Special spring meetings edition A CO-PRODUCTION OF THE BRETTON WOODS PROJECT WITH AFRODAD, BANK INFORMATION CENTER, CHOIKE AND EURODAD

the World Bank is pushing ahead World Bank climate funds: with “complete disregard” for the principles of partnership and mutu - al ownership of the Paris Dec- “a huge leap backwards” laration on Aid Effectiveness (see page 6). The Bank's proposed Adaptation The proposed climate investment funds to be administered by the World Bank are under Pilot Fund is seen by many develop - ing countries as a serious threat to fire for undemocratic governance and undermining the UN climate convention, UNFCCC. the new Adaptation Fund agreed at Meanwhile World Bank support for coal-fired power generation is increasing. Bali whose board would have a majority of developing country R O

The Bank’s initial portfolio would B members and designated represen - I N H E I

consist of three funds. G tation from least developed coun - H W A

The Clean Technology Fund will Y tries and small island states. It - B U R

assist with transformation to low Y would meet in Bonn, the seat of the / T H

carbon economies, mitigation of O UNFCCC secretariat. The World R O G O

green house gas emissions, and O Bank would only be minimally D international cooperation on climate involved in its management. By change. Its target size is $5-10 billion. comparison Müller and Winkler The Forest Investment Fund will assert the Bank’s fund is a “huge “provide financial incentives to leap backwards”. reduce emissions from deforestation A letter to the UK secretary of and degradation. It would support state for international development, countries participating in the Forest Douglas Alexander, from 22 UK and Carbon Partnership Facility (see international NGOs reiterated these page 2). Its target size is $1 billion. concerns. It argued that the sugges - The Adaptation Pilot Fund will tion to offer concessional loans 60 “pilot ways to mainstream climate instead of grants for adaptation risk and resilience into core devel - financing is “inappropriate”, given opment planning”. It will also influ - that the impact of climate change on M

A ence the design of the Adaptation developing countries was “largely

R Fund recently agreed at UNFCCC, created by rich countries”. C

H and initially focus on five to ten low- Despite high-level UK support, a recent report on DFID and the

/ income or climate-vulnerable coun -

A tries. It also seeks to raise $1 billion. World Bank by the UK parliament’s

P The Clean Technology Fund was International Development Com- R

I publicly proposed by finance minis - mittee (see page 6) concludes that L ters of the US, UK and Japan in a “we are sceptical that creating a new 2

0 joint statement published in the trust fund in addition to the dozen 0 or so that already exist within the 8 Financial Times on 7 February. They made “major commitments” to the Bank for such work is the best way various funds and urge other gov - forward for this money.” It recom - ernments to do the same. The US mends “that DFID conduct an audit has pledged $2 billion over three of the current bilateral and multilat - years and the UK will channel its eral funds available for international $1.6 billion Environmental Trans- in the governance structure” remain in Japan, South African environ ment climate change work ... before final formation Fund into the funds. unanswered. The decision making minister Marthinus Schalkwyk decisions are taken.” Japan will contribute $10 billion process would be made by consen - pointed out that it was only in the David Wheeler of the Washington- though it is not clear how this will sus, as on the Bank’s board. past few weeks that developing based Center for Global Develop- be channelled through the Bank. So The Bank would host a secretariat nations have even been consulted. ment asks “does anyone really far no other donors have pledged for the funds, collaborate on the He said “the World Bank should believe that donor-country taxpay - support. selection of staff and management, keep its distance from global climate ers will continue supporting the The Bank’s January Consultation and serve as a trustee. A minimum talks [and] shouldn’t become a play - Bank Group if it takes billions for the draft on climate investment funds states contribution for trust fund secretari - er in the negotiations because that Clean Technology Fund with one that each investment fund would at members, the level of which is will load the dice against develop - hand and invests billions in coal- have “an independent governance still “to be decided”, will be set, rais - ing countries”. fired monsters with the other?” He structure comprised of donors to ing serious concerns that smaller In a report One step forward, two undermines Bank claims that it is that particular fund, which has ulti - countries may be excluded from the steps back? Benito Müller, of the providing value-added by support - mate control over that fund”. governance of the funds. Oxford Institute for Energy Studies, ing supercritical coal-combustion Questions raised in the draft regard - At a mid-March meeting of G20 and Harald Winkler of the Uni- power plants (see Update 59), puts ing the “voice of recipient countries energy and environment ministers versity of Cape Town point out that continued on page 3

Camisea: a lost opportunity? Bank both player and referee World Bank and procurement: IMF governance: fresh paint, in road to Accra Development tool or TNC sop? rotting foundations ––comment, page 3 ––page 6 ––page 9 ––page 11 BRETTON WOODS UPDATE NUMBER 60 – MARCH/APRIL 2008

November 2007, IR notes that the Guebuza has declared not only that Leaky logic: dams resettlement of villagers on the the 1,350 megawatt dam “will not Nakai Plateau and the implementa - put the environment in any danger,” tion of livelihood restoration pro - but also that it will help forestall in three countries grammes are critically behind sched - flooding. His government continues ule. In addition, “downstream the to seek financing for the project By Soren Ambrose, Bank Information Center $16 million budget and proposed which will supply energy mostly to and Lucy Baker, Bretton Woods Project compensation and mitigation meas - South Africa rather than the 95 per ures are inadequate to deal with the cent of Mozambique’s population Recent reports have raised new largest lake. A new report published scale and severity of NT2’s impacts without electricity. Though China is questions about the impacts of in Wetlands Ecology and Management on communities”. A proposed bio - expected to provide the bulk of the World Bank-funded dams in finds that smaller dams near the mass clearance programme has been financing, the World Bank is antici - Uganda and Lao PDR , while in Bujagali site have used far more cautiously welcomed, though it will pating a request for partial funding – Mozambique the Bank will likely be water than expected and caused the likely be insufficient to solve water as discussed in Mozambique’s letter asked to fund a controversial proj - lake’s level to decrease by at least quality problems. At end February of intent to the IMF in January – or ect spearheaded by China. two metres over a six-year period. the Bank admitted to some of these at least to certify that environmen - The 250 megawatt Bujagali dam This has dried papyrus wetlands problems in an interim report and tal standards are being upheld. (see Update 59, 56) is the subject of adjacent to the lake which are key to added new requirements for the Advocacy groups like the Mozam - two investigations – one by the the area’s ecology and devastated its government and the NT2 power bican NGO Justiça Ambiental warn World Bank Inspection Panel and stock of tilapia fish, a main source of company to comply with. IR argues that Mphanda Nkuwa would nulli - the other by the African food and commercial income for that despite this and numerous fy years of work to restore the frag - Development Bank’s counterpart – lake communities. monitoring missions, the Bank has ile Zambezi delta region, which has following claims by the Ugandan In Lao PDR, implementation of not taken strong enough stances to been devastated by the even larger NGO National Association of the Bank-supported Nam Theun 2 correct critical problems. Cahora Bassa dam. Professional Environmentalists. dam (see Update 56) has reached a In light of the increased flooding Hydro electric dams pose a threat to Lake According to the World Bank, critical juncture. The recent Nam in the Zambezi River Valley in Victoria Theun 2 trip report and project update Mozambique, the location of the “financial closure” for Bujagali was ◊ www.sciencedaily.com/releases/ long-planned Mphanda Nkuwa achieved in December 2007 though by NGO International Rivers (IR) 2008/01/080129125342.htm construction had begun in August. states that the reservoir will be filled dam, the government is now recom - The Bank is lending $130 million in just a few months, yet social and mending that 100,000 of the evac - NT2 trip report and project update from the IFC, and $115 million each environmental programmes contin - uees who were forced out of the val - ◊ internationalrivers.org/node/2516 from IDA and MIGA in risk guaran - ue to lag behind. ley in January and February re- Article on Mphanda Nkuwa locate permanently to the areas tees. Having met with local villagers ◊ allafrica.com/stories/ A key concern about the dam is and reviewed project documents where they have been resettled. 200802080924.html its impact on Lake Victoria, Africa’s during a visit to Lao PDR in Mozambican president Armando

have highlighted the risk of flood - on a no voting rights basis; Forest carbon facility: ing the market and driving down • Oversight for safeguard applica - the carbon price, and the inadequa - tion is entrusted to the secretariat and cy of indigenous peoples’ participa - there is no allowance for a grievance more harm than good? tion in the design and governance of or redress mechanism for indigenous the facility. peoples; As details emerge of the World addressing forest dwellers’ rights. According to a report by NGO • There is no commitment to uphold Bank’s new facility to pay countries The purpose of the readiness fund Rainforest Foundation, “inclusion of human rights and the charter does not for preventing deforestation and is to provide financial support to forest-based carbon credits in any - hold the Bank to meeting standards in degradation, concerns about its countries to prepare them to begin thing like the existing size of carbon the UN Declaration on the Rights of operations and governance mount. trading avoided carbon emissions. markets might, at best, produce too Indigenous Peoples; and A draft ‘information memoran - Countries would be supported to little too late and, at worst, do more dum’ was circulated end 2007 on the establish a baseline (past emissions harm than good by depressing the • Plans to allow low-impact logging Forest Carbon Partnership Facility levels caused by deforestation and price of carbon below a level at and plantation development in the (FCPF) which is to assist selected degradation), create a strategy for which real emissions reductions emission reduction programmes will countries to find the most cost effec - REDD at a national level, and then projects were financially viable”. mean business as usual. tive way to reduce emissions from design and create a monitoring sys - Using carbon trading to prevent Planned retroactive consultations deforestation and degradation tem for the strategy. deforestation on any scale will with indigenous peoples on the (REDD) and promote carbon trad - The carbon fund is what would require that a number of very chal - draft FCPF charter were to take ing-based incentives for those reduc - actually pay for the emissions reduc - lenging preconditions be achieved, place end February in Nepal, and tions (see Update 57). The memo out - tions of the five pilot countries who including that rich countries agree in early March in Mexico and lines operating arrangements for the are considered ‘ready’. The fund’s to deep emissions reduction com - Burundi. funds that make up the FCPF, as secretariat would assess the carbon mitments. Rainforest Foundation FCPF draft information memorandum well as the applicability of Bank impact of various policies including believes that political energy should ◊ ifiwatchnet.org/?q=en/node/7309 safeguards and operational policies, general economic policies, forest be focused on ensuring that these and includes a draft charter. policies, forest management and conditions are achieved, “rather Carbon Sunk There will be two funding mecha - rural development, and pay coun - than becoming overly absorbed in ◊ www.rainforestfoundationuk.org/ nisms: a $100 million ‘readiness tries accordingly. Despite having no the probably only marginally effec - files/Carbon%20Sunk%20Report.pdf fund’ and a $200 million ‘carbon evidence yet of the fund’s effective - tive issue of avoided deforestation FCPF: Facilitating the weakening of fund’. Contributions to date include: ness, the programme is to be scaled- credit trading”. indigenous peoples’ rights Germany $57 million; UK $30 mil - up to the newly-announced ‘Forest On the FCPF’s impact on indige - ◊ www.forestpeoples.org/documents/ lion; Netherlands $15 million; Investment Facility’ (see page 1) nous peoples’ rights to land and forest_issues/fcpf_fpp_briefing_feb08_ Australia $10 million; Switzerland which aims to raise over $1 billion. resources, NGO Forest Peoples eng.pdf $7 million; and $5 million from con - Officials from some developing Programme points out that: servation NGO The Nature countries have asked how countries • Proposed governance arrange - Conservancy. The Danish govern - which have more sustainably man - ments only allow input from indige - ment has reportedly made its sup - aged their forests in the past will be nous peoples on invitation and only port contingent on the Bank credited. Two new NGO reports 2 BRETTON WOODS UPDATE NUMBER 60 – MARCH/APRIL 2008

