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Bretton Woods Observer Autumn 2017
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/2017/09/Bretton_Woods_-Observer_autumn_17_screen.pdf

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1.World Bank board oversight mechanisms derailed
(ACCOUNTABILITY/Analysis)
2. Flirting with disaster? World Bank’s push for climate insurance
questioned (ENVIRONMENT/News)
3. Back to basics: How the World Bank can finally get education
right (SOCIAL SERVICES/Commentary)
4. IEO finds IMF follows “nebulous standard” on social protection
engagement (RIGHTS/News)
5. World Bank’s cascade into education: Liberia’s public-private
partnership (SOCIAL SERVICES/News)
6. Will World Bank Global Gender-Based Violence Task Force
recommendations have a discernible impact?(GENDER/Analysis)
7. Azerbaijani Laundromat to sully Bank’s reputation?
(INFRASTRUCUTURE/Analysis)
8. Jon Sward joins BWP as Environment Project Manager
9. Indian plaintiffs seek US Supreme Court review of IFC’s “absolute
immunity” (ACCOUNTABILITY/News)
10.Labour in Greece: With friends like the IMF… (RIGHTS/News)
11.The World Bank and IMF Parliamentary Network
(ACCOUNTABILITY/Background)
12.CSOs await Guidance Notes for new Bank safeguard (RIGHTS/News)
13.IEG report finds Bank’s tax work lacks equity focus
(FINANCE/News)
14.Follow BWP’s coverage of the World Bank and IMF annual meetings
15.BWP edited volume on IMF’s policy impacts on gender equality
(CONDITIONALITY/Analysis)

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ACCOUNTABILITY Analysis

World Bank board oversight mechanisms derailed

Summary
-Multiphase Programmatic Approach delegates some executive board
oversight
-Civil society consultation on proposal extremely rushed and limited
-Approach at odds with need for increased board engagement and due
diligence

On 18 July the World Bank’s Operations Policy and Country Services
department (OPCS) released a document titled Multiphase Programmatic
Approach (MPA) proposing to delegate some executive board project
reviews and approvals, and therefore its oversight functions, to
management. In line with the strategy set forth in the Bank’s Forward
Look document, and its focus on a more agile Bank, the MPA set forth
a series of important changes in Bank procedures. It proposed that
the Bank follow the Inter-American Development and Asian Development
Banks in allowing management to “request board approval … for [an]
entire Program”, consisting of multiple phases, each containing
diverse projects. This implies a significant change as the board is
currently required to review and approve each individual project.

Having been made aware at the last minute of an executive board
meeting scheduled for 11 July to approve the document, civil society
organisations (CSOs) were highly critical of the lack of consultation
on the proposal. On 5 July, 29 CSOs, including the South African
Centre for Applied Legal Studies and Brazilian Conectas Direitos
Humanos, submitted a letter to the board outlining serious concerns
with the MPA, underscoring that, “given the implications for
oversight and accountability, it is imperative that the parameters of
this proposal are subject to public scrutiny before going forward”.
The letter stressed that “the board provides an important oversight
function of projects and the board approval date is a key moment in
the lifecycle of the project”. The absence of board approval for
individual projects in subsequent phases would therefore deprive
CSOs, affected communities and other stakeholders of an important
avenue to bring concerns to the board and to challenge management on
its assessment of project risks, adverse consequences and projected
development outcomes. The letter also noted that CSOs “are surprised
to see a reduction in board oversight at a moment when the Bank has
not yet tested the adaptive risk management approach under the new
Environmental and Social Framework (ESF), and is just rolling out its
cascade approach” (see Observer Summer 2017).

The letter further argued that, while CSOs understood that high risk
projects would still require board approval under the proposed
system, substantial risk projects should also go to the board, as
should Financial Intermediary (FI) projects with any Category A or B
subprojects. This recommendation drew on the work of the Inspection
Panel (IPN, the Bank’s independent complaint mechanism) with B-rated
projects, and the revelations of the World Bank’s Independent
Evaluation Group (IEG) 2010 report on safeguards about the
misclassification of projects and continued documented negative
impacts of investments in FIs (see Observer Spring 2016). Regarding
changes to the project classification system, the letter recommended
that when the new ESF goes into effect, both high and substantial
risk projects and FI projects with high and substantial risk
subprojects go to the board.

Management justified the proposed changes in terms of efficiency, and
benefits in supporting the Bank’s cascade approach. Civil society
argued in a July 2016 letter on the Bank’s new ESF, however, that
much of the impetus for the proposed “increase in agility” and
resulting weakening of due diligence lies in the Bank’s perceived
loss of leverage with its clients. This results from competition from
the Asian Infrastructure Investment Bank (AIIB) and the New
Development Bank, and the increasing availability of other sources of
financing. The consequence of this sense of competition was
highlighted in December 2014 by 28 UN human rights experts who noted
that the Bank’s new ESF reflected a “race to the bottom” (see
Observer Autumn 2016, Winter 2015). The pressure on the Bank to
retain its relevance is also evidenced by its push for the use of
borrower systems and increasing emphasis on leveraging private sector
investment through public-private partnerships (PPPs) and investments
in FIs. The trend is further reflected in the Bank’s unwillingness to
include Development Policy Loans in its new ESF. Throughout the much-
curtailed discussions with the Bank, CSOs have questioned the time
savings and efficiency gains claimed by the proposal and have seen a
shift in the Bank’s rationale to a focus on “adaptive learning” and
empowerment of staff and management.

