World Bank accountability: demand for reparations won’t go away

22 November 2004

In 1982, more than 400 Maya Achí men, women and children were tortured, raped and killed by the Guatemalan army after their community peacefully opposed their forced relocation caused by the construction of the World Bank and Inter-American Development Bank (IADB) funded Chixoy dam. The survivors of the massacres, who were subsequently displaced, have only received meagre compensation from the Guatemalan government and live in extreme poverty.

The two banks continued to finance and supervise the project despite evidence that gross human rights violations had occurred as a direct result of the project. There have been increased calls in Guatemala and internationally for reparations from the Bank for its negligence in relation to the massacre. In September, a peaceful demonstration by survivors of the massacre, and 17 other affected communities called on the Guatemalan government to provide compensation for land, homes, property and livelihoods that were lost as a result of the dam project. They also demanded justice for the human rights abuses that occurred with the project. A petition that was submitted to the Inter-American Commission on Human Rights in September 2004 deemed both banks and the Guatemalan government liable for reparations.

Bank blindness

The Chixoy dam was financed, supervised and controlled by the IADB and the World Bank provided initial loans of $105 million and $72 million respectively. The banks worked with the Guatemalan government throughout the planning and construction phases of the project. Instituto Nacional de Electrificación (INDE) was responsible for project coordination and construction of the dam itself. Throughout the period in question, it was owned solely by the Guatemalan government and run by Guatemalan army officers.

"extraordinary and sustained dedication to ignorance on the part of World Bank officials"

A 1978 Bank report indicated that some 1500 people would have to be removed from the Chixoy reservoir basin, but that assurances had been obtained from the Guatemalan government and INDE that “a programme will be implemented to compensate adequately and, if necessary, resettle, those residents…whose living and working conditions have been adversely affected by such flooding”. Despite the Bank’s supervisory role, it did nothing after the Guatemalan government had begun forcibly evicting the local community through a series of brutal massacres.

The Bank’s second loan instalment to the government of Guatemala in 1985 was given after the massacres had taken place. Given the extent of World Bank involvement and presence of Bank staff at the Chixoy site between 1979 and 1991, not to have known about the violence and repression at the time would have required an “extraordinary and sustained dedication to ignorance on the part of World Bank officials”, stated a 1996 report by NGO Witness for Peace.

Call for reparations

The facts of the forced eviction and displacement, including the massacres that were an integral part of the Guatemalan government’s strategy have been well documented by several human rights organisations both within and outside Guatemala.

A recent report by the international NGO, Centre on Housing Rights and Evictions (COHRE) concluded that the two banks failed to show due diligence in the implementation of a project they were directly supervising and financing. The report asserts that the grossly inadequate living conditions of the survivors and their families are a “direct result of, inter alia, the displacement of the community and the failure on the part of the Government of Guatemala, IADB and the World Bank to provide just and fair compensation to the survivors”.

COHRE also outlines that under international human rights law and principles, both the IADB and the World Bank are obligated to provide reparations to the R&iacuteo Negro survivors and their families. Furthermore, as an international lending agency, the Bank had a duty to ensure that the project was implemented in such a way that human rights were not violated. Similarly villagers in India have called on the Bank to uphold this duty (see box).

During the 2004 annual meetings of the World Bank, President Wolfensohn indicated the Bank’s readiness to be actively involved in negotiations between the Guatemalan government and villagers on the issue of reparations. “This is a hugely important case of holding international development actors fully accountable for the negative impact of their policies and actions” said Graham Russell of NGO Rights Action.

Peverse Incentives

Surrounding growing calls to tackle the impunity of IFIs, and establish the right of victims of development cooperation to be compensated, Kunibert Raffer argues for reforms to make them financially accountable. Referring to the ‘perverse incentive system’ he comments that badly implemented projects or adjustment programmes lead to increased financial gain for IFIs, as the damages they cause require yet another new loan to repair them. He points out that holding IFIs financially accountable would act as an incentive for them to perform better. His suggestions include a permanent international court of arbitration, which would decide the sharing of costs between the IFI and borrower country at which complaints could be filed by NGOs, governments and international organisations.