n February, the World Bank’s Camisea and the World been created. It is unclear International Finance whether the IFC has carried out a ICorporation (IFC) approved a Bank: A lost opportunity cost-benefit analysis, worrying $300 million loan for the Camisea for a project of this scale and II liquefied natural gas (LNG) COMMENT given how essential it is for the export project in Peru (see Update by César Gamboa; Derecho, Ambiente y Recursos energy security of the country. According to the Engineering 58). Even though environmental, Naturales; Lima, Peru social and now economic con - College of Peru, the project will cerns have been raised, the IFC provide less economic benefit to did not hesitate to provide a loan for the consortium managing the proj - the country than if the gas were used for domestic consumption. ect area known as Block 56, operated by Hunt Oil (Peru LNG). Instead it provides a windfall for the companies involved. The prob - In various communications, Peruvian NGOs have raised their con - lems with Camisea II fall into three categories: cerns with the IFC. The Camisea II project is part of a larger initiative Firstly, the original aim of the Camisea gas project was to ensure long- which began with Camisea I: it uses the same infrastructure (Las term energy security by reducing dependency on imported petrol. Malvinas processing plant in Cuzco, pipelines traversing the Peruvian However in the end the decision whether to export the gas or use it Amazon, and a chemical separation plant in Paracas); will export gas domestically was determined by corporate interests. There is no sys - from Camisea I’s gasfields; and both consortiums have at least two com - tematic national energy strategy which considers the opinion of those panies in common (US Hunt Oil and Spanish Repsol YPF). In effect the communities most affected by hydrocarbon development. There is the operations of Camisea II (Block 56 operated by the Hunt Oil-led consor - real possibility that gas exports from the Camisea project could damage tium) will become indistinguishable from those of Camisea I (Block 88 the future development of Peru. operated by the Pluspetrol-led consortium). Camisea II will contribute Secondly, the state lacks the capacity to ensure that revenues generat - to the accumulated impacts of Camisea I created by extraction, trans - ed by the project create sustainable development. The failure to port and distribution. Solutions should have been found to the prob - improve the quality of life at the local level has undermined one of the lems of Camisea I before work began on Camisea II, given that a hur - main arguments to convince the local population of the project’s merits. ried start could exacerbate problems and prevent solutions being found. Thirdly, the state lacks the capacity to adequately supervise and mon - The IFC’s due diligence was insufficient. It should have ensured that itor projects of this scale. This lack of capacity is evident from the five all ‘associated facilities’ of Camisea I and II met its standards even if it leaks and overflows that have occurred in the first two years of the pro - was not funding them directly (under Bank rules, loans are not permit - ject’s operation. These were caused by bad design and implementation ted to projects whose “associated facilities” breach safeguard policies). and were not detected by the responsible authorities. The approval of this kind of loan could set a dangerous precedent with It is not clear what benefits the IFC’s involvement will bring in terms regards to the implementation of the IFC’s new lending performance of improvement in the quality of life for indigenous communities and standards. It has yet to be revealed how the IFC applied the require - those directly affected by the project. To insist on the rushed implemen - ment to obtain “broad community support of affected communities” tation of Camisea II without first improving state capacity to mitigate its both for Camisea II and its upstream gas fields. impacts, safeguard the rights of indigenous peoples, and oversee Despite the importance that the IFC places on the role of foreign responsible actors will exacerbate the problems of Camisea I. investment in Peru and its potential to improve the quality of life of our César Gamboa; Derecho, Ambiente y Recursos Naturales; Lima, Peru citizens, the conditions for such improvements to occur have still not [email protected]

World Bank climate funds: “a huge leap backwards” continued from page 1 forward solar as an economically study. The Bank should adopt an feasible alternative, and recom - explicit carbon accounting charge The Bank, Brazil and biofuels mends using the Clean Technology added to all fossil-fuel projects. By María José Romero, Choike Fund to fill the remaining cost gap. Though subsidies may be needed to He analyses two supercritical induce clients to borrow for low- The World Bank has become a major financial and political supporter of coal-fired power plants that the carbon projects, “client interest Brazil's campaign for sugar cane based ethanol and the free market for biofuels. Bank is considering funding: Tata should increase as Bank programmes Currently, the IFC is investing around $200 million in three such projects in Power’s 4,000 megawatt plant in demonstrate the viability of large- São Paulo state. Mundra, Gujarat and the planned scale low-carbon energy systems”. In a recent speech Bank president Robert Zoellick said that the expansion of Mmamabula plant in Botswana, At end March the IFC board was an ethanol market could help mitigate climate change, "if we remove trade barriers which would supply power to the to discuss funding up to $750 mil - in developed economies." During his time as US trade representative from 2001 to South African electric grid. In the lion for Mundra. In mid-April it 2005 Zoellick was a tough adversary of Brazil in international negotiations. He has case of Mundra he points out that will discuss two loans of $150 mil - since changed his tune following the boom in biofuels. Zoellick's speech was several other private and public sec - lion each to the Calaca coal-fired transmitted by video link to the G8 plus 5 Legislator's Forum on Climate Change, tor supercritical plants are already facility south of Manila. In held in Brasilia in February. under construction or planned in November 2007 the IFC approved Civil society organisations, such as Friends of the Earth Brazil argue that India, thus precluding the need for $275 million for the Masinloc coal- the expansion of large-scale monoculture for export threatens small-scale Bank subsidies. fired plant in the Philippines. family run agriculture – which forms the basis of the region's food security In Crossroads at Mmamabula, One step forward, two steps back? – water availability, and the most productive land for food cultivation. Wheeler points out that the coun - ◊ www.oxfordenergy.org/pdfs/ try’s solar energy potential, which Bancos multilaterales y la exportación de los agrocombustibles comment_0208-1.pdf could easily exceed the power ◊ www.biceca.org/es/Article.710.aspx expectation of Mmamabula, was UK NGO letter on climate funds recently documented in a Bank ◊ www.ifiwatchnet.org/node/7081 3 BRETTON WOODS UPDATE NUMBER 60 – MARCH/APRIL 2008

IFC-funded Baku-Tblisi-Ceyhan Calls for Bank to uphold rights pipeline (see Update 47, 37). Civil society groups claimed that the The UN human rights council held its seventh session in Geneva in March, where a vari - clauses limited the host states’ abili - ety of reports were released calling for greater accountability of the World Bank to inter - ty to implement human rights obli - gations. national human rights law. The research covers a broad range of countries and industries, includ - ing power, water, health care servic - The January report of the UN High- Update 55) outlines general guide - Jean Ziegler, the UN Special es and extractives. One category of Level Task Force on the right to lines for states and financial institu - Rapporteur on the right to food stablisation clause is a "freezing development concluded that tions to ensure that “compliance refers to “schizophrenia in the UN clause", which 'freezes' the law of “though the principles of the Paris with the commitments arising from system and in states’ policies” as one the host state with respect to the Declaration on Aid Effectiveness are foreign debt does not undermine the of the key obstacles to the promotion investment project for the life of the consistent with human rights”, it capacity of states to fulfil their and protection of the right to ade - project. Findings include: “does not adequately address the human rights obligations”. His core quate food. He condemns the World asymmetries in power”. According recommendations include Bank and IMF for their refusal • no contracts from rich countries to the report, ownership rests with that: to recognise the existence of include freezing clauses; the donor countries and the World • states define “coun - the right to food and • 83 per cent of freezing clauses are Bank, while developing countries try-specific minimum finds that their insis - in the extractive sector; and have a limited voice. The report also standards in the area catastrophic tence on the privatisa - • limited freezing clauses explicitly found a “lack of mutual accounta - of economic, social tion of public utilities, include labour law changes. bility” and that the process “can consequences the liberalisation of and cultural rights”, The study’s recommendations work against the right to develop - agricultural trade, and which “must be coher - include: benchmarking of human ment and erode national democratic market-assisted models ent with the provisions rights standards at the outset of a processes” (see page 6). of land-reform “create cat - of international human project; analysis of how host-state Margot Salomon from the London astrophic consequences”. rights law”; capacity and the skills of negotia - School of Economics concurred with They are also in contradiction with • IFIs should harmonise their proce - tors impact the design of stabilisa - these findings in a paper which the UN General Assembly resolu - dures with international human tion clauses; and improving the highlights ways in which World tion of December 2007 in which the rights law; transparency of contracts. Multi- Bank and IMF policy-based lending Bank and Fund are asked to avoid stakeholder consultations are has violated human rights. Though • human rights obligations should actions that could have a negative planned imminently. IFIs have begun to consider the be harmonised across multilateral impact on the realisation of the right place of human rights in their rheto - organisations to avoid conflicting pol - to food. Report of UN High-Level Task Force on icy advice; and the right to development ric (see Update 53, 51), human rights IFC: atoning for past violations? accountability is missing from their • new tools such as human rights ◊ www2.ohchr.org/english/issues/ practice. Salomon outlines the dif - impact assessments, human rights- An IFC-funded research project on development/groups/docs/DraftreportH ference between Bank support to based budgeting and accountability stabilisation clauses and human LTF23012008.pdf countries to uphold and protect their measures for IFIs should be developed. rights by the office of the UN Special International economic governance and human rights responsibilities, and Mudho criticises the Bank-Fund Representative on business and human rights accountability, Salomon its lack of accountability for the neg - debt sustainability framework which human rights (see Update 57) finds ◊ papers.ssrn.com/sol3/papers.cfm? ative impact that its economic policy fails to assess a country’s ability to that investment contracts often dis - abstract_id=1013505 prescriptions have on rights. She meet its human rights obligations criminate against the ability of Reports of the 7th session of the human states that executive directors of the while servicing its debt. Capacity to developing countries to uphold their rights council, including by Mudho and Bank must comply with their pay “should not be assessed by pri - human rights and environmental Ziegler national and international human mary financial parameters alone” commitments. Stabilisation clauses rights obligations in the policies they and the regulatory framework of are included in private contracts ◊ www2.ohchr.org/english/bodies/ pursue. international public finance must be between investors and host states to hrcouncil/7session/reports.htm The March report of the UN improved to “take into account the address changes in law in the host Stabilisation clauses and human rights Independent Expert on human international human rights regime state during the life of an investment ◊ www.business-humanrights.org/ rights, economic reform policies and and innovative analytical tools on project. On-going concerns over this Links/Repository/111788/ foreign debt, Bernards Mudho (see debt sustainability”. issue arose in 2003 in relation to the link_page_view