As a result of the 5 July letter, the Bank agreed to postpone the
executive board discussion and several CSOs were invited to a meeting
with the incoming and outgoing vice-president of the Bank’s OPCS
department to discuss the proposal. Responding to the outcomes of the
meeting, on 12 July, a number of CSOs sent the two vice-presidents an
additional letter detailing their continued concerns. According to
Jolie Schwarz from US NGO Bank Information Center, the letter “aimed
at ensuring there are still checks and balances within a proposal
that is characterized by unprecedented flexibility and delegation of
approval authority.” The 12 July letter demanded that subsequent
phases of an MPA not requiring board approval have a defined and
publicly disclosed management approval date, and that the IPN retains
jurisdiction over entire MPA programmes rather than only individual
phases. The final version of the MPA proposal was approved by the
board on 18 July. While the final MPA document addressed some CSO
concerns, they await the procedures that will guide its
implementation. They hope that the consultation process will be
significantly improved and that MPA will not result in diminished due
diligence.

tinyurl.com/WB-derailed

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ENVIRONMENT News
Flirting with disaster? World Bank’s push for climate insurance
questioned

Summmary
-The World Bank strengthens support for climate insurance schemes
-Questions remain about effectiveness and incongruence with climate
justice

In August, the World Bank announced a new sovereign catastrophe risk
insurance programme in the Philippines, which provides $206 million
worth of aggregate coverage for federal government assets from
earthquakes and typhoons, as well as providing typhoon insurance for
25 provincial governments. The Bank noted, “Under this new program
[the] government-owned insurance agency Government Service Insurance
System (GSIS) will provide catastrophe risk insurance to the national
government and the participating provinces.” As an intermediary the
Bank will act “to transfer GSIS’s risk to a panel of international
reinsurers”. The Philippines suffers an estimated $3.5 billion in
damages from typhoons and earthquakes annually, and the World Bank
stressed that the new programme is, “the last line of defense against
severe natural disasters and complements other funding sources.” Pay-
outs under the scheme are based on parametric triggers. A World Bank
spokeswoman noted in an email to the Bretton Woods Project, “Because
it relies on parametric triggers, pay-out as estimated by the
catastrophe risk model may not perfectly match the actual damage,”
adding that the premium cost to the Philippines was $19.5 million for
the one-year programme.

The programme marks one example of the Bank’s promotion of climate
insurance over the past decade, as part of a wider approach focused
on leveraging private insurance and investor markets to increase
‘pre-arranged’ disaster risk financing. The Bank has provided
technical assistance for the Caribbean Catastrophe Risk Insurance
Facility (CCRIF) and the Pacific Catastrophe Risk Insurance Company
(PCRIF) – which are pooled insurance schemes providing coverage for
government assets of island nations in both regions. In July, the
Bank was announced as a partner in the UK-based Global Disaster
Protection Centre, which will “provide neutral advice and design new,
innovative financial tools – including insurance – that ... deliver
the most benefit for the poorest when disaster strikes”.

Climate insurance: a just policy?
---------------------------------------------------------------------

In a May 2016 ActionAid International blog, Jonathan Reeves raised
concerns about disaster and climate insurance schemes, arguing that
“we can’t insure our way out of the climate change problem”, as many
risks are uninsurable, especially for the most vulnerable. Reeves
noted that while insurance is portrayed as part of wider efforts to
improve disaster risk reduction in developing countries,
“implementation of the most critical parts of a holistic approach to
risk reduction crawls along at a snail’s pace, [while] the insurance
train ploughs full steam ahead.”

This has led to fears that climate insurance is being ‘oversold’. For
example, the Bank’s Independent Evaluation Group (IEG) found in 2010
that the Bank’s grant to Haiti that enabled it to join CCRIF had been
“supply-driven in the sense that the insurance solution was the
modality on offer when … a broader, demand-driven approach [seemed
more appropriate]”. A 2010 Christian Aid report added, “CCRIF does
not appear to contribute to better disaster risk planning and is seen
by communities … as a possible distraction from risk reduction as it
diverts resources into a long-term facility.”

