IF-Eye Issue #6

16 June 2006

This issue of the IF-Eye newsletter discusses the World Bank's anti-corruption initiative, highlights civil society activities around the IFIs, and provides recent updates on the institutions.

Issue 6: June 15, 2006
A publication of the Bank Information Center

In this issue

1. IFI Updates
2. Civil Society Highlights
3. Wolfowitz Watch: “Beware the big, bland wolf”
4. Word on H Street: new World Bank General Counsel and reorganization plans
5. Issue Spotlight: World Bank developing anti-corruption framework
6. Issue Spotlight: Over 100 groups call for global mobilization against the International Financial Institutions
7. Book Notes: Eurodad’s Gail Hurley on past debt, and Eisuke Suzuki and Suresh Nanwani on accountability mechanisms at the MDBs
8. Announcements and Resources
9. New at BIC: BIC seeking Latin America Program Manager
   

World Bank: World Bank drafting anti-corruption framework. June-September, 2006. During the Spring Meetings the Development Committee called upon the Bank to prepare a more rigorous anti-corruption framework in time for the Annual Meetings in Singapore this September. A draft framework is being hastily circulated between Bank management and Executive Directors this summer without any external consultation. See Issue Spotlight below.

Asian Development Bank: ADB releases new Medium-Term Strategy. June 13, 2006. The strategy outlines the institution's plans for 2006-2008, emphasizing five priorities: catalyzing investment, strengthening inclusiveness, promoting regional cooperation and integration, managing the environment, and improving governance and preventing corruption. Read more about the medium-term strategy on the ADB website.

World Bank: World Bank suspends loans to Cambodia over allegations of corruption. June 9, 2006. In yet another incident in its renewed and highly-publicized campaign against corruption, the World Bank suspended loans to three land management and administration, infrastructure, and water supply and sanitation projects in Cambodia. Read more about the suspended loans on the BIC website.

World Bank: World Bank Forest Policy undergoes belated mid-term review. June 9, 2006. The World Bank has initiated its review of the 2002 Forest Policy and Strategy. A draft report will be open for public comments in August. Read more about the Forest Policy review on the BIC website.

World Bank: ABCDE Conference addresses infrastructure and growth. May 29-30, 2006. Read feature story and opening speeches on World Bank website.

European Bank for Reconstruction and Development: EBRD approves new disclosure policy. May 22, 2006. While some improvements have been made, the new policy does not incorporate many civil society recommendations. Read an analysis of the new disclosure policy on the BIC website.

Global Witness: World Bank Inspection Panel finds slam Bank forestry project in Cambodia. June 15, 2006. A leaked World Bank Inspection Panel report heavily criticizes the Bank’s forest management project in Cambodia for breaking internal safeguards, ignoring local communities and failing to reduce poverty. Read the press release on the Global Witness website.

Various Organizations: Protest statement issued at the Asian Development Bank’s orientation workshop on the consultation phase of its Accountability Mechanism and Public Communications Policy (PCP). June 14, 2006. In addition to releasing the statement, several groups walked out of the June 14 consultation meeting in Bangalore, India. Read the statement.

Various Organizations: Civil Society organizations challenge the IFC's role in Glamis' Marlin Mine project and call for the recognition of a community referendum. June 12, 2006. Civil society organizations called for the recognition of a community referendum on the controversial Marlin Mine in a recent letter to World Bank Executive Directors. Eleven of thirteen villages impacted by the mine signed a statement opposing the project at the June 2005 meeting. The groups furthermore argued that the IFC is not taking responsibility for the problems posed by the Marlin Mine - in particular the plight of the communities which have been adversely affected. Read the letter to the World Bank Executive Directors.

Bank Information Center and Environmental Defense: Democratic Republic of Congo Trip Report. June 12, 2006. The report summarizes findings from an April 2006 trip to investigate the impacts of World Bank Group operations in the country, particularly in the natural resources and energy sectors. Read the report on the BIC website.

