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Bretton Woods Observer Autumn 2016
A quarterly critical review of developments at the World Bank and IMF

Published by BRETTON WOODS PROJECT
Working with NGOs and researchers to monitor the World Bank and IMF

For a full pdf version go to
http://www.brettonwoodsproject.org/wp-
content/uploads/2016/09/Observer_Sept_16_online.pdf

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1.  One man, one vote, one option: World Bank set to coronate Kim for
    second term (GOVERNANCE/Analysis)
2.  IMF’s Lagarde to face trial in France (GOVERNANCE/News)
3.  Uganda to close IFC partner’s schools (SOCIAL SERVICES/News)
4.  World Bank suspends Inga dam funding (INFRASTRUCTURE/News)
5.  World Bank project fails to safeguard the rights of workers in
    Cameroon
    Comment by an anonymous Cameroonian human rights defender
    (RIGHTS/Commentary)
6.  IFC’s (ir-)responsible tax investment policy (FINANCE/News)
7.  IMF increasing its influence in sub-Saharan Africa (FINANCE/News)
8.  The World Bank’s failed accountability experiment:Why the
    Inspection Panel’s ‘Pilot’ should end
    Guest analysis by Natalie Bridgeman Fields and Kindra Mohr
    (GOVERNANCE/Analysis)
9.  IMF “rebuked” over role in Troika and its lending to Europe
    (CONDITIONALITY/Analysis)
10. World Bank turns its back on pastoralist communities in Africa
    Guest analysis by Helen Tugendhat, with Tanzanian pastoralist
    representatives (RIGHTS/Analysis)
11. World Bank approves new “diluted” safeguards (RIGHTS/News)
12. Follow BWP’s annual meetings coverage from DC online
13. worldbankpresident.org

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GOVERNANCE Analysis

One man, one vote, one option: World Bank set to coronate Kim for
second term

Summary
-World Bank board nominates Kim for another five years as president
-Former senior staff and staff association raise concerns over
process, Kim leadership
-External pressure on Bank increasing as new “dynamic formula” for
Bank’s shareholding is discussed

In mid-September, the World Bank confirmed that president Jim Yong
Kim was the only candidate put forward by member countries for the
post of president when his five-year term runs out in June next year.
The Bank opened the much-criticised nomination process in late
August, nearly a year before the end of Kim’s current term, but with
no more than three weeks for World Bank board members, as well as
other stakeholders, to engage. The selection process is expected to
be finalised by the early October Bank annual meetings.

Only hours into the nomination process the US publically announced
its support for Kim, sending strong signals that it is seeking to
retain control of the post. The nominations of Kim and the associated
process has been widely criticised as a step backwards in terms of
the Bank’s leadership selection, reinforcing the unofficial and
longstanding “gentlemen’s agreement” that ensures that leadership of
the Bank and IMF is shared between the US and Europe, with Americans
running the Bank and the Europeans managing the Fund (see Update 80).

Internal protests
---------------------------------------------------------------------

In early August, prior to the Bank opening the nomination period, the
Bank staff association sent an open letter to the Bank’s executive
directors, challenging “decades of backroom deals which, twelve times
in a row, selected an American male”, rather than applying the
principles of “good governance, transparency, diversity,
international competition, and merit-based selection”, values
normally preached by the Bank. The letter argued that the Bank “came
close” to following these principles in 2012, when three candidates
were identified and interviewed: Kim, Ngozi Okonjo-Iweala and Jose
Antonio Ocampo, but noted that “in the end we reverted to status
quo.” On the day of the announcement of Kim’s appointment in April
2012 Okonjo-Iweala conceded to reporters: “You know this thing is not
really being decided on merit. It is voting with political weight and
shares, and therefore the United States will get it”.

As the nomination process closed in mid-September, 42 former senior
World Bank staff wrote a letter to the Financial Times (FT)
expressing their “deep concern about the shameful action of
governments around the world in bypassing good governance and
transparency” in the selection of the next president. The signatories
denounced the process as “deeply flawed; leaders should not be chosen
via antiquated ‘gentleman’s agreements’.” They urged that the
selection process “be extended to the end of the year, and a search
committee be formed to generate a truly open, transparent, merit-
based and competitive process.”