Ultimately, such schemes raise questions about who should foot the
bill for climate change. As Reeves’ blog noted “Climate change is
increasing the demand for and cost of insurance. Yet poor people and
nations – those least responsible for climate change – are paying the
vast majority of the premiums.”

tinyurl.com/climate-insurance
tinyurl.com/ReevesAAblog

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SOCIAL SERVICES Commentary
Back to basics: How the World Bank can finally get education right
by Jefferson Berriel Pessi of Education International

The official launch of the World Bank’s first World Development
Report (WDR) dedicated to education, tentatively titled Learning to
Realize Education’s Promise, is imminent and there is great
expectation among education sector activists and policy makers. NGOs
have expressed their concern with the perceived “narrow approach” of
the report (see Observer Spring 2017), which focuses on what the Bank
calls the “learning crisis”, forgetting that access and equity
problems remain unresolved. While I share this view, my main concern
is that the WDR 2018 will be a missed opportunity to reshape the
education policy debate. The Bank claims its objective is to “get
education right”, and to achieve that it will take stock of its 55
years of engagement with the sector. But will the report reflect
critically on the effectiveness of its policy advice? Is the Bank
really willing to learn from experience and accept that, just as any
other actor in the education field, it sometimes gets it wrong?

Regrettably, there are clear signs that this will not be the case.
The Bank’s stocktaking exercise seems more concerned with reinforcing
ideology-based policy advice than with providing sound, evidence-
based guidance. Check out the opinion polls the Bank has been running
to inform the report. It is interested in whether you would “choose
to attend the best private or public school in your hometown” or
whether you agree “that trade unions are a binding constraint to
reform”. One can only wonder what kind of policy will be informed by
such questions. One only needs to skim through a WDR background paper
to find out teachers know next to nothing and are teaching “just over
half the scheduled time”. Clearly, for the Bank, teachers and their
unions are to blame for the “learning crisis”. For more evidence, see
The World Bank’s doublespeak on teachers, by Fontdevila and Verger.

The World Bank is today the world’s largest provider of finance to
the education sector. From a shy debut in 1962, with a $5 million
credit line to build six schools in Tunisia, it dramatically expanded
its operations, disbursing more than 2,300 education loans and grants
to date. Surfing the “Education for All” wave since 2000, the Bank
disbursed over $45 billion in 134 countries (see Update 49), and that
figure does not include International Finance Corporation (IFC, the
Bank’s private sector arm) support for the private sector. Granted,
taking stock of 55 years of loans, grants, research and policy advice
is a herculean task and it is likely that many key documents that
could further the Bank’s thinking will be forgotten. There are two
documents in particular that I do hope the WDR team will take into
account, because there are key lessons to draw from them: the Bank’s
first education policy document, from 1963, and the 2005 Economic
growth in the 1990s: learning from a decade of reform report.

The Bank’s engagement with the education sector evolved from a simple
school-building exercise to a complex and controversial policy advice
operation of global reach. However, the 1963 memorandum by the Bank’s
fourth president, George David Woods, articulated a rather down-to-
earth approach: the Bank should focus on providing the funding
necessary for UNESCO to be effective. For Woods, the Bank should
regard UNESCO as “our technical arm in the education sector”. The
Bank should focus on funding education policy, not developing it.
Woods’ advice was ignored: the Bank has become a prolific producer of
policy, in clear competition with UNESCO.

The Bank’s education policies have been extensively critiqued (see
Update 86, Bulletin May 2014) and it is beyond the scope of this
article to summarise years of scholarly efforts. For a thorough
analysis, I would recommend Klees, Samoff and Stromquist’s 2012
brilliant World Bank and Education: Alternatives and Critiques.
Personally, having followed the Bank’s work on education for nearly
20 years, reviewing projects and evaluating their impact in the field
with teachers and their unions in over 50 countries, my fundamental
concern is that the Bank’s education team seems to ignore one of the
key conclusions of the Bank’s effort to learn from 1990s reform, that
“there is no unique set of rules” for economic growth, just as there
are no one-size-fits-all recipes for successful education reform. And
yet, the Bank’s flagship System Approach to Benchmarking Education
Reform (SABER) programme provides ministries of education with
standardised advice on, among other things, how to promote private
education and make public sector education unions less influential in
the process.

For the World Bank to finally get education right, it must accept
that education policy is best developed at national level. Going back
to basics, that is, focusing on funding policy rather than developing
it, and learning from the 1990s that reform should be country-
specific, is a good start.

Jefferson.Pessi@ei-ie.orgwww.ei-ie.org
tinyurl.com/WDR-edutinyurl.com/WDR2018

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RIGHTS News
IEO finds IMF follows “nebulous standard” on social protection
engagement

Summary
-IEO found Fund’s approach ‘not meshing well’ with human rights
approach

In July, the IMF’s Independent Evaluation Office (IEO, see Observer
Winter 2015) published its latest report, The IMF and Social
Protection, on the IMF’s policy advice on social protection. The
report found the IMF’s targeting approach did not “mesh well” with
the universal human-rights based approach of UN agencies. The report
noted that social protection had not been “an explicit part of the
IMF’s mandate”, and that it had been outside its “traditional
‘fiscal-centric’ approach” and expertise. The report adopted a narrow
definition of social protection, reviewing only policy instruments
that provide cash or in-kind benefits to vulnerable individuals or
households. This contrasts with the UN definition, which include
long-term policies such as government spending on health and
education.
According to Peter Bakvis of the International Trade Union
Confederation (ITUC), the report did not assess the effectiveness of
the Fund’s approach and whether IMF programmes actually led to
improved results in countries.