Bretton Woods Project: Beware the big, bland wolf: The first year of Paul Wolfowitz at the World Bank. June 8, 2006. Jeff Powell writes that what has most surprised World Bank watchers is how little Paul Wolfowitz has changed the institution he took over one year ago. On Africa, infrastructure, and debt relief, he has stayed the course - for better or worse - set by his predecessor James Wolfensohn. Read the article. Read a summary of the article in Wolfowitz Watch section below.

Various organizations: Organizations in Paraguay and Argentina denounce enduring problems with controversial Yacyreta dam. June 7, 2006. Concerns include the raising of the resevoir water level, procedures and guarantees for addressing social and environmental impacts, and a new $210 million loan to the project. Read more about the situation.

CEE Bankwatch: Shell falsifies External Monitoring Reports on Sakhalin II river crossings. June 7, 2006. Sakhalin II campaign groups demanded disclosure of factual monitoring reports after learning that Shell ‘cleaned’ the reports available to the public: publicly disclosed external observer monitoring reports were different from the original reports. Read more on the Bankwatch website.

Eurodad: Wolfowitz Needs to Look at Corruption of Yesterday, Not Just Today. Must Follow the Positive Example of Norway. June 1, 2006. Gail Hurley contends that any comprehensive approach to corruption must examine the World Bank's lending practices of yesterday and cancel debts found to be corrupt and fraudulent. Read the article on Eurodad’s website. Read a summary of the article in the Book Notes section below.

Bank Information Center: Azerbaijan, Kazakhstan and Kyrgyz Republic Country Updates. May 23, 2006. The updates provide information about recent developments, decisions, and civil society activities related to the international financial institution in these countries. Available on BIC’s website.

Various organizations: The Hyderabad Pledge. May 6, 2006. Over 100 struggle groups, peoples movements and organizations that gathered in Hyderabad to protest the 39th Annual Governors’ Meeting of the Asian Development Bank (ADB) released a statement denouncing the IFIs as institutional instruments of colonization. Read the pledge.

Visit BIC’s Wolfowitz Watch webpage: http://www.bicusa.org/bicusa/issues/wolfowitz_watch/index.php

Beware the big, bland wolf: The first year of Paul Wolfowitz at the World Bank
By Jeff Powell, Bretton Woods Project
Paul Wolfowitz's ascension to the World Bank Presidency in June 2005 sparked widespread fear that he would promote a neo-liberal economic agenda and US economic and security interests. For better or worse, in his first year in office Paul Wolfowitz has stayed the course set by his predecessor James Wolfensohn, Jeff Powell writes.

Although Wolfowitz's emphasis on battling corruption has created a stir, his plan remains unclear. He has stated Africa as a priority, but although an Africa action plan was presented at the 2005 Annual Meetings it fails to address the problematic export-led, resource-intensive growth model being promoted by the institution throughout the continent. In an attempt to remain relevant to middle-income countries, Wolfowitz is promoting "high-risk high-reward" infrastructure projects. And although the Bank approved $37 billion in debt relief for 17 countries at the end of March, the plan was devised by the G7 finance ministers well before he took office. Wolfowitz’s attempts to reorganize the institution have consisted of surrounding himself with a tight circle of close supporters, fueling an exodus of senior staff and crushing staff morale.

Key questions for the year to come include whether Wolfowitz can turn his anti-corruption fervor into a clear strategy, and whether the anti-corruption spotlight will shine on US allies as strongly as it does on countries further outside of US political interests. To stave off critics, Wolfowitz would be wise to reform the Bank’s flawed governance structures, steer the institution away from dictating economic policies to borrowing countries, actually absorb the lessons learned by past controversial big infrastructure projects, and finally address the question of odious debt. "But don't hold your breath," Powell concludes.