The Bank staff association’s concerns over the selection process are
grounded in longstanding internal opposition towards Kim, in
particular in response to the Bank’s restructuring process (see
Observer Summer 2015, Winter 2015). Its letter pointed to “a crisis
of leadership” at the Bank, referencing analysis from the past years’
employment engagement surveys which found that “only one in three
understand where the senior management team is leading us.” The FT
letter by former senior staff highlighted that “several of Dr Kim’s
senior appointees have had to be dismissed on performance grounds
[and] there has been a pattern of firing senior women.” They
described a “climate of fear”, as well as “the weakening of the
Bank’s finances resulting from ill-advised decisions”, calling the
Bank’s reorganisation “poorly designed and implemented.” According to
Hafed Al-Ghwell, a former adviser to the Bank’s dean of the board
quoted in a late August article on news site Devex, the Bank – by
pushing for Kim’s renewal – is trying to pre-empt “a serious revolt …
by the staff”. The Bank and Kim’s leadership have also been
repeatedly criticised by civil society, in particular with regards to
the recently completed environmental and social safeguards review, in
terms of both process and outcome (see article 11).

External pressures
---------------------------------------------------------------------

The selection process took place as the World Bank is experiencing
increased competition from new players in the international financial
arena (see Observer Autumn 2014). It is also seeking to rally donor
funding for its low income country arm, the International Development
Association (IDA), amidst concerns over weak results (see Observer
Summer 2016). In a mid-September blog on Economia Devesh Kapur of the
University of Pennsylvania commented: “Having found their own
alternatives for most of what the Bank does, [emerging powers’]
indifference to a second term for Kim suggests that they simply don’t
think the Bank matters much anymore.” In 2015 the Bank launched a
“Forward Look” process, due to be discussed at the annual meetings in
early October, addressing “three interrelated challenges of the
changes in the external environment, the WBG’s ability to adapt to
these changes, and its financial capacity”.

While the US affirmed its hold over the presidential position through
the nomination of Kim, the Bank also sought to strengthen its
relationship with China (see Observer Spring 2016). In the past six
months the Bank has signed agreements with China’s Asian
Infrastructure Investment Bank, (see Observer Summer 2016) and the
BRICS’ (Brazil, Russia, India, China, South Africa) New Development
Bank. In August the World Bank issued a yuan-denominated World Bank
bond in the Chinese domestic market. China confirmed its support for
Kim in early September, lauding his “role in promoting cooperation
between the World Bank and China”.

Controversy remains over voting rights at the Bank, with emerging
economies making no secret of seeking a bigger role in the
institution. Following the 2015 shareholding review, also on the
agenda for the annual meetings is a new “dynamic formula”, using
economic weight (based on GDP) and development impact (based on IDA
contributions), to determine countries’ shareholding and thus voting
power in the Bank (see Observer Spring 2016). A March report revealed
tensions and called for “significant compromise on currently stated
positions” to be able to reach agreement in time, in particular on
how to reflect the IDA element in the formula.

Jorge Daniel Taillant, of Argentinian NGO the Center for Human Rights
and Environment, commented: “The ‘pay to play’ dynamics of Bank
leadership … don’t show signs of change or any real willingness of
the countries that currently call the shots to modify. We have seen a
dangerous pendulum swing towards less transparent and less
participatory governance … That’s not the sort of leadership the
world needs.”

www.worldbankpresident.org

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GOVERNANCE news

IMF’s Lagarde to face trial in France

IMF managing director Christine Lagarde lost a July appeal to avoid
trial in France on charges relating to her time as finance minister
in 2008 (see Update 77). The case concerns Lagarde’s role in a legal
award of €400 million ($450 million) to a French businessman. Reuters
reported in September that the trial for “negligence” which led to
public funds being “misused” will commence in December, adding that
Lagarde’s lawyer confirmed that “she will attend”.

Lagarde has always denied any wrongdoing. If found guilty Lagarde
could face a prison sentence or fine. IMF director of communications
Gerry Rice issued a July statement that the IMF board “continues to
express its confidence in the managing director’s ability to
effectively carry out
her duties”.

www.tinyurl.com/IMFboard-RiceStatement

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SOCIAL SERVICES news

Uganda to close IFC partner’s schools

In early August the Ugandan minister of education and sports, Janet
Museveni, formally announced the closure of 63 nursery and primary
schools operated by the largest chain of commercial private schools
worldwide, Bridge International Academies (BIA). BIA is backed by
private education services provider Pearson and the World Bank’s
private sector arm, the International Finance Corporation (see
Observer Summer 2016). The minister stated that the decision to close
BIA schools was based on “danger from poor hygiene and sanitation on
the life and safety of the innocent children”. The Uganda National
Teachers’ Union commended the minister in Ugandan newspaper New
Vision on “the bold stand she has taken towards promoting quality
education.”

www.tinyurl.com/BIA-closure

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INFRASTRUCTURE news

World Bank suspends Inga dam funding

In late July the World Bank suspended funding for the Inga 3 hydro
power project in the Democratic Republic of Congo. The Bank approved
a $73 million grant for the project in 2014, despite the US
abstaining and the board noting “significant implementation risks”
(see Bulletin May 2014). At the time of the suspension the Bank had
disbursed approximately 6 per cent of the funding.

