The world bank, asian development bank and human rights developing standards of transparency, participation and accountability

ACHR American Convention on Human RightsADB Asian Development Bank AP Affected PersonsASEAN Association of Southeast Asian NationsBCRC Board Compliance Review CommitteeBIC Board Inspecti

The World Bank, Asian Development Bank and Human Rights

The World Bank, Asian Development Bank and Human Rights

Developing Standards of Transparency, Participation and Accountability

© Sanae Fujita 2013All rights reserved No part of this publication may be reproduced, stored in aretrieval system or transmitted in any form or by any means, electronic, mechanical

or photocopying, recording, or otherwise without the prior permission of thepublisher

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1 The World Bank, Asian Development Bank and human rights 20

2 Human rights critique of the World Bank and Asian DevelopmentBank’s information disclosure policy 85

3 Human rights critique of the World Bank and Asian DevelopmentBank’s participation policy 147

4 Human rights critique of the World Bank and Asian DevelopmentBank’s inspection policy 196

5 Case studies: Human rights analysis of inspection cases of theWorld Bank and Asian Development Bank 245

The activities of international financial institutions exact a profoundinfluence on the enjoyment of human rights In recent years, research andlegal scholarship has made significant progress in developing a betterunderstanding of the human rights impact of these institutions, as well astheir obligations under international law The focus, however, has been onthe roles of the World Bank and the International Monetary Fund due tothe reach and scope of their activities The regional development bankshave not been subject to comparable, rigorous, in-depth academic scru-tiny through a human rights ‘lens’ In examining the Asian DevelopmentBank (ADB), this book takes an important, timely and welcome steptowards addressing this omission

Transparency, participation and accountability are crucial to therealisation of other human rights The human rights community has beenslow to move from espousing such human rights to proposing practicalmeasures through which development practitioners and internationalfinancial institutions may implement them In the development context,human rights are often seen as without practical application and Dr

Sanae Fujita responds to this compelling criticism Drawing on dence, and analysing the work of development institutions, she offersstandards on the applicability of transparency, participation and account-ability to the day-to-day operations of the World Bank and ADB;

jurispru-illustrates how these norms can enhance the Banks’ activities; andsuggests how they might be achieved in practice, for example, byinclusion in operational manuals By using World Bank and ADB casestudies, Dr Fujita describes how human rights standards would enhancethe Banks’ operational activities Adopting a human rights perspective,she considers some of the controversial projects implemented by theseBanks and explains how the application of human rights standards couldhave prevented, or at least mitigated, some of the problems generated bythese initiatives

From its inception, the ADB has been significantly influenced byJapan, with a majority of its high-level staff, including all presidents,being Japanese As a native Japanese speaker, Dr Fujita was able tointerview ADB personnel whose views are rarely examined in the

existing English literature She also conducted face-to-face interviewswith World Bank staff, consultants to international financial institutionsand representatives of key civil society organisations Through herextensive interviews, Dr Fujita obtained valuable information much ofwhich has not previously been seen in the public domain The author wasalso involved in the review processes of some of these Banks’ policies.

The insights gained from these experiences deepens her understandingand analysis, enabling readers to more fully appreciate and comprehendthe complexity of protecting human rights with donor countries, borrow-ing countries, bank management and civil society organisations havingdifferent interests and priorities Dr Fujita reminds us of the criticallyimportant role that human rights can play

Opening up new perspectives, this book is a major and originalcontribution to the literature

Professor Paul HuntSchool of Law, Human Rights Centre

University of Essex

This book is based on my PhD thesis from the University of Essex,which was successfully defended in February 2008 Although it isimpossible to make a complete list of people who have made contribu-tions to this lengthy project, I would like to take this opportunity toexpress my appreciation, especially to the following people

An enormous amount of gratitude goes to Professors Paul Hunt andJanet Dine, who were my PhD supervisors Professor Hunt has inspired

me immensely through our discussions and professional lectures Duringand after my doctorate, he also gave me many opportunities to attend UNand other human rights meetings, which turned out to be valuableoccasions for obtaining information and ideas that were essential for theresearch for this book I thank Professor Dine for our weekly conversa-tions, and for her encouragement, which assisted me greatly in keeping

me motivated throughout the long and isolated journey of preparing aPhD thesis During and after my doctorate, she continued to provide mewith insights which deepened my understanding of my research I thankher for her support and advice while I was turning my PhD thesis into abook