Palacio resigns: Rural electrification Bank powerless to end Sri Lankan small farm - progress on rights? failing the poor Chad abuses ers slam World Bank

The resignation of World Bank general A report by the Bank’s internal evaluation Chadian president Idriss Déby has used Local farmers and agriculture activists in Sri counsel Ana Palacio who will step down group on rural electrification finds that only February’s failed coup attempt to clamp Lanka have slammed World Bank interven - mid-April has raised hopes that the Nordic seven per cent of Bank rural electrification down on critics of the Bank-supported tion in the agricultural sector, saying it has Justice and Human Rights Trust Fund projects have an explicit poverty reduction Chad-Cameroon pipeline. Leading opposi - caused the eradication of small-scale culti - (JHRTF), announced in mid-2006 may now objective. Though renewable energy tech - tion legislator, Ngarlejy Yorongar, who led a vation and resulted in high food prices, in move forward (see Update 53). Palacio was nologies are becoming cheaper and more complaint to the Bank’s Inspection Panel in particular rice and wheat. The Movement appointed in June 2006 by former Bank available, “the full benefits of providing 2001, was arrested by security forces for National Agriculture and Land Reform president Paul Wolfowitz in a move seen electricity to the poor are not being met” though later managed to escape to (MONLAR) held a gathering for concerned as reward for Spain's support for the US and households that benefit the most from Cameroon. Delphine Djiraibe who has parties to discuss possible solutions to the invasion of Iraq. During her time at the rural electrification are non-poor. The Bank challenged the government and the Bank problem. Former minister Indika Bank, Palacio failed to move forward any promotes an approach which favours com - to live up to commitments to use the coun - Gunewardena stated that tenant farmers human rights initiatives. In October 2007 munities nearer to the existing grid as a try’s oil revenues for poverty reduction fled will never be able to rise out of poverty as Nordic countries were prepared to finalise “least-cost” option. The study stops short of to Europe . The Bank has promised to long the government retains ownership of the JHRTF, but new Bank president Robert drawing the conclusion that public subsi - address development objectives “once it’s the land they work on. Small-scale farmers Zoellick postponed the official signing. dies are needed to enable the poor to possible to have discussions with the gov - state that the Bank has been encouraging access electricity. ernment”, but has backed down when companies to invest only in large-scale ◊ www.bicusa.org/en/Article.3697.aspx Déby has diverted oil profits to the military. farms. ◊ www.worldbank.org/ieg/electrification ◊ www.bicusa.org/en/Article.3693.aspx ◊ www.geocities.com/monlarslk/ 4 BRETTON WOODS UPDATE NUMBER 60 – MARCH/APRIL 2008

Inside the institutions The World Bank and health

In the last five years the global system for channelling development finance and IBRD lent 11 per cent of its portfolio to projects with health and other social to the health sector has changed radically. Assistance for health has shot sector components. This $2.75 billion is a 20 per cent decline from peak lending up from $6 billion to $14 billion, most of which is being provided by new in 2003. In IDA countries, health sector lending was 16 per cent of the total. players such as the Global Fund for AIDS, Tuberculosis and Malaria (GFATM), In terms of regional breakdown, in 2007, South Asia accounted for 44 per cent new bilateral funds and private actors like the Bill and Melinda Gates of new commitments with health components while Latin America and the Foundation. This has caused the Bank to seriously re-examine its role in Caribbean was 32 per cent and the African region was 14 per cent. The largest health finance. theme in 2007 was health systems lending (27 per cent of new commitments). This is followed by injuries and non-communicable diseases – including a vari - The World Bank puts its work on health and health systems together with its ety of work from tobacco control to road safety and indoor air pollution projects work on nutrition, population and family planning issues. Work that affects pub - – at 17 per cent and child health at 14 per cent. lic health is also carried out in other parts of the Bank, for example the water The new HNP strategy recognises that the World Bank’s health work has been and sanitation department. comparatively ineffective. The HNP lending portfolio had the lowest performance The health, nutrition and population (HNP) unit sits within the Human of all sectors for five years in a row from 2001 to 2006. Only 66 per cent of com - Development network of the Bank. The strategy for the unit was rewritten in pleted HNP projects between 1997 and 2006 were rated ‘satisfactory’ or better. A 2006 and 2007 and finally agreed by the board end April 2007 after controversy planned 2008 evaluation of health sector work by the Independent Evaluation over the support to reproductive rights (see Update 56). The new strategy has Group (IEG) will be a key method for remedying these problems. four overarching objectives: improve the level and distribution of key health out - The Bank’s direct HNP work may be suffering from declining staff and lend - comes, outputs, and system performance; prevent poverty-related illnesses; ing, but the HNP team also serves as the secretariat for a burgeoning number of improve financial sustainability in the health sector; and improve governance, trust funds related to health. Sixteen such trust funds, with governance and allo - accountability and transparency in the health sector. cation rules set by donors, are hosted by the HNP unit, not to mention regional The strategy seeks to address three main challenges facing work in health: the and country specific trust funds that also finance the health sector. Donors have need to ensure that financing creates tangible results on the ground; the need to committed $275 million for the 16 funds such as Human Resources for Health strengthen health systems; and the need to reduce duplication and increase Capacity Building and the Global Program to Eradicate Polio. coherence of health financing given the increase in actors on the international The Bank’s private sector arm, the International Finance Corporation (IFC) has health scene. The Bank believes its greatest comparative advantages in undertak - also increased its work in health. According to the IFC health strategy: “the ing health work are in health system strengthening and inter-sectoral approach - reliance solely on the public sector to address these major challenges appears to es to country assistance as well as macroeconomic policies and capacity to be no longer a viable or sustainable option in the long term because of fiscal enable large scale implementation. constraints.” From 2000 to 2007, the IFC provided $536 million in financing to 47 A count of World Bank professional staff working in the sector in mid-2006 private health care projects in 25 countries. However in December the IFC showed that health was the fourth biggest area with 206 people. This is only announced plans to manage a new $1 billion fund for private health care behind economic policy (349), rural development (309) and the environment providers and private health care systems in Africa (see Update 59). (255). However this is 23 per cent below the HNP’s peak staffing level in 1998. Over the course of the previous strategy (1997-2007) the World Bank funded Health, nutrition and population unit more than 500 projects with a health component in over 100 countries. That ◊ www.worldbank.org/hnp meant $15 billion in commitments though just over $12 billion actually dis - IFC health sector strategy bursed. At the end of the 2006 fiscal year the portfolio of active projects totalled ◊ www.ifc.org/ifcext/che.nsf/content/strategy $7 billion, a decrease from the 2001 high of $9.5 billion. In fiscal year 2007, IDA

