IF-Eye #9
10 November 2006
This issue of the IF-Eye newsletter discusses the World Bank's middle income country strategy, highlights civil society activities around the IFIs, and provides recent updates on the institutions.
Issue 9: November 10, 2006
A publication of the Bank Information Center
In this issue:
- IFI Updates
- Civil Society Highlights
- Spotlight: WSJ article chronicles Wolfowitz’s new push into Iraq
- Spotlight: Green light for the World Bank’s Middle Income Country (MIC) strategy
- Announcements and Resources
- New at BIC: New Latin America Program Manager Vince McElhinney; Now hiring Asia Program Manager; New Bangkok office
World Bank: World Bank suspends German firm over corruption. November 6, 2006. The Bank declared Lahmeyer International ineligible to receive World Bank contracts due to corrupt bidding practices in Lesotho Highlands Water Project.
World Bank: Governance and Anticorruption Strategy Work Plan debated by Executive Directors. October 30, 2006. The plan identifies the next steps on the public consultation process and proposes an independent review of the Department of Institutional Integrity.
World Bank: World Bank announces appointment of new Director in the Sustainable Development Network. October 27, 2006. Kristalina Georgieva will serve as Director for Strategy and Operations in the Sustainable Development Vice-Presidency. The position was established in June by World Bank President Paul Wolfowitz following the merger of the Environmentally and Socially Sustainable Development and the Infrastructure Networks. Georgieva is currently the World Bank’s Country Director for Russia.
EBRD: Russian authorities' complaints jeopardize Sakhalin II project. October 27, 2006. The Sakhalin II project has come under fierce scrutiny by the Russian authorities in recent days, and may be suspended in certain sections due to allegations of illegal deforestation, the dumping of toxic waste, and soil erosion.
World Bank: World Bank chief warns China about lending to Africa. October 27, 2006. As China's relationship with many of Africa's resource-rich countries grows at an accelerated pace, Wolfowitz says he is concerned that many Chinese banks are not respecting basic human rights and environmental standards.
World Bank: US senators protest World Bank's use of "Doing Business" to attack labor standards. October 27, 2006. A letter sent to World Bank president Paul Wolfowitz by six members of the United States Senate objects to the Bank's Doing Business publication because it "appears to discourage countries from upholding established standards of worker rights as set by the ILO." Read more:
World Bank: Board to vote on controversial Botnia Paper Mill. November 16, 2006. The King of Spain has also agreed to mediate the dispute between Uruguay and Argentina. Read more on the CEDHA website:
Extractive Industries Transparency Initiative: Bolder steps needed on EI revenue and contract transparency. October 19, 2006. More than 100 civil society activists from over 50 countries gathered in Oslo, Norway, called for stronger requirements on disclosure of revenues and contracts in the oil, mining and gas sectors.
Jubilee USA: Jubilee USA network appeals directly to Wolfowitz to cancel Liberian debt. October 16, 2006. Jubilee USA called on the World Bank, the IMF and Liberia’s other creditors to take real steps towards justice for Liberia by moving to immediately cancel Liberia’s debt so that the money can be used for desperately needed infrastructure and support, without which this fragile new democracy cannot survive.
Global Transparency Initiative: GTI Publishes FOI Testing Report on IFIs. October 12, 2006. This report deftly monitors and analyses the practical and real-world application of the access to information provisions and participatory decision-making processes at the international financial institutions (IFIs).
Greg Hitt’s October 30 Wall Street Journal article "In World Bank Role, Wolfowitz Keeps Up Battle to Reshape Iraq" details World Bank President Paul Wolfowitz's continued drive to chart Iraq's future.
Wolfowitz is drawing strong criticism for directing the World Bank’s increased engagement with Iraq, as it violates standard Bank practice of waiting for sustained stability in conflict countries before engaging in reconstruction. In general, the institution makes it a point not to reengage with countries until heavy fighting has subsided or is at least contained. For example, the World Bank reinitiated operations in East Timor, Liberia and Sierra Leone only after order had been restored by peacekeepers.
Wolfowitz contends that the World Bank would be a more effective vehicle for reconstruction than the U.S. because it “is viewed as a neutral power, not an occupying force.”