I would also like to sincerely thank Professor Sigrun Skogly who,having examined my thesis, provided valuable comments in the process

of turning it into a book I also thank Dr Mac Darrow for hisencouragement for my research and publication of my thesis as a book

I thank Professor Sheldon Leader who supervised my LLM at theUniversity of Essex where I began researching International FinancialInstitutions (IFIs) and Human Rights He encouraged me to continue todevelop this theme for my doctorate, even though I originally intended tochoose a different theme I appreciate his insightful guidance I also wish

to thank Professor Ian Nearly for drawing my attention to “Japanese IFI”

– Asian Development Bank (ADB)

I am very grateful to Professors Yozo Yokota and Kaoru Obata for theiradvice which deepened my understanding of the research and theirencouragement to pursue my PhD in the UK My work has also benefitedfrom invaluable information and comments provided by Professor DavidHunter, Dr Margot Salomon, Dr Sejal Parmar and Professor John

Packer My appreciation is extended also to Professors Sato Kan Hiroshi,Yoshiaki Nishikawa and Atsuko Ohashi for their assistance in deepening

my understanding of issues of “participation”

Finally, I would like to express my sincere gratitude to the lateProfessor Kevin Boyle He served as a great advisor to my research bothduring and after my doctorate Even a few weeks before his untimelydeath, I was privileged to discuss with him the information disclosurepolicies of IFIs, and I learned from his unlimited enthusiasm of humanrights issues and was given warm encouragement to complete my book Ithank his family as well for their friendship and have many preciousmemories from those times in Essex They even accommodated me for afew days while I finalised this book

Most importantly, my appreciation goes to my family and friends inJapan Both intellectually and emotionally, they have been a greatsupport Lastly, I wish to thank my colleagues at the University of Essex

Our stimulating discussions have always played an important part in myresearch

I was privileged to have conversations and to conduct interviews tosupplement my research based on primary and secondary literature I wasable to conduct interviews with Executive Directors and high levelpersonnel of ADB in its annual meetings, consultations with civil society,and ADB’s headquarters office in Manila In addition, I benefitted fromfruitful communication with personnel of the World Bank (former andcurrent), consultants and staff of ADB, and civil society organisationswhich monitor these banks Some interviewees requested anonymitywhich has been respected

ACHR American Convention on Human RightsADB Asian Development Bank

AP Affected PersonsASEAN Association of Southeast Asian NationsBCRC Board Compliance Review CommitteeBIC Board Inspection Committee

BP Bank PoliciesCAS Country Assistance StrategiesCDD Community Driven DevelopmentCEDAW International Convention on the Elimination of All Forms

of Discrimination Against WomenCERD Convention on the Elimination of All Forms of Racial

DiscriminationCESCR Committee on Economic, Social and Cultural RightsCHR Commission on Human Rights

CHRI Commonwealth Human Rights InitiativeCIDA Canadian International Development AgencyCPS Country Partnership Strategy

CRP Compliance Review PanelCWPRP China Western Poverty Reduction ProjectDMC Developing Member Country

EA Environmental AssessmentEBRD European Bank for Reconstruction and DevelopmentECHR European Convention for the Protection of Human Rights

and Fundamental FreedomsEIA Environmental Impact AssessmentEMP Environmental Management Plan

ES Environmentally Sensitive

EU European UnionFPIC Free Prior and Informed Consent

GA General Assembly (of the UN)GPs Good Practices

GTI Global Transparency InitiativeHIPC Heavily Indebted Poor Country

IAP Independent Appeals PanelIBRD International Bank for Reconstruction and DevelopmentICCPR International Covenant on Civil and Political RightsICESCR International Covenant on Economic, Social and Cultural