The IEO found that, while the type of policies the Fund endorsed were
broadly coherent, mostly cutting subsidies and targeting social
safety nets, the IMF’s level of involvement varied significantly. The
report found that “idiosyncratic factors” played a part, noting the
Fund’s involvement often came down to individual country staff’s
“expertise and interest”. It recommended a revision and
clarification of this “nebulous standard”, including in the Fund’s
upcoming interim comprehensive surveillance review process.

Lacking inter-institutional collaboration
---------------------------------------------------------------------

The IEO explored the collaboration between the IMF and other
institutions and found that nearly 75 per cent of IMF staff surveyed
reported “minimal to no interaction with UN agencies” and that the
Fund’s recent collaboration efforts were “not very successful”. In a
seemingly contradictory reaction to the report, IMF managing
director, Christine Lagarde, said that “much of the collaboration
with [these institutions] has been constructive”. The main challenge
to enhanced inter-institutional collaboration identified was the gap
between the Fund’s targeting approach to social protection and the
UN’s human rights-based universal approach. The IEO described this as
a “difference in viewpoints”. According to Bakvis, leaving the IMF as
“the odd man out in its attitude to social protection”.
In response to the IEO’s recommendations, the IMF board agreed in
July to establish a clear strategic framework to guide future Fund
involvement on social protection, through a board-approved
‘institutional view’, the Fund’s highest-level guidance document.
Questions remain if this will set clear boundaries, outline when to
defer to other organisations’ expertise, and develop a consistent
approach to what the Fund deems ‘macro-critical’.

tinyurl.com/IEOspreport

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SOCIAL SERVICES news
World Bank’s cascade into education: Liberia’s public-private
partnership

Summary
-Privatisation hinders 2030 agenda progress
-Independent research of education PPP trial in Liberia finds
unsustainable costs

A July global report Reclaiming policies for the public by the Civil
Society Reflection Group on the 2030 Agenda for Sustainable
Development concluded that “privatisation and corporate capture have
become obstacles to progress under the 2030 Agenda”, whilst finding
“that public finance has to play a vital role in achieving the SDGs
[Sustainable Development Goals].” It noted austerity policies make it
impossible for most countries to “Leave no one behind”. The Bank’s
April cascade approach focuses on “leveraging” private monies for the
public good and foresees an increase of public private partnerships
(PPPs) (see Observer Summer 2017). The recent trial in Liberia
illustrates some of the potential pitfalls with this model.

In July, education minister George Werner  declared the ‘early
successes’ of its new education initiative, the Partnership Schools
for Liberia (PSL), in which eight non-state operators manage 93
public primary schools (see Observer Summer 2016). However, an August
report reviewing PSL by Education International, a Global Union
Federation for teachers and education employees, concluded that
“privatisation of the entire primary and pre-primary education system
will expose Liberia’s public education system to grave risks”. A
September evaluation report by the think tank Center for Global
Development (CGD) found that the government assigned 37 per cent more
teachers to PSL schools, including first pick of better-trained, new
graduates. CGD found that performance varied across operators and
that additional spending per child ranged from $40 at Omega Schools
to $663 at Bridge International Academy (BIA), which critics say is
unsustainable. The study also found that “contracts authorized the
largest operator [BIA] to push excess pupils and under-performing
teachers into other government schools”. David Archer of ActionAid UK
said to Devex that there are serious questions “about the
sustainability owing to the high costs”. Anderson Miamen, from COTAE,
the Liberian Coalition on Transparency and Accountability in
Education urged “the Liberian Government to abandon the PSL program”.
In early August, 174 organisations worldwide called on investors,
including the International Finance Corporation (IFC, the Bank’s
private sector arm) to cease support to BIA, which is currently in
court for failing to meet national education standards in Kenya and
Uganda. Following research by RESULTS Educational Fund which found
that the IFC’s investments in private education “marginalises” the
poorest (see Observer Spring 2017), Milagros Lechleiter of RESULTS
commented “the IFC should steer away from investing in for-profit,
fee-charging, private schools targeting the poorest groups, as school
fees perpetuate marginalization of the world’s most vulnerable
students and families”.

tinyurl.com/eduPPP-WB

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GENDER Analysis
Will World Bank Global Gender-Based Violence Task Force
recommendations have a discernible impact?

