IDB Readies 2007 Annual Meeting in Guatemala
22 January 2007
The IDB has announced that it will hold its 48th Annual Meeting in Guatemala City, Guatemala between March 14-20. The official agenda is not yet known, but participants are speculating that the hot issues at the 2007 Annual Meeting will be announcements about the heralded IDB realignment, Camisea, and HIPC debt relief.
Overview
The IDB has announced that it will hold its 48th annual meeting in Guatemala City, Guatemala between March 14-20, preceded by a formal Civil Society meeting in San Jose, Costa Rica in February. Basic information can be found on the IDB Annual Meeting web portal. The official agenda is not yet known, but participants are expecting that the hot issues at the 2007 Annual Meeting to be announcements about the heralded IDB realignment, Camisea, and HIPC debt relief. Surprising to some is the scaled back schedule of events that currently bills only four public seminars on social inclusion, youth, two private sector events related to the IDB’s new initiative, Building Opportunities for the Majority.
Key Moment for the IDB
The 2007 Annual Meeting happens at a moment of change for the bank. A major organizational realignment was announced on Dec. 15 of last year. One of the principal motivations behind the realignment are growing questions about IDB relevance to Latin America. In the past two years, an increasing number of new governments have been elected on platforms that directly reject a large part of policy framework that the IDB has pushed (privatization, free trade, top-down infrastructural integration, fast track hydrocarbon development). Other governments benefiting from the recent windfall of oil, gas and mineral prices are taking fewer loans from the IDB. Consequently, lending to the region has been flat. Facing competition from below in the form of aggressive lending by subregional banks with many fewer social or environmental safeguards, the IDB is challenged to maintain its intermediary market position between the World Bank and a growing field of new sources of development finance for Latin American borrowers. The realignment is intended to make the IDB more agile and responsive to the competition. A great concern is that IDB safeguards, weak as they are, will be further marginalized. BIC has produced an extensive analysis of the proposed IDB reorganization.
Guatemala and the IDB
The IDB’s choice of Guatemala to host such a high profile event is surprising to some. Guatemala is not the ideal venue to showcase the IDB’s track record as a development bank. In Guatemala, close to $3 billion in IDB lending has been unable to reorient a country with one of the region’s worst development records, where two thirds of the population live in poverty, the vast majority of indigenous people are excluded from society’s benefits and a state presides over one of Latin America’s lowest levels of public investment.
Guatemala also has the dubious honor of being one of the worst performing countries in the IDB’s lending portfolio. A recent bank evaluation of a decade of IDB lending to the country found patterns of failed or problem loans at a frequency unseen in most of Latin American countries. The Country Program Evaluation of Guatemala, (1993-2003) found that the country’s portfolio may have been the worst supervised in Latin America. One of every three audits was simply not done between 1998-2002, and the mounting reservations noted in other audits were not addressed in a timely manner. The report underscored the lack of internal controls, lax country supervision, and an IDB auditing system that had no teeth. The Bank’s evaluation itself was necessary to force the Bank to quickly take remedial steps. The departure of the former country representative from employment at the IDB, despite Bank claims to the contrary, strongly suggests a linkage to this dismal performance. For further details, see these articles:
IDB President Luís Alberto Moreno visited Guatemala in November to promote the transparent and accountable administration of Central American infrastructure mega-projects within the framework of Plan Puebla Panamá. For more information, see the IDB press release "Mega infrastructure projects for Mesoamerica presented in Guatemala." Some of the initiatives being promoted by the IDB in the Mesoamerican region include:
- Consolidation of the Mesamerican regional power transmission grid and Colombian President Uribe’s goals of linking Meso- and South American power systems by opening the Darien.
- A $7 billion Central American oil refinery
- A $5.5 billion expansion of the Panamá Canal, recently approved by Panamanian voters in a referendum.
- Alternative transoceanic land canals are also actively seeking investors (the Great Inter-Oceanic Canal of Nicaragua and the Transoceanic Corridor on Mexico across the Tehuantepec Isthmus, linking the port of Coatzacoalcos on the Gulf of Mexico with the port of Salina Cruz on the Pacific Coast).
- Liquefied natural gas terminals or a gas pipeline from Colombia.
- Hydropower mega-plants such as El Diquís in Costa Rica, the Chaparral and Cimarrón dams in El Salvador, a dam system in the Sula Valley in Honduras and the Copalar dam in Nicaragua.
- Transportation mega-projects, such as the Northern Transnational Highway in El Salvador, the Metropolitan Beltway in Guatemala and the highway system in Panama.
Moreno announced that the IDB had set a goal of approving $12 billion in financing over the next five years for critical infrastructure projects in Latin America and the Caribbean. To this end, it created InfraFund, a $20-million fund to support identification, development and preparation of bankable, sustainable infrastructure projects proposed by governments, semipublic entities or private enterprises. InfraFund resources may be used to finance specialized consulting services, studies and innovative mechanisms to promote private sector participation in infrastructure financing.
Infrastructure vs. a Social Agenda
Social mega-projects, long neglected by Plan Puebla Panama and the region’s governments, were absent from the agenda. As illustrated in the graph below from a 2004 analysis of the PPP portfolio, the lion’s share of both approved and proposed PPP finance is clearly directed towards four of the nine initiatives with
McElhinny and Nickinson, 2004
Plan Puebla Panama Projected Investments, current to 2004 ($US bn)
in PPP (transport, energy, trade facilitation, and telecommunications). These four represent the private sector-oriented agenda. The other four initiatives (sustainable and human development, tourism, disaster mitigation, plus the special smaller program on information, communication and participation) were inaugurated at a much lower profile and represent PPP’s social agenda. Funding commitments disproportionately favor the private sector priorities.
