BACKGROUND: PUBLIC HEARING ON THE WORLD BANK
The context: The World Bank in Crisis
The World Bank is the world’s largest multilateral development bank and one of the
most powerful international organisations, providing financing and promoting policy
paths which affect the lives of hundreds of millions of people across the developing
world. The official main goal of the institution is to reduce poverty world wide.
Today, the World Bank faces a severe institutional and political crisis. The institution
is rapidly loosing legitimacy. It is criticised more strongly than ever by donor and
borrower governments as well as civil society organisations and local communities
for increasing rather than reducing poverty by imposing harmful economic policy
conditions; for environmental devastation; for contributing to conflict; and for failing
to respect local peoples’ rights. Evidence of harm from the ground has been
corroborated by a series of official reviews of the Bank’s activities. In addition, the
World Bank’s internal governance still shows a big democracy deficit. One
emblematic example of that is the process for selecting the president of the World
Bank – a decision which still rests with the White House.
Permanent People’s Tribunals in 1987 and 1994 assessed the WB and the IMF
activities and roles against their impact on peoples' rights. They considered the
institutions’ activities not a contribution but an impediment to human development.
The limited reforms carried out in recent years have failed to satisfy governments,
researchers and local communities. Meanwhile, the international political context has
changed dramatically.
Why do we need a new Hearing?
A new Hearing is needed to provide a forum to assess the performance of the World
Bank in the last 15 years. The Hearing should consider whether the institution has
indeed taken sufficient steps to adapt to the changed international situation and
provide the added value to help developing countries face climate change while
reaching the Millennium Development Goals.
At the same time, we would like to demonstrate that the World Bank is still enjoying
legal immunity and that there exists no possibility for people to take the World Bank
to any national or international court.
How has the international context changed? With the end of the Cold War and with
the rise of major economic powers in Asia and Latin America, today’s international
scene is very different. One important signal is the proposal for a Bank of the South in
Latin America as an alternative to the World Bank, which excludes the United States
and Europe. At the same time, climate change has become more urgent. This is a
consequence of the economic model based on fossil fuels consumption, which is
pushed by the international financial institutions. The consequences of growing
emissions in the North are hitting poor countries the hardest. In such a context where
finding global solutions for global problems is crucial, the World Bank is showing not
to be the right institution to deal with this new international context.
For various reasons, we feel that this year is the right time for this Hearing. Following
a period of severe political division at the World Bank Board under the presidency of
Paul Wolfowitz, a new Bank president took up office in July 2007. He will have to
consider where he wants to take the World Bank and build a political coalition to
support this. 2007 is also the year where donor governments negotiate the 15th
replenishment of funds to the concessional arm of the World Bank, the International
Development Association. At the end of this year, governments and the World Bank
will discuss the world’s new energy framework at the 13th UN Conference of the
Parties on climate change in Bali. Among civil society groups there is also a very high
level of interest in the World Bank. And finally, in 2008, elections in the US may
change the US’ policy towards the World Bank.
Now is therefore an ideal moment to analyse accusations aimed at the World Bank
and provide updated testimonies, to see whether the WB can face the challenges of
this time.
What will the Hearing lead to?
The Hearing will:
- take stock of the extent to which the World Bank has improved its policies and
actions since 1994;
- center this around two important issue areas: conditionalities and extractive
industries;
- address European governments and their role in decision making at the World
Bank.
Our primary audience will be European governmental and non-governmental policy
makers, , parliamentarians, students and media. The conclusions of the Hearing will
put donor governments under pressure to set more precise objectives for how
taxpayers’ aid money should be spent, and to audit performance on a regular basis.
The documentation of the Hearing will also provide a solid source to feed an intensive
debate about the future of the organisation, the current development model and
potential alternatives.
As an indirect result, the preparation of the Hearing will help civil society groups in
different regions gather evidence and marshal arguments about the World Bank’s
activities in key areas. It will provide local community people with an international
space to make their voices heard and give testimony. Finally, the Hearing will enable
civil society groups and researchers to test the strength of their arguments and
evidence facing a team of experts.
The Hearing will in itself be a forum for enhanced public debate on an important
international institution like the World Bank and possible alternatives. Publicity
around the Hearing will trigger further discussion via the media and related advocacy
work.
We are aiming for live streaming on the internet so that the Hearing can be viewed
from anywhere in the world. We will also make a video registration to ensure further
distribution of the event and its results afterwards.
Issues to be investigated by the Jury
We would like to take the two rather general judgements from the PPT on the World
Bank in 1988 and 1994 further by analysing two policy ‘cases’ of the World Bank,
economic conditionalities and the funding of extractive industry projects. These two
issues are particularly suited to demonstrate how the Bank’s poverty reduction
strategies are constantly failing to benefit poor people. In many instances they have
even worsened the situation for local communities while continuing to harm the
(global) environment.
In the case of conditionalities the list of negative impacts is endless, e.g. through
privatisation of public services like water and electricity supply poor people have lost
access. In the agricultural sector there are also many examples: the privatisation
(liberalisation?)of the cotton industry has forced the local sector to compete with
subsidised cotton producers from the North. The issue of conditionality closely links
to current debates of national ownership over development and to the diminishing
fiscal space in poor countries, with national budgets highly dependent on aid flows. It
also demonstrates how global investors’ interests rather than the needs of the poor
seem to be determining policy decisions.
The funding of large fossil fuel projects like Chevron’s Chad-Cameroon oil pipeline
do not provide many job opportunities for local communities, and do not help local
governments gain energy security. As most extractive industry projects serve western
consumption needs, poor communities are still living off-grid without access to
electricity and energy for basic needs. Worse still, there is widespread evidence that
these projects harm the environment and therefore destroy the livelihoods of many
farmers in the affected regions. Local negative social impacts often include
prostitution, pollution, health problems, corruption and exclusion. Additionally, fossil
fuel projects contribute substantially to global warming, while the World Bank
committed to fight climate change. In developing countries, oil, mining and gas
development leads to the “resource curse” - intensified marginalisation of the poorer
population, bad governance, the aggravation or the emergence of violent conflicts,
and failed economic development.
The set-up
The day will start with an introduction on the overall context of the Hearing.
Testimonies will follow, by people from countries affected by World Bank policies
and operations in Africa, (Central) Asia and Latin America. A panel of well respected
experts with different areas of expertise will question the witnesses to get the relevant
information on the table. The following people are being contacted for this panel:
Maartje van Putten, Emil Salim, Elmar Altvater, Francesco Martone, Shalmali Guttal,
Arundhati Roy, Francois Houtard. The testimonies will give a detailed insight into the
consequences of policy decisions of the World Bank. The witnesses can also propose
alternative approaches to foster development concepts suited for individual countries
and social contexts. Concluding remarks will include an element of looking forward.
The panel of experts will convene in the evening to draft a declaration on the basis of
what they heard. This will be presented at a press conference the following morning
Oct 16.