Civil Society Action is Critical for Establishing Strong Safeguard Policies at the Inter-American Development Bank
26 October 2005
Look at the latest versions of the IDB's environmental and indigenous peoples' policies, which have been finally made publicly available. Read more to learn about the current stance within the IDB that is stalling the further strengthening and approval of these important tools.
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The Context
The Inter-American Development Bank (IDB) is suffering a severe legitimacy and credibility crisis, as a result of its inability to adopt clear and strict policies to ensure that its activities contribute to sustainable development and do not result in environmental and social harm. During the latter part of Enrique Iglesias' presidency, the IDB decided to rewrite its outdated, 452-word Environmental Policy, that has not been revised since its creation in 1979. At the same time, under pressure from civil society and indigenous peoples' organizations across the Americas, the Bank began developing-for the first time-an Indigenous Peoples Policy. The IDB also decided to rewrite its Independent Inspection Mechanism (IIM) the accountability mechanism that allows people negatively affected by IDB projects to seek formal investigations from the Bank.
Since the last World Social Forum, six consultations were held on the Environmental Policy. Then-President Iglesias appointed a Blue Ribbon Panel of prominent environmental advisors to make recommendations on the policy, and made a variety of commitments in response to the panel's report. Under pressure from civil society, the IDB also held three public consultations for the IIM (now dubbed the Consultation and Compliance Review Mechanism-CCRM), one in Washington DC, and two others in Mexico and Brazil. After moderately successful consultation periods on both the Environmental Policy and the IIM, civil society was not provided with the final draft versions submitted to the IDB's Policy Committee, despite promises from the Board and Management. This lack of transparency ultimately undermined the entire consultation process, as it was impossible for civil society to know if their comments and suggestions were included in the new drafts.(See footnote at the bottom of this brief to learn about how we recently obtained the latest versions of these policies)
Meanwhile, the process regarding the Indigenous Peoples Policy has been wholly inadequate. The actual draft of the policy was released for only one month for comments, and only one public consultation was held. Even worse, this consultation was by invitation only, and some key actors for indigenous rights were not allowed to attend.
Nonetheless, President Iglesias publicly committed to making the IDB an "environmental bank" with policies "as good or better" than the World Bank's. This gave civil society the hope that the three policies would be strong and mutually-enforcing. Some among IDB staff had expected that President Iglesias, who departed from the IDB on September 30, 2005 after 17 years of heading the bank, would use his accumulated political capital to push the policies through the IDB's Board before his departure, in order to claim them as part of his "legacy." However, this did not occur, and it is now up to the new IDB president, Luis Alberto Moreno, to champion them. In his first days as President of the IDB, Moreno has not yet taken a public stand on these important policies nor demonstrated his level of commitment.
Executive power vacuum
In the executive power vacuum during the presidential transition at the IDB, the status of these policies remains unclear, at best. Borrowing-country Executive Directors on the IDB Board appear to be exercising powerful opposition to any strong social or environmental safeguard policies. The Indigenous Peoples policy was presented to the Policy Committee of the Board in late September of 2005. According to insider reports, it was summarily eviscerated-largely because some board members thought that it would inhibit Bank operations and interfere with borrowing country sovereignty. (Bank officials have continually stated that both the environmental and the Indigenous Peoples policy might keep the IDB from being "competitive" with regional development banks such as the Andean Finance Corporation (CAF), which lack social or environmental safeguards and policies to guide their lending.) Sources inside the Bank say that borrowing-country Executive Directors, spoke vehemently against the policy, with one actually stating that 'indigenous people need to assimilate'. Apparently, the only Directors that defended the policy were those from Canada and Germany.
It is expected that the Indigenous Peoples policy, which was grossly inadequate to begin with, will now be seriously watered down-if it is passed at all. Fearing similar treatment, the Environmental Division of the IDB has refrained from presenting the latest environmental policy draft to the Policy Committee, and staff in the department think that it could now take up to a year for it to be approved by the Board. Likewise, the latest draft of the CCRM (Inspection Mechanism) has also not been sent to committee and is still being revised by the IDB's legal department. There is no reason to expect that it will receive better treatment than the other policies.
Moving Forward: What can we do?
There appears to be very little political will among IDB executive directors to learn from the mistakes of projects like Camisea and Cana Brava and to promote the strong environmental and social safeguards it would take to avoid these problem projects in the future. Instead, forward-thinking policies have been subjected to flawed consultation processes and then have been further watered-down to satisfy the borrowing country Board members. And now the Indigenous Peoples policy has been rejected out of hand by the Policy Committee of the Board, with the possibility of the same treatment being given to the other policies.
