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IF-Eye Newsletter #14

20 February 2007

A number of hot topics are covered including a series of articles exposing tensions between Paul Wolfowitz’s team and World Bank Executive Directors, a vulture fund’s pending attack on Zambia, and the imprisonment of a noted oil and gas transparency campaigner in Angola. This edition also provides a handy breakdown of the International Development Association replenishment process, a review of IFI accountability, and a critique of this month’s Inter-American Development Bank’s Civil Society Meetings.

IF-Eye
Issue 14: February 20, 2007
A publication of the Bank Information Center

Welcome to the February 20 issue of the IF-Eye – the Bank Information Center’s bi-weekly distillation of key developments concerning the international financial institutions. A number of hot topics have surfaced in the past week, including a series of articles exposing tensions between Paul Wolfowitz’s team and World Bank Executive Directors, a vulture fund’s pending attack on Zambia, and the imprisonment of a noted extractives industries campaigner in Angola. Catch up to speed on these issues below. This edition also provides a handy breakdown of the International Development Association replenishment process, a commentary on accountability, and a critique of this month’s Inter-American Development Bank’s Civil Society Meetings. As always, please send feedback and suggestions to .

In this issue:

  1. IFI UPDATES
  2. CIVIL SOCIETY HIGHLIGHTS
  3. SPOTLIGHT: Demystifying International Development Association replenishment
  4. SPOTLIGHT: Who’s watching whom? Recent advances in the discourse on global accountability
  5. SPOTLIGHT: IDB 2007 Civil Society Meeting in San José, Costa Rica - a step backwards?
  6. SPOTLIGHT: Whose Development is it anyway? A view from the Mekong Delta
  7. ANNOUNCEMENTS AND RESOURCES
  8. NEW AT BIC: Join the BIC team!

1. IFI UPDATES: what’s new at the institutions, member governments and private sector

 

 

2. CIVIL SOCIETY HIGHLIGHTS: what’s new in civil society and the media

  • The Fox runs to the Wolf’s cry. EURODAD. February 16, 2006. Commentary on recent Fox news articles highlighting tensions between World Bank Management and the Board of Directors. http://www.eurodad.org/articles/default.aspx?id=762.
  • Bujagali Dam fails to meet international standards. IRN and NAPE. February 15, 2007. New report cites several key areas where the project does not meet the criteria set out in the World Commission on Dams decision-making framework. 
  • Salween Dams Global Day of Action. NGO CORD and the Salween Watch Coalition. February 9, 2007. Civil society groups issue a call to join activists from around the world to stand in solidarity with Burma’s victims of severe and systematic human rights violations and environmental destruction, and protest the Thai government's plans with the Burmese military regime to dam the Salween River in Burma on February 28.
  • Bridging the democratic deficit: Double majority decision making and the IMF. Bretton Woods Project, One World Trust. February 2, 2007. New paper discusses the IMF’s current voting system based on unequal weights, which puts weaker members at considerable disadvantage in decision making. As a result, the IMF faces further loss of confidence and disengagement by member countries.
  • Skeletons in the Cupboard: Illegitimate Debt Claims of the G7. Eurodad, CRBM Italy, Erlassjahr Germany, Plate-forme Dette et Développement France, Probe International Canada, PARC Japan, Jubilee USA, Jubilee Debt Campaign UK. NGOs in the G7 countries have released a damning new report which argues that if the G7 is serious about corruption, good governance and transparency, it should apply these principles to the past. The report highlights cases of illegitimate debts being claimed by Canada, France, Germany, Japan, Italy, UK and USA. These loans were the result of irresponsible lending, and some of these debts should not be paid.
  • Declaration on Debt. Various groups participating in the World Social Forum. January 24, 2007. Campaigns, social movements, NGOs, community- and faith-based organizations and activists gathered in Nairobi for the 2007 World Social Forum issued a statement on debt. “It is a scandal that the rich world demands hundreds of millions of dollars every day from the South in payment of ‘debts’ that have emerged from the unjust economic relations that impoverish the South and enrich the North. Indebtedness is still robbing the peoples of Africa, Latin America and Asia of their rights – their rights to independence and political autonomy, as well as to health, education, water and all the other essential goods and basic services which should be available to all,” the statement begins.