Rudo Sanyanga of NGO International Rivers commented that the Bank
should not have been involved in the project in the first place:
“Inga 3 represents a failed development model which bypasses the poor
for the benefit of extractive industry and export markets”.

www.tinyurl.com/Inga3suspension

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RIGHTS Commentary

World Bank project fails to safeguard the rights of workers in
Cameroon
by a Cameroonian human rights defender who prefers to remain
anonymous

Cameroon has ratified most International Labour Organisation
conventions regulating labour and living conditions of workers. World
Bank clients are obliged to enforce Bank directives on occupational
health and safety and its safeguard policies. Despite these
regulatory frameworks, China International Water and Electric
Corporation (CWE) has grossly violated labour rights on the World
Bank-financed Lom Pangar Hydro Power Project under the watchful eyes
of the Cameroonian government and the project owner Electricity
Development Corporation of Cameroon (EDC). The Bank financed 44.75
per cent of the total $295 million loan made to the project (see
Observer Spring 2015).

Despite repeated complaints made to the Bank by workers during the
Bank’s missions to evaluate the environmental and social management
progress, human rights violations persist. Workers complain of unpaid
work; corporal punishment; non-payment of social security
contributions; dismissal and absolute neglect. Abandonment of work
accident victims and discrimination in favour of Chinese workers were
amongst other serious concerns evidenced by frequent industrial
actions and over ten cases filed at the local Bertoua courts and the
labour inspector’s office.

Disturbed by inhumane living and working conditions at Lom Pangar,
some current and former workers filed in April a complaint to the
World Bank Grievance Redress System (GRS, see Observer Summer 2015),
including a request for the complete payment of their unpaid lodging
allowances and overtime pay and the reinstatement of all workers
dismissed after testing hepatitis B positive. While the GRS is
considering all breaches of worker’s rights mentioned above, it seeks
to waive the mandatory requirements for compensations regarding
inadequate lodging conditions arguing that the contract between the
Bank and the government of Cameroon does not make reference to
housing and living conditions. However, before funding the project,
the Bank obliged EDC to conduct an environmental and social impact
assessment. This resulted in an environmental and social management
plan requiring EDC to ensure the contractor (CWE) respects the plan
and guidelines based on both national legislation and World Bank
safeguard policies. The plan contains clauses requiring the respect
of laws protecting citizens and the criteria for the construction of
housing.

Workers claim that they have been subjected to unacceptable living
and working conditions since 2012. Appropriate rest is recognised as
a prerequisite for proper working conditions, but housing conditions
at Lom Pangar are deplorable. Though the law obliges employers to pay
a compensatory housing allowance to workers in case lodging
facilities do not respect minimum legal requirements, CWE has failed
to respect the construction specifications, such as the number of
occupants per room and has not paid the compensatory allowance. In
Lom Pangar, four workers share a room which reduces sleep intensity,
affecting performance and concentration at work. Consequently, some
workers have suffered serious accidents resulting in incapacitation.
Instead of retraining incapacitated workers as required by law, CWE
has dismissed some for lack of capacity and are underpaying those
maintained by downgrading their posts.

In January 2014, a Cameroon Network of Human Rights Organizations’
report called the human rights situation on the project site
deplorable, with discrimination obvious, starting with housing.
Workers have organised four industrial protests since 2012.
Regrettably, to date the World Bank has not reacted to the concerns.

Since its launch civil society has cast doubt on the country’s 2010
Growth and Employment Strategy’s assertion that investments in
construction, mining and agri-businesses will create jobs for
Cameroonians (see Update 81). In fact approximately 600 mostly
unskilled Chinese workers occupy positions reserved for qualified and
unqualified Cameroonians in Lom Pangar.

An independent environmental and social panel, set up by the project-
implementing agency in agreement with the Bank, undertakes a mission
every semester to evaluate the environmental and social progress made
at the project. During these visits workers have repeatedly expressed
their concern at the treatment they receive from CWE and have also
made these complaints public during industrial protests and social
dialogue meetings. It is alarming that the Bank has failed to take
action against these reported violations.

EDC and the labour inspector, who is responsible for ensuring that
labour legislation is respected, have failed to compel CWE to respect
legislation. In private discussions, workers argue that the inspector
is complicit with CWE in violating labour rights and suspect that CWE
and EDC may have paid off both the labour inspector and the courts to
avoid enforcing their rights. According to newspapers in Cameroon,
the Bank has conducted two investigative missions on the project
site.