Summary
-World Bank Global Gender-Based Violence Task Force releases
recommendations
-CSOs concerned over Task Force’s short duration and limited mandate
-Despite Action Plan, questions remain about Bank’s approach to GBV

In August the World Bank’s Global Gender-Based Violence (GBV) Task
Force released its report Working Together to Prevent Sexual
Exploitation and Abuse: Recommendations for World Bank Investment
Projects. The Task Force was launched in October 2016, in reaction to
the  Inspection Panel’s (IPN, the World Bank’s accountability
mechanism) August 2016 report on its investigation of the Uganda
Transport Sector Development Project, which involved allegations of
sexual misconduct and abuse of women and children by contractors (see
Observer Spring 2017). The Task Force was mandated to recommend
“specific steps to strengthen the World Bank’s capacity to identify,
mitigate, and prevent risk of sexual exploitation and abuse in Bank
projects”. Next is for Bank staff to develop an Action Plan to
implement its recommendations, which is expected to be completed this
autumn. Following the release of the report, questions remain about
the Task Force’s make-up, its focus, and whether its findings will
have a discernible impact on the Bank’s approach to GBV.

Concerns over process and mandate
---------------------------------------------------------------------

The Task Force was established “to strengthen the institution’s
response in its projects on issues involving sexual exploitation and
abuse”. While the Task Force consisted of ‘external experts’, such as
representatives from the Anglican Church, there were no women’s
rights groups represented or civil society organisations (CSOs)
specialising in GBV in the context of development, while there were
two current and one former Bank staff members. The mandate was
limited to producing a report with recommendations and did not grant
it the power to develop binding policies, and excluded Development
Policy Lending (40 per cent of Bank’s lending). Its timeline was
restricted to nine months, offering limited opportunities for civil
society engagement.Civil society raised further concerns about the
possibility that the Task Force’s report would not be made public
until the Action Plan was complete, thus depriving stakeholders the
opportunity to meaningfully engage in its development. The report was
finally released after a concerted advocacy effort, including an
August letter by 12 UK-based civil society organisations, such as
Womankind Worldwide and London Mining Network, raising concerns to
the Bank’s UK executive director.

Bank as incidental convenor
---------------------------------------------------------------------

The report only considered a narrow set of circumstances, focussing
in particular on “area-based” infrastructure projects that bring a
large influx of male workers to a particular area, as was the case in
Uganda, without considering how other dimensions, such as project-
related displacement, may relate to GBV. The report identified five
key actors that need to interact and collaborate in order to prevent
or mitigate against project-related risk of sexual exploitation and
abuse (SEA), including the Bank, as a “responsible change agent”. In
doing so the report framed the World Bank as an almost incidental
convener of relevant stakeholders to address GBV-related problems,
rather than emphasising the legal and moral obligations of the Bank
to prevent serious harm caused by its own projects. It stated that
the Bank “has the obligation and the institutional strength to serve
as the link which brings all the actors … together to protect women
and children from SEA”.

The report recommended that senior management should “designate a
senior-level champion” to “sustain attention to this work”. It noted
added that the Bank’s relevant operational policies and practices
should “be consolidated into a staff guidance note”. The report also
recommended that the “internal Independent Evaluation Group (IEG)
conduct a review after four years to assess what is working and where
gaps remain”, and noted the need to link the evaluations to the “new
Environmental and Social Framework [ESF] to protect people and the
environment in the context of World Bank operations”. Lastly, the
report highlighted the need for adequate funding for the
implementation of its recommendations, noting firstly that a
“Dedicated one-time surge funds will be needed for training and
knowledge development”, and secondly, that the Bank should “establish
a two-year, time-bound GBV Prevention and Mitigation Fund to
supplement High-Risk projects, existing project preparation and
supervision coefficients as needed”. Elana Berger of NGO Bank
Information Center commented that “if implemented the task force
recommendations make progress in preventing the next Uganda but do
not go far enough to address all sources of GBV and SEA risk related
to World Bank projects”.
The International Development Association (IDA, the Bank’s low income
country arm) replenishment document referenced the need to implement
the Task Force’s recommendations. While in its August press release
the Bank stated it is “committed to implement the recommendations as
applicable within operations in countries eligible for funding from
[IDA]”, the Task Force recommendations apply across all bank
operations. Thus, civil society noted the lacking ‘commitment’ to
implement the recommendations in non-IDA projects. Remarking on the
report, Geeta Rao Gupta, co-chair of the task force and former Deputy
Executive Director of Programs at UNICEF, stated that as is the case
with the development process in which the World Bank engages,
“addressing sexual exploitation and abuse and other forms of gender-
based violence is complex and challenging”. Nonetheless, the Bank
should streamline GBV prevention as part of its ‘do no harm’
policies.

tinyurl.com/GGBVTaskForceWB

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INFRASTRUCTURE Analysis
Azerbaijani Laundromat to sully Bank’s reputation?

Summary
-Laundromat scandal raises new questions about World Bank’s TANAP
loans
-CSOs concerned about human rights abuses in Turkey and Azerbaijan
-CSOs say proposed pipeline out-of-step with Paris Agreement

According to a September report by the Organized Crime and Corruption
Reporting Project (OCCRP), “From 2012 to 2014 … members of
[Azerbaijan’s] … ruling elite were using a secret slush fund to pay
off European politicians, buy luxury goods, [and] launder money.” The
scandal, dubbed the Azerbaijani Laundromat, saw $2.9 billion
transacted through a series of shell companies. Among the Azeri
politicians implicated in the scandal is first deputy prime minister
Yaqub Eyyubov, who according to OCCRP, has been tasked “with
developing the oil-dependent country’s oil and gas strategy” since
2009.

