As the UN Human Rights Council holds its fourth session, the last few months have witnessed dynamic processes on human rights and development finance that bolster arguments to hold international financial institutions accountable under international law. These have included a consultation at the OHCHR in February; key reports by the Independent Expert on economic reform policies and foreign debt, Bernards Mudho and Special Rapporteur on the right to food, Jean Ziegler; and a session at the Inter-American Court of Human Rights in March.
Debt sustainability must include human rights
As part of Bernards Mudho’s mandate to draft general guidelines for states and IFIs to ensure that compliance with commitments derived from foreign debt do not undermine the obligations for the realisation of fundamental esc rights, the UN independent expert undertook consultations with WB/ IMF staff. The findings in his resulting January report can be summarised thus:
- On the debt sustainability framework: Mudho is critical of BWI concepts of debt sustainability which rely heavily on overoptimistic WB analytical tools and projections. The framework’s key objective is focused on the financial ability to service debt, rather than to achieve development and human rights objectives. He warns that the resources saved as a result of HIPC and MDRI debt relief do not “automatically and directly translate into poverty reduction or human rights related expenditure”, even with the existence of government policies orienting expenditure towards human rights objectives.
- On conditionality: Macroeconomic stabilisation needed to achieve poverty reduction and the achievement of human rights should not be based on generalised benchmarks or thresholds, but individual analysis of the country-specific context.
- On health and education sector reform policies: User-fees are an obstacle to human rights enjoyment. “Structural reforms in health and education sectors should always be guided by countries’ international human rights obligations”, hence free primary education has to be part of all PRSPs.
- On trade liberalisation: Badly implemented trade reforms, promoted more by economic dogma than an informed social and economic analysis, have lead to a serious erosion of fundamental human rights. Human rights inspired safeguard clauses in trade agreements should also be considered.
- On privatisation of state businesses: This may increase profitability, but has also destroyed important external social benefits resulting in a rise in the cost of basic services such as water, unemployment, and increased inequality.
- On governance: Public sector reforms have focused too much on downsizing. Efforts should focus on more efficient public sector that delivers quality services to people.
Legal personality without question
In his latest report, frank statements from the UN Special Rapporteur on the Right to Food Jean Ziegler regarding the role and obligations of the World Bank and human rights (see Update 48) have been welcomed by human rights activists. “In an age when other public and private actors [including the World Bank, IMF and WTO] are more powerful than States, human rights must be extended to limit their potential abuses of power against people”. Endorsing Skogly’s claim that “the strict territorial application of human rights obligations is now outdated”, he points out that within the current context of globalisation and strong international interdependence, the ability of national governments to protect the human rights of their citizens are often impeded by the impacts of decisions taken in other countries. Hence he asserts that “states should refrain from taking decisions within the WTO, the IMF or the World Bank that can lead to violations of the right to food in other countries”.
He highlights General Assembly resolution 60/165 on the right to food, which invites the World Bank and IMF to “promote policies and projects that have a positive impact on the right to food … and to avoid any actions that could have a negative impact on [its] realisation”.
Ziegler finds that WB/IMF programmes have resulted in a deterioration of food security for vulnerable populations rather than an improvement, particularly as a result of policy instruments such as structural adjustment, economic reform and poverty reduction strategies on poor and indebted countries to meet their obligations. He refers to the example of Zambia, where an evaluation by the IMF’s own evaluation body found that rapid agricultural liberalisation caused maize consumption amongst poor Zambians to fall by 20 per cent between 1990 and 1997. He also refers to Bank supported projects such as dam construction, mining and natural resources extraction which promote economic growth at the cost of the right to food of poor and vulnerable populations. He concludes that “there is no question today that international organisations such as the World Bank, IMF and WTO have legal personality under international law”
As part of his research, Ziegler wrote to World Bank representatives regarding project-related human rights violations on: the IFC-funded Newmont’s Ahafo South gold mining project in Ghana; the Left Bank out-fall Drainage project in Pakistan; and the Nam Theun 2 dam in Lao PDR. No reply has been received from the World Bank to date.