The perceived influence of US politics in the Bank’s Iraq strategy is also concerning for many. “The tight association between Wolfowitz and the Bush administration is quite problematic,” BIC Executive Director Manish Bapna tells Hitt.
Read the article (subscription required): In World Bank Role, Wolfowitz Keeps Up Battle to Reshape Iraq, by Greg Hitt, October 30, 2006 (Wall Street Journal website) /en/Article.2995.aspx
More facts on Bank lending to Iraq:
- As of August 2006, the Bank’s Iraq Trust Fund has financed 10 emergency projects in the country worth about $385 million. Most recently, $135 million was approved for emergency road rehabilitation.
- The World Bank Iraq Trust Fund provides a framework for the institution’s provision of up to $1billion in IDA and IBRD resources. Find out more on the World Bank Iraq webpage: www.worldbank.org/iraq
Alarmed by a decline in lending to middle-income countries (MICs) in the past decade, the World Bank has been adapting its operations and product lines to make it a more attractive lender with some success: International Bank for Reconstruction and Development (IBRD) investment lending has increased by nearly 60% since 2003. However, Bank management is pushing for further steps that would enable the Bank to better compete with commercial lenders in emerging markets.
At its 2006 annual meeting in Singapore, the Bank presented a paper on “Strengthening the World Bank’s Engagement with IBRD Partner Countries” and received a green light to “tune-up” the IBRD’s business model. Approved initiatives include:
- Unbundling the Bank’s typical integrated loan package (loans backed by analytical work and tied to policy prescriptions) to allow provision of policy and other advisory services on a fee basis, further opening the way for the Bank to expand its international consulting business.
- Further streamlining of internal Bank procedures to reduce the cost of doing business with the Bank.
- Simplification of loan pricing so borrowers can more easily compare the price of Bank loan products to those of other lenders. Management has also proposed waving certain fees to lower its prices.
- Expansion of IBRD lending to sub-sovereign entities without sovereign guarantees (a significant departure for the Bank which has always required governments to secure its public-sector loans). The IBRD would run such operations through the IFC’s balance sheets (IFC does not require sovereign guarantees).
- Expansion of financing vehicles to help MICs that face external shocks (e.g., natural catastrophes, recessions, adverse commodity price swings, etc.). The Bank is looking to expand its pre-approved loan business (known as Deferred Draw Down Options) as well as the creation of a facility to provide catastrophe insurance to member countries.
Bank management’s call to reduce costs through greater reliance on “country systems” – running Bank operations according to the borrower’s regulations and standards rather than the Bank’s own operational policies and procedures – was less than enthusiastically endorsed. At the behest of the United States – which has expressed strong reservations of the country systems approach, especially in the areas of procurement – the Development Committee noted that country systems, while an important element in scaling up development effectiveness, should proceed only where “mutually agreed and verifiable standards are in place,” constraining the Bank’s ability to move more quickly toward reliance on country systems (the Bank’s current country systems pilot program is bogged down on verifying the standards to be used in the four pilot cases).
Going forward, Bank management will develop an action plan to address “internal constraints” on moving toward a more competitive footing with commercial lenders and will present a detailed overview and updates of the MIC program to the Bank’s Executive Directors.
Resources:
BIC welcomes new Latin America Program Manager Vince McElhinny. Vince will lead BIC’s outreach activities and project and policy monitoring in Latin America. In particular, he will direct our Building Informed Civic Engagement for Conservation in the Andes-Amazon (BICECA) project, helping civil society organizations analyze and influence economic integration projects and policies in the Andes-Amazon. Contact Vince at
Now Hiring Asia Program Manager! BIC is also seeking an Admin/Finance Assistant (based in Delhi) and Policy Program Intern (based in Washington). Read more on BIC’s Jobs webpage
BIC opens Mekong/SE Asia Regional Office in Bangkok! The office will strengthen and build partnerships with local civil society organizations in Vietnam, Cambodia, Thailand, Laos, Burma, China, Indonesia and the Philippines. For more information please contact: Jelson Garcia, Regional Coordinator, Mekong/SE Asia. Email: . Telefax: +66 2 2758815; 02-2765420 local 5801