Reassessing the Prospects of a Human Rights Safeguard Policy at the World Bank
Suzanne Zhou
1. Introduction
For much of its history, the World Bank has been criticised for taking an approach to development overly focused on economic growth at the expense of social and environmental concerns, and in particular, for ignoring the human rights impact of its projects. Over the last 20 years, however, it has been increasingly willing to engage with the question of how human rights concerns affect its work, with this engagement intensifying in the last five years with the establishment of the Nordic Trust Fund and a number of World Bank studies in the use of international human rights concepts in Bank policy. Despite these developments, significant legal and institutional obstacles, including the prohibition on political interference in its Articles of Agreement,[1] have meant that engagement with human rights at the Bank remains largely ad hoc, informal, and independent of the international law on human rights, a fact that continues to fuel criticism of the Bank.[2]
A frequent suggestion arising from such criticism is that the Bank should adopt a formal human rights safeguard policy, incorporating norms drawn from international human rights law, for its public sector lending arms, the International Bank for Reconstruction and Development (‘IBRD’) and the International Development Association (‘IDA’).[3] This article examines whether existing social safeguard policies at the World Bank could be subsumed into a comprehensive human rights based safeguard policy of this type, and the possible ways of accommodating such a policy within the constraints set by the Bank’s constitutive documents. It argues that while the Articles of Agreement are no longer seen to automatically exclude all human rights concerns, they continue to constrain the potential form of a human rights safeguard policy. Additionally, institutional obstacles which limit the desirability of adopting a policy and the effectiveness of such a policy if adopted remain. These include concerns over the appropriateness of having the Bank impose human rights conditionalities, internal incentive structures that cause pressure to lend, and the difficulty of enforcing safeguard policies through the Bank’s existing oversight mechanisms. Given these constraints on the potential of a safeguard policy to improve human rights accountability, I advocate for a system which incorporates human rights safeguards into evaluations of project effectiveness, accompanied with broader reforms of Bank incentive structures. Such a system would not only work with rather than against the Bank’s institutional limitations, but also make the best opportunity to advance existing Bank initiatives.
2. What Would a Formal Safeguard Policy Add To Existing Bank Practice in Relation to Human Rights?
It is perhaps an overstatement to say, as some authors do, that human rights are ‘marginal’ at the World Bank.[4] At present, much of the Bank’s work engages human rights, particularly in terms of the obligation to ‘fulfil’ human rights under the tripartite taxonomy of obligations to ‘protect, respect, and fulfil’ human rights. As David Kinley has noted, however, it is difficult to identify with precision what the Bank already does in the area of human rights, because although many of its activities may have an effect on human rights, few of them are couched explicitly in rights language.[5] The Bank’s approach may therefore be better described as ‘doing [human rights] quietly’: [6] while it is broadly accepting of the factual congruence between the goals of human rights and poverty reduction, and of the guidance that principles from human rights may bring to development projects, it stops short of incorporating human rights as legal obligations into its work.[7]
A number of Bank projects engage human rights related concerns in an indirect manner. The Bank’s official position is that its existing activities, pursued primarily for the goal of poverty reduction, already result in greater fulfilment of human rights, particularly economic and social rights, by providing for the basic needs of those in borrower countries. It also runs a host of programs concerned with the policy climate in the borrower country which can be broadly considered to promote human rights issues. Among these are programs on governance, judicial reform, and anti-corruption; post-conflict stability, gender equality, disability, and public health. By and large these programs are expressed in terms of their economic benefit – very few explicitly use the language of human rights, and even fewer specifically acknowledge international human rights law norms, although there are notable exceptions such as a 2004 project to design a human rights law curriculum at the University of Chile Law School.[8]
Additionally, a number of pilot and ‘learning’ projects have been set up to explore how a more direct adoption of human rights can aid Bank activities. A special trust fund set up in 2006 and operational since 2009 investigates the relevance of human rights to the Bank’s work,[9] and since the early 2000s a number of workshops and official pronouncements have broadly supported the use of human rights concepts in the Bank’s development projects.[10] Most recently, the Nordic Trust fund has sponsored a study into the adoption of human rights indicators in development.[11] There is therefore broad acceptance of the role that the Bank can play in promoting the values embodied by human rights, even if many of these are more commonly labelled ‘empowerment’, or ‘pro-poor’ polices than ‘rights’ at present.[12]
