Lingering Asymmetries in SDGs and Human Rights: How Accountable are International Financial Institutions in the International Accountability Network?

The recent US nomination (and thus de facto appointment) of well-known World Bank critic and US Treasury official, John Malpass, as the new World Bank President following the abrupt resignation of Jim Yong Kim (former Dartmouth College president who announced he was leaving the World Bank for opportunities in the private sector) brought a slew of criticisms (see here, here, and here) against the United States’ traditional prerogatives of appointing the World Bank President, in tandem with the European Union’s counterpart prerogatives in appointing the Managing Director of the International Monetary Fund (IMF).  The tradition arises from a “gentlemen’s agreement” struck at Bretton Woods at the inception of the World Bank and IMF.  Neither the IMF Articles of Agreement or the World Bank Group’s Articles of Agreement contain any whiff of this gentlemen’s agreement – but they are effectively carried out because of the United States’ overwhelming voting power at the World Bank and the European Union’s counterpart voting power at the IMF.  In any event, contestations over power and leadership of the Bretton Woods institutions are not exactly new – they are precisely the same matters that have impelled rival geopolitical powers such as China and Russia to set up new international financial institutions (IFIs) where their influence and leadership can be more palpable, as seen from the BRICS New Development Bank and the Asian Infrastructure Investment Bank. Leadership contests at the IFIs – often between one hegemon and other fellow hegemons in the international system – do not, however, scrutinize the real nature of accountability of IFIs under their development mandates, as to the populations for whom such mandates were created to begin with.  During his presidency at the World Bank, Jim Yong Kim was heavily criticized for soliciting private funders in Wall Street to finance the Bank, sourcing capital infusions beyond the traditional donations of governments.  World Bank staff challenged him for his managerial style and the lack of strategic direction, that was alleged to be inconsistent with the Bank’s actual development mandate.  

Even as the IFIs continued to tout “inclusive growth” at the November 2018 G20 meetings – a goal which the World Bank defines as “growth that allows people to contribute to and benefit from economic growth” – it is quite remarkable to this day that IFIs shirk from openly embracing their own member States’ human rights treaty obligations as the normative template for their development mandates, preferring to refer strictly to their internal mandates under their respective Articles of Agreement.  (On this point, see the interesting 2017 article by Thomas Stubbs and Alexander Kentikelenis).  It may be recalled that the UN Independent Expert for a Democratic and Equitable International Order, Mr. Alfred de Zayas, formally called on the World Bank in September 2017 to align their articles of agreement with human rights, and to ensure that development projects with Members’ own international human rights commitments, all the more so because the World Bank could not afford to be a “human rights-free zone”.  

Some Consideration in Sustainability ESC Compliance Frameworks, but Not Internalization

However, it should also be noted that the World Bank Group, through its International Finance Corporation (IFC), elaborated in 2016 about the IFC Sustainability Framework’s relationship with the International Bill of Rights, noting among others that:

The decision not to explicitly internalize international human rights law commitments of States remains baffling, especially in 2019 when the very same Agenda 2030 on Sustainable Development (which the World Bank Group, IMF, and other IFIs commit to support) is explicitly premised and grounded on international human rights commitments of States.  This is nowhere more evident than in the remaining gaps in IFIs’ understanding and practices of conducting ‘consultations’ with indigenous peoples and local communities affected by IFI-financed development projects, and in the tolerated variances by which IFIs accept environmental, social, and economic risk assessments for such projects.  More than seven years on since the June 2012 Report of the Independent Accountability Mechanisms (IAM) Network (the network comprising the World Bank Inspection Panel, and other compliance mechanisms at many IFIs) pushed for the need for reforms, the public reports of the World Bank Inspection Panel still evidence ongoing structural gaps in constructing meaningful consultations and internalizing community feedback, as well as in determining the subject-matter, temporal, and community scope of such risk assessments.  At the very least, these investigation reports still appear silent on making climate change impact risk assessments as well as explicit human rights impacts assessments, based on the very same terms of the international commitments made by the States when they agree to development projects are undertaken and financed by the World Bank.  Other IFIs largely do environmental and social compliance with much the same ambivalence to deliberately internalizing the recipient State’s obligations under international human rights law, climate change law, and international environmental law.

Inspection Panel Decisions: Human Rights as Part of Compliance Assessment?

The Inspection Panel’s significant mandate since 1993 is to take complaints from affected peoples (indigenous or otherwise) (dubbed as “Requesters” in Panel reports) regarding Bank-financed projects, when the conduct of these projects appear inconsistent with Bank Operational Directives and policies (including its Environmental and Social Framework).  Out of the 131 cases thus far before the World Bank Inspection Panel (Editor’s note: one of my current streams of research at Notre Dame focuses on scrutinizing compliance with human rights-related decisions and investigations by international economic tribunals), very few explicitly incorporate sections on human rights in the Panel’s investigation reports, preferring to refer strictly to Bank Operational Directives and policies that relate to environmental compliance or social compliance norms defined by the Bank.  It was not until the 2001 Chad-Cameroon Pipeline Project that the Inspection Panel even included a discussion on human rights in its Investigation Report, albeit quite reluctantly and evidently with its own views of the place of human rights in Panel investigations:

“34. The Requesters allege violations of Directives on proper governance and human rights.  Management maintains that improving governance is one of the key objectives of the Bank’s Assistance Strategy to Chad and instances of poor governance are of concern to it.  As for human rights, Management states that the Bank is concerned about violations of human rights in Chad and elsewhere while respecting the Bank’s Articles of Agreement but that, in this case, it believes that the Project can achieve its developmental objectives.