RightsICT International Campaign for TibetIDA International Development AssociationIEE Initial Environmental ExaminationIFC International Financial CorporationIFIs International Financial InstitutionsIGOs Intergovernmental OrganisationsIHRC Irish Human Rights CommissionILO International Labour OrganizationIMF International Monetary FundIPDP Indigenous People’s Development PlanJBIC Japan Bank for International CooperationMDBs Multilateral Development Banks

MDGs Millennium Development GoalsNGOs Non-governmental OrganisationsNHA National Highway AuthorityNTF Nordic Trust Fund

OAS Organization of American StatesOCR Ordinary Capital ResourcesOCRP Office of Compliance Review Panel

OD Operational Directive (of the World Bank)OED Operations Evaluation DepartmentOHCHR Office of the High Commissioner for Human Rights

OM Operational Manual (of the World Bank)

OM Operations Manual (of ADB)

OP Operational Policy (of the World Bank)

OP Operational Procedure (of ADB)OSCE Organization for Security and Co-operation in EuropeOSPF Office of Special Project Facilitator

PCD Project Concept DocumentPCR Project Completion ReportPDAC Public Disclosure Advisory CommitteePIC Public Information Centre

PID Project/Programme Information DocumentPPTA Project Preparation Technical AssistancePRA Participatory Rural Appraisal

PRGF Poverty Reduction and Growth FacilityPRSP Poverty Reduction Strategy Paper

RCS Regional Cooperation StrategiesRETA Regional Technical AssistanceRRPs Report and Recommendations of PresidentsSAL Structural Adjustment Loans

SAP Structural Adjustment ProgrammeSES Special Evaluation StudiesSPF Special Project FacilitatorTIN Tibet International NetworkUDHR Universal Declaration of Human Rights

UN United NationsUNDP United Nations Development ProgramUNDRIP UN Declaration on the Rights of Indigenous PeoplesUNECE UN Economic Commission for Europe

UNRISD UN Research Institute for Social Development

About the author

Sanae Fujita is a member of the School of Law and Human RightsCentre at the University of Essex, and teaches the foundation of humanrights as well as human rights in the Asia-Pacific region She is also avisiting scholar at Aoyama Gakuin University in Tokyo, Japan

She has been engaged in policy reviews of the World Bank and theAsian Development Bank and teaches her area of expertise regularly both

in the UK and Japan

She holds a PhD in Law and an LLM in International Human RightsLaw from the University of Essex as well as an MA in InternationalDevelopment from Nagoya University, Japan

The activities of the International Financial Institutions (IFIs)1 have asignificant impact on people’s lives and their human rights The obliga-tions of the IFIs regarding human rights have been a hotly debated issueover the last few years, notably in the UN Sub-Commission on HumanRights and the Commission on Human Rights which adopted severalresolutions and decisions regarding the negative effects of StructuralAdjustment Programmes (SAPs) on the full enjoyment of human rights.2

In addition, the negative influences of the World Bank’s developmentprojects – such as involuntary evictions and serious environmental andsocial impacts – also have been criticised.3

From this perspective, this book argues that human rights standardsshould be developed in order to hold IFIs accountable for their decisionsand for the impacts of their operations As the Special Rapporteur on theright to food has observed: “These organizations are so powerful todaythat they have enormous influence on the policy and programmes ofnational governments, particularly in the poorer, weaker countries thatare heavily indebted to the international financial system.”4Thus, I argue

in support of Reinisch who observes that:

1 The term Multilateral Development Banks (MDBs) refers to the WorldBank Group and four Regional Development Banks including ADB The termInternational Financial Institutions (IFIs) refers to MDBs plus IMF This bookwill use “MDBs” for issues particularly related to Development Banks and

“IFIs” for issues of financial institutions generally

2 E.g., UNCHR (Sub-Commission) Res 1995/32 “Effects on the FullEnjoyment of Human Rights of Structural Adjustment Programmes” (24 August1995), UNCHR decision 1998/102 “Effects of Structural Adjustment Policies onthe Full Enjoyment of Human Rights” (9 April 1998)

3 E.g., J Fox and L Brown (eds), The Struggle for Accountability: the World Bank, NGOs, and grassroots movements (MIT Press 1998), especially

Part II

4 UN Commission on Human Rights (CHR), “The Right to Food: Report ofthe Special Rapporteur on the Right to Food, Jean Ziegler”, UN Doc E/CN.4/