Training for nothing? IFIs asked to surrender reins over capacity building

The World Bank’s Independent results.” It noted that the World between a quarter and a half of aid, human capacities. While the propos - Evaluation Group (IEG) revealed Bank Institute lacks the ability to it has largely been ineffective, over- al to rely on donor funding for TA serious shortcomings in the applica - assess capacity gaps and does not priced, donor-driven and based on may help alleviate the financing bur - bility of the Bank’s training work. It engage in direct consultation with an outdated model of development. den, it will also imply that the Fund published its report on the Banks’ clients on their requirements. Elvira Groll of ActionAid UK said: is competing for donor resources project-based and central training The IEG made three recommen - “We have repeatedly called for a with its members.” programmes that are supposed to dations: develop clearer guidelines strong alignment of capacity build - While Gakunu argues for the build capacity for development in and quality standards for training ing programmes to national and Fund to continue providing TA free February. The Bank has provided programmes; make training experts local needs and priorities in order to of charge to low-income members, around $720 million annually for available to staff and borrowers actually have any impact. As this some civil society organisations training programmes in the last ten before the design of programmes; evaluation shows, the World Bank is have argued for a more recipient- years, though training is only a por - and clarify the World Bank really failing to deliver.” owned approach that lets countries tion of the Bank’s overall technical Institute’s training man - Those same cri - choose how to use aid resources. In assistance (TA) work. date. Management the Fund is tiques are finding evidence submitted to a UK parlia - The IEG conducted surveys in six committed to draft a new target in mentary inquiry on aid effective - countries and field studies in anoth - guidelines for training competing the IMF, which ness, the Bretton Woods Project rec - er four on trainings and revealed design and circulate a for has announced ommended that “funding to pay for that “only about half resulted in sub - roster of training donor plans to start TA should be routed through coun - stantial changes to workplace experts before July resources charging for its try procurement systems. Recipient behaviour or enhanced develop - 2008, but did not give TA work (see countries should be free to choose ment capacity.” It found that there any indication of how with its members Update 59). Peter which TA projects they want and was a lack of attention to the appli - it would ensure imple - Gakunu, the IMF who will undertake the project.” cation of newly learnt knowledge mentation of new guide - executive director rep - Using training to build capacity and a lack of training targeted at lines. It put off consideration of resenting anglophone ◊ www.worldbank.org/ieg/training/ participants’ needs. reforms to the World Bank Institute Africa wrote, “The likely outcome Incentives for participants to until the Bank finishes developing could be a trade-off between financ - Real Aid 2: Making technical assistance apply their knowledge as well as the knowledge component of its ing critical social spending and pay - work, ActionAid International incentives for employers to rely on long-term strategy (see page 11). ing for TA. For countries that cannot ◊ www.actionaid.org.uk/doc_lib/ new knowledge were low. The IEG NGO ActionAid International has afford to pay for TA, this would real_aid2.pdf found that “the Bank does not ade - set out a detailed critique of TA adversely affect their efforts to quately monitor or evaluate training arguing that while constituting develop their institutional and 5 BRETTON WOODS UPDATE NUMBER 60 – MARCH/APRIL 2008

ing signed up to a civil society posi - Bank both player and referee tion paper Better aid: A civil society challenge to the 2008 Accra High Level Forum on Aid Effectiveness. in road to Accra Meanwhile, negotiations are underway to agree the text of the By Lucy Hayes, Eurodad communiqué that development ministers will announce in Accra as The Africa Cup of Nations has ment, ownership and results. both donors and developing coun - the outcome of the conference – the ended, but Ghana will host two Despite the influence of the Bank, tries have made commitments to Accra Agenda for Action. other international events this year: particularly in the latter two areas, pay more attention to the results of Developing countries have outlined the UN Conference on Trade and its own actions avoid scrutiny. their interventions, the indicator for six priorities – conditionality, capac - Development quadrennial confer - The Bank’s controversial scoring measuring progress refers only to ity development, incentives for good ence in April and the High Level system, known as Country Policy efforts of the developing country, as performance (for donor agencies), Forum on Aid Effectiveness in and Institutional Assessments or judged by the Bank. division of labour/complementarity, September. On aid effectiveness the CPIA (see Update 52), is used to Using a review of its 2005 predictability and untying aid. The World Bank is both player and ref - measure the quality of developing Comprehensive Development Bank says in principle that it agrees eree, prompting cries of foul play by countries’ public financial manage - Framework progress report, the Bank with these six proposals - the devil is civil society groups. The Bank is ment systems. This is assessed using examines the quality of developing of course in the details of how they heavily involved in the process of the results from one CPIA score, countries’ performance assessment are addressed. Some donors want to monitoring commitments and is namely the “quality of budgetary frameworks - based on the quality of ensure that no detailed pledges are very present in the run-up to the and financial management”. statistical data available, stake - made, just vague discussion on Ghana meeting. The second target holder access to informa - identifying “good practice princi - The Organisation for Economic assessed by the Bank is tion and coordination ples”. Others are pushing for agree - Cooperation and Development ownership. This is of monitoring and ment on concrete actions. (OECD) High Level Forum on Aid viewed as develop - donors evaluation. The monitor themselves, The Bank sits in a pivotal posi - Effectiveness will review progress ing countries exer - Bank, together tion on the executive committee for against the 2005 Paris Declaration cising effective recipients with other the High Level Forum, together and make commitments in areas leadership over donors, plays a with representatives from the where more needs to be done. The their develop - are monitored by leading role in OECD and the government of World Bank has signed up to the 56 ment policies, deciding the con - Ghana. The Bank managed to rile commitments and 12 targets to be strategies, and the Bank ditions and indica - both its team members and the reached by 2010, agreed to by most coordinating devel - tors in these perform - other side in June last year by uni - donors and many aid recipient gov - opment actions. The ance assessment frame - laterally producing a “zero-draft” ernments. The 2006 baseline survey indicator and process for works, and often in a non- of this communiqué, kicking the to monitor progress shows that the measuring success is circular at best. transparent way. It is ironic ball into play before the whistle was World Bank scores relatively well in Developing countries are scored by that the Bank can then judge their blown. The game was restarted, but some areas compared to other how operational their Poverty quality. No country was awarded it remains to be seen how much donors, such as providing budget Reduction Strategy Paper (PRSP) is the top score, and only Tanzania, developing countries will be able to support or “programme-based” aid. as judged by the Bank. No country Uganda and Mozambique made the get or keep possession of the ball in It is only slightly better than aver - scores the top grade of having a second grade. the lead up to the Accra event. age at disbursing money on time, “sustainable” PRSP, and 8 out of 62 A new Eurodad report, Turning and using developing country finan - countries are deemed to have the tables , showcases civil society and Turning the tables, Eurodad cial systems. And it does less well “developed” PRSPs. There is no southern government views on aid ◊ www.eurodad.org when it comes to providing techni - indicator to measure what the Bank effectiveness. It argues: “The current Better aid cal assistance and coordinating mis - (or other donors) should do to monitoring process for the Paris ◊ www.betteraid.org/index.php? sions to the country. enable country ownership, such as Declaration is asymmetric - donors option=com_content&task=view&id=88 The rules of the Paris Declaration ending policy conditionality. monitor themselves, while recipients &Itemid=26 game are favourable to the Bank. The third area measured by the are monitored by the World Bank The Paris Declaration and the right to Despite being a player, the World Bank is particularly problematic. and others.” CSOs from around the development, Roberto Bissio Bank also gets to be the referee on This is the extent to which aid is world are mobilising to make aid three targets. These are the targets implemented in a way that focuses more effective, with over 380 organ - ◊ www.betteraid.org/downloads/ related to public financial manage - on the desired results. Although isations from over 80 countries hav - A-HRC-8-WG-2.2-TF-CRP7.pdf

Rebuke for UK's WB New Bank financial Venezuela v. Exxon Slaughtering the love affair products back to ICSID? Amazon

The UK’s International Development In March the Bank approved a new lend - Venezuela has asked Exxon Mobil to go In the past three years Brazil’s National Committee has sharply reprimanded the ing facility, the Catastrophe Risk Deferred back to the Bank’s International Centre for Development Bank (BNDES) and the World Department for International Development Drawdown Option, to give middle-income the Settlement of Investment Disputes Bank have poured funds into the cattle for its decision to hand over a 50 per cent countries immediate access to up to $500 (ICSID), and drop lawsuits filed in courts in industry in the southern Amazon. “While increase in funding for the World Bank million in the event of a natural disaster. London and New York. The lawsuits stem governments insist they are doing their without sufficient analysis of whether or Countries qualify if they have a hazard risk from the nationalisation of a heavy-crude oil utmost to stop deforestation they have been not this is good value for money. The management programme monitored by the project in Venezuela in which Exxon Mobil putting in place incentives for the destruc - report contains sharp analysis of the Bank. The fund is to have fewer conditions, owned a majority stake. Injunctions tion of the forest,” said Roberto Smeraldi, Bank’s failure to use impact assessments; longer maturities and be cheaper than pre - obtained in the London and New York head of Friends of the Earth Brazil and co- its continued use of conditionality; and the vious similar facilities which have lan - courts had resulted in $12 billion in author of a new report The Cattle Realm . British government’s lacklustre efforts to guished unused. Bond fund management Venezuelan assets being temporarily frozen. The IFC gave $9 million to Brazil’s leading bring democracy to the Bank. The commit - company PIMCO has been selected by the Venezuela’s Congress called for pulling out beef processor to upgrade its slaughter - tee has called for a “greater weight of sub - Bank to manage its $5 billion Global of ICSID, following the lead of Ecuador and house operations in the Amazon (see sidies for clean, renewable energy and less Emerging Markets Local Currency Bond Bolivia (see Update 58). However, Venezuelan Update 55), despite an environmental study for extractive industries and this rebalanc - Fund, to assist countries to build local cur - minister of energy Rafael Ram írez has showing that the expansion would lead to ing should be happening at a faster rate”. rency bond markets (see Update 58). vowed to stay in ICSID and fight. the loss of up to 300,000 hectares of forest.