35.  It is not within the Panel’s mandate to assess the status of governance and human rights in Chad in general or in isolation, and the Panel acknowledges that there are several institutions (including UN bodies) specifically in charge of this subject.  However, the Panel felt obliged to examine whether the issues of proper governance or human rights violations in Chad were such as to impede the implementation of the Project in a manner compatible with the Bank’s policies.

36.  As far as “good” or “proper” governance is concerned, the Panel recognizes that this is an evolving process in Africa and elsewhere in the developing world, and that several Bank-supported Projects, including the Capacity-Building Project which is the subject of this investigation, have components designed to improve the country’s governance record and performance.

37.  As for human rights, the Panel has examined several reports addressing the situation in the country and the extensive exchange of correspondence between Bank Management and NGOs in Chad and abroad.  The Panel takes note of the fact that on more than one occasion when political repression in Chad seemed severe, the Bank’s President personally intervened to help free local opposition leaders…During its visit to Chad, the Panel did not seek out other opposition leaders…who had been arrested.  In the field however, several local leaders and organizations mentioned to the Panel that, while at times feeling harassed by authorities, they have expressed their opinions about the project without incurring physical violence.  The Panel observes the situation is far from ideal.  It raises questions about compliance with Bank policies, in particular with those that warrant informed and open consultation, and it warrants renewed monitoring by the Bank.” (2001 Investigation Report, paras. 34-37.)

Evidence from 2015-2019 Inspection Panel Reports

The Inspection Panel’s reports since 2015 (the exact year countries committed to climate change action through the December 2015 Paris Agreement and adopted Agenda 2030 for Sustainable Development in September 2015) – a total of 31 cases to date, with the majority of them either dismissed or deemed by the Panel as not eligible for registration to proceed – do not show much progress at all on the role of human rights as part of the Bank’s compliance assessments in its development projects (and notwithstanding the Bank’s expressed support for the Paris Agreement as well as for its Strategic Partnership with the UN to  Implement Agenda 2030).  For example, with respect to expressed concerns over transboundary harms to affected peoples in mining infrastructure investments in Mongolia, the Panel noted the defects in the scope and content of consultations as well as the environmental and social impact assessment concerns raised by experts such as the International Union on the Conservation of Nature (IUCN) and referred the situation back to Management, but it still did not reflect or otherwise internalize the treaty commitments of either Mongolia or project partner Russia with respect to climate change or human rights.  The same could be said of the Panel’s investigation report on alleged involuntary resettlement of local communities in relation to a Kosovo Power Project; alleged lack of meaningful consultations with affected local communities on irrigation projects in Armenia; alleged environmental, health, and social harms and exclusion of communities in Colombia with respect to the Rio Bogota Environmental Recuperation and Flood Control Project; alleged harm to livelihoods, food security, and the environment from an urban infrastructure project in Amaravati, India; and alleged human rights abuses committed by security forces in the Democratic Republic of Congo in relation to a high-priority roads project (where in para. 186 of the investigation report, the Panel did at least note that the International Finance Corporation recently developed a handbook “based on the concept of providing security and respecting human rights”, without specifically referring to Congo’s human rights and climate change treaty commitments).  

In none of these Panel investigation reports was it ever explicitly accepted by or openly recognized the World Bank’s Management (or even by the Panel itself) that the international human rights, environmental, and climate change treaty commitments of the State in which the development project was taking place should be the baseline for determining the scope of environmental and social impact assessments, more so the content and conduct of informed and meaningful consultations with affected local communities and indigenous peoples.  Thus, while the Bank or the IFC may be considering international human rights law in its environmental and social frameworks it is entirely unclear and somewhat nebulous to what extent it is indeed doing so, especially with a view to ensuring explicit accountability towards affected local communities and indigenous peoples to whom such human rights obligations are owed.

Conclusion

In this veil of ignorance regarding how the Bank Management or the Inspection Panel builds their normative expectations as to environmental and social impact assessments and ‘informed and meaningful consultations’ to this end, one is left to wonder if the IFI’s accountability rhetoric in their environmental and social compliance processes matches up to their actual operational practices.  That kind of direct accountability to constituent populations of IFI-financed projects is, in my view, more directly crucial to the fulfillment of the Bank’s development mandate, more than the many jeremiads (however justified, of course) that scholars and practitioners make today about trying to reform Bank leadership away from the monopolies held by the United States and the European Union.  It is all the more urgent, in 2019 when IFIs keep resounding “inclusive growth” and “strategic partnerships” on climate change and the SDGs, that they can indeed be held directly accountable to the populations and communities affected by climate change and the SDGs, and not just to the States that dominate voting at these IFIs. The diversity and representativeness of ephemeral Bank leadership is of course a worthy subject of scrutiny. But it should concern all of us with a sense of greater urgency that Bank practices today remain so far behind their public rhetoric and commitments to support  climate change, the SDGs, and “inclusive growth”.  IFIs cannot afford the continuing gap, given the obvious time sensitivity to programmatically addressing climate change  (especially from the latest IPCC report cautioning the critical nature of the next 12 years), and with barely 10 years to go to achieve Agenda 2030 targets. If IFIs still do not take seriously their own public rhetoric of support for Agenda 2030 and the Paris Agreement within their development mandates – according to the obligatory terms of international human rights law, climate change law, and international environmental law that States owe to their populations – the window for achieving their desired “inclusive growth” will just keep narrowing.