2006/44 (2006), para 39

If it is true that “with power comes responsibility” then it is only logical todemand human rights observance by those non-state actors which are now aspowerful as some states and may thus violate human rights in the same way

as states.5

Accordingly, this book will examine the World Bank and the AsianDevelopment Bank (ADB) as two of the world’s most powerful inter-state actors and IFIs

In the area of scholarly research on IFIs and human rights, the focushas been mainly on the World Bank and the IMF This is probably due tothe worldwide membership and influence that these institutions cancommand As UN specialised agencies, these institutions can easily drawboth attention and criticism from within the UN and from other actors inthe human rights arena In addition, they (especially the World Bank) areseen by other regional IFIs as a benchmark for preparing and conductingpolicies and activities Moreover, by being based in Washington DC, USexperienced activists and NGOs can easily draw attention to any prob-lems arising with these institutions

It is interesting that there has been no scientific or empirical humanrights research concerning ADB This is remarkable because ADB is thesecond largest institution operating in the field of development in Asiaand the Pacific Indeed, its size and impact is growing following itsmember countries’ agreement in 2009 to triple ADB’s capital.6 Inaddition, the Asia-Pacific region accounts for more than half of the

5 A Reinisch, “The Changing Legal Framework for Dealing with Non-State

Actors” in P Alston (ed.) Non-State Actors and Human Rights (Oxford

Univer-sity Press 2005), 37–89 at 74, 75 Regarding the limited treatment of non-stateactors in the current international legal regime, Alston criticises internationallegal practice for preventing reform of this limitation He summarises theproblems as follows: “(i) the international legal framework is and will remainessentially state-centric; (ii) there is a very limited formal role for otherinternational actors, although their participation in international decision-makingprocesses is often desirable; (iii) transnational corporations should perhapsaccept some moral obligations: but (iv) they have no clear legal obligations inrespect to human rights apart from compliance with the law of the particularcountry in which they are operating This is hardly a clarion call for reform… ”

P Alston (2005), “The ‘Not-a Cat’ Syndrome” in P Alston (ed.) Non-State Actors and Human Rights (Oxford University Press 2005) 3–36 at 36.

6 This capital increase [Ordinary Capital Resource (OCR) 5] triples ADB’scapital bases from $55 billion to $165 billion ADB, “Over 80% ofADB Member Countries Subscribe to General Capital Increase” (28 January2011) http://beta.adb.org/news/over-80-adb-member-countries-subscribe-general-capital-increase (last accessed 15 July 2011) By contrast, the capital of other

world’s population, and more than 600 million people in the region stilllive in absolute poverty (defined as living on less than $1 a day) Almosthalf of the world’s poorest people live in South Asia.7ADB therefore hasconsiderable influence on the lives of a great number of people, includingthe poor ADB presents similar human rights problems to the World Bank– NGOs have been criticising ADB for the negative effects of itsactivities.8 Therefore, ADB similarly deserves to be subject to closescrutiny and careful analysis.9

Considerable research has been conducted by human rights scholarsand activists on the human rights impact of the programs of the WorldBank and IMF.10 One of the principal areas of research explores a legalargument that endows IFIs with human rights obligations.11 Currently,international human rights law does not provide any mechanism fordealing with non-State actors, though some work has been done to try totackle this problem.12

MDBs after the increase is: the World Bank (IBRD), $270 billion; American Development Bank, $170 billion; African Development Bank, $104billion; European Bank for Reconstruction and Development (EBRD), 30 billionEuros

Inter-7 ADB, Strategy 2020: The Long Term Strategic Framework of the Asian Development Bank 2008–2020 (ADB 2008), para.10.