In December, the World Bank’s board of directors approved two $400
million loans to Turkey and Azerbaijan, respectively, for
construction of the Trans-Anatolian Pipeline (TANAP). TANAP will
stretch across Turkey, accounting for more than half of the proposed
Southern Gas Corridor (SGC), a mega-project that will convey natural
gas from Azerbaijan’s Caspian Sea region to Italy (see Observer
Summer 2016). In December, the Bank’s Multilateral Investment
Guarantee Agency (MIGA, the World Bank’s political risk insurance
arm) also proposed a guarantee of up to $950 million for TANAP
against the risk of the non-honouring of a sovereign financial
obligation. This guarantee would provide potential de-risking for
‘yet to be named’ investors, and would help cover Azerbaijan’s
required contribution of $750 million towards the construction of
TANAP.

Civil society raises concerns about TANAP
---------------------------------------------------------------------

A letter from four CSOs, including Counter Balance and BankWatch, to
UK newspaper The Guardian published on 6 September suggested that
covert payments to European politicians uncovered by the Laundromat
scandal may be linked to the SGC, calling it the “elephant in the
room” that has been absent from media reports. The letter stated,
“Azerbaijan is particularly keen to present a positive image in
Europe because it needs significant European support for its flagship
project – the Southern Gas Corridor – despite the regime’s serial
human rights abuses, systemic corruption and election rigging.”
Decisions on proposed loans from European multilateral banks for
construction of the SGC are imminent. The European Bank of
Reconstruction and Development (EBRD) board is to vote on a $1
billion loan for TANAP’s construction on 18 October. The European
Investment Bank (EIB) is due to consider a $2 billion loan for
construction of the Trans-Adriatic Pipeline (TAP), the final leg of
the SGC connecting TANAP to Italy via Greece and Albania, on 18
October, and is to vote on its proposed $500 million loan to TANAP by
the end of the year.

Additionally, a 12 September letter from 25 CSOs, including Both ENDS
and Crude Accountability, to the EIB noted, “In March this year, the
Extractive Industry Transparency Initiative (EITI) suspended
Azerbaijan’s membership as a result of a crackdown on civil society
organizations. This was followed by the Azeri government deciding to
quit the EITI.” Azerbaijan’s withdrawal from EITI came despite the
World Bank’s board acknowledging in the chair’s summary of the TANAP
loan approval in December, “the need for continued dialogue with
Azerbaijan on [EITI] and ensuring that efforts are made towards
restoration of its membership.”

CSOs have criticised multilateral development banks’ support for
TANAP, due to serious concerns about human rights violations and the
negative environmental impact of the SGC project (see Observer Summer
2016). Xavier Sol from NGO Counter Balance said, “In addition to
contributing to human rights violations in Azerbaijan and Turkey,
NGOs have repeatedly highlighted that, in a post-Paris Agreement
world, it is no time for public development banks to finance fossil
fuel projects. In addition, this project – if completed – would do
little to provide additional energy security to the European Union,
and would be detrimental to the diversification of the Azeri
economy.”

tinyurl.com/Azblaundromat
tinyurl.com/occrp-report
tinyurl.com/CSOs-EIB-letter

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Jon Sward joins BWP as Environment Project Manager

We are delighted to welcome Jon Sward as the Bretton Woods Project’s
(BWP) new Environment Project Manager. Jon will manage BWP’s work on
the environmental impacts of World Bank policies and projects. Jon
completed a PhD in Migration Studies at the University of Sussex
focussing on in-migration of tenant farmers, changing land tenure
norms, and environmental vulnerability in Brong Ahafo Region, Ghana.

jsward@brettonwoodsproject.org

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ACCOUNTABILITY news
Indian plaintiffs seek US Supreme Court review of IFC’s “absolute
immunity”

Indian communities harmed by the Tata Mundra coal-fired power plant
financed by the International Finance Corporation (IFC, the World
Bank’s private sector arm) will take their case to the US Supreme
Court, the highest court in the US On 26 September the US Court of
Appeals for the District of Columbia Circuit ruled that it will not
reconsider its immunity rule. The decision was taken in response to a
July petition by communities represented by international NGO
EarthRights International (ERI) asking the full US Court of Appeals
for the DC Circuit to revisit a decision in their lawsuit against the
IFC. In June the Court of Appeals ruled that the IFC is entitled to
“absolute immunity” from suit in the US and could not be sued for its
role in the coal plant that devastated communities in Gujarat, India
(see Observer Spring 2017, Summer 2015). After one of the judges on
the June panel wrote in a dissenting opinion and suggested the full
court should reconsider them, the plaintiffs requested a rehearing
“en banc”. “This decision tells the world that the doors of justice
are not open to the poor and marginalized when it comes to powerful
institutions like IFC,” said Gajendrasinh Jadeja, the head of Navinal
Panchayat, a local village involved in the case, adding “But no one
should be above the law.”