However, the Bank takes a more cautious approach to human rights as legal obligations. At present, there is no systematic integration of human rights into Bank policies, despite the increasing recognition of their relevance to the Bank’s work, and the adoption of human rights policies by national development agencies, international development institutions, and even certain private financial institutions.[13] The closest analogues the Bank has to a human rights policy are its social safeguard policies, adopted during the 1980s and 1990s after a series of highly criticised projects including the Sardar Sarovar dam.[14]These policies are part of the Bank’s Operations Manual, and consist of Operational Policies (‘OPs’), which constitute a binding set of standards on Bank staff, Bank Procedures (‘BPs’) which provide elaboration and guidance on OPs, and non-binding memos which provide guidance where no policies exist.[15] Existing safeguard policies provide human rights protection in a limited set of circumstances, by requiring consideration of the effects of Bank-funded projects on indigenous populations, gender and involuntary resettlements, as well as a number of other environmental and social interests.[16] Staff who contravene these policies may be the subject of investigations by the Inspection Panel.[17] While these provide valuable protection for groups most vulnerable to adverse effects from Bank projects, particularly in large infrastructure or extractive industries projects,[18] they remain ad hoc rather than comprehensive policies, and potential human rights situations not involving the particular groups named by OPs remain outside their reach.[19]
The gap between recognition of human rights as values and human rights as legal obligations has driven continuing calls for an international human rights law safeguard policy,[20] couched in similar terms to the current policy relating to environmental assessments, which requires consideration of both a borrowing state’s domestic environmental legislation and its obligations under international environmental law and states that the Bank does not fund projects that contravene such obligations.[21] This would add a number of mechanisms which would increase the level of human rights scrutiny given to Bank projects. First, a safeguard policy would allow for the possibility of civil society complaints through the Inspection Panel, which can only consider compliance with operational policies, rather than being a general forum for complaints.[22] Second, such a policy would require staff to evaluate a project’s potential impact on a borrower state’s ability to comply with domestic and international human rights law obligations, and to identify ways in which this impact can be mitigated. While the policies are binding only on staff, in practice they often also form the basis for loan conditions, Country Assistance Strategies, and Poverty Reduction Strategy Plans.[23] As a borrower country is also allowed to substitute its own equivalent system for the safeguard policy,[24] a policy would set a minimum level of consideration that must be given to a borrower country’s human rights obligations. Finally, advocates for safeguard policies at the Bank note that such policies would provide clarity for staff on how to balance the potential benefits against the potential adverse effects of a development project.[25] Thus, an effective safeguard policy would improve both the consideration of and accountability for the human rights impacts of the Bank’s operations.
3. Legal Considerations in the Adoption of a Safeguard Policy
A number of legal and institutional obstacles, however, constrain the ability of the Bank to adopt comprehensive human rights safeguards. The first of these, and the one that explains the Bank’s persistent reluctance towards human rights, is the mandate of each of the Bank entities. Both the IBRD and the IDA are institutions with limited mandates, set out in their respective Articles of Agreement. While historically, the mandate has been seen to prevent consideration of human rights law, it has increasingly been seen to permit a certain level of engagement with human rights by both Bank General Counsel[26] and academic commentators.[27]
A. Legal Framework
Three related sets of obligations govern the scope of the Bank’s mandate: the requirement that the Bank’s activities further its purposes, the prohibition on political activities, and the legal obligations on the Bank as a subject of international law. First, the decisions of both institutions must be guided by the purposes in art I of each of their Articles of Agreement. For the IBRD, this includes:
assist[ing] in the reconstruction and development of territories of members by facilitating the investment of capital for productive purposes … promot[ing] the long-range balanced growth of international trade and the maintenance of equilibrium in balances of payments by encouraging international investment … thereby assisting in raising productivity, the standard of living and conditions of labor in their territories… [and] conduc[ting] its operations with due regard to the effect of international investment on business conditions in the territories of members.
Similarly, the purposes of the IDA are:
to promote economic development, increase productivity and thus raise standards of living in the less-developed areas of the world included within the Association's membership, in particular by providing finance to meet their important developmental requirements on terms which are more flexible and bear less heavily on the balance of payments than those of conventional loans, thereby furthering the developmental objectives of the [IBRD].