In fact, of an estimated $15 billion in approved PPP investments, 77% is directed toward infrastructure.[1] Also, as illustrated in the Figure 1, total PPP funding wholeheartedly favors the “big four” - transport, energy, trade facilitation and telecommunications initiatives ($19.95 billion, 85%) versus the social initiative, or “the human face of PPP” ($3.35 billion, 15%).
One of the negatives attributed to PPP, reiterated in a 2003 media assessment by the Fleishman-Hillard public relations firm, was that the public perceived PPP as having little, if anything, to offer in terms of social development. PPP was viewed (accurately) as a euphemism for large-scale infrastructure that would have little benefit to the poor, and would likely have significant negative environmental impacts. This is in fact the reality of PPP, although dams, highways and ports were not the types of priority investments that many had in mind after Hurricane Mitch.
IDB Civil Society Meeting in Costa Rica
The Annual Meetings will be preceded by a day long meeting between representatives of civil society and the IDB to be convened in San José, Costa Rica. Annually, the IDB invites civil society to discuss issues of its choosing. The 2006 meeting was held in Campinas, Brasil and like meetings before it focused on ongoing policy debates, progress on their implementation, concerns about high profile, high risk projects and the lack of transparency in how key decisions are made at the Bank. Official records of past Civil Society Consultations can be found on the IDB website.
It is not clear how much importance civil society will be devoting to the San José meeting given that one of the principal demands at the 2006 Annual Meeting in Campinas was to shift the date of future civil society meetings to October to avoid holding it just a month before a second similar meeting with civil society that is part of the Annual Meetings. The request was refused, even though some in the Bank supported the proposal. This comes after a series of recent complaints by civil society organizations that have been subjected to harassment and censorship in a prior Annual Meeting in Lima, Perú. The IDB denied claims of authority for these abuses and laid the blame on the Peruvian hosts. One can only wonder if Guatemalan security forces will be any more tolerant of the civil liberties exercised by participants at this year’s Annual Meeting.
The tentative agenda for the 2007 IDB – civil society meeting in Costa Rica includes report outs by the Bank on recently approved policy reforms. A report on the recently approved Environment Policy will be counterbalanced by three infrastructure specialists from the PRI, PPP & IIRSA – a reflection of the ratio often found on most project design committees. Indigenous People’s Policy and institutional integrity are addressed in the second panel. A report by the Office of Institutional Integrity on transparency with respect to corruption and recent Bank measures to enforce ethics and protect whistle blowers is also planned. After a third panel of three case studies of successful Bank-civil society alliances, IDB President, Luis Alberto Moreno, will reportedly attend the meeting for just over an hour to answer participant questions directly.
Among other topics, the implications of the Bank’s realignment will certainly register as one of the most central questions for all of the IDB staff. Moreno was put on alert in a letter send by a wide cross-section of environmental groups regarding a growing displeasure in light of the treatment that environmental issues are receiving in the realignment. Proposals for greater immediate process transparency will be reiterated in San José.
Indigenous People and the Annual Meeting
It is being reported that Rigoberta Menchú Tum, a Guatemalan Maya-Quiché leader and winner of the the Nobel Prize, has been invited to address the closing session of the IDB Annual Meeting. In contrast, within the IDB, the Indigenous Peoples Unit has been excluded from the planning process for the full day session on Social Inclusion. The Guatemalan backdrop for the Annual Meeting highlights the failure of the IDB's portfolio to address ongoing social exclusion in the region.
Perhaps coincidentally, the III Cumbre Continental de Pueblos y Nacionalidades Indígenas de Abya Yala will also be convened in Guatemala just one week after the IDB Annual Meeting (March 26-30). While the Indigenous Summit was not intended as a response to the IDB’s attempt to speak about social inclusion in one of Latin America’s most anti-indigenous contexts, the proximity of the two events must not have gone unnoticed by the event’s respective organizers. In the run-up to the March meetings, the Bank’s leaders might reflect on the conclusions of the prior summit in Quito:
National governments, following the guidelines emanating from the IMF, WB and IDB, are devastating us for the payment of the external debt and are disregarding our collective rights to our land, changing legislation to allow privatization, corporative alliances, and individual appropriation.
We denounce that national governments in the Americas are increasingly using violent repression, and this is expressed in: the violation of our human rights and our rights as Peoples; the criminalization of our actions for the defense of life and religious ceremonies, paramilitarization, removal from our lands, military occupation, the corruption of leaders and local authorities; promotion of projects to "compensate" the damage done by transnational corporations; the so-called equitable benefit-sharing; and forced migration. They promote division, confrontation and armed conflict among the communities to impose their excluding, racist, and oppressive policies.
We firmly oppose the development of plans such us the South American Regional Plan for Infrastructure Integration (IIRSA); Plan Puebla Panama; Plan Patriota; Plan Colombia; Plan Dignidad; Plan Andino, and the establishment of military bases. We also oppose the adoption of the FTAA and FTAs, which are fostered by the WTO for the benefit of the looter countries of the world. They only intend to create infrastructures to facilitate the circulation of their goods, to exploit natural resources on our lands and territories, and to protect transnational corporations. We consider them invasion plans for plundering, destruction and death.[2]
[1] See McElhinny and Nickinson (2005) Plan Puebla Panama: Recipe for Development or Disaster (pdf, 1296 KB). Of the official PPP portfolio, the infrastructure proportion encompassed 97% in February 2004, according to BCIE Chief Economist Marvin Taylor Dormond (“Inversiones Clave en Infraestructura para Aprovechar el CAFTA")
[2] Declaration of the II Continental Summit of the Indigenous Peoples and Nationalities of Abya Yala, July 21-25, 2004, Quito, Ecuador