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Business News/ Opinion / Online-views/  World Bank draft raises red flags
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World Bank draft raises red flags

The bank's approach to remedying its standards for investment project financing has been criticised by environmental and human rights groups

A file photo of the World Bank headquarters in Washington, DC. Photo: AFPPremium
A file photo of the World Bank headquarters in Washington, DC. Photo: AFP

There’s a bit of battle brewing between the World Bank Group and a loose coalition of environmental and human rights groups over the bank’s approach to remedying its standards for investment project financing. With a CV of over 12,000 projects in more than 170 countries, even the bank’s intention to reform is significant news.

The bank’s critics are legion and often accuse it of leaving human rights and livelihood wastelands in the wake of projects. At the least, the Washington DC-based organization is being engaging. Not quite charming yet, just engaging stakeholders. Though the coalition believes what it is doing is mostly wrong.

In July, the bank circulated the second draft of a paper for consultation titled Environmental and Social Framework: Setting Environmental and Social Standards for Investment Project Financing. The first draft took a year, mid-2014 to mid-2015. It took fully two years from July 2012 to July 2014 to complete an approach paper to that first draft. As to when a final document will be ready is anybody’s guess, though a schedule marks it for this year-end.

The coalition of 19 organizations critiquing the current approach made their views known earlier in this month. The draft provisions “vastly weaken protections for affected communities and the environment at the same time as the bank intends to finance more high-risk projects", a Human Rights Watch (HRW) International statement on behalf of the coalition said. The draft, HRW’s collective statement maintains, “contradicts" bank president Jim Yong Kim’s “commitment to ensure that the bank’s new rules will not weaken or ‘dilute’ existing mandatory environmental and social protection measures".

These, HRW’s note says, include “removing protections for forests, biodiversity and forest dependent peoples". Makoma Lekalakala of Johannesburg-based Earthlife Africa expresses concern that the bank’s new draft eliminates thresholds for accounting greenhouse emissions and moving these into a “non-binding" area like “guidance notes" permits the bank’s borrowers—governments, from national to provincial and municipal—to opt out of climate safeguards.

A representative of Peru’s Derecho, Ambiente y Recursos Naturales, another of the 19 critics, points to the bank “replacing its own mandatory safeguards and accountability mechanisms with … an over-reliance on borrowers’ national systems, and even those of opaque ‘financial intermediaries’".

What struck a chord with me was the red flag Derecho’s César Gamboa raised about violence as a risk to local communities—an ever-present reality in India as elsewhere in the world. “At the same time," Gamboa maintains, “the bank proposes to allow the use of ‘preventive’ violence by security forces..."

His concern isn’t misplaced. In the section titled Community Health and Safety, the bank’s second draft states: “The Borrower will not sanction any use of force by direct or contracted workers in providing security except when used for preventive and defensive purposes in proportion to the nature and extent of the threat." The key loopholes here are “preventive and defensive purposes". In borrowing countries with aggressive national and provincial governments, police and paramilitary forces are frequently used as tools of land acquisition, and to dampen protests about inadequate and incomplete resettlement and rehabilitation measures—in India, this has ranged from registration of spurious police cases to beatings, even numerous deaths—it’s more red rag than red flag.

It isn’t clear how far the critics will be able to push, especially if the bank stands accused of sliding between drafts one and two. Perhaps greater scrutiny by watchdogs from developed nations—usually better equipped to name and shame than those in poorer and, often, target nations of the bank’s largesse—will help. The coalition of critics includes 11.11.11. of Belgium; US-based Bank Information Center, Center for International Environmental Law and International Accountability Project; Bretton Woods Project and Forest People’s Programme of the UK; Oxfam International and the International Trade Union Confederation.

There’s still much ground to cover before the bank’s framework is signed and sealed by its president and executive directors. Subjects for the next round of consultations include “Non-discrimination and vulnerable groups" and “Land acquisition and involuntary settlement"—my large red flag for India.

It will be good for the bank’s worthies to keep in mind a cautionary note from Jessica Evans, whom HRW quotes. “The draft treats human rights as merely aspirational, rather than binding international law," Evans, a lawyer and researcher on international financial institutions warns. “The bank’s refusal to require respect for human rights, despite pleas to do so from communities around the world, sends a message to its own staff that respect for rights is discretionary."

Enough said.

Sudeep Chakravarti’s latest book is Clear.Hold.Build: Hard Lessons of Business. His previous books include Red Sun: Travels in Naxalite Country and Highway 39: Journeys through a Fractured Land. This column, which focuses on conflict situations in South Asia that directly affect business, runs on Fridays.

Respond to this column at rootcause@livemint.com

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Published: 21 Aug 2015, 01:05 AM IST
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