Public hearing on the World Bank
Upon request from the World Bank Campaign Europe, a Public Hearing was convened on October 15 in the Hague, The Netherlands under the auspices of the Permanent Peoples’ Tribunal to provide a forum to assess the performance of the World Bank in the last 15 years.
The Permanent Peoples’ Tribunal (PPT) in continuity with the Russell Tribunal supported by the Lelio Basso Foundation, has the stated goal of giving public profile and a juridical qualification to violations of fundamental rights that do not find a proper redress at the institutional level. It bases its actions on the Universal Declaration of Peoples’ Rights of Algiers, 1976.
The PPT held specific sessions in Berlin in 1988 and Madrid in 1994 to assess World Bank and International Monetary Fund activities and roles against their impact on peoples’ rights. Other sessions have also taken place that are relevant to the specific area of work and analysis of the later Hearing, addressing the challenges posed by the globalized economy to peoples’ rights and self-determination.
The latest session held in Vienna in May 2006 within the Enlazando Alternativas 2 process, dealt with the responsibilities of European Transnational Companies (TNCs) in Latin America. It analysed cases of the privatisation of public utilities and the extraction of natural resources. It pointed out the “complicity of European governments that support their TNCs“ and the role of international institutions such as the World Bank, the WTO (the World Trade Organisation) and the International Monetary Fund. The last of a series of hearings held by the PPT Chapter in Colombia, focusing on the oil sector, acknowledged the relevance of the concept of ecological debt when dealing with the responsibilities of European TNCs.
At the end of September 2007, an Independent People’s Tribunal on the World Bank took place in India. Finally, a few days before the The Hague Hearing, another PPT session was held in Managua, Nicaragua, on the Spanish Company Union Fenosa.
The later hearing in The Hague was an important opportunity to continue developing new approaches to the current area of activity, by deepening the analysis of the World Bank’s role in various countries of the Global South.
It took place on the first day of a Global Week of Action on Debt and the World Bank, launched by a broad platform of NGOs and social movements across the globe calling for a substantial change in World Bank policies and practices, an end to public financing of fossil fuel projects, an end to the imposition of strict conditionalities that instead of leading to poverty alleviation lead to further impoverishment, and a commitment by governments to launch public audits on foreign debt. It developed along two areas of work, namely the human, social and environmental consequences of the World Bank’s role in imposing economic and policy conditionalities, and the role of the Bank in support of fossil fuel extraction and use.
The expert panel was chaired by Francesco Martone, an Italian Senator in representation of the Permanent Peoples´ Tribunal and was further composed by Charles Abugre, development economist and head of policy and advocacy for Christian Aid from Ghana, Maartje Van Putten from the Netherlands, former member of the World Bank’s Inspection Panel, Marcos Arruda a development economist and publisher from Brazil, member of PACS and the Transnational Institute and Medha Patkar, from India, Founder of the Save Narmada (River Valley) Movement and National Convenor of National Alliance of People’s Movements.
The expert panel heard testimonies by
- Gonzalo Salgado, of the National Consumer Defence Network (Nicaragua) on the liberalisation of electricity services;
- Collins Magalasi, of Action Aid Malawi, on the issue of food security;
- Temo Tamboura, of CAD Mali, on the liberalization of the cotton sector;
- Miguel Palacin of the Coordinadora Andina de Organizaciones Indigenas (CAOI), from Peru on reform of the mining laws in Peru;
- Svetlana Anasova, of the Berezovka Initiative Group, Kazakhstan on “The Karachanak Oil Pipeline” (as she was unable to attend the Hearing in person, her submission was read aloud);
- And Michael Karikpo, of Environmental Rights Action, Friends of the Earth Nigeria on the West African Gas Pipeline;
Findings and outcomes of testimonies
The World Bank came into existence after the World War II in order to rebuild Europe and with the purpose of creating new markets, mobilizing resources while supporting infrastructure and productive capacity. Notably after the creation of the International Development Association (IDA) it has repositioned itself in support of poverty alleviation, its avowed goal, while advancing a global free trade agenda through its lending and conditionalities. A parallel and unofficial history of the World Bank tells us years of resistance at the local and global level by social movements and communities eager to reclaim their right to self-determination and control over their resources.
The testimonies presented to the Panel in The Hague indicate that the World Bank has been rather influential while dealing with the State and the public sector in borrowing countries. Its interventions have gone much beyond its formal limited role of a lending agency and went into policy-making, prioritizing, budgeting and planning in every sector of governmental action. This has enabled the Bank to generate and force a development paradigm that is market- and growth-oriented rather than aimed at meeting basic human needs while attaining social and environmental justice. Its lending conditionalities lead to the conversion of life-supporting natural resources such as land, food, air, seeds and energy into merchandise.
In the case of *Nicaragua* the panelists listened to an extensive explanation of the developments in the energy sector what in brief showed a failure of the privatization process of public utilities in guaranteeing full and broad access to electricity for the poor majority of the country, while generating huge profits for the Spanish monopoly Union Fenosa while at the same time creating indebtedness for the State.
