by David Pred and Natalie Bugalski
There are big changes happening at the World Bank today, which will have far reaching consequences for millions of the world’s poor.
For the first time in over a decade, the Bank is undergoing a major review of its Safeguard Policies, which serve to ensure that Bank projects do no harm to people and the environment. While civil society groups are pushing to strengthen the policies and upwardly harmonize them with international human rights and environmental standards, the view that seems to prevail within the Bank’s senior management is that the World Bank needs to become a more attractive lender, with fewer strings attached to its loans, in order to “stay relevant” in the face of increasing competition from Brazil and China.
The World Bank, under President Jim Yong Kim, is trying to redefine itself for the 21st century. Mr. Kim has admirably reoriented the Bank’s strategy around its original poverty reduction mandate, setting two ambitious goals for the institution: the elimination of extreme poverty by 2030 and promotion of ‘shared prosperity’ to boost the incomes of the poorest 40 percent of the population.
Yet Mr. Kim often speaks about the need for the Bank to be less risk averse and support more “transformational large-scale projects” in order to achieve these ambitious goals. Many are starting to worry that this discourse is code for gutting the Bank’s social and environmental requirements, which are seen by some as inhibiting risk taking, while returning the Bank to the business of financing mega-projects. The irony is that the world’s poorest and most vulnerable communities – the very people the Bank has pledged to work for – are the ones who will bear the greatest risks if these concerns are realized.
One of the primary ways in which these risks materialize is in the form of development-induced forced displacement. As described by sociologist Michael Cernea, forced displacement remains a “major pathology” in Bank-sponsored development around the world. According the Bank’s Independent Evaluation Group, more than one million people are affected by forced displacement and involuntary resettlement from active Bank projects at any given point in time. Displacement is often accompanied by threats of and use of violence and results in loss of livelihoods and education, food insecurity, and psychological trauma.
Although the Bank has a resettlement policy aimed at avoiding these harms, local communities displaced in the name of “development” continue to face impoverishment and violations of their human rights due to Bank-financed projects. Revisions of the policy that harmonize it with international human rights standards, coupled with incentives for improved implementation could end put an end to this injustice.
The Nam Theun II Hydropower Project in Laos provides an apt example of the need for strong requirements for human rights due diligence, participation, and free, prior, informed consent for project-affected people whose livelihoods and cultural identity are tied to their land. The construction of the dam was set to displace some 5,700 people, most of them indigenous, and economically impact more than 110,000 people downstream.
In the closed society of Laos, there was little possibility of a free consultation process, in which people could raise objections to resettlement. Yet, the Bank and its partners largely ignored the repressive political environment and stage-managed a show of participation intended to ratify pre-determined pro-project outcomes.
Today, according to International Rivers, those resettled several years ago are still struggling to recover their livelihoods after they lost access to critical natural resources. Downstream, changes to the river ecosystem have meant that villagers have suffered poor water quality and declining fish catch. Human rights due diligence and a genuine process of consultation could have prevented or mitigated these harms, including through consideration of a no-project option.
A case in Ethiopia also highlights the need for human rights due diligence. Since 2006 the Bank has provided over $2 billion in budget support to local governments for basic service delivery. At the same time, the Ethiopian Government has embarked upon a Stalinesque campaign to transfer an estimated 1.5 million people in five peripheral regions to new villages, with the stated aim of improving services for remote communities.
According to Human Rights Watch, the program has entailed the violent forced relocation of tens of thousands of indigenous peoples from their fertile ancestral lands to more arid areas, where the promised basic services are often deficient or absent. The result in some cases has been starvation, with many victims of the program fleeing across national borders to seek sanctuary. Although there are clear links between the Bank project and villagization, described in a complaint to the Inspection Panel, Bank Management claims that its resettlement policy does not apply, first because all relocation is “voluntary”, despite strong evidence to the contrary, and second because resettlement is not regarded as a direct consequence of Bank-financing.
Also in Ethiopia, the Bank is financing the construction of a transmission line that many suspect would export electricity from the controversial Gibe III Dam, projected to economically impact hundreds of thousands of people in Ethiopia and Kenya. According to current Bank rules, however, the application of the resettlement policy beyond the direct physical displacement impacts of the transmission line construction is a matter of discretion for the Bank, leaving unprotected the thousands of communities at risk of destitution from the dam construction, despite the clear interdependency of the two facilities.
With negotiations now underway for the 17th replenishment of the Bank’s International Development Association (IDA) fund, international donors have an opportunity to help shape the Safeguards Review process for the next two decades. In a previous era, responding to the uproar of social movements around the world after Bank-financed mega-projects caused a series of social and environmental disasters, the U.S. Congress wielded pivotal influence in pushing the Bank to adopt stronger policies to protect affected communities and ecosystems.
Congress also used its power of the purse to demand the establishment of the Inspection Panel, the first complaints mechanism at a multilateral institution that provides affected communities with direct recourse to hold the Bank accountable when they are harmed due to violations of its policies. Regional development banks followed the World Bank’s lead and adopted safeguard policies and accountability mechanisms of their own. Today several regional banks have far stronger standards than their big brother in Washington.
It is imperative that the World Bank’s safeguards review should preserve the hard won gains made with the adoption of binding social and environmental protection policies and the establishment of the Inspection Panel. The review and the IDA 17 negotiations should be seized as an opportunity to align Bank policies with human rights standards, and to ensure that poor and vulnerable communities are never again made to shoulder the burden of development.
For details and recommendations on how to bring the Bank’s practices and policy on Involuntary Resettlement into line with human rights standards, see our submission to the Safeguards Review.
An abridged version of this blog post appeared on the Council on Foreign Relations Development Channel blog.