tinyurl.com/IFC-immunity-court-rule
tinyurl.com/appeal-ERI

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RIGHTS News
Labour in Greece: With friends like the IMF…

Summary
-IMF approves new Stand-By Arrangement for Greece and calls for
continued suspension of collective bargaining
-IMF staff report notes “excessive reduction in wages” in Greece

In July, the IMF executive board approved in principle a $1.8 billion
Stand-By Arrangement (SBA) for Greece expiring on 31 August 2018. The
approval comes after acrimonious disagreements over the
sustainability of Greece’s debt with the other members of the Troika,
the European Commission and the European Central Bank (see Observer
Winter 2017). The Fund’s participation in the next phase of the
European Stability Mechanism’s  (ESM) €86 billion package paved the
way for the disbursement of €8.5 billion by the ESM. The actual
disbursement of the Fund’s resources will depend on “specific and
credible assurances” from Greece’s European partners to ensure debt
sustainability and on Greece’s economic programme remaining on track.
The agreed package prevented Greece from defaulting on its maturing
debt in July, but required Greece to “adopt tax and pensions reforms
to cut spending by 2 per cent after 2018”, when the programme ends.
Peter Bakvis of the International Trade Union Confederation (ITUC)
stressed that these reforms have been required “despite a July IMF
staff report noting that the most recent pension cuts voted by the
Greek parliament, at the insistence of the IMF and EU creditors, will
result in average pensions falling by an additional 12 per cent, but
some retirees will suffer declines of up to 18 per cent”. The report
also noted that thereafter pensions will be frozen until 2022.

“Excessive reduction in real wages”
---------------------------------------------------------------------

While international media focused on the debates about debt
sustainability and painted the Fund in a more positive light, civil
society was concerned about the Fund’s continued calls for additional
weakening of labour rights. In announcing the SBA, IMF managing
director Christine Lagarde noted that the Greek “authorities should
reconsider their plans to reverse cornerstone collective-bargaining
reforms after the end of the programme”.

The reversal to which Lagarde refers relates to the suspension of
sector-wide extensions of collective bargaining agreements in 2011,
also under IMF pressure. Bakvis stressed that according to the IMF
staff report, “this action along with some other labour market
deregulation measures, such as a reduction in the minimum wage,
caused ‘an excessive reduction in real wages’” in Greece. Bakvis
emphasised that “the report also acknowledges that ‘too much of the
burden [of structural reforms] has fallen on labour’”. Considering
the suspension of collective bargaining, he stressed that according
to an ILO analysis “the de facto abolition of sector bargaining led
to collective bargaining coverage falling from 70 per cent in 2007 to
10 per cent in 2015”.

Impacts on inequality
---------------------------------------------------------------------

The staff report failed to acknowledge the positive impact of
collective bargaining in counter-acting low productivity and
increased income inequality in Greece. The lack of consideration of
the distributional and human rights impacts of the policies proposed
by the Fund mirrors serious concerns raised by the UN independent
expert on the effects of foreign debt, who underscored that IMF
labour policies result in “retrogression of work-related gender
equality; weakening of worker’s protections; undermining collective
labour rights; and [contribute] to an increase in inequality and
insecure and informal employment” (see Observer Spring 2017).
The disparity between the Fund’s rhetoric and policies on inequality
was detailed in a February Huffington Post blog citing economists
Alex Nunn and Paul White who noted that, in 11 countries surveyed
since the latest IMF guidelines became effective, little more than
“very passing references” to inequality were found. The blog added
that “in every case, the IMF has continued to recommend fiscal
discipline, and very few of the policies that could be used for
reducing inequality have even been mentioned.” The Fund’s antagonism
to labour rights seems to contravene its research, which has found
that “labour income shares [globally] now are almost 4 percentage
points lower than they were in 1970” and that, “as capital tends to
be concentrated in the upper ends of the income distribution, falling
labor income shares are likely to raise income inequality.”

tinyurl.com/IMF-Gr-labour
====================================================================
ACCOUNTABILITY Background
The World Bank and IMF Parliamentary Network

The Parliamentary Network on the World Bank and the IMF aims to
create a mechanism through which parliamentarians worldwide can hold
international financial institutions and their governments
accountable for the development outcomes of initiatives financed with
taxpayer’s money.

This Inside the Institutions looks at how the network has facilitated
interactions between members of parliament and the Bank and Fund
since it was established in 2000. It explores the role of local and
regional chapters, the ‘Parliamentarians in the Field’ programme and
the ‘Parliamentary Relations Team’. It also highlights the network’s
limitations in ensuring parliamentary oversight of Bank-funded
projects.

tinyurl.com/IMFWB-ParlNW

====================================================================
RIGHTS News
CSOs await Guidance Notes for new Bank safeguards

Following the World Bank’s approval of a new Environmental and Social
Framework (ESF) in August 2016, civil society organisations (CSOs)
continue to await their opportunity to provide input into Guidance
Notes (GNs) detailing how the ESF will be implemented. CSOs were
broadly dissatisfied with the ESF, arguing that the new safeguards
contained vague language, diluted standards, were over-reliant on
‘borrower systems’, and lacked clear commitments to human rights (see
Observer Autumn 2016). While CSOs were told throughout the four-year
long ESF consultation process that their concerns would be addressed
in the GNs, the Bank has seemed reluctant to share the draft GNs for
consultation and input.