8 For example, about 600 protesters staged a peaceful march against ADBprojects during its Annual Meeting in Hawaii in 2001 ADB, “President ChinoMeets Protesters” (2001), see http://adb.org/AnnualMeeting/2001/Media/chino_

protesters.html (last accessed 18 April 2007)

9 Unlike the World Bank and IMF, ADB is not a UN specialised agency anddoes not have a legal relationship with the UN However, since the UN treatshuman rights problems caused by a variety of actors outside the UN system, such

as transnational co-operations, regional IFIs including ADB can be the subject ofdiscussion of the UN

10 For academic publications discussing the IMF, the World Bank and human

rights, see S Skogly, The Human Rights Obligations of the World Bank and the International Monetary Fund (Cavendish Publications 2001); M Darrow, Between Light and Shadow: The World Bank, The International Monetary Fund and International Human Rights Law (Hart Publishing 2003); W Genugten, P.

Hunt and S Mathews (eds), World Bank, IMF and Human Rights (Wolf Legal Publishers 2003); P Alston and M Robinson (eds), Human Rights and Develop- ment: Towards Mutual Reinforcement (Oxford University Press 2005); B.Ghazi, The IMF, The World Bank Group and the Question of Human Rights (Trans-

national Publishers 2003)

11 See e.g., Skogly, ibid

12 See e.g., Alston (n 10); A Clapham, Human Rights Obligations of Non-State Actors (Oxford University Press 2005).

International law applies only to States Under the traditional concept

of human rights, only States are considered to be bound by human rightslaw – thus only State behaviour can lead to responsibility under inter-national law The State is still seen as the predominant actor in inter-national law However, there is now a growing perception that otherentities, such as international organisations, individuals and companies,have gained some degree of international legal personality,13 and theirhuman rights obligations are being discussed For instance, the UNCommittee on Economic, Social and Cultural Rights considers non-Stateactors’ obligations regarding the right to health:

While only States are parties to the Covenant and thus ultimately accountablefor compliance with it, all members of society – individuals, including healthprofessionals, families, local communities, inter-governmental and non-governmental organizations, civil society organizations, as well as the privatebusiness sector – have responsibilities regarding the realization of the right tohealth.14

This movement demanding human rights accountability on the part ofnon-State actors, including IFIs, has been growing Arguments regardingthe human rights obligations of IFIs consider mainly two inter-relatedapproaches: member countries’ human rights obligations in relation toIFIs and, second, the obligations of the organisation itself As shorthand,this book labels the former an “indirect approach” and the latter a “directapproach”

In the arena of international law, fundamental actors are States IFIsare States’ innovations and are controlled by States Therefore, theindirect route will be examined first

I.1 INDIRECT APPROACH

IFIs are composed of governments These governments have humanrights obligations stemming from the UN Charter and other human rights

13 P Malanczuk, Akehurst’s Modern Introduction to International Law (Routledge 1997) 91–92; R Higgins, Problems and Process: International Law and How We Use It (Clarendon Press 1994) 39; Skogly (n 10) 63.

14 UN Committee on Economic Social and Cultural Rights (CESCR),

“General Comment No.14 in ‘The Right to the Highest Attainable Standard ofHealth (Art.12)’”, UN Doc E/C.12/2000/4 (2000) paras 38, 39

instruments They are obliged to respect human rights, not only tically, but also when they are acting internationally.15 Thus, as Skoglyargues:

domes-These obligations are not directly transferred to the two institutions as such(as they are separate international legal personalities), but the governments areobliged to ensure that the organisations operate in a manner consistent withthe human rights provisions of the UN Charter, and other general principles ofinternational law and international human rights law.16

She continues that “the human rights obligations that each individualState has voluntarily accepted are retained when acting through the IMFand the World Bank.”17 Skogly expands her argument that States havehuman rights obligations in inter-governmental organisations by referring

to the theory of States’ extra-territorial obligations, which deals withdiagonal obligations – the relationship between a State and individuals inanother State – as opposed to vertical obligations, which occur within thejurisdiction of a single State (i.e the State-individual relationship), orhorizontal obligations among States (i.e the State-State relationship) Shesuggests that the strict territorial application of human rights obligations

is now outdated and argues that human rights obligations may wellextend beyond national borders; as such, inter alia, principles of Stateresponsibility need to be applied more systematically to States’ humanrights violations in foreign countries.18 Based on this theory, Skoglyargues that States cannot avoid their human rights obligations in theiractivities as members of inter-governmental organisations, includingIFIs.19

Bergsmo (ed.) Human Rights and Criminal Justice for the Downtrodden: Essays

in Honour of Asbjorn Eide (Marinus Nijhoff 2003) 403–420 at 403–407; S.