Six months after filing the complaint with the GRS, victims still
await meaningful outcome of the procedure. While the GRS has
requested and gotten substantial information from victims such as
their identification and exact claims, workers still wait for a
resolution.

This article was written by a Cameroonian human rights defender who
prefers to remain anonymous for fear of reprisals for his work in
protecting workers’ rights at Lom Pangar.

www.tinyurl.com/Lom-Pangar-strike

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FINANCE News

IFC’s (ir-)responsible tax investment policy

Summary
-Oxfam report highlights the negative impact of tax havens on
development
-Civil society demand responsible IFC tax policy in line with
development mandate, international best practice

In April, ahead of the World Bank and IMF spring meetings in
Washington DC, NGO Oxfam International released a report titled The
IFC and tax havens in where it revealed that 51 of the 68 companies
in which the International Finance Corporation (IFC, the World Bank’s
private sector lending arm) invested in sub-Saharan Africa in 2015
use tax havens. The report argued that this leaves countries in the
region at risk of being deprived of essential resources to meet their
human rights obligations and the Sustainable Development Goals.

A 2015 UN Conference on Trade and Development paper estimated that
developing countries lose $100 billion annually in tax revenue noting
that “lost tax revenues and … the reinvested earnings that are lost
as profits are shifted away from the developing country yields a
total ‘development finance loss’ in the range of $250 – $300
billion.” In his opening statement during the World Bank and IMF
spring meetings in April, World Bank president Jim Yong Kim
acknowledged the damaging effect of tax havens, by stating that “the
transfer of state assets to tax havens can have a tremendous negative
effect on our mission.”

In July civil society organisations submitted a briefing document to
the World Bank executive directors ahead of a board meeting to
discuss the IFC’s Offshore Financial Centres policy. They argued that
the board must hold the IFC accountable for the development and
implementation of a tax-responsible investment policy. They stressed
that the policy should be developed in consultation with civil
society and that at a minimum it should include “due diligence beyond
legal compliance to ensure that the IFC cannot invest in companies
with aggressive or abusive tax practice in relation to the use of tax
havens, intra-firm financing, pricing of intangibles, use of tax
incentives, etc” and that the IFC take “active ownership to encourage
responsible tax practice from clients such as public country-by-
country reporting and public beneficial ownership information.” The
organisations also demanded that the recommendations apply equally to
direct and indirect investments through financial intermediaries.

Sara Jespersen from NGO Oxfam IBIS in Denmark stated: “many
development finance institutions are taking the responsible tax
agenda very seriously by developing tax policies and implementing due
diligence tools that go beyond asking simply for legal compliance
from the companies they work with”, adding that “the IFC must end all
links between their lending and corporate tax dodging, as this
amounts to giving with one hand and taking with another”.

www.tinyurl.com/IFC-tax-havens-Africa

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FINANCE News

IMF increasing its influence in sub-Saharan Africa

Summary
-IMF increasingly active in sub-Saharan African states
-New loan contemplated for Zambia
-Existing borrower countries struggling to adhere to strict deficit
limits set by Fund

The IMF is increasingly active in sub-Saharan states, with sixteen
current loans to countries in the region and more being discussed.
Despite endorsing an ‘Africa rising’ narrative just two years ago
(see Observer Autumn 2014), the IMF set out grave concerns in its
April Regional Economic Outlook for sub-Saharan Africa. It advocated
cuts to spending and cautious fiscal policy to “prevent a disorderly
adjustment” noting that countries are “vulnerable to a financial
crisis if external conditions worsen further”. Concerns have centred
on debt levels in the region, particularly on the use of foreign-
currency bonds to plug financial gaps.

Local civil society raised concerns in 2016 over the impact of
conditionalities in Ghana (see Observer Summer 2016), one of the
‘Africa Rising’ countries which the IMF is now strongly pressuring to
adhere to its policy conditionalities. In August, Ghana’s national
media reported that a $300 million tranche from Ghana’s $918 million
IMF loan in 2015 might be withheld due to concerns over a
parliamentary bill relating to central bank policy. In early
September Ghana issued another foreign currency bond, worth €750
million ($840 million). A government statement reported by the
Financial Times (FT) reassured the Fund and investors that “it was
not ‘considering any spending that will not allow the country to meet
the fiscal deficits set for the year’, as demanded by the IMF
programme”.

Kenya is also contemplating bond financing, though under its $1.5
billion precautionary agreement with the IMF announced in May it was
expected to reduce its “fiscal deficit by 3 per cent over the next
two years”. In a September letter to the FT Tim Jones of UK-based NGO
Jubilee Debt Campaign argued that the concern of investors and
institutions like the IMF about increasing use of bonds, leading to
their demands for strict adherence to fiscal deficit limits, neglects
the risk arising from “direct loans from banks, governments and
multilateral institutions”. Jones cautioned that the continued
“global failure to create debt restructuring processes” represented a
“huge cause for concern”.