3. SPOTLIGHT: Demystifying International Development Association replenishment

The World Bank is gearing up to initiate another round of International Development Association (IDA) replenishment this year. The process, the fifteenth such replenishment and thus known as IDA-15, is a critical component of the institution’s regular fundraising efforts. It is also an important moment for member governments to assert their lending priorities and requirements for the institution. Following is a breakdown of the IDA process, and how it works in the US context.

What is replenishment?

The World Bank and other multilateral development banks (MDBs) require assistance from their member governments to finance their operations. Because many of their loans are low-interest or interest-free, and have long grace and repayment periods, the MDBs continually need to have money injected into their coffers. This periodic allocation of funds by donor governments is known as replenishment. 

How it works

World Bank IDA replenishments occurs every three years, and includes two phases prior to commencement:  donor government negotiations and national level appropriations. During negotiations, representatives from IDA donor governments (the IDA Deputies) meet with World Bank Management to determine appropriate sizes of replenishment, draft policy frameworks for identifying the particular types of projects that will receive replenishment resources, and negotiate equitable contributions from each donor government to the institution during the replenishment period. The US IDA Deputy is Kenneth Peel, Deputy Assistant Secretary of International Development Finance and Debt at the US Treasury.

Following these negotiations, appropriations take place at the national level, as donor governments work within their own legislative frameworks to allocate the necessary funds promised to the Bank during replenishment negotiations. 

The Unites States and Replenishment

A number of federal agencies within the United States Government, most notably Congress and the Treasury Department, are involved in MDB replenishment. The US Executive Director (ED) to the World Bank reports directly to the Secretary of the Treasury through the Assistant Secretary of International Affairs. The Treasury Department thus establishes US policy at the Bank though recommendations and advice to the ED. Treasury is also responsible for securing resources from Congress promised by the ED to the Bank during replenishment negotiations. Since Congress appropriates funds for foreign operations - including replenishment at the MDBs - during its annual Congressional Budget Cycle, it can influence Treasury policy towards the MDBs.  

Congress typically uses three types of legislation to promote reforms at the MDBs, in part during replenishment: reporting conditions, voting restrictions and policy guidance.  

The IDA-15 Timeline

The IDA Deputies will have four meetings during the negotiations process, the first scheduled for early March in Paris. Key issues and priorities are identified at this first meeting, based on IDA Deputy position papers that were to have been submitted to IDA-15 Chairman Philippe Hourer by the end of 2006 (word is that few papers were submitted by that deadline).

Money and funding for the replenishment will be debated at the second meeting, currently scheduled for June in Mozambique. This meeting will be a key intervention point for borrowing governments and civil society organizations. Priorities and funding will be decided during the third meeting, which will take place during the October  WB Annual Meetings in Washington, DC.  The fourth meeting, scheduled for the end of the calendar year, is mostly ceremonial. 

Hot topics expected to be addressed by IDA-15 contributions include: conditionality, governance, extractive industries revenue and contract transparency, strengthening accountability mechanisms and climate change.

Read more on the BIC website: /en/Article.3167.aspx

4. SPOTLIGHT: Who’s watching whom? Recent advances in the discourse on global accountability

by Manish Bapna, Executive Director, Bank Information Center

The global public sphere, the space in which global decision-making takes place, is an increasingly important and contested arena. Many of the most urgent problems today -- global warming, migration, pandemics -- cross national boundaries. Therefore, a global response and solution is required; however, the ability of individual people or even the public at large to influence or shape these solutions is tenuous at best. It is in this context that we welcome the recent literature on global governance and specifically on the accountability of global institutions. 

One World Trust, a UK-based NGO, recently launched a report comparing accountability between different types of transnational actors, namely intergovernmental organizations; international non-governmental actors; and transnational corporations. One of the more important contributions of this report is the framework they have constructed to measure accountability. The framework unpacks accountability into concrete indicators assessing an organization’s commitment to transparency, participation, evaluation, and complaints and response. Separately, Lisa Jordan and Peter van Tuijl, two well-known experts on civil society, edited and released a book titled ‘NGO Accountability: Politics, Principles and Innovations’. The book provides an exhaustive treatment of the issues and politics of NGO accountability and answers questions such as: Who do NGOs actually represent? Who should they be accountable to and how? Both the report and book were launched in Washington DC at workshops in January 2007.

