Emerging Voices: Natalie Bugalski and David Pred on the Dark Side of Development

Emerging Voices features contributions from scholars and practitioners highlighting new research, thinking, and approaches to development challenges. This article is from Natalie Bugalski and David Pred of Inclusive Development International. Here they discuss the World Bank’s Safeguard Policies review process.

For the first time in over a decade, the World Bank is conducting an internal review of its Safeguard Policies, which aim to ensure that Bank projects do not cause social or environmental harm. Civil society groups are advocating for the Bank to bring these policies in line with international human rights and environmental standards and consistently apply them to all Bank operations. The Bank’s senior management, on the other hand, seems more concerned with making the Bank a more attractive lender that can compete with increasingly powerful state financiers, such as Brazil and China, by ensuring there are fewer strings attached to loans. However, this move would hurt the very people the Bank is supposed to help.

The current World Bank Group president, Jim Yong Kim, has set two ambitious goals for the institution: eliminating extreme poverty by 2030 and boosting the incomes of the bottom 40 percent of the global population. In order to achieve these goals, Kim wants the Bank to be less risk averse and support more “transformational large-scale projects.” Kim refocusing the Bank’s strategy on its original mandate of reducing poverty is commendable, but many NGOs, including our organization, Inclusive Development International, worry that this will mean gutting the Bank’s binding social and environmental requirements and replacing them with more lax standards.

In past decades, Bank-financed mega-projects, conducted without consulting local communities, caused a series of social and environmental disasters and sparked protests around the world. In response, with pressure from the U.S. Congress, the Bank adopted stronger policies to protect communities and ecosystems. During Congressman Barney Frank’s tenure as chair of the House Financial Services Committee, Congress also used its power of the purse to demand the establishment of the Inspection Panel. Over the past two decades, the Panel has enabled affected communities to hold the Bank accountable when safeguard policies are violated. Regional development banks have followed suit by adopting safeguard policies and accountability mechanisms of their own. In fact, several regional banks now have stronger standards than those of the Bank.

One of the most glaring areas where the Bank has fallen behind is in protecting people affected by Bank projects from forced displacement and ensuing impoverishment. According to the Bank’s Independent Evaluation Group, at any one time more than one million people are affected by involuntary resettlement caused by active Bank projects. Displacement is often accompanied by violence and corruption, and threatens livelihoods, education, food security, and mental and physical health. Although the Bank has a resettlement policy aimed at avoiding these negative outcomes, gaps in the policy and its implementation have meant that local communities displaced by Bank projects continue to face adversity and human rights violations.

The Nam Theun II Hydropower Project in Laos is an apt example of the need for human rights due diligence, and for ensuring the informed participation of people impacted by development projects. The construction of Nam Theun II displaced 6,200 indigenous people and affected more than 110,000 people downstream. In the closed society of Laos, there was no open and thorough consultation process in which people could raise objections to the project. The Bank and its partners largely ignored the repressive political environment and proceeded with the project without meaningfully consulting the affected communities and responding to their concerns. Today, according to the organization International Rivers, the local population is still struggling to recover their livelihoods after they lost access to critical natural resources.

Development projects in Ethiopia further highlight why the Bank needs to adopt stronger human rights standards. Since 2006, the Bank has provided over $2 billion to help the Ethiopian government provide basic services to its citizens. However, under the guise of improving services for rural communities, the government has embarked on a mass relocation program affecting an estimated 1.5 million people. According to Human Rights Watch, the program has involved the violent, forced relocation of tens of thousands of indigenous peoples from their fertile ancestral lands to more arid areas, where promised basic services are often deficient or absent. In some cases, this has led to starvation and many victims of the program have fled to neighboring countries seeking sanctuary. There are clear links between this abusive government campaign and the Bank’s Protection of Basic Services project, as argued in a complaint brought to the Inspection Panel in September 2012. Yet the Bank has not applied its resettlement policy to this case, standing behind the Ethiopian government’s dubious claims that the relocation is “voluntary,” despite strong evidence to the contrary.

In addition to the Safeguard Policies review, the Bank is also currently engaged in negotiations for the seventeenth replenishment of its International Development Association (IDA) fund, which provides concessional loans to low-income countries. Once this process is completed, Congress will be asked to approve the United States’ financial contribution to the IDA. This gives the legislature considerable influence to shape the Bank’s social and environmental protection policies for the next twenty years. Congress should use its leverage to encourage the Bank to harmonize its policies with international human rights standards. It is imperative that the hard-won gains of adopting binding safeguard policies and establishing an Inspection Panel to enforce them are not undone. Rather, the Safeguards Review and IDA 17 Replenishment negotiations should be seized as an opportunity to ensure that the rights of poor and vulnerable communities are protected and promoted in all Bank projects.