• Read the article on the Bretton Woods Project website

Our ever-attentive sources tell us that former Spanish Foreign Minister Ana Palacio’s nomination as new World Bank General Counsel has been submitted to the Board of Directors for final approval. The Board has 72 hours to object to the nomination. Palacio’s close relationship with Paul Wolfowitz will certainly spark renewed debate over the processes through which top management posts are filled at the institution. BIC first reported this rumor in the March IF-Eye.

We have also heard that the World Bank may announce reorganization plans by the end of this month. Civil society has expressed grave concerns over rumors that Wolfowitz may dismantle the Environmentally and Socially Sustainable Development Vice Presidency Unit. Such a decision would send a clear signal to the global community that the World Bank is not serious about sustainable development and undermine the institution’s ability to promote sustainability in its lending and policy operations.

World Bank President Paul Wolfowitz has made corruption a defining theme of his first year in office, arguing that the leakage of development funds is “one of the biggest threats to development in many countries”. In addition to halting hundreds of millions of dollars in World Bank lending to projects in Kenya, Congo, India, Yemen, Argentina, and most recently Cambodia, he has taken steps to overhaul the Bank’s own internal unit for addressing corruption – the Department of Institutional Integrity.

While many would agree on the negative impacts of corruption, opinions diverge on how the Bank should address this broadly recognized “development cancer”. Civil society is not alone in criticizing the seemingly subjective approach Wolfowitz has taken to the issue. The Development Committee asked the Bank to develop a clear framework for stamping out corruption at this year’s Spring Meetings. Reportedly Graham Wheeler, one of the Bank's two new managing directors, has been tasked with drafting the strategy, assisted by Danny Kaufman (the Director of Global Governance at the World Bank Institute), Jim Adams (the Vice-President of Operational and Policy Country Services for the World Bank) and Sanjay Pradhan (Sector Director, Public Sector Group, Poverty Reduction and Economic Management (PREM) Network for the World Bank).

Following the circulation of a set of questions to guide the framework development in mid-May, this week Bank management submitted a more extensive outline of the proposed framework to the Executive Directors (link below). Word is that management will submit a final draft to the Executive Directors in late July or early August, and to the Development Committee at the Annual Meetings in September.

Avenues for civil society input into the process remain unclear. While some ED offices have directly solicited opinions from civil society groups, the rapid pace at which the framework is being developed leaves little room for anything of a consultation period. Although Wolfowitz acknowledged the importance of opening up the process to external actors in a speech at the Vatican last week, unless he develops the framework in a transparent, inclusive and accountable fashion - which cannot done on the current timetable - there is little hope for broad public acceptance of the new strategy.

• Read an outline of the proposed anti-corruption framework (BIC website)

Over 100 organizations have signed a new call for action against the IFIs, centered around the upcoming 2006 IMF/World Bank Annual Meetings in Singapore. “This year, 2006, we pledge to intensify our struggles against these institutions and raise the level of international coordination and concerted action,” the call states. Denouncing the IFIs as tools used to exercise control over the global South, the call demands the following:

• Immediate and 100% debt cancellation of multilateral debts
• Open, transparent and participatory external audits of IFI lending operations and related policies
• An end to the imposition of conditions and the promotion of neoliberal policies and projects
• An end to the promotion of privatization of public services and the use of public resources to support private profits
• Cessation of IFI funding and involvement in environmentally destructive projects including big dams, oil, gas and mining, and implementation of the recommendations of the Extractive Industries Review
• Cessation of imposing conditions that exacerbate health crises like the AIDS pandemic and make restitution for past practices such as requiring user fees for public education and health care services

The call forecasts a level of mobilization similar to that which occurred at the recent Asian Development Bank Annual Meetings in Hyderabad, India. Both mobilizations highlight the number and strength of groups taking a progressive and critical stance against the IFIs.