A few thoughts on some of the findings and recommendations of these reports which may contribute to the ongoing dialogue within civil society on the accountability of transnational actors:

First, it is critical to differentiate between evaluations of accountability based on policies or systems versus those based on practice. As we all well know, what is on paper does not necessarily translate to what is practiced. A classic example is the high scores received by the World Bank on accountability – as assessed in the One World Trust report. This may seem as odds with what civil society activists have been arguing for decades. However, if one looks solely at policies on paper, the World Bank has indeed introduced a few positive reforms, often in response to persuasive demands from civil society. Yet whether these are practiced in actual day-to-day operations is a separate question altogether. 

Second, the question of how to measure and compare accountability between different organizational sectors is a difficult one raised by the Global Accountability Report. For example, what would a robust accountability system look like for a transnational corporation such as ExxonMobil? How would this differ from accountability at an intergovernmental organization such as the World Health Organization or a non-governmental actor such as Oxfam International? Although the objectives and principles shaping accountability are indeed the same, the systems, processes and capacity devoted to accountability should clearly differ – and be calibrated to the nature and impact of the operations of the organization in question. 

Finally, let me turn briefly to the accountability of NGOs – the central question posed by Jordan and van Tuijl’s recent book. Over the past years, critics have launched an offensive accusing NGOs of being neither transparent nor accountable. The American Enterprise Institute, a conservative think-tank based in Washington DC, coordinates ‘NGO Watch’ – a project to monitor NGOs on questions such as who funds them; how effective are their programs; how do they influence governments; who are they accountable to; etc. These questions have entered the discourse on development assistance and some policy-makers have all too easily used this critique to dismiss NGOs, especially those based in the West. The questions are indeed important ones but the motivations behind many of those asking these questions are less noble. In this debate, it is critical for NGOs to not lose sight of their primary lines of accountability – to the constituents they claim to serve. Accountability to critics, the media or even donors can not trump accountability to the NGO’s principal clients or audience.

The forces of globalization will continue to create profound impacts on people and the planet. The ability of transnational organizations to forge solutions to these challenges will in no small part depend on the accountability of these organizations themselves. 

5. SPOTLIGHT: IDB 2007 Civil Society Meeting in San José, Costa Rica - a step backwards?

by Vince McElhinny, Latin American Program Manager, Bank Information Center

For the seventh consecutive year, the IDB invited civil society leaders to discuss topics of mutual interest.  The 2007 encounter was limited to a one-day meeting in San José, Costa Rica on February 7, 2007.  Among those who listened to President Moreno discuss the significance of the Bank's relationship with civil society since the last meeting in Campinas, Brazil in 2006, some of the 64 people who attended this year qualified the San José meeting as a step backwards in this relationship. Both the IDB and civil society maintain their respective interest in deepened engagement, yet 2007 was disappointing as a missed opportunity. Profound questions exist about the value added of future meetings unless structural changes are considered.

In addition to an unstructured question-and-answer session with IDB President Moreno, parallel panels were organized on two themes: 1) infrastructure and environment, and 2) participation, indigenous policy, transparency and corruption. The first panel failed to live up to expectations and made poor use of the time available. In particular, many with experience were disappointed that past civil society advice seemed not to have been taken into account. The second panel reflected much better participants' expectations but was too ambitious in its scope. Although the themes dealt with were clearly interrelated, a division of the panel into subgroups would have allowed for more detailed explanations from Bank staff and some meaningful dialogue with CS participants.

