Highlights of meeting with Tom Scholar and UK NGOs

Thursday 14 December, DFID's offices

18 December 2006 | Minutes


  • Martin Kirk, Save the Children Fund
  • Matt Griffith, CAFOD
  • Jesse Griffiths, Action Aid
  • Olivia MacDonald, Christian Aid
  • Tricia Rogers, JDC
  • Lucy Baker Bretton Woods Project
  • John Moye, DFID
  • Claire Harris, DFID
  • Chris Hindley, DFID
  • Nirav Shah, DFID
  • Alexis Ferrand, DFID


  • Conditionality
  • WB governance and anti-corruption strategy
  • Clean energy investment framework
  • World Bank research team and concerns over the World Bank paper on special products
  • WB funding to fragile states
  • Illegitimate debt and debt sustainability
  • Memorandum of Understanding between Singapore authorities and the WB/IMF

Conditionality (TR, JG, OM)

JG: Congratulated the UK on a strategy which has helped to get action on the issue and asked about the strategy going forward. TR: What is meant by ‘ownership’ using Kyrgyzstan as an example? OM: Questioned focussing just on formal conditions and overlooking the others the WB can push certain policies (ie CPIA, TA).

On strategy:TS: There has been great progress in the last 3 months. The subject has been under intense scrutiny that it would not have been had the UK not pursued its strategy.We are pleased that we have noticed a change in Wolfowitz on this issue. The preparation of the paper was a useful exercise and the paper is comprehensive and candid with clear proposals. It was important to publish the supporting analysis and it was helpful that Oxfam pointed out some omissions in this which have now been rectified.

The Bank is committed to strengthen procedures and there is a clear focus of management to achieve this. This is now clearly an issue in the IDA 15 negotiations. The Oslo conference was useful; the issue is now an important one between donors.

The UK was right to pay the 50 million to show we’re a serious participant in WB, as the approval of the paper was unanimous. To have unilaterally withheld our money would have weakened our influence. The next steps are:

  • (i) focus country by country and operation by operation (with NGO help)
  • (ii) have a further review in late 2007 to factor in to IDA 15 negotiations; this is likely to have similar methodology, but there will be a longer track record to look at.
  • (iii) working in the IDA 15 discussions with sympathetic partners.

JG: What about the involvement of Southern governments in the process? TS: in the IDA replenishment process everyone comes with their own agenda and then finds common ground. The borrowing countries are represented in the discussion and their voices should be well heard. Their representation is on a regional basis at the mid-term review. Before the replenishment meetings there are separate regional (including Europe) meetings. IDA replenishment is “a London thing”, discussion between capitals. UK voice is a crucial one

On ownership:TS: Doesn’t agree the very existence of conditionality undermines ownership. It’s perfectly appropriate to have conditions to monitor progress, but what is important is that they are not imposed. Being prescriptive risks getting ourselves in the political affairs of a country where we should not. Can encourage consultations, but can not require this.

on IDA negotiations:TS: They’ll be encouraging developing countries to participate in IDA discussions as per previous replenishments

WB governance and anti-corruption (TR, OM, JG)

On arbitrary and inconsistent criteria for withholding funding:TS: WB has worked on governance for a long time and has had an anti-corruption strategy since 1996 and are now giving it increased attention. It needs to have consistency and predictability. The Development Committee called for a new framework for this at the spring meetings which is already being worked on- decisions are now less arbitrary. It is difficult to influence governance, requires partnership and collaboration from business, government and citizens of the country themselves. Many are trying to do it, so we need to share ideas and experience and work together.

On integrating different governance assessments:TS: UK was worried by arbitrary action by Wolfowitz hence why pushed for this framework. Encouraged that no recent case of arbitrary action in the last few months. Important to work with other donors to avoid duplication. It’s a process of partnership and collaboration. This strategy largely a response to the fact that the Bank was initially trying to go it alone without collaborating with other donors.

On CPIA v country-specific criteria:TS: We need general principles applied country specifically. The CPIA is for overall assessment of how well countries can use donors’ resources. He will have another look at the details of the CPIA to see if it undermines economic policy ownership. CPIA is just a basic set of principles to allocate resources and ensure they can be effectively used. It involves some judgement and is not completely scientific. Country flexibility is then made in the design and use of those funds. The CPIA is not so focused on specific policies like liberalisation, more on general investment climate reforms. The WB can’t insist on parliamentary scrutiny, etc. It is up to each country to decide its own processes. Kyrgyzstan is very complicated, involving its self image and different factions. WB and IMF officials feel a more public role pushing HIPC would be inappropriate. There is much TA, but not enough is disclosed (or is disclosed too late). The WB disclosure policy needs to be changed to facilitate this; it is being reviewed in 2007. The argument on ownership needs to be prominent in the disclosure document. Bank has promised more systematic effort to disclose, but partly hemmed in by Bank disclosure policy. DFID is pushing for stronger disclosure.

On governance consultation:TS: Need enough time for this to happen. Process has been too slow for them. Wanted it to kick off earlier. Have asked for a briefing. Want a structured and extensive consultation.OM: They were told that consultations will end in January, but that “they can still take ideas after that”.TS: Will try to find out more. Please get in touch. People need to know about the consultation. It is a big and important exercise and he doesn’t want it to go wrong.