The IMF’s focus on imposing strict limits on government spending was
a major discussion point during Zambia’s recent elections in August.
Following the polls, loan discussions with the IMF were renewed.
Bloomberg suggested $1.2-$1.5 billion was being negotiated that would
require Zambia, according to re-elected president Edgar Lungu, “to
either completely do away with subsidies or progressively reduce
them”. Kryticous Nshindano of Zambian NGO network Civil Society for
Poverty Reduction commented that “The risk of reduced investment in
key social public services is high; it’s imperative that sufficient
and broad enough social safeguards are put in place to protect the
vulnerable, especially Zambians living in absolute poverty”.

www.tinyurl.com/JDC-FTletterSept

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GOVERNANCE Analysis

The World Bank’s failed accountability experiment: Why the Inspection
Panel’s ‘Pilot’ should end
by Natalie Bridgeman Fields and Kindra Mohr, Accountability Counsel

Summary
-CSO report finds Inspection Panel’s Early Solutions Pilot in Nigeria
disastrous
-Panel’s authority undermined, allows management to avoid compliance
investigations

As a public institution with a mission that extends beyond making
money, it is critical that the World Bank remain accountable to its
twin goals of ending extreme poverty and promoting shared prosperity
despite market pressures. When it fails to live up to these promises
and causes harm to people and the environment, those harmed need a
forum to seek justice. The Bank owes this to the people who are
supposed to benefit from the projects it supports and the taxpayers
who enable its existence.

In 1993 the Bank created the Inspection Panel to ensure
accountability for its own human rights and environmental
obligations. Through its ability to conduct compliance investigations
and publicly report on the Bank’s failures, the Panel became a
powerful tool for communities that often have no other recourse.
However, the Panel operates with one hand tied behind its back. As
the first of its kind, it is the only accountability office among the
multilateral development banks without an additional dispute
resolution role. Done well, dispute resolution can address the core
concerns of communities through negotiation and can provide an
opportunity to more prompt remedy of abuses.

In 2013, the Panel introduced its Pilot for Early Solutions programme
(see Observer Autumn 2014). The Pilot could be considered a second-
chance deferral process that involves putting a Panel investigation
on hold while allowing Bank management more time to resolve community
complaints. In practice, however, complaints are removed from the
Panel’s impartial and transparent process. Affected communities are
forced to negotiate solutions directly with the same Bank staff and
government officials who are often responsible for the problems. The
Pilot also lacks predictable rules or protections to ensure that
those harmed have a fair and equitable process and outcome.

Rather than serving as a tool to enhance remedial action, the Pilot
programme perpetuates the power imbalance that already exists between
the Bank, its clients, and communities. It undermines the Panel’s
authority by allowing Bank management to circumvent compliance
investigations, shielding the Bank from unpleasant compliance
findings and prevents it from learning lessons to prevent future
harm.

These flaws were recently captured in the NGO report, An evaluation
of the Inspection Panel’s Early Solutions Pilot in Lagos, Nigeria.
The report’s authors, Inclusive Development International (IDI) and
the Centre for Research on Multinational Corporations (SOMO), showed
that the Panel used the Pilot to disastrous effect in Badia East,
Nigeria. There, in 2013, 9,000 people were forcefully evicted from
their homes – bulldozers razing their community without notice or
consultation. The evictions were in the context of a Bank-funded
project to upgrade slums. The community, with the assistance of the
Social and Economic Rights Action Center, a community-based NGO in
Lagos, filed a complaint to the Panel. But instead of its normal
process, the Panel decided to use the Pilot, leaving the community,
which had lost almost everything and was desperate for remedy, to
negotiate with government authorities and the Bank.

Ultimately, the communities were coerced into accepting a deal that
did not adequately compensate all those who were forcibly displaced
or who lost their livelihoods. Even though this was in clear
violation of Bank policies on involuntary resettlement, the use of
the Pilot left the affected communities without the benefit of a
compliance report – the Panel’s key product. As the IDI and SOMO
report found, not only were the negotiating positions unfair, the
Pilot process lacked impartiality and transparency. Instead of a
Panel process that could potentially address persistent community
concerns and improve future projects, those affected were left
without remedy for violations of their human rights. The report found
that one year after the Panel closed the case, labelling it
“effective”, almost one-third of people who received compensation
remained homeless.