Skogly, Beyond National Borders: States’ Human Rights Obligations in national Cooperation (Intersentia 2006) 4, 5, 203 This approach was applied by

Inter-Ziegler He argues that all countries should ensure that their policies do notcontribute to human rights violations in other countries, and states that countries

“must respect, protect and support the fulfilment of the right to food of peopleliving in other territories, to fully comply with their obligations under the right tofood.” E/CN.4/2006/44 (n 4) paras 28, 34

19 Skogly, Beyond National Borders, ibid.196.

The Committee on Economic Social and Cultural Rights also sises Member States’ obligations when they act as members of IFIs,either as recipient countries or donor countries For instance, withreference to Egypt as a recipient country, the Committee states:

empha-The Committee strongly recommends that Egypt’s obligations under theCovenant should be taken into account in all aspect of its negotiations withinternational financial institutions, like the International Monetary Fund,World Bank and World Trade Organization, to ensure that economic, socialand cultural rights, particularly of the most vulnerable groups, are notundermined.20

In addition, with reference to a developed State:

The Committee encourages the Government of Italy, as a member ofinternational organizations, in particular the International Monetary Fund andthe World Bank, to do all it can to ensure that the policies and decisions ofthose organizations are in conformity with the obligations of State parties tothe Covenant, in particular the obligations contained in article 2(1) concerninginternational assistance and cooperation.21

The Maastricht Guidelines22 also state that:

[t]he obligations of States to protect economic, social and cultural rightsextend also to their participation in international organizations, where they actcollectively It is particularly important for States to use their influence toensure that violations do not result from the programmes and policies of theorganizations of which they are members.23

IFIs have human rights obligations via the indirect route That is, as Huntargues, Member States do not just shed these obligations upon entering

20 UNCESCR, “Concluding Observation of Committee on Economic, Socialand Cultural Rights: Egypt”, UN Doc E/C.12/1/Add/44 (2000) para 28

21 UNCESCR, “Concluding Observation of Committee on Economic, Socialand Cultural Rights: Italy”, UN Doc E/C.12/1/Add.43 (2000) para 20 See alsoE/C.12/1/Add.67 para 37 (Japan), E/C.12/2000/21 para 450 (Finland), E/C.12/

2000/21 para 493 (Belgium)

22 Elaborated by a group of more than 30 experts under the auspices of theInternational Commission of Jurists, the Urban Morgan Institute for HumanRights, and the Centre for Human Rights of the Faculty of Law of MaastrichtUniversity

23 Maastricht Guidelines on Violations of Economic, Social, and Cultural

Rights (1997) para 19, reprinted in (1998) 20 Human Rights Quarterly 691, 698.

an IFI.24This argument is important, not only for international assistanceand cooperation through multilateral development agencies, but also forsetting standards of accountability, transparency or any safeguards withinthese institutions Each member country is required to meet internationalhuman rights standards including, for instance, the right to access tojustice (a fair trial) or access to information in their countries Thisstandard should not be lower when States act through internationalorganisations That is to say, in the establishment and review of policiesand mechanisms of accountability or transparency, or any safeguardpolicy in these institutions, Member States should not lower the standardbinding upon them whether by virtue of domestic law or internationallaw which they are applying (or which they are expected to apply) intheir countries Therefore, States should collectively set standards for IFImechanisms which accord with their own standards.

However, difficulties arise from the fact that States have sharedresponsibilities in international institutions It is difficult, in practice, tohold each State fully accountable for the conduct of an entire IFI Thusthe indirect approach is not sufficient to improve institutions’ accountabil-ity In addition, not all States ratify all human rights treaties and thehuman rights obligations of each State differ depending accordingly

These facts cause additional complications when trying to hold IFIsaccountable via Member States