◊ brettonwoodsproject.org/idcreport ◊ treasury.worldbank.org/Services/ ◊ www.iisd.org/investment/itn/ ◊ www.amazonia.org.br/arquivos/ Financial+Products/ 259673.pdf 6 BRETTON WOODS UPDATE NUMBER 60 – MARCH/APRIL 2008

little has changed. “Donors come Europe questions IFI conditionality: along with new formulas every now and then, and after a few years these fade away and they come with new whose outcome? ones … But it is always about their agendas, not necessarily ours” says By Nuria Molina, Eurodad civil society activist Deus Kibamba of the Tanzania Gender Networking A new report shows that IMF structural conditionality did not decline in the five years after the Programme. Governments still face approval of the Fund’s conditionality guidelines. With little progress at the World Bank, many policy conditions and now have to get used to outcome conditions as wonder whether the European Commission's new approach is what is needed. well. An EC official quoted in the Eurodad report was forced to admit that ”there is now more condition - A forthcoming briefing by Eurodad, have reformed its conditionality pol - beyond that of the EC, which large - ality than in the past.” This was also which uses the Fund’s own condi - icy, Eurodad analysis published in ly looks at on the ground poverty validated by the report’s analysis of tionality data, finds that IMF loans November found that more than reduction and human development the EC’s pilot operations in Burkina carry an average of 14 structural two thirds of loans and grants from improvements. The World Bank Faso and Mozambique. conditions each. These are condi - the Bank’s International Develop- uses the term to refer to the proxi - Citizen groups will continue to tions spelling out policy reforms to ment Association (IDA) still had mate results of policy actions as well demand a reduction in conditions the structure of a borrower’s econo - sensitive policy reforms attached as results for people on the ground. but also transparency in how money my, such as privatisation. Sensitive (see Update 58). The majority of these An example for Tanzania is the is spent and information on whether policy reforms – including privati - were privatisation-related condi - requirement to improve its ranking it is helping countries reach the sation and liberalisation related con - tions. in the World Bank’s controversial Millennium Development Goals. ditions, as well as other conditions In light of these findings, Doing Business index (see The EC’s attempt to break ranks prescribing regressive taxation, or European civil society page 12). The with the Washington-based institu - constraining the fiscal space avail - demanded their govern - Commission, by tions is still tentative, but provides able to recipient governments – ment’s contributions it is always contrast, focuses an opportunity to test out and comprise a third of the IMF struc - to IDA were made on results such as debate a new approach. tural conditions and their number contingent on further about their increasing net The World Bank certainly seems has not declined. progress on the school enrolment to be on notice. At a recent launch The Fund continues to push con - implementation of agendas, rates and has, to a event for the Eurodad report in ditions in areas beyond its core the Good Practice large extent, Brussels, Manuela Ferro, country mandate of monetary policy, public Principles on condi - not ours phased out eco - economics manager in the Bank’s financial management and financial tionality. nomic policy con - Operations Policy and Country sector soundness. These non-core Disappointingly, the ditions from their Services department, made a ten areas include state-owned enter - final report of the IDA aid which is chan - minute intervention and engaged prise reform and privatisation, negotiations published in March nelled to poor countries in lively debate with the EC official social policies, civil service reform, welcomes “progress under the Good as budget support. at the table. Ferro insisted on the or regulatory reform. Eurodad esti - Practice Principles on conditionali - Tracing government responsibili - ‘official’ World Bank arguments for mates that nine per cent of IMF ty” and management’s proposal to ty for successes and failures in edu - being reluctant about this new structural conditions are privatisa - further review application of condi - cation, health and other sectors is a approach: the problem of attribut - tion-related, and 11 per cent are pri - tionality as part of the internal challenge, recognised in ing poverty reduction results to the vatisation and liberalisation condi - review of Development Policy Commission reports and assessed in action of the government, the lack tions in the banking and financial Operations. There is no mention of the Eurodad study. It is hard to find of data to measure results, and the sector. calls from civil society and some reliable baseline or annual data, and fear of leaving developing coun - Then IMF president Horst shareholder governments for an when shocks occur it is debatable tries to their own fate if multilateral Koehler wrote to IMF senior man - independent review of the Bank’s whether the government should be institutions withdraw their “valu - agement in September 2000: “I am use of conditionality. blamed for slower progress. Some able policy advice”. Surprisingly, personally convinced that there is Policies or outcomes? developing country decision-mak - the World Bank and some substantial scope to streamline and ers fear that outcome-based condi - European countries, while express - focus our conditionality, both to The European Commission (EC) has tionality might make them respon - ing doubts about the merits of this reinforce country ownership of the introduced a new approach to con - sible for results which are out of new approach, proved to be more programmes which the Fund sup - ditionality, one which is garnering their hands. In this regard, the open than in the past. ports and as part of our overall Malawian minister of finance increasing attention across Europe Final IDA 15 report efforts to focus the work of the Fund and in Washington. The EC says it Goodall Gondwe said “outcome ◊ www.worldbank.org/ida on its core areas of competence”. will emphasise conditions focussing indicators are not in the hands of the This call culminated in the approval on “outcomes” rather than on poli - government and they are very diffi - Outcome-based conditionality too good of new conditionality guidelines in cies. This means that governments cult to achieve.” to be true?, Eurodad September 2002, which committed negotiating a programme with the The EC seems to lack the courage ◊ www.eurodad.org/uploadedFiles/ the IMF to the principles of owner - EC can propose objectives they of its convictions with its new Whats_New/Reports/ ship and criticality in its application would like to reach, rather than instrument. It is using it only to dis - Outcome_based_conditionality.pdf of structural conditionality, as well commit to implementing specific burse about two to three per cent of as to streamlining the number of policies. As long as the government its overall budget support. The rest conditions (see Update 32). Over makes continued progress towards of its finance is still linked to more seven years later it seems that these these objectives the EC will continue traditional policy conditions. From recommendations from the top to provide its aid money, often as a recipient country’s point of view have been more honoured in the budget support. breach than in the observance. A A Eurodad study launched in recent report of the IMF's February compared this new EC Independent Evaluation Office con - approach with the results frame - For a free subscription to this publication see: firms that progress in implementing works that have been announced in brettonwoodsproject.org/subs the conditionality guidelines has recent years by the World Bank and been limited (see Update 59). IMF. The report shows that the The World Bank is not doing any World Bank and the IMF’s treatment better. Even if the Bank claims to of the term “results” goes well 7 BRETTON WOODS UPDATE NUMBER 60 – MARCH/APRIL 2008

are binding for all parties. IFIs foot dragging on key debt issues In 2001, the IMF released a brief - ing on private sector involvement in By Nancy Dubosse, Afrodad international finance entitled Resolving and preventing financial The World Bank and the IMF are struggling to catch up to global debates on ‘odious’ debts and crises . The brief concedes that vul - responsible financing; have failed to take action on vulture funds; and have been dragging their ture funds create a disincentive for creditor nations to participate in feet on debt relief programmes for Haiti and Liberia. debt restructuring by providing an additional avenue through which to The World Bank released a draft addresses the protection of human to the establishment of a transparent recoup part of their lending. As an report on ‘odious’ debt (defined as rights and the environment, public arbitration mechanism. Afrodad has organisation that has the ears of the loans knowingly given to a despotic consent and transparency, procure - already compiled ten dossiers, world on macroeconomic stability power to repress and not benefit its ment, and repayment difficulties or including Nigeria, Cameroon/Chad, and public financial management, people) in September 2007 (see disputes. On the thorny issue of Argentina, and the Philippines. the IMF should be able to adopt a Update 57). While the report conced - human rights, the charter stipulates Afrodad is organising national meet - concrete policy proposal on the issue ed that there is “factual analysis of that activities financed must not vio - ings in Nigeria and DRC in April of vulture funds, particularly with the irregular transactions and the late rights as set out in the treaties to 2008 to inform both local civil society respect to their activities in HIPC consideration that the lender knew which either borrowers or lenders groups and parliamentarians. countries. of the use of the funds”, there was are signatories. Similarly, financing Vulture watching For its part, the World Bank has no agreement that this was a useful must not contravene internationally failed so far to respond to debt cam - way to classify sovereign debt nor accepted minimum standards on To date, eleven countries which are paigners’ call for the expansion of were there any recommendations social, labour and environmental graduates of the Highly Indebted the International Development for what to do about odious debts. protection. These include the Bank's Poor Countries (HIPC) initiative Association’s (IDA) debt reduction Debt campaigners were asked by safeguard policies, the IFC's per - have been targeted by so-called ‘vul - facility. The facility enables countries the Bank to respond to the paper. It formance standards, and the ILO's ture funds’ (currently Uganda, going through HIPC to buy back was not clear what purposes their core labour standards. Nicaragua, Sierra Leone, Niger, and their commercial debts at a discount, response would serve, and so the This is a key distinction of the Zambia are being targeted). These preventing vulture funds from get - two sides have been in dialogue charter from G20 discussions on a companies buy up ‘bad’ debt at a ting hold of them. over how to take the process for - responsible lending charter. The discount, and then attempt to recov - ward. A roundtable discussion is G20 charter, largely driven by rich er the full amount, often by suing HIPC updates: Haiti and Liberia planned for the WB-IMF spring country fears about the growth of through the courts. The commodifi - The link between external debt and meetings in April in Washington. lending by China and India, has cation of public debt, particularly development has never been more While debates over odious debts reportedly been opposed by Brazil, from countries that have been party pronounced than in the case of have looked back at lenders’ past China and South Africa. A revised to debt relief discussions, gives an Haiti. Debt relief of $1.2 billion ($464 practices, the question remains how text is to be discussed at the next opportunity for vulture funds to be million of which is owed to the to prevent such behaviour in the G20 meeting in Brazil in November. free-riders, as they are profiting World Bank) has finally been grant - future. Brussels-based network Eurodad has called on govern - from the fiscal space created by debt ed conditional upon completion of Eurodad has contributed towards ments and donor agencies to volun - relief and from loans given for the HIPC programme. The cost of this end by creating a Charter on tarily adopt their charter, and for development purposes. not meeting the conditions of debt Responsible Financing , which debate on the issues to take place as In January, Belgium set a prece - relief by the 2009 deadline is esti - attempts to move away from insti - part of the UN Financing for dent by passing a resolution to mated at $44 million. From a devel - tution- or sector-specific responses Development process which next “safeguard development coopera - opment perspective, the key issue is to concerns over responsible lend - meets in Doha in November. tion and debt relief from the actions the opportunity cost of delayed debt ing and fair resolution of debt crises Afrodad has launched the Fair taken by vulture funds”. The legisla - relief and current debt servicing towards “internationally recognised and Transparent Debt Arbitration tion translates into clauses being while Haiti is going through the legal standards for responsible lend - Campaign, which aims to gather inserted into future bilateral agree - HIPC programme. ing and borrowing”. and disseminate evidence on cases ments preventing these funds from Liberia has $4.7 billion in exter - In addition to technical and legal of illegitimate and odious debt taking advantage and urges the IFIs nal debt, of which $1.6 billion is terms and conditions, the charter throughout the world, with a view to ensure that debt relief initiatives owed to multilateral institutions. In March, after several delays, the IMF finally granted Liberia decision The IMF in Argentina: the search for relevance point status and committed $952 By María José Romero, Choike million in financing. Liberia is cur - rently under an IMF Staff- Since Cristina Fernández de Kirchner assumed the calculating inflation may have been temporarily amended. Monitored Programme to strength - Argentinian presidency in December the Fund has been He demands that Argentina inform the Fund of any change en its public financial management involved with the renegotiation of Argentinian debt with envisaged for the measurement of inflation and indicate the systems. It took Liberia two years the Paris Club and a controversy over official statistics. reason for the change. Predictably, the Argentine government to get to this point, and it can not The Paris Club of rich country creditors has failed to has rejected this attitude. hope to be relieved of its debt until conclude debt renegotiations with Argentina since 2005. In early March, the Fund’s Argentinian executive director it has implemented a Poverty The club requires borrowers to have a programme with the Héctor Torres informed his government that the IMF intended Reduction and Growth Facility IMF, which Argentina has steadfastly rejected. In December to strongly censure the country in its flagship publication, the arrangement for one year. IMF managing director Dominique Strauss-Kahn visited World Economic Outlook , to be launched in April. Ultimately Charter on responsible financing Argentina and expressed the Fund’s readiness to cooperate the IMF decided to postpone a formal, public critique and ◊ www.eurodad.org/whatsnew/ but advised that the best option is for the Paris Club to waive used the government’s inflation figures in the report. The reports.aspx?id=2060 its requirement of the IMF’s endorsement of the Argentinian Argentinian government sees this as an attempt by both local Jubilee Zambia vulture fund campaign economy. The Paris Club has not moved on this financial circles and the IMF to undermine the president’s www.jctr.org.zm/vulturefund.html recommendation, blocking any possibility of agreement. credibility. According to vice president Julio Cobos, “these ◊ Meanwhile, the IMF is investigating the Argentinian [criticisms] are assessments of the institution; we could also Belgian Senate resolution on vulture inflation index to determine whether the country violated criticise the policies that the IMF has recommended funds international statistics standards. In a letter to the throughout its history, since many of them affected us, ◊ http://www.senate.be/www/ government, the director of the IMF statistics department, yet we maintain prudent reserve in our words”. ?MIval=/publications/viewPub&BLOKNR Robert Edwards, suggests that the indicators that go into =1&COLL=S&LEG=4&NR=244&PUID =67109457&LANG=fr