In the case of *Mali *the Panel was told that Mali was forced to privatise the cotton sector in order to meet World Banks conditions with the purpose to receive a debt reduction of 70 million and eligibility for the Enhanced Indebted Poor Countries Initiative. As a result, according to the witnesses, the cotton prices were liberalised what subsequently led to a decrease by 20% while cotton is the principle source of the country’s revenue. It is significant for the panellists that the timing of World Bank programs in Mali coincided with the cotton liberalisation negotiations at the WTO.
The Panel noted the remarks made by the witnesses as to how the World Bank is imposing conditions on countries negotiating a loan, leaving little or no room for these countries to choose their own direction. In at least two cases, the Panel noted that access to the HIPC debt reduction processes was conditioned to the implementation of structural adjustments and liberalization of economies, thereby producing a vicious circle of forced payment of increasing volumes of debt. An uneven distribution of resources and benefits resulted in a massive drain of national resources away from the imperatives that could ensure distributional and social equity and self-reliance. In this process, the traditional, customary, cultural and territorial rights of local communities and indigenous peoples are compromised and sacrificed. International conventions and UN covenants such as ILO 169 on the rights of indigenous populations have been either ignored or violated.
The panel acknowledges the relevance of the concepts of ecological and social debt when dealing with the consequences of such development paradigm. Additionally, evidence of odious and illegitimate debt - such as in the cases of Peru and Nigeria – has been presented, whereby foreign debt accumulated during dictatorial regimes is still being paid off by the victims of the past. Still, the legal frameworks that can be applied to the concepts of illegitimate, odious and ecological debt might require further articulation and development.
In many cases, the Panel noted the points made about violations of peoples’ right to be proactively engaged at all levels of the decision-making process as is laid down in several of the World Banks own policies. Besides the Panel notes this is not in free agreement with the principle of ‘prior informed consent’ in any policy or decision affecting their own lives, and territories.
Hence, through its policy advice, the Bank has prevented the full exercise of participatory and direct democracy, thereby widening the gap between governments and peoples, creating a fictional political space where genuine interests are overlooked if not ignored. In this context, the role of the national parliaments has frequently been undermined if not denied by imposing on them decisions already made by governmental authorities and Washington-based officials.
The Panel learnt however interestingly, that in certain cases, such as in *Malawi* countries might be able to find their own route to social justice, food sovereignty and food security, by rejecting World Bank conditionalities and continuing to subsidize local agriculture and markets, while fostering the inclusion of the poor. The Panel was told that the parliament of Malawi was forced to accept the closure of 400 local rural markets that according to the witnesses led to a dramatic loss of jobs of thousands including rural farmers that did no longer have access to markets to sell their products. This decision in a later stage was turned over and the markets were re-opened. As a consequence of this decision the food situation in rural areas improved substantially.
The cases on mining in *Peru* and oil and gas extraction in *Nigeria and Kazakhstan* show the link between World Bank developmental priorities and the advan, and fossil fuel extraction has, according to the witnesses, resulted in the violation of peoples’ rights to health, a clean environment, and water. No compensation of losses or replacement of livelihoods was ever ensured either by the Bank or the government despite evidence produced by the Bank itself.
More generally, the continued support of the World Bank to fossil fuel extraction and use, with the associated greenhouse gas emissions, rather than small scale renewable energy, raises serious questions about the Bank’s role in and commitment to the Post-Kyoto process and support for eco-friendly technologies. It is another case of “institutional amnesia” considering that the Extractive Industries Review, 2004, supported by the Bank itself, recommended a phase-out of Bank financing of fossil fuel projects, the adoption of the principle of free, prior informed consent and compensation for affected communities.
Recommendations and next steps
Drawing from the testimonies and its own experience and analyses, the Panel believes that:
- There is a need and urgency to build upon local resistances and alternatives to the dominant economic free-trade and growth oriented paradigm, in order to strengthen alliances and movements, while confronting World Bank culture and ideology, challenging its political and economic role;
- Commons are for the common good and not for corporate profit. Therefore, the Bank should abstain from supporting - or recommending - the privatisation of the commons and of life-supporting resources such as public energy services and drinking water systems;
- Social-environmental and economic audits and/or impact assessments of the World Bank should be carried out in a transparent and timely fashion and the same should include the people that could be directly or indirectly affected by the projects funded by the World Bank. Moreover, a moratorium of projects causing conflict should be considered in order to allow for a meaningful assessment and compensation measures to be developed and implemented;
- The recommendations of the 2004 Extractive Industries Review, the outcome of a multi-stakeholder exercise in global policymaking, on the request of the World Bank itself, are still valid and cogent and should be implemented in letter and spirit as a matter of urgency;
- Parliaments and governments should initiate independent debt audits in order to identify historical responsibilities, and the social, economic and environmental, as well as juridical implications of debt for peoples’ rights and self-determination. Parliaments and governments should take the opportunity of the ongoing negotiations for the replenishment of IDA (International Development Association) to condition any new replenishment to a significant and urgent change in World Bank’s practices and conditionalities currently aimed at fostering a pro-growth, pro-free trade agenda rather than social, economic and environmental justice;
- No violations of UN conventions and covenants in any development project can be accepted, with or without bilateral and multilateral funding;
- Any investment or operation by the World Bank must respect the community rights by practising the principle of ‘free prior informed consent”.
Francesco Martone, Chair
Maartje Van Putten