Overall, the most notable criticisms of the event include:

  • The one day structure and poorly moderated event/panel process ignored past civil society suggestions that at least two days and trained moderators are needed to facilitate serious discussion.
  • The first panel began with a civil society presentation (about social control mechanisms in Bolivia in the case of infrastructure or environment) that was neither relevant to nor of a quality that the topics merited.  The presentation and associated interventions served more as a distraction than a stimulus for the proposed debates.
  • The interventions by Bank representatives and Bank moderators in Panel 1 consumed at least half of the slotted time and made claims or referred to documentation that required far more time to explore than the panel was designed to accommodate. While essentially true for Panel 2 as well, extending the session for another hour reduced the proportion of time taken up by Bank staff closer to a third of the total.
  • The moderation lacked the ability to maintain any continuity of the conversation and the rapporteur’s summary report didn't seem to reflect the weight of what came out from the participants.
  • In general, the discussion focused more on aspirations or broad hypothetical claims rather than clear performance indictors. A perpetual debate about the existence or quality of Civil Society Advisory Councils (CASCs) tends to be based on anecdotal rather than systematic assessment criteria. Selective references to the Bank's information disclosure were hastily introduced by the Infrastructure panel Bank moderator, demonstrating not only an apparently weak grasp of the policy itself, but also a lack of experience as a moderator.
  • Specifically on the issue of infrastructure, broad claims were made regarding the linkages between infrastructure, growth and poverty reduction that remain largely in the realm of theory but were treated in the panel as fact. Casual references to equity outcomes and participation in infrastructure mega-projects were presented by the IDB as low priority concerns.
  • References to progress on recommendations of the Blue Ribbon Panel on environment (IDB website) were based on documentation that was provided late to the participants (Sustainability Review) or has not been made available for public review (Sustainability Index, Country Environmental Reports, and Strategic Environmental Assessments).
  • The minutes for the 2006 meeting (IDB website) did not reflect feedback loops to IDB decision making processes, therefore resembling a laundry list of concerns and proposals with little indication of actual impact.

For many of these reasons, participants left the panel either confused about the goals of the event or frustrated about the disorganized and deficient planning.

Read the complete analysis of the event: IDB 2007 Civil Society Meeting in San José, Costa Rica - A Step Backwards? (BIC website)

6. SPOTLIGHT: Whose Development is it anyway? A view from the Mekong Delta

by Jelson Garcia, Mekong Regional Coordinator, Bank Information Center. Excerpt from “Whose Development is it Anyway? A Scoping Report”

The Asia Pacific region is home to 55% of the world’s population. Despite the remarkable prosperity experienced by the region in recent years as exemplified by 5.5% average growth, the unequal distribution of this growth has left over 620 million people living in abject poverty. Multilateral development banks (MDBs) have traditionally played a major role in setting the development agenda of Mekong/SE Asian governments. The World Bank (WB) and Asian Development Bank (ADB) have provided billions of dollars to regional governments and the private sector over the years.

Civil society organizations (CSOs) in the region are increasingly concerned that MDB priorities to lend more, accommodate the needs of middle-income countries and catalyze greater involvement of the private sector are part of the overall design to keep the Banks afloat - even if they pose social and ecological pitfalls. Man groups allege that the concessions being made by the MDBs - such as the relaxation of safeguard policies and partial compliance with accountability mechanisms - as well as the Banks’ renewed focus on large infrastructure projects will exacerbate existing social and economic injustices and cause more ecological disasters. CSOs stress the difficulty of translating the net effect of these changes into gains or development for the poor.

So the question arises: under the current socio-political environments and future trajectories of multilateral development banks, how do civil society organizations engage with the Banks in Mekong/Southeast Asia?

Some key findings:

  • Mekong/SEA CSOs differentiate their approaches in dealing with IFIs based on the nature of Bank investments, their own contexts of struggles and their institutional dynamics. Simply put, players, not just targets, drive MDB campaigns in Mekong/SEA.
  • CSO engagement with the MDBs does not escape the challenges of domestic politics. Four of the region’s countries—PRC, Lao PDR, Cambodia and Vietnam—are shifting from centrally planned to market economies. With the exception of Cambodia and Thailand, these countries still espouse socialism as a political dogma. Under these regimes, critical elements for democratic process, i.e. civil society participation, transparency, increased access of the poor to common resources and decentralization, remain weak. Embarking on IFI advocacy in these countries, which can at times be critical of both the IFIs and national governments, is not trouble-free. There is fear of military reprisal, from which local communities cannot protect CSOs. INGOs also find themselves wrapped within political restrictions set by central governments.