8 BRETTON WOODS UPDATE NUMBER 60 – MARCH/APRIL 2008

The Bank favours a standard pro - World Bank and procurement: curement law and system rather than developing a reform that can be adapted to be appropriate to each Development tool or TNC sop? country context. Following complex new procurement rules places a A new study on procurement reform suggests that the World Bank's narrow focus on value for heavy burden on governments, including the major spending min - money may undermine the ability of governments to use procurement as a tool for development; istries. According to the Christian meanwhile US and European corporate lobbyists continue to pressure the Bank to go slow on the Aid report, local governments in Zambia and Ghana have been par - use of developing countries' own procurement systems. ticularly affected, because they do not have access to the professionals Procurement refers to the purchas - message received by recipients is nationality were among those (such as engineers and procurement ing, leasing, or renting of materials, that such policies limit competition weighted more highly. As a recent consultants) required to make pro - services, or equipment by govern - and thus efficiency. internal Bank document states, “the curement decisions. Local organisa - ment agencies. The Bank plays a Ironically, whilst putting a great Bank must ensure that there is a fair tions in Ghana argue that procure - lead role in procurement reform, deal of legwork into reforming pro - and level playing field for foreign ment reform has run counter to the arguably the most controversial of curement systems to get them firms to participate under procure - drive to decentralised governance - so-called ‘good governance’ aligned with international best prac - ment processes that are expected to surely a more fundamental goal for reforms. Countries like Afghanistan, tice, the World Bank is itself drag - attract international competition.” long-term poverty reduction. Bangladesh, Ghana, Peru, Rwanda, ging its heels on using those sys - The Bank’s Use of Country Olivia McDonald of Christian Aid Sierra Leone, Tanzania and Uganda tems. The targets of the Paris Procurement Systems initiative has says procurement reform “should be have all introduced new procure - Declaration on Aid Effectiveness drawn extensive fire since it was designed to be locally appropriate ment legislation since 2001 in (see page 6) commit donors to using first proposed in 2005, not least from and focus predominantly on how response to World Bank conditions. country procurement systems, US and European corporate lobbies procurement decisions can be scruti - Government procurement recognising that it is counter-pro - fearful of losing contracts if national nised by and accountable to poor accounts for approximately 4.5 per ductive for a recipient with poor competitive bidding (NCB) systems men and women as well as busi - cent of developing countries’ gross administrative capacity to follow the replace the Bank’s standardised nesses involved in the contracting domestic product and governments different procurement regulations of international competitive bidding process. The focus on who is eligi - tend to be the largest their various donors. rules. International firms typically ble to bid can distract attention from single consumers of Of course, do not compete well under NCB this fundamental goal as well as goods and services the model donors are not likely to systems: between 2001-2006 firms undermining the perceived legitima - in most countries. start using recipient from G7 countries won only 0.1 per cy for the Bank engagement in this Globally, govern - favoured procurement systems cent of NCB tenders as recorded in sector”. There is an important role ment procure - by the Bank is until they are safe in the World Bank’s procurement data - for the Bank and other donors to ment is big busi - biased to the knowledge that base. help recipients share best practice on ness, with annual they are robust and The US administration opposes procurement policy – however the spending estimat - foreign the risk of money the Bank’s country systems propos - decision on how far to open up to ed at more than going astray is limited. al. The US Congress, urged on by US foreign firms should reside with $2 trillion. This, firms But the best practice corporate lobbyists, has threatened recipients themselves. along with the fact model they use is riddled to withhold portions of the US con - Christian Aid has urged that the that government pro - with assumptions about tribution to the International issue be addressed as part of the curement is the most significant sec - the benefits of open competition. Development Association (or IDA Accra aid effectiveness ministerial tor excluded from multilateral Whilst allowing some preferences to 15, see Update 59) if the initiative in September (see page 6): “The processes, explains why procure - local firms, the indicators developed goes forward. Furthermore, as pub - current emphasis on liberalisation ment is increasingly on the agenda by the Organisation for Economic lic procurement processes are often runs the risk of undermining the of trade negotiations. Co-operation and Development rife with corruption, international legitimacy of this important In the past, substantial trade lib - (OECD) and the World Bank reward business and some civil society process”. eralisation commitments were non-discriminatory procurement groups have cautioned that use of Buying power: Aid, governance and pub - secured through World Bank condi - systems with higher scores, as exclu - country procurement systems lic procurement, Christian Aid tionality rather than (or prior to) sions “may arbitrarily limit competi - requires extensive monitoring and ◊ www.eurodad.org/uploadedFiles/ trade agreements. A new report tion and may result in inefficient oversight. Buying%20Power.pdf from UK NGO Christian Aid has procurement and higher prices”. The Bank has scaled back its ini - found that whilst procurement These criteria are used to measure tiative and is now proposing to pilot World Bank website for country procure - reform is counted as a governance the robustness of country procure - the use of country procurement sys - ment systems reform, the model favoured by the ment systems, a goal in the Paris tems in eight to ten countries. ◊ go.worldbank.org/KB821V1XI0 Bank is “biased to open competition Declaration. However, the pilots would entail a Programme conditions, project safe - that facilitates market access for for - Use of country systems complex process of assessing equiv - guards: Quo vadis World Bank? eign firms”. In Ghana and Sierra alence of a country’s systems with ◊ brettonwoodsproject.org/ Leone there have been specific The other relevant Paris goal is for the “principles” of Bank procure - responsibleatissue57 demands by the Bank to allow for - donors to actually use these ment policies, closing any gaps eign firms access to contracts. reformed procurement systems. between the two, and judging coun - The Bank is not pushing full liber - Recently the World Bank had a con - try capacity and compliance in fol - alisation. Recipients retain some pol - sultation on its pilot programme on lowing their own regulations. The icy flexibility to favour local firms. the use of country procurement sys - pilots would most likely prove to be But the Bank is far from promoting tems. It proposed weighting certain costly and intrusive affairs. procurement as an economic devel - OECD-World Bank criteria more opment tool largely because it highly to evaluate whether they For longer versions retains a very narrow focus on effi - could risk using country systems. of Update articles with additional links , see: ciency and value for money. Many The weighting made it highly brettonwoodsproject.org/update countries in their economic develop - unlikely that a low-income country ment have used procurement rules with weak administrative capacity Para la versión en español , visite: to favour local producers (most would be selected as a pilot country. notably the US through the ‘Buy Indicators focusing on allowing par - brettonwoodsproject.org/es/boletin American Act’) but the consistent ticipation of bidders regardless of 9 BRETTON WOODS UPDATE NUMBER 60 – MARCH/APRIL 2008

