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Michael Kouraba headshot

New World Bank Policies Potentially Devestating to Poor, Indigenous People


It looks like the World Bank is succumbing to budgetary pressures and choosing to neglect its human rights responsibilities as the world’s largest and most influential development bank.

Proposed revisions to the World Bank’s Safeguard Policies and Environment and Social Framework -- which are meant to protect people and the environment in the investment projects that the World Bank finances  -- leaked last week and were immediately and uniformly criticized as potentially devastating to indigenous people, the poor and the environment.

On July 28, 99 non-governmental organizations and civil society networks across Asia, Africa, Latin America, North America and Europe sent a letter to the World Bank’s board, urging it not to adopt the draft.  Yet, despite the viscerally negative reaction of rights groups around the world, the draft was cleared by the World Bank Board’s Committee on Development Effectiveness on July 30, and it will now be subject to a period of broad public consultations.

Indigenous people's rights

The prevailing criticism of the draft is that it “moves from [a framework] based on compliance with set processes and standards, to one of vague and open-ended guidance.” Perhaps the most offensive example of this, according to Bank watchdogs and rights groups, is the change the draft makes to the application of standards regarding “indigenous peoples.”

The old standard governing the rights of indigenous peoples required governments borrowing funds from the Bank (hereinafter referred to simply as “borrowers”) to obtain free, prior and informed consent from identified indigenous populations in the project area; conduct an impact assessment of the project; prepare and disseminate a plan about how to handle and mitigate those impacts; and, monitor the project on an ongoing basis.

The revised standard, Environmental and Social Standard 7 (ESS7), leaves these procedures in place in most instances; however, in an effort to “address implementation challenges and consolidate a range of stakeholder views,” the new standard provides an “out.”  ESS7 states that, “where identifying Indigenous Peoples would exacerbate ethnic tension or be inconsistent with the provisions of the national constitution, project impacts on Indigenous Peoples may be addressed through the application of” other (read: less stringent) standards.

Moreover, there is no standard governing the determination of whether an opt-out is justified in a particular case.  Rather, “The Bank will have the sole responsibility for determining the validity of the Borrower's concerns, and may use whatever means the Bank deems appropriate to do so,...”  Thus, the criticism goes, where a borrower simply does not want to be burdened with the rigorous indigenous peoples’ standards, it may simply attempt to “opt out” under this clause, and there is nothing but the sole and unfettered (and opaque) discretion of the Bank standing in the way.

Land administration projects

Another glaring deficiency in the new draft is the exemption of land titling/regularization activities (or land administration projects) from Environmental and Social Standard 5 (ESS5), the new standard governing involuntary resettlement and population displacement resulting from World Bank-financed projects.

From a human rights perspective, potentially problematic land administration activities are those where a government undertakes to officially record titles to particular plots of land and, in the process, denies or changes the ownership of the land, usually in an effort to unlawfully lease or sell it to a developer.  For example, in an infamous case involving Cambodia’s Boeung Kak Lake community, the Phnom Penh government in 2007 leased the area covering the lake and the surrounding villages (home to ~20,000 people) to a private developer, thereby stripping residents of their land rights.  When the developer began filling the lake with sand, the lake flooded, forcing many families to leave their homes; others accepted below market value compensation, according to the group Inclusive Development International.

Unfortunately for the displaced families, a 2006 Bank-financed titling project -- whereby the Cambodian government purported to register land and issue titles across the country -- had excluded Boeung Kak residents, denying them legal claim to the land in the process.  Remarkably, a complaint to the World Bank’s Inspection Panel resulted in the Bank admitting fault and freezing its loans to the Cambodian government, which ultimately led to many families receiving legal titles to their land.

It is hard to believe that the Bank, which knows so intimately the history of land titling projects and their abuse by governments, would exempt land administration activities from the new safeguards.  Yet, that is very clearly what the new draft does.  As the group of 99 NGOs argued in its letter to the Bank’s board: “The resettlement policy should apply to all Bank-assisted projects, including land administration projects, in order to protect persons whose [land rights] are denied, revoked or restricted and are thus subject to displacement.”

Ceding power to borrowers

Finally, in a frightening turn away from past protocol, the new safeguards would allow borrower states to carry out their own environmental and social assessments before a project.  Further, borrowers “may, where appropriate,” apply their own national environmental and social assessment framework to “address the risks and impacts of the project,” providing they are “consistent with the ESSs.”  (see ESS1)  As Reuters points out: “That means Brazil's ministry of planning, for example, could apply its own social and environmental guidelines when it uses World Bank money to build a new bridge, as long as the lender deems its protections ‘acceptable.’”  This validates concerns raised earlier in July, when a series of leaked emails revealed that senior World Bank officials feared that rolling back of environmental and social safeguards regulations would lead to an increase in "problem projects" funded by the Bank.

The "why"

This all begs the question:  Why is the Bank doing this?  The answer is simple:  money.  According to The Observer, the leaked emails suggest that the Bank wants to increase overall lending, but feels constrained from doing so by the present, ostensibly onerous, standards.

This might not be so controversial if the World Bank didn’t have a history of contributing to human rights violations.  The Bank’s human rights record is well documented.  For instance, a scathing 2013 report by Human Rights Watch highlighted several instances where the Bank “neither acknowledged nor mitigated human rights risks in its programs,” including: (i) in Vietnam, where the Bank funded programs in government drug detention centers, wherein arbitrary detentions, forced labor, and torture occurred; and (ii) in Ethiopia, where a so-called Bank-funded “villagization” (read: forced relocation) program was marred by violence and often did not result in the improvement of services and infrastructure promised by the government.

The World Bank provides a crucial service to “developing” countries that, when done properly, can succeed in lowering poverty and improving lives.  Yet, with the new safeguards, it appears that the Bank is choosing to bolster its finances and shirk its human rights responsibilities.  The Bank should be ashamed.

Image credit: World Bank

Michael Kourabas headshotMichael Kourabas

Trained as a lawyer, I now focus on legal business development, corporate social responsibility (CSR), and business & human rights. My past experience includes work on complex commercial litigation, international human rights advocacy, education policy, pro bono legal representation, and analysis of CSR challenges in both the private and public sectors.

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