Clean energy investment framework (LB)

LB: Appreciation for certain aspects of the clean energy investment framework published at the annual meetings, e.g analysis on the impact of climate change on poor people and development aid, adaptation. However, can not reconcile this with the WB’s continued and increasing funding of fossil fuel projects that contribute to high levels of green house gases. A contradiction.

TS: WB mission is poverty reduction. Most change is needed in industrialised countries, who are responsible for the emissions. WB can play an important part. Needs to be responsive to member’s objectives and need for energy access. This is key to development. Wrong to make developing countries bear a disproportionate share of the burden.

LB: I couldn’t agree more, but in the oil sector, 82 per cent of WB’s funding goes to projects that export to the north. Also the investment framework fails to hold northern polluters sufficiently responsible- one of the main criticisms.

TS: At least countries benefit from the revenue of mining, if not from the resources.

LB: Multinational oil companies generally benefit more. Resource curse i,e poor countries rich in natural resources rarely benefit from the exploration of their wealth, e.g Nigeria.

LB: Reference to the ‘phase out’ recommendation of the Extractive Industries Review phase out of oil, gas and mining investments by 2008. What is the UK’s position on this now? Will they push for this to be reconsidered at the board?

TS: Next EIR review is due in December. We support the Bank’s work in the sector, it “genuinely contributes to development..at the heart of poverty reduction”. Part of the case for IFC investment in oil is that they can promote good practice, and it is part of part of economic investment and helps countries use their own resources. The UK supports this with appropriate environment and human rights safeguards. However, IFC needs to prove it’s doing this, our decision will be evidence based.

WB special products

MG: concerns about the World Bank Trade Research Team and the recently published, and then withdrawn, paper Implications of agricultural special products for poverty in low-income countries. Paper had major flaws: used a country example that would not use the proposal (Zambia as an LDC); selected products for examination that would not be ‘special products’; used scenarios (the 50 per cent increase in price for ‘exportable’ products) that it would be impossible for the tariff policy in question to achieve. G33 – a coalition of 46 developing countries at the WTO complained to Bank president Paul Wolfowitz about the paper’s lack of knowledge and understanding of the details of WTO negotiations.

The Bank should take serious steps to improve its system of consultation with developing country trade policy makers. DFID is a major funder and is undertaking a periodic review of its funding. It should push to improve the framework of consultation and policy dialogue that the World Bank Trade Research Team is subject to. What plans do you and DFID have on this?

TS: World Bank employs diverse range of academics, that’s its strength. Important that they have freedom to expore ideas without obstacles. I have talked to DFID about this, they agree that the paper had significant errors. Is currently being redrafted. We will wait to see when that comes out.

MG: Controversial papers need to be accurate. The paper made many inaccurate assumptions, that were politically contested in Geneva. It was picked up by the US Treasury quickly after publication and quoted against the G33. Geneva delegates increasingly see WB trade team as defacto consultants for USTR.

TS: There is “a free market of ideas”. DFID took this up with the WB directly. The process has not concluded yet. He hopes they will revise it. “it’s not the World Bank’s job to get involved in WTO negotiations”. They need to be more sensitive. They’ll keep in touch about this.

World Bank funding to fragile states

MK: DFID says it wants to invest more in fragile states. The Bank governance strategy basically favours selectivity and rewards good performers. There is an inherent tension between the two approaches. Does HMG recognise this tension and what is it doing about it? Perceives a tension between DFID and the World Bank’s position. Heading in different directions.

TS: Agree with our basic reading of the tension between DFID and WB direction on fragile states. WB “could be much better”. Need for greater WB presence in fragile states. Fragile states are under-aided. They want to allocate resources where they will be used most effectively, but it’s not just a Bank issue. Are working with other countries e.g Australia and the other countries in that constituency. Where you have a corruption problem, need to be intensive and intelligent. The Independent Evaluation Group presented a paper to the last Board meeting (one month ago) on this, which he can give NGOs.

LB: On Iraq, understanding that part of IMF conditionality is for the government to pass a new petroleum law, to be approved by Iraqi parliament in December. Also understand that this new law is to be based on controversial production sharing agreements, which essentially removes government control and decision making and allows most of the profits to companies. An example of this is the EBRD- funded Sakhalin oil and gas project (see recent press reports). Can he confirm this, does he know anything about it and will the new petroleum law be made public?

TS: IMF has a stand-by arrangement with Iraq, shortly up for disbursement. It is under the third review. He doesn’t know much about this, will get back to us.

Singapore Memorandum of Understanding

LB: BWP has requested a copy of this from FCO, UKdel, DFID, and HMT. We have been told that UKdel have asked Wolfowitz to respond to us directly on the matter.

TS: He knows that Caroline Sergeant has asked for it. He will make sure that we get a reply. The WB board would not have had the MoU

TR: The World Bank/IMF should make sure this doesn’t happen again. Whilst Wolfowitz criticised the Singapore authorities, representatives from the IMF/WB and senior members of the UK delegation also said what a wonderful job they did

TS: Agreed, this was not good. The situation was unexpected and there were “lessons learned”.

Wolfowitz meeting with NGOs

TS: Requested feedback on this meeting LB: No one in the room was actually at the meeting so unable to give feedback, TR: Wanted to go but was told that only representatives from the larger BOAG were able to attend LB: Similarly, environmental and human rights NGOs were not invited. Minutes from the meeting are on the BWP website