in Zambia, saying they were “unfair A taxing agenda for the IMF and unbalanced.” In their place “the government has, therefore, decided to introduce a new fiscal and regula - By Alex Wilks and Marta Ruiz, Eurodad tory regime in order to bring about The irony of the IMF giving a passing grade to Liechtenstein on money laundering in the same equitable distribution of the mineral wealth.” Without the reforms min - month that Germany launches a massive investigation into tax evasion based in the Alpine coun - ing firms would have earned $4 bil - try shows that the Fund has a lot of work to do if it wants to help clamp down on illicit flows. lion in the 2009 financial year but would only have paid tax of $300 Zambia may be showing the way for poor countries. million. T ax is expected to reach $650 million after the change. The concern that the Fund is giving gramme Reviews of Standards and from foreign bank accounts to coun - The World Bank supported the cover to dubious government prac - Codes (ROSCs), which are assess - tries of the global south can only be contract re-negotiations in Zambia, tices was clear during the ments of countries’ financial systems achieved via strengthened, multilat - but has been reticent to wade fur - Liechtenstein scandal that first including on anti-money laundering eral cooperation.” ther into reform of the global finan - emerged in February. After arrest - and countering the financing of ter - It remains to be seen if the IMF, in cial architecture. In September ing high-profile suspected tax rorism (see Update 54). its search for relevance, will take up Bank president Robert Zoellick dodgers, Germany pressed Criticism of the ROSC framework a vigorous role in policing tax eva - acknowledged that “a study of the Liechtenstein to take action, saying has come from campaigners in the sion. It will have to stand up to development impact of off-shore it was undermining its budget by Tax Justice Network (TJN) (see major shareholders, like the UK, financial centres would be a valu - facilitating tax evasion. At the Update 49). On their blog they cite a which allow secretive accounting able contribution to the governance launch of an IMF report on his legal expert who states: “the way the and financial practices that should and anti-corruption agenda”. This country in early March, Liechten- IMF has been conducting its ROSCs be outlawed. followed Norway’s request to con - stein prime minister Otmar Hasler has led to turning its offshore finan - Proposing windfall taxes duct a study on the more than $500 picked out the positive messages – cial centre surveillance process into a billion that illicitly flows out of that “the praise by the IMF shows grant of a seal of approval”. In a It emerged in February that French developing countries each year (see that we are on a successful path of March comment in the Financial president Nicolas Sarkozy has asked Update 57). But it appears that the reform” and that “most of the IMF’s Times , TJN members John the IMF to study whether a windfall Bank is backing away from its pres - recommendations will be taken up Christensen and David Spencer tax could be levied on corporate ident’s promise and instead plans in our implementation of the Third argued that the current official ini - profits, according to a statement to organise a conference at the end EU Money Laundering Directive, tiatives, including the IMF’s reviews from French finance minister of 2008, with unspecified input which is imminent”. In fact the IMF are “legitimising the illegitimate” Christine Lagarde. Sarkozy has papers. NGOs continue to push for report found “discrete and flexible because they ignore banking prac - asked the Fund to think of a world - a full study with external peer legal structures, strict bank secrecy tices that facilitate tax evasion. wide tax on oil companies’ profits. review mechanisms. and favourable tax arrangements”. TJN has called for companies to The global commodities boom Liechtenstein: Detailed assessment report Some 90 per cent of the country’s provide country by country break- gives new negotiating power to on anti-money laundering financial business is from abroad downs of where they take their prof - countries that export raw materials. www.imf.org/external/pubs/ft/scr/ and “by its nature, Liechtenstein’s its to help eliminate the transfer pric - The Zambian government has ◊ 2008/cr0887.pdf financial sector business creates a ing that facilitates tax evasion. This toughened its treatment of extractive particular money laundering risk”. call is echoed by three German industry contracts that were origi - Stop this timidity in ending tax haven UK parliamentarians pressed NGOs in a report on public finance nally promoted as part of World abuse, Tax Justice Network IMF managing director Dominique written by Jens Martens: “It is the Bank and IMF conditionality. It is ◊ www.ft.com/cms/s/8f8a5770-ea55- Strauss-Kahn about the potential for industrialised countries, particularly demanding higher royalties from 11dc-b3c9-0000779fd2ac.html the Fund to better police tax havens the EU, the USA and the institutions mining multinationals which were The precarious state of public finance during his mid-March visit to that they dominate – the IMF, the given tax concessions as part of ◊ www.globalpolicy.org/eu/en/publ/ London. Strauss-Kahn was report - World Bank and the WTO who are Bank-supported efforts to improve martens_precarious_finance_2007.pdf edly wary of the IMF becoming responsible for the erosion of rev - the ‘investment climate’. more involved, saying that the Fund enue bases … The effective taxation Zambian president Levy The World Bank and IMF’s long shadow must stick to the mandate given by of transnational corporations, the Mwanawasa has announced the over Zambia’s copper mines, Eurodad shareholders. That mandate fight against corruption and the cancellation of all tax concessions for ◊ www.eurodad.org/aid/report.aspx? includes the Fund surveillance pro - repatriation of embezzled money copper mining companies operating item=2108

Conditions demanded IMF pension reform IMF rebukes Tajiks over Fund trade advice in on IMF gold sales prompts Turkish strikes false information the crosshairs

A coalition of 60 US NGOs, including large In early April Turkish unions launched a Tajikistan has gotten itself in hot water with The Independent Evaluation Office (IEO) labour unions, wrote to Congress in March mass demonstration to protest against the IMF over poor reporting of information released the draft issues paper for its to demand that planned IMF gold sales plans for pension and health insurance while the country was borrowing money planned evaluation of the IMF’s trade policy pay for debt relief as well Fund as adminis - reform. This follows an early March two from the Fund. The authorities failed to advice. While past IEO reports have tended trative expenses. They also “urge that hour “warning strike”. The social security mention that they had guaranteed a com - to look at whether IMF practice is following before authorising gold sales, Congress reform is a condition of the IMF’s stand-by mercial loan of $500 million to the cotton policy, the issues paper indicates the evalu - insist on meaningful reforms in IMF policy arrangement (SBA) with Turkey, and failure sector, which if defaulted upon would have ation “will aim to move beyond the question in developing countries” including an end to fulfil it could delay the next loan dis - increased sovereign debt by 50 per cent. of whether the IMF’s role should be more to overly restrictive macroeconomic targets, bursement of $1.3 billion under the pro - The IMF also found misreporting of the focused and address questions of whether an exemption for health and education gramme due to expire in May. The Turkish level of international reserves in order to … critics of the IMF’s positions have a solid spending from budget ceilings, transparen - economy minister Mehmet Simsek appear to be in line with IMF conditions. basis”. That will include criticisms that the cy at the IMF, and more participation of announced in late March that a new SBA The IMF demanded repayment within six IMF’s trade policy advice has not been civil society in the formulation of IMF pro - was unlikely because the government did months after taking into account even handed and that it has constrained grammes. This effort builds on a February not need the money, but concluded that Tajikistan’s “very difficult economic circum - developing country policy space (see briefing published by Jubilee USA about some sort of IMF programme, such as a stances … as well as the severe humanitari - Update 47). The IEO welcomes comments the use of the proceeds of IMF gold sales. precautionary arrangement, would be an crisis prevailing in the country”. on the issues paper. signed. ◊ www.ifiwatchnet.org/node/7929 ◊ www.imf.org/external/np/sec/pr/ ◊ www.ieo-imf.org/eval/ongoing/ 2008/pr0843.htm Trade_IP.pdf 10 BRETTON WOODS UPDATE NUMBER 60 – MARCH/APRIL 2008

“Achieving a single euro area chair IMF governance renovations: in international fora has so far been considered an objective for the longer term. But the world is mov - fresh paint while foundations rot ing faster and we need to reconsider our timetable … we cannot avoid The shareholders of the IMF have squandered the political will for governance reform of the insti - pressing member states to move for - tution by making marginal changes that will fail to shift the balance of power. ward on this issue.” But Almunia’s timetable, measured in years not The Fund’s members have been the compromise inadequate: “The nations to work with us to reduce the months, seems timid. debating how to revamp the formu - image to have in mind is that of a number of chairs … in doing so, the Other governance issues have la that sets voting rights at the insti - decades-old building in need of number of developing and emerg - yet to be sorted out. African execu - tution for more than two years (see major repairs and renovation. The ing market country chairs should be tive directors were given an addi - Update 51). Much rancour has been plumbing is ancient. The roof is preserved. … We also advocate an tional alternate director, thereby directed at Europe, which has been leaking in places. Termites have amendment to the Articles so that all increasing their capacity to handle the obstacle to quicker progress. A been found in the support joists in executive board members are ‘elect - large work loads, but the budget deal was finally approved by the the basement. What is on offer is, ed,’ abolishing the current practice freeze means this will likely be off - IMF board end March and sent to essentially, a fresh coat of paint in of ‘appointed seats’ for the five set by fewer advisors. The resigna - the IMF board of governors for the entrance hallway and the fixing largest shareholders.” tion of Italian Tommaso Paddoa- approval. The total increase for of some broken glass panes in the Without saying so , McCormick Schioppa from the post of IMFC developing countries, if the gover - windows facing the street.” targeted Europe . An end to appoint - chair, in the wake of his govern - nors approve the resolution, is only One of the few officials willing to ed chairs would facilitate the consol - ment’s collapse in Italy, may give 1.6 percentage points, meaning that comment was the director of the idation of representation for the impetus for the IMFC to finally be rich countries, representing about 15 South Centre, a Geneva-based inter - three European countries with such chaired by a developing country per cent of the membership of the governmental think tank for devel - seats: the UK, France and Germany. (see Update 58). The delay of a IMF, will continue to wield 60 per oping countries, Yash Tandon. He Ted Truman of the US think tank the review of the Fund’s transparency cent of the voting rights. welcomed the recognition of the Peterson Institute concluded: policy has rankled civil society who The final quota formula included need for changes but felt that they “everyone knows what needs to be have written to IMF managing some use of GDP measured at pur - "do not go far enough to remedy the done to break this logjam: dramatic director Dominique Strauss-Kahn chasing power parity (PPP), a key governance imbalance in the IMF. consolidation of European represen - to complain of being shut out of the demand of developing countries, What is being proposed is too little tation.” NGOs across Europe have process of Fund reform. as part of the increase of the weight and preserves developed country been pressing this point both in their Reform of quota and voting shares in the of GDP in the formula. The new control over the IMF. ... The real capitals and with European Union IMF, Ralph Bryant formula continues to use trade issue is how developing countries institutions in Brussels. ◊ www.g24.org/bray0308.pdf openness, which the G24 group of can have a stronger 'voice' in shap - The European Parliament con - Remarks by David McCormick devel oping countries has repeatedly ing how the institution is run. This curred in 2006 (see Update 50) and called flawed because it is highly means that other aspects of IMF now the European Union commis - ◊ www.treas.gov/press/releases/ correlated with GDP and it tends to governance must also be dealt with". sioner for economic and monetary hp861.htm favour small rich countries with lots The board of governors still must affairs Joaquín Almunia, the closest NGO letter on IMF reform of trade. As before, the formula also agree to the deal, by end-April. the EU has to a finance minister, ◊ www.ifiwatchnet.org/node/7893 uses the variability of trade and invest - Because it alters the IMF’s Articles gave a speech in January recognis - ment flows and the amount of inter - of Agreement, the deal must also be ing the need for faster movement. national reserves. A small compres - ratified by legislatures in some sion factor has also been introduced. member states, like the US. This The total size of quotas will be leaves a chance it could be rejected. Bank review kicked into long grass increased by 9.5 per cent, with only News reports indicate opposition the new shares being distributed on the board from some emerging In late 2006, then-president Paul Wolfowitz initiated a process to come up with a along the lines of the new formula. markets who stand to lose, notably long-term strategic vision for the World Bank. Former chief economist François If the entire quota were adjusted Russia, Iran, Egypt, Indonesia and Bourguignon published a background paper before his retirement last October (see to the new formula automatically, it Kenya. But they concede that the Update 57). In a speech at the 2007 annual meetings, new president Robert would actually shift voting weight reforms will likely go ahead. Most Zoellick announced six “strategic themes”: the poorest countries, post-conflict coun - to rich countries at the expense of developing countries think this is tries, middle-income countries, global public goods, the Arab world and the Bank’s middle- and low-income ones, a the best deal possible at this time so knowledge function. Bank watchers have been trying to decipher what this means problem identified as early as 2006 have resigned themselves to the for the planned strategic review. At a meeting between European executive direc - (see Update 53). To achieve the com - minor changes. Bryant would prefer tors and NGOs in February, the officials claimed that they were also being kept in mitted goal of increasing the voting more resistance, saying in a G24 the dark about the review. weight of developing countries, technical paper: “For the short run, The Bank’s vice-president for external affairs, Marwan Muasher has said that basic votes, which are given in a set ‘nothing’ is a better gamble than an the institution will be holding “two rounds of broader communication about these amount to every member of the IMF, inadequate ‘something’.” thematic areas, both internally and externally”, stressing that “this will be an ongo - will increase from 2.1 to 5.5 per cent Board reform still off the table ing process, not a finite one - Bob Zoellick has described it as a ‘network of conver - of the total. This is still below their sations’”. The process could continue “over the next year or two”. No formal global highest level of almost 16 per cent. Part of the problem is that the quota consultation is planned because, as Muasher explains, “we don’t think it would Additionally the US will forego reform is being discussed in isola - work well and we can use other channels for getting input”. any quota increase. It promised in tion from other elements of gover - The exception to this is work on the Arab world. Zoellick and other senior staff 2006 to not increase its quota share nance reform. While European dom - will be making trips to the region and further consultations are planned including beyond its pre-reform level. In the inance of the board is becoming a a meeting with “prominent thinkers” in Egypt in May. Consultations so far have final bargaining, official sources tell hot issue, the quota reform was included: Arab and Islamic funds; visits to Egypt, Jordan, Morocco, Bahrain, UAE, the Bretton Woods Project that the agreed without any compromise on Kuwait and Oman; the Arab League; and “several Arab civil society groups”. US accepted remaining at their the issue of representation. At the end of March, the Bank was due to begin work on its regular bi-annual slightly lower current quota share, In a February speech, US Treasury poll of “global opinion leaders”. This iteration will cover, amongst other topics, the but that in return they expected all under secretary for international six strategic themes. According to Muasher, the results of this poll “will be disclosed the other countries on the board not affairs David McCormick fired a eventually, after the board has seen it - but that will not be for many months”. to publicly complain about the final shot across the bow of Europe: “The Descriptions of the work being done are to be posted on the Bank’s website, and compromise. executive board is simply too large, online discussions with leaders of the thematic groups are planned. A ‘dialogue Ralph Bryant, a scholar at the US- too inefficient, too costly, and too session’ with civil society is planned for the spring meetings. based Brookings Institution, called unrepresentative … we call on other 11 BRETTON WOODS UPDATE