• Read the Call to Action

Wolfowitz Needs to Look at Corruption of Yesterday, Not Just Today and Follow the Positive Example of Norway
By Gail Hurley, Eurodad
June 1, 2006
Paul Wolfowitz’s anti-corruption quest is incomplete unless it examines past lending and accepts responsibility for its mistakes. Gail Hurley writes that while Wolfowitz charges forward, freezing loans, denouncing corrupt governments and projects, and preparing an anti-corruption framework, he has yet to challenge the legitimacy of existing debts incurred by kleptocrats and corrupt dictators. Although Bank officials were fully aware that the Democratic Republic of Congo’s Mobutu, Indonesia’s Suharto and the Philippines’ Marcos were siphoning off development assistance into personal accounts, the institution continued to provide financial support. Those dictators are gone, but the debts remain and poverty worsens.

While some countries are unwilling to even engage in the debate, Norway is setting a positive example. The country is seeking to open up the dialogue on odious and illegitimate debt in the international community. It has independently offered money to the World Bank to finance a study on debt, and the country’s Development Minister, Erik Solheim, is said to have agreed to examine debts claimed by Norway that could be illegitimate. The World Bank Board needs to acknowledge and evaluate its own involvement in this issue before proceeding with any further anti-corruption initiatives or labeling its approach comprehensive.

• Read the article (Eurodad website)

Responsibility of International Organizations: The Accountability Mechanisms of Multilateral Development Banks
By Eisuke Suzuki and Suresh Nanwani
Michigan Journal of International Law
May 16, 2006
Until the 1990s, private individuals allegedly affected by multilateral development bank operations could not file claims. Eisuke Suzuki and Suresh Nanwani review the law of responsibility of international organizations and how it relates to private third party claims for remedies. The authors analyze the effectiveness of various MDB accountability mechanisms, and critique new developments in the structures of those mechanisms. They also postulate the need for creativity in the settlement of private party claims, including recommending the use of the existing MDB administrative tribunals as special tribunals for the settlement of private claims relating to the accountability mechanism.

• Read the article (BIC website)

World Bank/IMF Spring Meetings notes. BIC has compiled a comprehensive overview of events and discussions that took place around the 2006 World Bank/IMF Spring Meetings, including notes from civil society and World Bank meetings. Read the document on BIC website.

World Bank buildings now carbon neutral. The institution, which produces 148,000 tons of carbon dioxide emissions annually, will offset emissions produced by the Washington D.C. headquarters, Spring and Annual Meetings, and staff travel and commuting. While a positive step, the impacts of Bank lending, especially in the fossil fuel industry, are far from carbon neutrality. The Bank continues to resist calls to calculate the greenhouse gas emissions of the projects it finances. Read more.

World Bank begins update of Environment Strategy. June 5, 2006. The Bank adopted a new Environment Strategy in 2001. The World Bank launched a three week, by-invitation-only, global e-dialogue program on June 5. The discussion is being moderated by Rita Klees and Anjali Acharya, two specialists from the World Bank Environment Department. Weekly discussions include: The Record so Far, Future Directions and Working in Global Programs and Partnerships. The dialogues will close on June 23 and a draft of the updated strategy should be available by October.

ADB is taking comments on its draft Translation Framework. Read the draft on the ADB's website. Email comments to by July 31, 2006

Oil, gas and mining industries biggest rights and standards violators. An upcoming UN study cites oil, gas and mining industries as responsible for the majority of human rights and labor and environmental standards violations worldwide, according to Terraviva Europe. Read the article.

2006 IMF/World Bank Annual Meeting participant accreditation process now open. Civil society representatives planning to attend the meetings can register on the World Bank website.

BIC's Latin America regional work focuses on the World Bank Group and the Inter-American Development Bank as well as other key financial institutions in the region. The Latin America Program Manager will lead the organization’s efforts to develop and strengthen relationships with civil society organizations and international financial institutions. The Manager will also monitor World Bank Group and IDB projects, policies, and initiatives (e.g., PPP and IIRSA) that are of significant environmental and social concern for affected groups in Latin America. Find out more on BIC's employment webpage.

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