-based approach with standards binding on IFC staff. We would like to receive clarification of what the UK Government’s position is with respect to the IFC Safeguards Update and hope that the UK position paper will be publicly available in good time before the final decisions on a new IFC safeguard framework are taken by the Bank’s Board.

Like many NGOs we agree that it is desirable that borrower countries should develop the capacity, policies, laws and procedures required to safeguard vulnerable groups and ecosystems. Indeed, one of the purposes of the Bank’s safeguard policies is to require borrowers to develop adequate in-country frameworks to achieve this. However, we are very concerned that the World Bank, in encouraging further ‘country ownership’ of the safeguard process, is measuring the ‘equivalency’ of national safeguards regimes against a much reduced and truncated set of principles. We urge therefore for:

q       revision of the equivalency lists

q       participatory and third-party assessments of the equivalency of national regimes with Bank policies

q       clarification of how Bank staff involved in lending remain accountable to project-affected persons, if the safeguard policies are no longer to apply where country systems are substituted

q       a thorough, consultative and participatory review of the effectiveness of the application of country systems after the pilot phase before the approach is more widely adopted by the World Bank Group.

The process for the harmonization of the World Bank’s policies with those of the UN and bilateral development agencies provides an important moment to ensure that World Bank Group safeguards are on a par with best practices of other development agencies. However, the harmonization process is not readily accessible to civil society groups. DfID should be pushing for a more participatory process of policy and safeguard harmonization to help secure outcomes which will favour standards that meet the needs and secure the rights of communities in developing countries.

Official GEF evaluations and independent critical analyses of GEF policies and biodiversity projects have found that the GEF policies relating to biodiversity conservation and sustainable use are out of date. The same studies have shown that affected communities still sometimes suffer impoverishment as a result of GEF-assisted conservation and development projects. To address these problems, there is a pressing need for the GEF to update its policies and strengthen its oversight and accountability mechanisms. DfID and other relevant UK government departments should use the UK position on the GEF Council and GEF Assembly to support the upgrading of GEF standards in accordance with the recommendations of NGOs, indigenous peoples’ organisations, the 2004 Biodiversity Program Study and the forthcoming GEF Local Benefits Study. Again, in line with UK policy, DfID should press the GEF to adopt a rights-based approach to development and conservation.

We look forward to your reply and to learning how DfID and UKDEL will deal with these various points.