The timeline for the publication of the Tier 1 GNs, outlining
implementation of the ten key standards of the ESF, remains unclear,
with some indications that they could be published following the
annual meetings in October.

tinyurl.com/ESF-BWP-story
tinyurl.com/ESF-guidelines

=====================================================================
FINANCE news
IEG report finds Bank’s tax work lacks equity focus

Summary
-IEG finds Bank’s tax work failed to consider equity considerations
-Bank’s domestic resource mobilisation work focused on creating an
enabling environment for private sector

In February the World Bank’s Independent Evaluation Group (IEG)
published a report on lessons learned from the Bank’s support for tax
reforms. According to the report, one of the principal objectives of
the Bank’s work on tax was to improve the investment climate. The
report found that, “with a few exceptions, reviewed DPOs [development
policy operations] did not specifically address the efficiency and
equity of tax systems.” Covering $28.4 billion of projects from 2005
to 2015, the report noted that the large majority of support was
provided through DPOs, which are used to support “a program of policy
and institutional actions”, with only 11 per cent comprising
investment projects.

The report also found that during the period under review, the Bank
“did not have a specific strategy for domestic resource mobilisation
(DRM)”, adding that DRM was seen as an element of “creating an
enabling environment for private sector development”. While this
seems well-aligned with the Bank’s explicit focus on leveraging
private sector investment (see Observer Summer 2017), it is
potentially at odds  with the Bank’s goal of ‘increasing shared
prosperity’. In contrast to the Bank’s lack of focus on equity
identified by report, in February, IMF research concluded that “high
inequality imposes a direct economic cost, in addition to … capture
of the political process by elites, and a decline in social
cohesion”. The Fund’s 2017 Programme of Work noted that it “will
examine key choices regarding tax and expenditure policies for
addressing rising concerns about inequality” (see Observer Summer
2017).

The Committee on Economic, Social and Cultural Rights, the UN body
responsible for ensuring compliance with economic, social and
cultural rights, noted in August  that, “Lowering the rates of
corporate taxes with a sole view to attracting investors … undermines
the ability of all states to mobilise resources domestically to
realise … [human] rights”, concluding that, “this practice is
inconsistent with the duties of the states”. The IEG’s findings
therefore raise questions about whether the Bank’s focus on improving
the investment climate may have resulted in tax policies that
contribute to tax competition and contradict its obligations, and
that of its shareholders and clients, under international human
rights law.

As the IEG noted, DRM has become increasingly important in light of
its “potential benefits for state-building … the fiscal impact of
trade liberalisation [and] the financial and debt crisis in countries
that provide development assistance”. Goal 17 of the Sustainable
Development Goals includes an indicator on improving DRM in
developing countries by improving capacity for tax and revenue
collection.

Given the significant impact of the Bank’s DPOs, and echoing concerns
raised by a 2015 IEG report, civil society has called for the  World
Bank to ensure that environmental and social safeguards, currently
limited to project lending, are expanded to cover development policy
lending, which now accounts for approximately 40 per cent of the
Bank’s lending.

tinyurl.com/IEG-WB-tax-report
tinyurl.com/iegDRMreport

=====================================================================
Follow BWP’s coverage of the World Bank and IMF annual meetings


World Bank and IMF governors will meet in Washington DC from 13-15
October. Key themes to be discussed include the Bank’s efforts to
streamline procedures, tackling climate change and inequalities, the
consequences of efforts to leverage private sector investment and
lack of global tax cooperation.

The Civil Society Policy Forum (CSPF)  will take place from 9-13
October. The Bretton Woods Project (BWP) will provide notes  from
CSPF seminars, available on a dedicated page, as well as analysis of
the communiqués and more. Attendees and those following events from
afar are encouraged to check BWP’s updates.

tinyurl.com/BWP-annuals-Dispatch
tinyurl.com/CSPF2017tinyurl.com/annuals2017

=====================================================================
CONDITIONALITY Analysis
BWP edited volume on IMF’s policy impacts on gender equality

In October, the Bretton Woods Project (BWP) published an edited
volume on the impacts of commonly-prescribed IMF macroeconomic
policies on women’s rights and gender equality. The volume forms part
of BWP’s Gender Equality and Macroeconomics Project. It explores the
impacts of the Fund’s policy advice on tax, expenditure and labour
market flexibilisation and demonstrates how these policies often
undermine women’s rights and gender equality, calling for the
creation of a gender-just macroeconomic framework.

tinyurl.com/BWPCompendium
tinyurl.com/BWPGEMproject

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

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