Unfortunately, this backtracking at the IDB coincides with the Bank's promotion of large scale, high-risk infrastructure projects and integration initiatives such as IIRSA (the 400-project Initiative for the Regional Integration of South American Infrastructure) and Plan Puebla Panamá, (a similar plan in Central America). Given this portfolio, it is critical that the IDB implement strong social, environmental and indigenous policies and to make readily available a transparent and fair recourse accountability mechanism for those who may experience negative impacts from these mega-projects. Although these policies do not change the overall structure and mandate of the IDB, they do provide civil society with crucial tools to leverage the Bank towards compliance with international norms and hold it accountable for mismanaged, poorly conceived and badly implemented development projects. As the head of the IDB's Blue Ribbon Panel for the environment, former U.S. Secretary of the Interior, Bruce Babbitt, stated, "… new infrastructure alone is not enough to better peoples' lives-strong policies and safeguards are needed to ensure that development is sustainable and positive." It appears that civil society's campaigns to influence these new development and integration initiatives may need to begin with the IDB's current stalled policies.
All the three policies under threat are equally important for ensuring an equitable and sustainable future in Latin America. A strong environmental policy helps to protect the environment and the interests of indigenous peoples, while a strong indigenous policy supports democracy, human rights and environmental protection across the region. These policies, however, are meaningless unless there is a robust accountability mechanism that allows citizens formal recourse when they are violated or ignored by the Bank. Moreover, with strong policies at the IDB, it might be possible to leverage a 'virtuous cycle' by which other regional development banks such as The Andean Finance Corporation (CAF), The Fund for the Development of the River Plata Basin (FONPLATA), The Brazilian National Development Bank (BNDES), and the Central American Bank for Economic Integration (BCIE) could be encouraged to strengthen or develop their own environmental and social safeguards.
In the face of these challenging circumstances it is up to environmental, indigenous and human rights advocates to explore new strategies- both in Washington and Latin America-to pressure the IDB to support strong and fair policies.
Civil society action is critical
- Latin American Executive Directors and governments need to hear the concerns of Southern civil society directly. Coordinated national efforts are needed to lobby the finance ministers of each country to tell their respective Executive Directors at the IDB to vote in favor of strong environmental and social policies and a transparent and fair recourse mechanism. We urge all organizations and communities to contact their governments, especially their finance ministers, asking them to send a clear message to the board of directors that strong and effective policies and safeguards are needed to safeguard the rights of its citizenry. If finance ministries are difficult to approach, indirect pressure through environmental ministries can also be effective.
- The IDB's new president, Luis Moreno, needs to hear from those concerned about the future of development in Latin America. Write a letter to the IDB president demanding that the Bank pass and enforce policies that reflect the input of civil society and indigenous groups and that protect people from the negative impacts of the IDB's projects.
- IDB staff need to hear civil society concerns. In those countries where the IDB continues to consult with civil society organizations, attend the consultations in order to raise the issues outlined here and demand strong policies.
- Civil society groups will have an opportunity to coordinate further at the poli-centric gathering of the World Social Forum in Caracas, Venezuela in January, 2006. At the Forum, we will have an opportunity to review the outcomes of these new strategies and coordinate further actions to pressure the Bank.
Unless civil society and indigenous organizations in Latin America put pressure on these ministers and create political will for strong safeguard and accountability policies, high risk initiatives like IIRSA and Plan Puebla Panamá are likely to severely jeopardize the environment, livelihoods, and human rights of communities throughout the region.
We strongly encourage all civil society and indigenous groups across the region and in donor countries to focus their attention on the IDB and its policies. Immediate coordinated and determined action is needed, or it may be years before adequate environmental and indigenous policies and an effective recourse mechanism are passed by the Bank. Without strong policies, the negative impacts of IDB involvement in high risk projects and the IIRSA and Plan Pueblo Panamá integration initiatives will be multiplied as projects continue to be funded without proper socio-environmental oversight.
Footnote: Eventually, in late October, 2005, the IDB Executive Director for Argentina provided CSOs with the draft copies of the Environmental Policy and the Indigenous Policy.
Resources
Read the latest versions of the Indigenous Peoples' policy and the Environmental Policy here. The CCRM is still being rewritten by the legal department of the IDB and is not publicly available.