2008 World Bank-IMF IFC challenges highlighted in the Middle East: spring meetings schedule Doing Business indicators come under fire Official meetings By Amy Ekdawi, Bank Information Center 11 April Meeting of G24 group of developing countries and G7 The International Finance Corp- be required to make up for lost rev - finance ministers oration (IFC), the private sector arm enue by doubling the general sales 12 April International Monetary and Financial Committee meeting. of the World Bank, is rapidly tax to 10 per cent in 2009. Other pro - Tentative agenda: Global economic outlook; IMF quota increasing its investment in the posed reforms include ending reform; progress reports on the activities of the IEO Middle East and North Africa region domestic fuel subsidies by 2010 and 13 April Development Committee meeting (MENA), raising questions about the cutting wages and salaries by 1.6 per Tentative agenda: development value of its activities. cent of GDP. With 42 per cent of • poverty in low-income countries (particu - MENA is the fastest growing Yemenis living in poverty, the Bank larly Africa), including achieving the region in the IFC’s portfolio, with estimates that the elimination of Check back MDGs, growth strategies, and higher investments doubling from $670 petroleum subsidies will increase for regular commodity prices; million in 2006 to $1.2 billion in the poverty rate by 9.2 per cent. The updates from the 2007. The portfolio in 2007 consist - spike in global food prices could • strategy for Bank engagement in Bretton Woods Project fragile and post-conflict states; and ed of 41 projects primarily invested lead to a further 6 per cent increase. during and after the in financial institutions. Investment The introduction of a higher regres - • further discussion on: food and meetings will surpass $1.5 billion in 2008. sive sales tax will also hit the poor energy prices, voice and representa - During a January visit to Saudi the hardest. tion at the Bank Arabia, IFC head Lars Thunell Not Doing Business World Bank, civil society events expressed the IFC’s commitment to help expand housing finance - a pri - Influential in the region has been the 9 April Karachaganak oil and gas field in northwestern Kazakhstan ority area for the IFC. He signed a IFC’s annual Doing Business indica - 10 April Meeting with the Inspection Panel, use of country systems, public-private partnership agree - tors, which rank countries on how implementing the anti-corruption strategy, CSOs and Bank ment with the General Authority of ‘business friendly’ they are (see training, the IFC in India Civil Aviation to work closely with Update 57). Egypt topped the list of 11 April World Bank’s six strategic themes, IFC and IDA, review of the the Saudi government in developing reformers in the most recent report Bank's CSO engagement, aid effectiveness, update on the three “airport cities” in the country. released last October. The week of CAO, macroeconomic consequences of climate change, water This in one of the richest countries the report’s release, 27,000 employ - privatisation in Ecuador in the world currently enjoying an ees of the country’s largest textile 12 April Extractive industries revenue transparency, capital flows to unprecedented oil bonanza. mills, most of whom receive salaries low-income countries Yemen is the poorest country in below the poverty level, went on 13 April World Bank/Bechtel investment in Ecuador's water system the region and one of the ‘frontier strike demanding higher wages and countries’ that the IFC has commit - benefits. Saudi Arabia was also For full details of events, contact information for groups in Washington for the meetings, blogs of the events and links to documents released by ted to focus on (see Update 58). among the top reformers, receiving 60 While oil revenues currently account the best possible score on the civil society, visit for three-fourths of Yemen’s rev - ‘employing workers’ index, despite ◊ www.ifiwatchnet.org enues, experts expect that it could its prohibitions of freedom of associ - become a net crude oil importer by ation, the right to organise and col - 2011. The IMF and the World Bank lective bargaining. Special issue: Feedback wanted have emphasised the importance of The Bank’s own evaluation unit This expanded issue of the Bretton Woods Update is part of a trial initiative to diversification, however a signifi - is due to release an evaluation of the bring you broader insights into the international financial institutions. It was cant part of the IFC portfolio Doing Business indicators. That eval - produced in conjunction with colleagues at NGOs Afrodad, Bank Information remains in the oil and gas sector. uation has been pre-empted by a Center, Choike, and Eurodad. Please send us your feedback and comments. Despite trumpeting the impor - study commissioned by the [email protected] tance of small and medium enter - Norwegian ministry of foreign prises to build the backbone of fron - affairs. Conducted by the ESOP tier countries’ economic systems, the research centre at the University of IFC has yet to invest in them in Oslo, the study questions the value Yemen. It has decided to cooperate of the indicators as a policy tool. The mainly with stronger private groups indicators, assuming that they do after it “suffered in the past from cPaupbltiushred tbhyeBreutntodneWrloyoidnsgProbjuecstiness dealing with weak sponsors”. Out einnvcoir-pornomduecntiot,nawreith not able to “clear - of the six projects that the IFC has ly distinguish the quality of the busi - co-produced by approved for Yemen in the last two ness environment of an economy years, two are owned by the same ranked at number 75 from one well-established Yemeni investor, ranked at number 40”. While ques - the HSA Group. tioning the indicators’ assumption ◊ afrodad.org ◊ bicusa.org ◊ eurodad.org ◊ choike.org In March the IFC organised a that extra labour costs are always workshop for Yemeni government bad for business, the study finds the No permission needed to reproduce articles. Please pass to colleagues interested in officials and the private sector to dis - effect of the ‘employing workers the Bank and Fund, and let us know of other groups interested in getting the Update. cuss the country’s tax reform index’ on the overall ranking mar - The Update is available in print, on the web and by e-mail. process. The initiative is one of a ginal. The authors call on the IFC to Subscriptions: www.brettonwoodsproject.org/subs series of conditions introduced by be more transparent about its Spanish: www.brettonwoodsproject.org/es/boletin the Bank with its latest $50 million methodology, and warn against Bretton Woods Project IDA grant to support the Yemeni governments designing policies to Hamlyn House, Macdonald Road, London N19 5PG, UK government’s economic reform pro - improve their position in the rank - +44 (0)20 7561 7610 gramme. While the IFC takes the ings. +44 (0)20 7272 0899 lead on advising the government to Bank Information Center MENA page, [email protected] lower corporate taxes to be “in con - ◊ www.bicusa.org/en/Region.18.aspx www.brettonwoodsproject.org formity with international norms” IFC MENA page as mandated by the IMF, Yemen will A publication of an independent non-governmental organisation, supported ◊ www.ifc.org/mena by a network of UK NGOs, the C.S. Mott Foundation and Oxfam Novib.

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