Destroying eco-systems, devastating forests, threatening vulnerable species, hurting the poor, increasing inequality, facilitating corruption, warming the planet, promoting “unfair trade” and encouraging human rights abuses, the forced evictions of 1000s of people and even “cultural genocide”, amongst other things. . . You might have thought that, with a history of such charges levelled against it, the World Bank would be improving its lending culture to guarantee that in the future its loans don’t have such shattering social and environmental impacts.
Right? Actually, no. The Bank is coming to the end of an extended review of its “environmental and social safeguards policies”, and things aren’t promising. A “consultation” on draft new safeguards in Peru earlier this month met with a mass walk-out - not the first time that has happened. Immediately afterwards, over 190 civil society institutions and individuals from across Latin America and the Caribbean issued a statement, from Lima, saying:
We wish to express our profound concern and dissatisfaction with the World Bank’s Environmental and Social Safeguard review process, as well as with the current draft of the new Environmental and Social Policy and Environmental and Social Standards published by the International Bank for Reconstruction and Development [one of two institutions making up the World Bank, one of five in the World Bank Group]. The backtracking and weaknesses found therein considerably outweigh its positive aspects.
The draft safeguards were made public last July, after being leaked to the Guardian, and responses have been scathing. In November 360 civil society organisations wrote:
We strongly object to the World Bank’s safeguards draft since it falls far short of the rules needed to protect the environment and respect the rights of affected communities, workers and indigenous peoples. The draft derogates from well-established international standards and would effectively dismantle 30 years of policy evolution, setting a dangerous precedent among national, regional and global actors. The draft represents a massive dilution of current Bank policy that undermines momentum for the upward harmonization of social and environmental standards and their alignment with universal human rights.
Not only civil society is concerned. According to the Financial Times, US senators told the Treasury secretary the draft “may represent a dilution of existing protections”, while the African Commission on Human and Peoples’ Rights has warned Bank president Jim Yong Kim of a “major setback” undermining “the achievements made by the Commission during the past decade.” In addition, 27 UN human rights specialists have written to Kim noting the draft “seems to go out of its way to avoid any meaningful references to human rights and international human rights law.”
How can this be happening? How can things be getting worse?
“Financial institutions from emerging economies are setting a low bar by lending to governments without social and environmental requirements,” Nezir Sinani, from the Bank Information Centre, told the Guardian. “In a race to the bottom, the Bank is weakening its safeguards to attract large borrowing countries.”
“The Bank is diluting its safeguards in response to the reduction of its funding and savage competition with other actors,” says Mariana Gonzalez, from FUNDAR in Mexico. “In Latin America and the Caribbean, BNDES [Brazil’s National Bank for Economic and Social Development] in the last ten years has increased its financing 1,185%, and Latin America’s Development Bank has managed to duplicate its size in only six years. A study shows that in 2010 China’s loans to the region exceed the total combined by the World Bank, the Inter-American Development Bank and the US’s Ex-Im Bank.”
“Players like the Bank of China, BNDES and Latin America’s Development Bank in the last few years have globally increased their investment in infrastructure, due to the fact their safeguards, and the loan requirements, aren’t as demanding as the World Bank’s,” said Gonzalo Roza, from FUNDEPS in Argentina, in a recent interview. “The Bank wants to be more competitive and has decided to weaken its standards.”
The Bank itself told the Guardian the draft safeguards will be revised from March, and appears optimistic things will improve. In a slightly ambiguous statement the Director for Operations Risk Management, Stefan Koeberle, emailed:
When this process is complete, we will have an environmental and social framework that represents stronger leadership, stronger partnership, and stronger protections for the poor and the environment. We will do more and we will do it better.
The Bank is clearly no longer as important as it once was, particularly in Latin America, but it remains one of the most powerful development institutions worldwide and impacts the lives of millions. And the UK is one of its largest contributors, meaning it holds considerable influence over policies and decisions and it should play a significant role in the safeguards review.
Indeed, this is especially pertinent given a report by the House of Commons’ Environmental Audit Committee (EAC) in 2011. This stated that, in the context of fossil fuels in particular, “the World Bank should not assume that the UK will continue to provide financial support if it does not change its practices.”
A summary of the EAC’s findings stated that the report recommends the UK “should only provide funding for multilateral institutions with strong environmental credentials”, and that funding should be withheld if it didn’t clean up its act.
“The World Bank should not assume continued support from the UK unless it changes its ways,” Committee chair Joan Walley was quoted as saying.
In terms of safeguards, the Bank is changing its ways - for the worse. So what is the UK doing about it?
In a report titled “UK Engagement with the World Bank 2013/14” the Department for International Development (DFID) stated “the UK will continue to engage closely” in safeguards reform, yet the 2014/15 report refers to “new and strengthened safeguards policy” without acknowledging the draft made public three months before is weaker, not stronger. DFID met with the Bank last month, and wrote beforehand outlining the key issues it wanted to discuss, including “climate impacts and vulnerabilities” and its “concern” about the “level of protection for Indigenous Peoples.”
Asked by the Guardian for its response to the draft safeguards, DFID emailed a parliamentary statement made by Secretary of State Justine Greening on 2 February:
The Government attaches considerable importance to the current review of the World Bank’s Safeguards Framework. We have been strongly engaged throughout both with UK civil society organisations and the World Bank, most recently at UK consultation meetings on 19-20 January. At these, discussions with the Bank included a specific focus on how the safeguards will ensure proper consideration and risk management for vulnerable or disadvantaged groups such as women, the disabled and LGBT people. The Government will continue to raise these points as the review progresses.
True, that statement was made in response to a question specifically referring to “LGBT people” and then vaguely to “other vulnerable groups”, but it begs another question. What about everyone else around the world?
Helen Tugendhat, from NGO Forest Peoples Programme, calls Greening’s response “very, very shallow.”
“Every shareholder on the Bank board and the governments behind them have a direct responsibility,” Tugendhat says. “They vote in the approval of every project, and they vote on policy frameworks like this one expressly intended to protect people from harm.”
As lawyer and author Bruce Rich wrote in his 2013 book Foreclosing the Future: The World Bank and the Politics of Environmental Destruction, “The Bank is to blame, but its member governments are even more so.”
As a member government that contributes so much, the UK is more to blame, or rather, more responsible, than most. Time for Greening, David Cameron, MPs, DFID and the FCO to make a stand.