These establish the primary purpose of the Bank’s public sector lending agencies as that of promoting economic development. This is now primarily framed as a focus on poverty reduction.[28]
Additionally, each of the institutions is prohibited from considering the ‘political affairs’ of each member. Article IV(10) of the IBRD Articles and art V(6) of the IDA Articles state that each institution
and its officers shall not interfere in the political affairs of any member; nor shall they be influenced in their decisions by the political character of the member or members concerned. Only economic considerations shall be relevant to their decisions, and these considerations shall be weighed impartially in order to achieve the purposes stated in [their respective Articles of Agreement].
Taken together, these provisions establish that ‘economic’ considerations may be taken into account, but not ‘political’ ones.
B. The Bank’s Evolving Interpretation of Its Mandate
Exactly what constitutes an ‘economic’ or a ‘political’ matter has evolved considerably since these Articles were adopted, in part because of the Bank’s evolving understanding of development. Early interpretations took a narrow view of the Bank’s permissible activities, with the most notorious example of this interpretation being the Bank’s behaviour during the South African loan controversy, where the Bank refused to cease loans to South Africa and Portugal despite recommendations by the General Assembly to impose sanctions on both regimes for their apartheid policies.[29] This interpretation did not entirely prevent ad hoc suspension of loans based on political events, usually construed legally as an intervening event which frustrated performance of the loan agreement.[30] Nevertheless, the general approach was to construe the mandate as prohibiting a broad range of activities. While these are primarily examples of conditionality rather than safeguard policies, they do show the Bank’s then-rejection of responsibility for human rights obligations, consistent with its understanding of its mandate as being focused on economic growth, rather than its current wider focus on human development.[31]
Evolution in the understanding of development economics, particularly in the reconstruction of poverty as ‘capability deprivation’[32] and the increasing attention paid to the relevance of institutions and governance in economic growth[33] meant that this mandate began to widen in the late 1980s and early 1990s. In 1990, an influential opinion by then-General Counsel Ibrahim Shihata on governance paved the way for an expansion of the Bank’s activities away from infrastructure projects and toward a variety of reform projects in the borrower country.[34] Shihata argued that political activities which had economic effects, or which constituted binding obligations under the Charter of the United Nations (such as embargos imposed under Security Council resolutions), could be taken into account, as long as the Bank avoided interfering in partisan politics and did not seek to influence the borrower country’s political character.[35] This allowed for a variety of civil service and legal reforms that could improve the investment climate in the borrower country.[36] A 1998 opinion on the scope of the political prohibition went slightly further, acknowledging that the Bank played an important role in promoting economic, social and cultural rights, but limiting involvement in ‘political’ rights to those of ‘pervasive proportions’, or where freedoms of speech and assembly were necessary to ensure that participation requirements in Bank environmental assessments could be met.[37] While Shihata’s opinions were cautious about the Bank’s role in relation to human rights, they served as the legal basis for a dramatic increase in the scope of the Bank’s functions.[38]
This culminated in initiatives in the late 1990s and early 2000s under Wolfensohn’s presidency to more explicitly integrate human rights into the Bank’s work. A series of workshops were held from 2002 to 2004 on integrating development and human rights, and in 2006, at the request of Bank management, General Counsel Roberto Danino issued a legal opinion on human rights that went several steps further than Shihata’s earlier opinions, recognising human rights as ‘an intrinsic part of the Bank’s mission’.[39] Danino’s opinion removed Shihata’s previous distinction between economic and social rights and civil and political rights, arguing that human rights considerations and international human rights law obligations of either type could be relevant to Bank decisions ‘provided there is economic impact or relevance’ and were done in ‘a non-partisan, non-ideological and neutral manner, and so long as these are related to projects the Bank aims to support’.[40] Human rights could also be an acceptable consideration in gaining an understanding of the context of a project, and if the borrower country requested assistance in fulfilling its obligations.[41] Although the status of this opinion as a formal interpretation of the Bank’s articles is uncertain, given that it was never presented to the Board,[42] subsequent statements by Danino’s successor, Ana Palacio, have appeared to support its approach. [43] The eventual creation of the Nordic Trust Fund and the Bank’s general preponderance of activities in the area of gender, post-conflict, and disability would also seem to indicate a more expansive view of the relevance of human rights to the Bank.