The Panel points to the Pilot’s second implementation in Paraguay to
validate its effectiveness. But that case, unlike the vastly more
complicated complaints that are the normal purview of the Panel, was
an easy fix that appears to have had little to do with the Panel’s
role. New approaches to strengthen accountability should not come at
the expense of a community’s ability to use the Panel’s flagship tool
– compliance investigations. Beyond what dispute resolution might
offer, the compliance tool is often the only one that can provide the
institutional learning the Bank needs to avoid repeating past
mistakes. The Panel is right to want to ensure a strong
accountability framework. The Pilot, however, is not the way to do
it. It has failed, and must now end.

Natalie Bridgeman Fields, Accountability Counsel
natalie@accountabilitycounsel.org
Kindra Mohr, Accountability Counsel
kindra@accountabilitycounsel.org
www.accountabilitycounsel.org
www.tinyurl.com/IP-pilot-Lagos-NGOreport

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CONDITIONALITY Analysis

IMF “rebuked” over role in Troika and its lending to Greece, Ireland
and Portugal

Summary
-IEO criticised IMF for surveillance, design, implementation and
decision making in European lending
-Former Greek finance minister calls evaluation a “brutal assessment”
-IEO complains of obstacles to evaluation

In July, a long-awaited evaluation of the IMF’s lending to Greece and
Ireland in 2010 and Portugal in 2011 was released by the IMF’s
Independent Evaluation Office (IEO). The report severely criticised
the IMF’s role, leading the Wall Street Journal to describe it in
July as a “rebuke”.

Fund “too easily swayed by European officials”
----------------------------------------------

The evaluation found that the approach the IMF adopted to lending in
Europe and its role within the Troika (the ad hoc joint lending
arrangement including the Fund, the European Central Bank and the
European Commission) “helped create the perception that the IMF
treated Europe differently”. The IEO argued that the practice of
permitting lending decisions to be taken by the Fund’s Troika
partners before the Fund’s own board meetings occurred added to the
perception that board decisions were a “fait accompli” that were
simply “rubber-stamped”. The board’s formal response to the
evaluation pointed to longstanding divisions at board level between
directors representing developing countries and the major
shareholders over the IMF’s perceived “junior status” (see Observer
Summer 2013). The board statement added that “many directors” noted
that political economy considerations “could offer relevant
perspectives” in future lending.

The IEO found the IMF’s role in the Troika to be “unusual”, having
“no clear demarcation of responsibilities” and concluded that the
manner in which Troika partners collaborated meant that IMF staff
were “potentially subjected to political pressure at an early stage”.
The IEO report set out concerns that the Fund failed to “play its
customary sole or lead role” that it adopts when lending to
developing countries. Instead the IEO argued that the IMF’s Troika
partners had “veto power” over the Fund. The IEO found that the
board’s oversight function was performed only in a “perfunctory
manner” – a “recurring issue” according to the IEO. July analysis by
the New York Times highlighted that the IEO report revealed “how IMF
staff members operated outside official channels, kept sensitive
papers in personal files, [and] withheld crucial documents”.

Managing director Christine Lagarde’s official response to the
evaluation rejected the IEO’s recommendation that “the executive
board and management should develop procedures to minimise the room
for political intervention in the IMF’s technical analysis”. Despite
rejecting the recommendation, Lagarde was in “support [of] the
principle that the IMF’s technical analysis should remain
independent”. The July Wall Street Journal article quoted an
anonymous Fund official who admitted that during recent negotiations
with EU partners over Greece “we were under extraordinary pressure
from the Europeans last summer … [and] again a few months ago”. Greek
prime minister Alexis Tsipras commented on the delayed negotiations
at a September press conference that “what is creating conditions of
delay … is the constant clash and disagreement between the IMF and
European institutions”.

Though former Greek finance minister Yannis Varoufakis called the
evaluation a “brutal assessment” in a July blog post, Lagarde, in her
official response, considered the evaluation’s overall findings to
indicate that the IMF’s role in the lending to the eurozone had in
fact been a “qualified success”, considering the Greek crisis’
“unprecedented” nature and the “backdrop of the global financial
crisis”. Lagarde specifically argued that the IMF’s intervention
succeeded in “buying time to build firewalls”, restoring growth,
market access (except in Greece) and preventing contagion. She
conceded that the Greek challenge was “unique” with “recurrent
political crises” and “pushback from vested interest” but maintained
that the key goal was achieved: for Greece “to remain a member of the
euro area”.

