NGOs Claim Win as Bank Extends Rules Review

NGOs Claim Win as Bank Extends Rules Review

Emad Mekay, Inter Press Service (IPS)

27th December 2004

Washington - Groups fighting for a more equitable global economic system are claiming victory over the World Bank after the international public lender said it would extend the deadline for consultations on some of its lending rules and standards and release more information to the public.

Friends of the Earth (FOE), a global group that was spearheading a series of boycotts of the World Bank consultation process, said boycotts by non-governmental organisations (NGOs) forced the institution to extend the process, originally due to end this month, till the end of April 2005.

The consultations are about the "performance standards," of the bank's private sector arm, the International Finance Corporation (IFC), the rules that borrowers and other companies benefiting from IFC funds must follow in completing development projects.

A World Bank official, speaking on condition of anonymity, confirmed the extension but denied that the IFC was changing plans because of pressure from civil society groups. Instead, the official said, the extension is to give clients and stakeholders more time to look at so-called "guidance notes," interpretive texts that accompany the standards and rules.

According to the new schedule the Washington-based IFC will release the notes and a 'Draft of the Policy on Social and Environmental Sustainability and Performance Standards' on Jan. 31, 2005. Public consultations on them will end Apr. 29, according to the bank.

The IFC said in August it was opening its doors for talks on its rules and guidelines for lending, and that it would launch public consultations as it updates its environmental and social safeguard policies. The IFC is also reviewing another policy on information disclosure.

While the World Bank is the world's largest public-sector lender to developing nations, the IFC lends to companies whose projects are supposed to contribute to that development.

The standards and "safeguard policies" are designed to ensure that the projects the IFC supports do not harm the environment or local communities. They cover issues including human and labour rights, resettlement, biodiversity protection and cultural heritage.

For example, it is expected that the new rules will require that certain pesticides used in IFC-funded projects meet specific minimum criteria, including that they have negligible adverse human health effects and minimal impact on non-target species and the natural environment.

The standards also impose safeguards against corruption and bribery.

The guidelines are particularly important because they set standards for other development banks as well as commercial banks and export credit agencies that lend to developing nations. This could involve billions of dollars in investments in developing nations every year.

Last week Friends of the Earth quoted a "reliable source" who said the IFC would comply with the various demands made by NGOs concerning the timeline and information available for the consultations, and that the extension was due to the boycotts.

The bank official denied the report.

"No, it wasn't because of the boycott. I suppose it was kind of an obvious reaction that civil society, which sees absolutely everything through their own prism, would see this announcement as (within) their ability to claim victory," the official told IPS on Monday.

But groups point out that the decision comes after a three-month civil society boycott of the IFC's process.

Groups from around the world shunned consultations in Brazil, Manila, London, Nairobi and Istanbul, claiming a lack of time, transparency and relevant background documents.

The organisations that skipped various meetings include War on Want, World Development Movement, Bretton Woods Project, FOE and the World Wildlife Fund (WWF), among many others. Only anti-corruption NGO Transparency International (TI) attended a meeting in London.

Other gatherings have already been held in Tokyo and Washington; many groups also boycotted those consultations and staged protests instead.

The NGOs called the meetings merely a "public relations exercise" and said the bank was not serious about giving a greater say to indigenous and other local people affected by bank-financed projects carried out by international companies.

But Friends of the Earth called the new schedule good news.

"These developments are a welcome signal that the IFC took note of our concerns," said FOE's Janneke Bruil, in a statement.

"The institution agrees now that policies that took years to develop cannot be discussed through a rushed process where relevant information is not available. It is curious however that these issues could only be resolved after a boycott," she added.

Bruil also suggested that hurdles remain before the process will be adequate. "Invitations for the consultations took place in a secretive manner and it remains unclear how any input will be processed ... We hope IFC will look at these issues as well. If not, it will continue to be difficult for us to spend our time on this review."

The advocacy groups continue to criticise the IFC proposal for maintaining that new standards should be voluntary not mandatory. If approved, they argue, the new guidelines would constitute a turn away from obligations under international law.

"The new IFC proposals are unacceptable. How can an international public institution shy away from international laws? It is crucially important that the IFC substantially improve the quality and implementation of its standards and start to protect people instead of profits," said Longgena Ginting of FOE International in a statement from Amsterdam.

That argument too was denied by the bank.

"The performance standards are mandatory. There is no sense in which any project can kind of cherry pick their way through the performance standards," said David Cowan of the IFC's communications department.

The IFC has loaned 16.8 billion dollars worldwide since 2003. From its founding in 1956 through 2003, it has lent around 59 billion dollars to 2,990 companies that worked in 140 developing countries.

Its parent, the World Bank, an institution dominated by the group of eight most industrialised countries (the G8) is often accused of working on behalf of the interests of western-based corporations and local elites at the expense of the poor, the environment and social norms in developing nations.

The bank lent 20 billion dollars to developing nations in 2004 alone, giving it great sway over the economic, social and environmental policies of those nations, many of which, say activists, are not accountable to their own people.