Human rights and the financial sector
In February the UN Special Representative on human rights, TNCs and other business enterprises John Ruggie held a consultation to “consider existing initiatives and standards relevant to the financial sector, and examine ways to strengthen the protection of human rights in the activities and decision-making of financial institutions”. It included representatives from civil society, the IFC, private banks and export-credit agencies. A report on the consultation was submitted to the 4th session of the Human Rights Council. Panel presentations from civil society included: NADI/Solidaritas Perempuan, Indonesia; Amnesty International; Halifax Initiative, Canada; Centre for Environment and Development, Cameroon; and the international network, Banktrack. Key society arguments included:
- public financial institutions have an obligation to ensure that their clients meet international human rights standards;
- IFIs are bound by general international law, including customary law and international legal obligations take precedence over internal procedures;
- Human rights impact assessments need to be embodied in national and international normative and regulatory frameworks; and
- clauses in host-government agreements that exempt the private sector from national laws and restrict access to justice for project-affected people should be prevented.
Ruggie’s consideration of the role of the financial sector has been welcomed by civil society as a positive step which pushes the boundaries of his mandate and the limited resources at his disposal. However, many human rights activists are concerned by Ruggie’s faith in voluntary standards and the role of market mechanisms to establish accountability practices. They are disappointed by his failure to acknowledge the complex scenarios that often result in states being in a weak position to stand up to companies and gain access to justice, even if ‘legal and policy’ tools should technically permit them to do so.
Karyn Keenan from NGO Halifax Initiative in Canada summarised, “IFIs have played a major role in facilitating the reform and liberalisation of domestic laws, regulatory frameworks and markets which allow business enterprises to operate as they do. IFIs have also played a part in the creation and perpetuation of ‘weak governance’ zones to which Ruggie refers. We urge the Special Representative to confront the human rights responsibilities of IFIs as part of his mandate, including the human rights obligations of member states as decision-makers within the IFIs”.
IACHR: Internal policies not enough
In written legal analysis for a hearing on human rights violations and the responsibility of IFIs at the Inter-American Commission of Human Rights (IACHR), NGOs the Indian Law Resource Center, Centre for International Environmental Law and Oxfam America demonstrated that internal IFI operational policies and investigation mechanisms are not equivalent to human rights mechanisms established in universal and regional systems. They urged the Commission to help strengthen human rights protection mechanisms relating to IFI-funded projects. In cases where IFIs have failed to respect human rights, they should be considered responsible and obliged to provide reparation. The report demonstrated that regardless of whether a project complies with an IFI’s internal operational policies, IFIs are still responsible if that project infringes on human rights.
Making an impact? Internal processes at the Bank
The IFC declared recently that contrary to earlier claims, its human rights impact assessment (HRIA) (see Update 52) will now be “road-tested” before public consultation even begins. In a letter to Houria Sammariof the IFC’s environmental and social development department, human rights advocates recognised the IFC’s move to adopt the HRIA as a potentially progressive step. However for this to be the case, the guidelines must be “subject to widespread public scrutiny prior to their adoption”. Tom Griffiths from UK NGO Forest Peoples Programme said: “The IFC have made it clear that they are taking a “flexible” approach to their HRIA. However, if this tool is truly to reflect best practice, it can not allow companies to opt-in or opt-out as they see fit, and must draw on actual jurisprudence, rather than interpretation”.
The Compliance Advisor Ombudsman (CAO) closed its 90 day public comment period on its Revised Draft Operational Guidelines in start February. Civil society comments, independently submitted by BIC, Oxfam, CEDHA, IATP and American University Washington College of Law, included:
- The IFC’s sustainability commitment can not be limited only to the time it is involved in a project thus the CAO should be able to address complaints on IFC/MIGA projects even after the institutions have divested from the projects;
- in the interests of impartiality CAO staff should be barred from employment with IFC, MIGA and their clients for period of two years following termination of employment with the CAO;
- welcomed some clarifications in relation to the ombudsman and compliance role but urged for greater control for the complainant during these processes;
- called for more stringent reporting requirements;
- recommended that the assessment phase be reduced to 90 days and that procedures be adapted to situations requiring a more rapid response; and
- opposed the requirement of Presidential clearance of the final report at its discretion.
It is not yet been made public which recommendations the CAO will adopt into their new operational guidelines.