IEO evaluation “hampered”
-------------------------

The IEO complained that while conducting the evaluation it did not
receive documents from Fund staff in a “timely manner”, noting that
some documents “were not provided for over a year”. Moreover “some
sensitive documents were provided to the IEO following the managing
director’s intervention at the IEO’s request” and only following
circulation of a draft of the evaluation report to staff. The IEO
concluded that the “lack of documentation” from the IMF had
“hampered” its evaluation and therefore the IEO was “not in a
position to state that it saw all relevant documents” despite the
apparent intervention of the managing director. The board’s formal
response “noted with concern the difficulty that the IEO had
experienced in obtaining confidential documents”. The evaluation
recommended that “the executive board and management should reaffirm
their commitment to accountability and transparency and the role of
independent evaluation in fostering good governance”.

www.tinyurl.com/IEOeurozone
www.tinyurl.com/IMF-MD-statementeuroIEO

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RIGHTS Analysis

World Bank turns its back on pastoralist communities in Africa
Guest analysis by Helen Tugendhat, Forest Peoples Programme, in
collaboration with Tanzanian pastoralist representatives who prefer
to remain anonymous

Summary
-World Bank grants waiver for indigenous peoples policy for Tanzania
project
-US abstains from vote on project waiver
-Indigenous peoples highlight lack of consent, question protection of
land rights

In March the World Bank board granted a full waiver of its current
safeguard policy for indigenous peoples (Operational Policy 4.10,
OP4.10) in relation to a loan to the government of Tanzania for the
Southern Agricultural Corridor of Tanzania (SAGCOT), a multi-million
dollar public-private partnership agribusiness development project.
The waiver means that the requirements of OP4.10 are formally set
aside for the implementation of this project (see Observer Summer
2016). Indigenous peoples in Tanzania who will be impacted by the
project have objected strenuously to this waiver.

The World Bank assessed the Bank-funded SAGCOT Investment Project, an
investment of $70 million into the SAGCOT initiative, as a Category A
project, meaning that the project has the potential for “significant
adverse environmental impacts that are sensitive, diverse, or
unprecedented”. In this instance, ‘sensitive’ refers to irreversible
impacts, or impacts caused by involuntary evictions or resettlement,
or upon indigenous peoples.

The ‘policy’ on waiving policies
--------------------------------

The policy under which the World Bank board granted this waiver was
adopted in April 2014. It is unclear on requirements for when and how
operational policies can be waived, stating that the waiver: “may be
granted only in response to clearly delineated individual
circumstances”. The US government abstained from the vote to approve
the SAGCOT waiver, arguing that “any waiver of an operational policy
should be underpinned by a thorough and convincing justification that
is well documented and evaluated … and subject to appropriate
consultation.” The SAGCOT project did not fulfil this minimum set of
criteria. The Tanzanian government’s justification for requesting the
waiver was that OP4.10 “is considered inconsistent with the Tanzanian
Constitution”, which “emphasises unity among its citizens and calls
for an equal treatment of all ethnic groups”. However, Tanzania has
applied OP4.10 in the past, yet no constitutional reform has taken
place that would explain the government’s  changed position.

Concerns about land rights and the absence of consultation
----------------------------------------------------------

In granting the waiver the World Bank board recognised that “the
project involves complex land and institutional arrangements”. OP4.10
requires that where a project involves “activities that are
contingent on establishing legally recognised rights to lands and
territories that indigenous peoples have traditionally owned or
customarily used or occupied” or “the acquisition of such lands” the
project must set forth “an action plan for the legal recognition of
such ownership, occupation, or usage”. There is no such plan in the
SAGCOT project documents.

The news of the waiver was met with consternation in Tanzania. A
group of 21 organisations, along with indigenous peoples’
organisations from Uganda, Kenya and Burundi, wrote in June to the
Bank president objecting to the decision. The letter demanded
information about how the customary land rights of the pastoralist
peoples in Tanzania will be protected in the agricultural corridor.
It highlighted that “the waiver was not granted with the informed
consent of indigenous peoples in Tanzania. Those of us who live in
Tanzania had heard nothing of this proposed waiver until the approval
… was made public.” No response has been received to-date from the
Bank.

The lack of consultation with indigenous peoples in Tanzania was a
concern for the US government, along with their assessment that “any
request for a waiver of … OP 4.10 should demonstrate how the World
Bank and the borrower would provide affected communities with the
same level of protection”, which the project appraisal document (PAD)
fails to do. Instead the PAD notes that “to mitigate any potential
risks resulting from a waiver of OP 4.10, the [government of
Tanzania] ensures that the project components are designed and
implemented in a manner that does not adversely affect the land
rights/use of any of the people in the project area”. It is difficult
to see how the land rights and the protections inherent in OP4.10
will be fulfilled when the government of Tanzania refuses to
acknowledge the existence of indigenous peoples in the country.

Now that vital safeguard protections have been suspended, how will
the Bank and the borrower uphold the rights of pastoralists impacted
by SAGCOT investments? Communities and organisations in Tanzania
still await an answer.

