BIC letter to World Bank Board outlines concern that first safeguard pilot project will weaken role of Inspection Panel
8 June 2004
A proposed project in Mexico will be the first to test the World Bank’s new approach to social and environmental safeguards. BIC sends a letter outlining serious concerns.
On Tuesday, June 8, the Board of Directors at the World Bank discussed a proposed project for Mexico called the “Decentralized Infrastructure Reform and Development Project.” This project is the first “safeguard pilot” which will test the new approach to environmental and social protection proposed by Bank Management. However, many civil society organizations are concerned about Management’s proposal to substitute country systems for Bank safeguard policies.
The letter below, sent by BIC to all World Bank Executive Directors, outlines concerns with the Mexico safeguard pilot project, specifically around the possible weakened role of the Inspection Panel. For more information on this project and the World Bank’s new approach to safeguard policies see:
BIC letter to World Bank Executive Directors
7 June 2004
Executive Director
World Bank Group
1818 H Street, NW
Washington, D.C. 20433
Re: Weakening of Inspection Panel
Dear Director:
I am writing to express concern about World Bank management’s proposal to weaken the scope of the Bank’s Inspection Panel in the safeguard pilot project known as the “Mexico: Decentralized Infrastructure Reform and Development Project” (DIRD). The Bank’s Board of Directors is reportedly scheduled to discuss this project tomorrow, Tuesday June 8.
The Mexico project is to serve as the Bank’s first comprehensive environmental and social safeguard pilot. Strengthening borrower country systems in the environmental and social safeguard areas is an objective that we fully share, and Bank efforts in this regard are to be commended.
However, Management’s safeguard pilot proposal contains critical implications that do not appear to be adequately addressed. Management’s proposal to substitute country systems for Bank safeguard policies has raised the concern of many civil society organizations, as expressed in the June 7 letter ‘international standards for international projects’ (endorsed by 186 organizations in 60 countries). I am writing to amplify the Bank Information Center’s concerns with this approach and pilot project:
- Management is proposing to severely limit the scope of the Inspection Panel. According to the DIRD’s project documentation, Management is proposing to limit the Inspection Panel’s review authority to the application of the Bank’s supervision policy and procedures. Management is also seeking to place its decision-making concerning the reliance on country systems beyond panel review. [1] Management’s proposal would unduly restrict the operations—indeed the purpose—of the Inspection Panel and is seeking limits on its own accountability. The proposal challenges internal Bank governance (only the Board can alter the Panel’s mandate).
- Landmark decision with little transparency and civil society engagement. Decisions to alter the application of Bank safeguards and the mandate of the Inspection Panel require high degrees of transparency and stakeholder engagement. Management’s pilot proposal has exhibited neither. There is no documentation whether the safeguard pilot approach was discussed with civil society groups in Mexico. While the Bank released a general safeguards framework paper in October 2002, it contained no information concerning operations of the Inspection Panel. Management stated that it would conduct a dialogue on the 2002 paper with civil society organizations, but no further public materials indicate whether such dialogues in fact took place. Regarding transparency of pilots, the 2002 paper stated that “[i]mportant pilot activities would be flagged in the Monthly Operational Summary….” [2] The Mexico DIRD project was not flagged as such, hindering awareness by external stakeholders. [3] While the Bank will soon be releasing Project Appraisal Documents (PADs) in draft form on a pilot basis, but Management chose not to disclose the draft PAD for this critical safeguards pilot project. For the safeguard pilot, it is unclear how—or whether— the Bank’s information disclosure policy would apply.
- Management has established no objective criteria for its decisions. Management states that in reviewing the relevant national and state policies in Mexico it found a “high degree of analogous treatment between local systems and the Bank [sic] policies and procedures” (PAD, p. 19). However, management does not provide any criteria by which this judgment could be independently verified. Management acknowledges that Mexico's environmental assessment policy neither requires an analysis of alternatives nor public consultations—both central elements of the Bank’s EA policy. Management does not address these gaps through any “supplemental practices and procedures” in the project. What then makes such treatment “analogous”? Furthermore, other critical dimensions of the Bank’s EA policy remain unaddressed. OP 4.01, for example requires impact evaluation of a project’s “area of influence” ( “all its ancillary aspects”). Also, the Bank’s EA policy contains specific disclosure requirements so potentially project-affected groups may make informed decisions about the project. Management provides no information on whether these critical objectives of the Bank’s EA policy are addressed by Mexico’s policies or procedures. Substituting vague “best practice” procedures for the Bank’s policy on involuntary resettlement, as management proposes, hardly appears analogous.
The Bank Information Center recommends that the Board of Directors delays a final decision on this project until (a) critical dimensions of the safeguard pilot approach are clarified, in particular regarding the operations of the Inspection Panel, and (b) an open, transparent process has been undertaken to ensure stakeholders’ views—in particular those of local groups in the project area—have been taken into account. It does not appear logically consistent to approve a landmark pilot project before agreeing on a coherent framework in which that pilot will operate—a framework which ensures that the integrity of the Bank’s safeguard policies and independent Inspection Panel is maintained.
Sincerely,
Bruce Jenkins
Policy Director
cc:
President James Wolfensohn
Vice President James Adams
Vice President David de Ferranti
[1] “As a result, any potential future claims that the project may not be in compliance with Bank policy would be measured by determining whether the Bank is supervising the project so that the local systems, as supplemented by the Manual, are being applied by the Mexican authorities so as to satisfy materially the objectives (but not the letter) of Bank policy and procedures. However, management’s reliance on the local systems, as supplemented, would not be subject to such a review, nor would whether such systems’ application satisfies local laws (that being a Mexican legal judgment).” World Bank, Project Appraisal Document, “Mexico: Decentralized Infrastructure Reform and Development Project, May 6, 2004, pp. 19-20.
[2] World Bank, “Safeguard Policies: Framework for Improving Development Effectiveness—A Discussion Note,” October 7, 2002, p. 17.
[3] The project first appeared in the MOS in October 2002 and continues to appear in this publication to date. What follows are the first and latest entries in the MOS: (1) “MOS October 2002, Mexico, Urban Development, (N) Decentralized Infrastructure Development Program: The objective of the project is to support infrastructure development at state and municipal levels anchored to comprehensive sector or sub-sector strategies fully owned by the respective state or local authorities. Project preparation is under way. Environmental Assessment Category FI. US$ 250.0 (IBRD). Consultants will be required for project preparation. BANOBRAS, Monterrey 206, Col. Roma, Mexico, DF, Mexico, Tel: (525) 564-1138.” (2) “MOS May 2004, Mexico, Urban Development, (R) Decentralized Infrastructure Development Program: The objective of the project is to support infrastructure development at state and municipal levels anchored to comprehensive sector or sub-sector strategies fully owned by the respective state or local authorities. Negotiations were tentatively scheduled for mid-April 2004. Environmental Assessment Category FI. PID: 80149. US$ 125.0 (IBRD). Consultants will be required for implementation. BANOBRAS, Javier Barros Sierra No. 515, Col. Lomas de Sta. Fe, 01219 México, DF, Mexico, Tel: (52-55) 5270-1200, Contact: Lic. Veronica Baranda, Officer of the Subdirection of Project Evaluation.”