Read “Whose Development is it Anyway? A Scoping Report” on BIC’s website: /en/Article.3065.aspx.

 

7. ANNOUNCEMENTS AND RESOURCES

The Aid Effectiveness Debate. World Bank. A new paper reviews the connections between aid flows and development outcomes. Although clear causal links are hard to identify, there is some value in looking at three relationships: the links between donors and policy makers (through examining quantity and quality of aid, donor coordination, domestic policies, etc.), policy makers and policies (through examining governance), and policies and outcomes (using economic research and development experience). Investigation of these ties leads to a promising but challenging new development aid model based on country ownership and performance-based aid allocations.

Read the paper: http://siteresources.worldbank.org/DEC/Resources/Aid-Effectiveness-MS-FB.pdf  

2006: A Global Justice Year in Review, by Mark Engler, CommonDreams, January 3, 2007. Mark Engler highlights the wins of global justice and grassroots activism in 2006, at a time when positive and inspiring headlines can be hard to find. Most notably for North Americans is the shift in political power in the November 7 elections. Latin America also had a remarkable year - rejecting corporate power and its models of economic “progress” with the election of Michelle Bachelete (Chile), Lula da Silva (Brazil), Hugo Chavez (Venezuela), Rafael Correa (Ecuador), and Evo Morales (Bolivia). With the changes in Latin America and other popular pressures in the developing world, developing nations have changed their resigned compliance to the US and Europe in trade negotiations, resulting in a deadlock at the Doha round of talks at the World Trade Organization. These are quiet wins, Engler argues, but ones that can renew hope of a better future for all. 

Read the report: http://www.commondreams.org/views06/0103-53.htm

Getting More Doctors, Nurses and Teachers Hired in Developing Countries. ActionAid International USA. This economic literacy training is designed to introduce US-based international advocacy organizations working on health, education, HIV/AIDS and women’s rights to the issues and debates about how to increase public spending in poor countries throughout the Global South. March 13-15, 2007. Contact:

Building scrutiny of the World Bank and IMF – A toolkit for legislators and those who work with them. World Development Movement. Toolkit provides advice to help legislators in developing countries wrest back some influence over their own economic policies. The toolkit also shows how legislators in donor countries can work in solidarity with their colleagues in the developing world.

Check out the toolkit: http://www.wdm.org.uk/news/worldbankIMFtoolkit06022007.htm

Dancing with Giants: China, India, and the Global Economy. World Bank. The World Bank’s new report assesses the sustainability of China and India’s current growth trends through 2020, the form their growth will take in the future, and its likely impact on the global economy. China and India account for 37.5 percent of the world’s population and 6.4 percent of the value of output and income. With continued growth they will soon reach the same economic level of consumption and per capita production of today’s developed nations – thus earning them the name ‘Giants’. China’s growth has produced the largest individual nation impact to the global economy in history; it has also experienced the greatest continuous growth any county has ever seen.

The paper raises a number of concerns. The Giants are growing at a time when the world is forcefully pushing the limits of resource availability. The impact that China and India will have on multilateral efforts to increase aid standards is another area of unease. Foreign direct investment does not require the same level of social and environmental standards attached to aid from multilateral banks. This leaves open opportunities for greater inequalities to accompany development projects. With growth comes a level of responsibility to citizens and the world, and many are concerned about how well China and India will handle this new burden. Western nations must adjust to the Giants entrance into developed nations space, while China and India must become more socially and environmentally responsible to their own citizens and the world as they continue to grow. 

Read the report: http://web.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EXTCHIINDGLOECO/0,,menuPK:2
842045~pagePK:64168427~piPK:64168435~theSitePK:2841990,00.html

IFI Spring and Annual Meetings on the horizon!

8. NEW AT BIC: Join the BIC team!  

BIC is how hiring for FIVE positions: Middle East/North Africa Program Manager, Africa Program Manager, Europe/Central Asia Program Assistant (2), and Asia Program Associate. /en/Page.Jobs.aspx

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