The newly proposed World Bank Safeguards – A paper tiger?
Bankwatch Mail | 17 December 2015
The social and environmental policies of the World Bank – commonly referred to as the ‘Safeguards’ – have been under review since 2012. In July 2015, as part of this review, the World Bank, released a second draft of the Safeguards for consultation and public comments.
This article, contributed by Pieter Jansen of Both ENDS in Amsterdam is based on an analysis conducted jointly by Ulu Foundation and Green Watershed. Parts of it are excerpts from an article written by Green Watershed which soon will be released on the www.safeguardcomments.org website. An overview of comments on the safeguards by different organisations can be found there, and additional analyses and comments will also be forthcoming.
This article is from Issue 63 of our quarterly newsletter Bankwatch Mail
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(This article is not included in the pdf version of Bankwatch Mail 63.)
On a preliminary analysis of this second draft of the Safeguards, the only conclusion you can arrive at is that it entails a radical dilution of the Bank’s existing environmental and social safeguards. Among other, the policies in this new draft weaken the Bank’s independent accountability mechanism and will allow large-scale forced evictions to continue as a result of the projects it decides to finance in the future.
The latest draft also sees the inclusion of a labour standard, however it is narrowly drawn, fails to mention International Labour Organisation core labour standards, and only guarantees the rights to collective bargaining and freedom of association if these exist in national law. The second draft also weakens existing protections and the scope of coverage for biodiversity and forest dependent peoples, and reverses the ban on financing projects that lead to the destruction of critical habitat, protected areas and nature reserves. These are a quick selection of the policy dilutions that the World Bank is hoping to now implement.
However, the most controversial issue currently hanging over the process concerns how the new safeguards would initiate an over-reliance on borrower country national laws and regulations and the policies of financial intermediaries. The Bank appears intent on increasing dependence on borrower systems while, at the same time, eliminating the current due diligence requirements found in its country safeguard systems.
This development has its origins in a World Bank board meeting of March 18, 2005 when the bank’s directors approved the launch of a pilot program to explore using a country’s own environmental and social safeguard systems (that is, its national, sub-national, or sectoral implementing institutions and applicable laws, regulations, rules and procedures), in cases where they are assessed as being equivalent to the Bank’s systems, in Bank-supported operations.
Since the introduction of this program, the Bank’s own analysis of Country Systems pilot projects identified significant difficulties in the implementation of all pilot projects which made use of country systems. Thus, an over reliance on a further weakened version of the country system approach could further worsen this situation.
The new draft proposes to replace the 64 detailed mandatory equivalency testing points of country systems currently in place with Bank discretion for determining equivalence, and is only required to be “materially consistent with the objectives”. The objectives are few in number and vaguely worded.
Moreover, instead of 64 mandatory equivalency testing points for the Bank itself, client or borrower countries will be allowed to monitor their own projects in terms of social and environmental impacts and their compliance with national rules. The draft seems to propose that the Bank will rely, almost entirely, on the due diligence information provided by the borrower – which therefore boils down to any borrower’s self-assessment of its compliance with the objectives of the safeguards.
Apart from the risk of fraud, there are several operational problems associated with the likely effectiveness and efficiency of this kind self-assessment.
The Bank is signaling its intention to improve clients’ capacity to do the self-assessment as well as monitoring of compliance with the country system’s rules. Therefore the borrower, in consultation with the Bank, will identify measures and actions to address any gaps in the national Framework.
For such a gap-filling exercise the Bank will have to be equipped with experts familiar with the legal, technical, environmental, social, political and economic dynamics of different borrowers. It will also have to allocate huge amounts of time and budget beyond (if not out of) the financial sources of the project in question. This sounds expensive, inefficient and not very effective at all.
A further related problem is the lack of clarity on whether the gap-filling is related to national systems or to bank rules. Assuming that gap-fillings are treated as part of national systems, then they would not solve the often weak enforcement present in many countries.
Further, the absence of public participation in the legal process and governance culture in many countries remains a major challenge. In order to achieve an objective and reliable conclusion on ‘equivalence’, the Bank needs to be ensuring that the public’s voice is being heard during the whole assessment process, which unfortunately isn’t likely in many of its client countries. This would also be a risk in the decision-making over gap-filling measure.
The Bank also claims to look at the track record of a country related to performance in terms of law enforcement. However, it is not clear how this performance-based approach can be made feasible in practice. Law enforcement is an extremely complex issue in many countries. It would go beyond the Bank’s competence and authority and could be expected to trigger a jurisdiction conflict between the Bank and the borrower state concerned.
To conclude, this current second draft of the Bank’s Safeguards eliminates the mandatory due dili-gence of the Bank for analysing borrower systems and, at the same time, over-relies upon the use of self-reporting by borrowers. Even in spite of this, not all borrowers would feel happy with the bank’s discretion for determining the equivalency between national laws and regulations on the one hand and Bank rules on the other.
Theme: Social & economic impacts | Other harmful projects | Development
Tags: BW Mail 63 | safeguards
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