This article was written in collaboration with Tanzanian pastoralist
representatives who prefer to remain anonymous due to their fears of
retaliation for speaking out about SAGCOT.

Helen Tugendhat, Forest Peoples Programme
helen@forestpeoples.org
www.forestpeoples.org

====================================================================
RIGHTS 	News

World Bank approves new “diluted” safeguards

Summary
-CSOs warn of loopholes in new Bank safeguards, reliance upon
“borrower systems”
-Lack of respect for human rights, LGTBQ references removed
-References to core ILO labour standards absent

After a four-year process the World Bank’s board in early August
approved a new Environmental and Social Framework (ESF), to replace
the current safeguards (see Observer Summer 2016, Autumn 2015). The
new framework is expected to take effect in early 2018 with the
existing safeguards running in parallel for about seven years to
govern previously approved projects.

Following the public release of the final draft, a joint response in
late July by 14 civil society organisations (CSOs), including NGO
Forum on ADB and Social Justice Connection, cautioned that “gains
have been largely undermined by the replacement of clear time-bound
requirements with vague language, loopholes, flexible principles and
reliance upon ‘borrower system’”, which “reflects a race to the
bottom in a shameful scramble to eliminate requirements for careful
environmental and social due diligence”.

Gretchen Gordon, of international NGO Coalition for Human Rights in
Development, highlighted on blog site Open Democracy that all
references to sexual orientation or gender identity have been removed
from the new policy. Ty Cobb of US-based NGO Human Rights Campaign
wrote “it is deeply disappointing that the Bank chose to side with
anti-LGBTQ [Lesbian, Gay, Bisexual, Transgender and Queer] voices who
wanted to roll back potential human rights protections, rather than
standing up for human rights and the dignity of all people.”

On the day of its approval the US released a public statement
supporting the new ESF, but calling for the Bank to “be conservative
in its use of borrower frameworks” given the risks. While welcoming
the new ESF on labour, the US raised concerns, including that it
“appears to allow primary suppliers to self-identify child labour and
forced labour risks to their own workers”.

In late July, before the ESF was approved, the International Trade
Union Confederation (ITUC) raised concerns on their website over the
absence of any reference to the International Labour Organization’s
(ILO) core conventions, which prohibit discrimination, child and
forced labour, and require respect for freedom of association and the
right to collective bargaining. Peter Bakvis of ITUC commented: “it
should be an imperative for the Bank to ensure full consistency with
the norms of the recognised international standard-setting bodies,
including the ILO for labour.”

Concerns remain over the safeguards consultation process (see
Observer Winter 2016, Winter 2015). In a July statement 36 African
civil society groups, including Peace Point Action in Nigeria and
Jamaa Resource Initiatives in Kenya, stressed that “certain views and
agendas which would seek to weaken the safeguards’ protection of
people and the environment being attributed to ‘African countries’.”
The groups emphasised that “these positions are not reflective of the
positions of civil society from African nations”, pointing out that
despite their engagement “the inputs of African civil society
organisations are not reflected in the text”. They concluded that
“from the outcome, this was not a consultation, but a monologue.”

Elana Berger of US NGO Bank Information Center (BIC) commented “now
that the new framework has been adopted it is critical that
sufficient resources and tools are developed during this
implementation process that emphasise the importance of meaningful
engagement with civil society and communities — particularly those
that are most vulnerable to the negative impacts of development.”

www.tinyurl.com/newESF-NGO-concerns
www.tinyurl.com/African-NGO-statement-ESF
www.tinyurl.com/ESF-Aug16

====================================================================
Follow BWP’s annual meetings coverage from DC online

World Bank and IMF governors will meet in Washington DC from 7-9
October for their annual meetings. Key themes to be discussed include
the Bank’s Forward Look exercise and its shareholding review. The
civil society policy forum (CSPF) will take place from 4-7 October.
An open meeting for CSOs with Bank and Fund staff to provide feedback
on the CSPF will take place at 12:30, Friday 7th October.

A dedicated page on BWP’s website will include analysis of the
communiqués, notes from seminars, background information and more.
Attendees and anyone following events from afar are encouraged to
check for updates on www.brettonwoodsproject.org

www.tinyurl.com/annuals-cspf
www.tinyurl.com/BWP-annuals-updates

====================================================================
worldbankpresident.org

As the short three week nomination period closed, Jim Yong Kim was
the only nominee for the next five year term as World Bank president.
Have your say on the blog on who should have been selected, what they
should do and the selection process generally. Read what activists,
officials and experts think about the process.

www.worldbankpresident.org

====================================================================
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