The World Bank approves new safeguard framework

Author: Maïka Sondarjee

 

Shortly before the World Social Forum 2016 in Montreal last week, the World Bank quietly approved a new Environmental and Social Framework. Their new safeguards rules delegate more power to borrowing countries… but at what price?

Since the heyday of the structural adjustment programs (SAPs) of the 1980s, a chorus of commentators condemned the top-down approach associated with the so-called Washington Consensus. They accused the Bank of making aid conditional to a set of one-size-fits-all policies. Indeed, far from resolving debt crises, the imposition of ultra-liberal conditions on borrowers namely contributed to worsen the lost decade in Latin America and the 1997 Asian financial crisis.

 

Hoping to repair the damage, the Bank now promotes a greater inclusion of countries of the Global South in the planning and implementation of multilateral development programs. So far, it seems commonsensical. Among others, the poverty reduction strategies, adopted in 1999, or the Programs-for-Results (PforR) adopted in 2010 illustrate this change in attitude. The empowerment of aid-receiving countries is now viewed as essential to development. Then again, it seems very commonsensical.

 

The new environmental and social framework, adopted on August 4th 2016, is part of this new orientation. Following consultation with 33 Global South countries, the World Bank created this new integrated framework of protection rules, which will serve as a reference in the writing of all the projects financed by the organization.

 

One of the major aspects of the new framework is the transfer of responsibilities for the implementation and monitoring of social and environmental protection. Projects financed by the Bank will now follow national regulations and national jurisdictions concerning the protection of vulnerable populations, workers or the environment.

Dam construction in the Mekong. Credit: Prince Roy
Dam construction in the Mekong. Credit: Prince Roy

The International consortium for investigative journalism (ICIJ) explains that the construction of dams or environmental protection campaigns, for example, will not have to follow the Bank’s legal directives or endure the monitoring of safeguards by international experts. If the construction of a highway or electric lines has a negative impact on surrounding environments, damage will be assessed and controlled by local experts.

 

The establishment of new protection measures has thus been delegated to local governments who often lack efficient mechanisms for social and environmental protection. Safeguards monitoring is also delegated to local expert teams, who will produce ad hoc reports to the Bank. The Bank is obviously supposed to finance this shift.

 

This example of “local appropriation” has been criticized by a group of NGO including Human Rights Watch and the Ulu Foundation, because it dismantles the Bank’s system of institutionalized safeguard policies. “Clear time-bound requirements (have been replaced) with vague language, loopholes, flexible principles and reliance upon ‘borrower systems’ instead of Bank safeguards.”

 

The President of the World Bank, Jim Yong Kim, contends that this change eliminates a previously highly expensive system that was too onerous for borrowers to even comply with. Kim also suggests that most countries already have standards similar to those of the Bank. But what happens when the standards differ?

 

A flagrant example is population relocation. One of the mechanisms put aside in the new framework is the requirement for local officials to produce an initial relocation plan for displaced populations. Previously, infrastructure projects required the production of a detailed protection plan of vulnerable populations before it was approved. From now on, the approval of projects will not necessitate such a plan. Predictions of relocations and compensations will now only have to be submitted right before the populations are to be evicted.

 

Paul Cadario, an engineering professor at the Munk School of Global Affairs and former senior manager at the World Bank, says that this new clause is a fundamental flaw in any infrastructure project. In an interview with ICIJ, he stated: “I don’t think you can design something without determining how many people’s properties you’re taking. I can’t imagine that a client would get away with saying we’ll do this as we implement it. It’s not how things work today.”

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Local cacao producer, Bolivia.

As reported by the Huffington Post last year, projects financed by the World Bank forced the eviction of over 3.4 million people in the past decade only. The international organization admitted having problems relocating vulnerable populations efficiently. While they might genuinely think that transferring this responsibility to borrowing countries is the right thing to do, the future of the new framework is uncertain at the very least. A more efficient partnership between borrowers and the Bank might have been more appropriate.

 

The main problem with conditionalities is not that the Bank keeps an eye on the implementation of the projects it finances, nor that they impose high safeguards standards. The problem with conditionalities is when one-size-fits-all are imposed on borrowers, especially concerning macro-economic policies.

 

In that case, activists and NGOs have pushed the Bank for decades to adopt higher safeguards policies regarding labour, populations at risk and the environment. To be clear, the new framework contains many good points, namely on the protection of LGBTQ communities, the reduction of inequalities and other workers’ protection rules. We should not throw the baby out with the bathwater. But we must be vigilant to not let safeguards standards go down in the name of empowerment.

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