The second perspective to consider is that of intergovernmental isations themselves – not so much as agents of States but as actors inthemselves to be held directly accountable and responsible If this doesnot occur, then there is a gap between effective accountability andresponsibility which is to the detriment of the intended beneficiaries

organ-I.2 DIRECT APPROACH

The direct accountability of non-State actors is underdeveloped in humanrights instruments and in international law in general Discussion on thedirect approach regarding IFIs’ human rights obligations looks at thisissue on the basis of three characteristics of IFIs: through IFIs’ inter-national legal personality, through their status as UN specialised agen-cies, and through their own mandates and commitments

24 See P Hunt, “Using Rights as a Shield” (2000) 6 Human Rights Law and Practice 111 See also J Tooze, “Aligning States’ Economic Policies with Human Rights Obligations: the CESCR Quest for Consistency” (2002) 2 Human Rights Law Review 229.

I.2.1 Obligations through International Legal Personality

Both the World Bank and ADB have an international legal personality.25

International legal persons subject to the provision of international lawwill have rights and obligations stemming from treaty law, customary

international law, general principles of law, and jus cogens Among these

sources, some provisions in the Universal Declaration of Human Rights(UDHR), as customary international law, are frequently cited as a source

of IFIs’ human rights obligations.26

In Skogly’s opinion, since neither the World Bank nor the IMF is party

to any human rights treaty, they do not have the same obligations asStates They have a duty simply to respect human rights or not to makethe situation worse They only have limited obligations to protect humanrights, for instance, through a careful choice of sub-contractors Skoglysees no duty on the Bank or the IMF to fulfil any human rightsobligations.27 However, Darrow interprets the obligations of these insti-tutions more widely.28 Moreover, Clapham suggests:

… if the entity has sufficient legal capacity to be the bearer of internationalobligations, the relevant obligations include multiple aspects of the appropri-ate customary international law of human rights The international financialinstitutions can therefore be said to have obligations, not only to respecthuman rights, but also to protect and even fulfil human rights in appropriatecircumstances … The customary law obligation will go beyond a simpleinjunction to respect the prohibition on racial discrimination in their activities,

or to refrain from acting in a way that immediately denies people the right tolife, or which involves facilitating forced labour The customary obligation

25 For elements of an international legal personality, see e.g., I Brownlie,

Principles of Public International Law (5th edition, Oxford University Press

1998) 680; Higgins (n 13) 47; Skogly (n 10) 64 Skogly identifies the WorldBank’s international legal personality through the international nature of itsmandate and staff, legal personality, privilege and immunity, and ability to enterinto and conclude international agreements These elements can also be found inADB’s Articles of Agreement: possession of legal personality (Art 49), privilegeand immunity (Arts 50–56) and ability to enter into agreement (Art 49)

Therefore, ADB also has an international legal personality Accordingly, as theGeneral Counsel of ADB says, ADB is also subject to international law

Interview with Mr Arthur Michel, General Counsel, ADB (5 May 2005,Istanbul)

26 The extent to which the UDHR’s provisions are binding as a matter ofcustomary international law is an issue of ongoing dispute, Darrow (n 10) 130

27 Skogly (n 10) 151, 193

28 Darrow (n 10) 132, 133

will be to avoid directly violating any human rights and to avoid complicity insomeone else’s violation of human rights obligations.29

In addition, on the basis of studies by academic institutions and NGOs,Ziegler (then UN Special Rapporteur on the right to food) discusses thethree levels of responsibility of international organisations regardingthe right to food: “respect”, “protect” and “support the fulfilment” Theobligation to respect is a minimum obligation, which requires IFIs toensure that their advice, policies and practices do not lead to violations ofthe right This means that IFIs have minimum negative obligations torespect, or not to do harm, in relation to the realisation of the right

Therefore, these organisations should not promote “development” jects that would result in situations which harm the realisation of humanrights such as forced displacement or the destruction of sources oflivelihood Moreover, Ziegler argues that IFIs should not increasepeople’s food insecurity in a given country, for instance, by applyingadjustment measures Such measures should not be implemented withoutcarrying out impact studies on vulnerable groups.30 The obligation toprotect requires international organisations to ensure that their partners,such as States or private actors, including transnational corporations, donot violate human rights.31The obligation to support the fulfilment of aright requires IFIs to facilitate the realisation of the right and to providenecessary assistance when required for all people, including IndigenousPeoples, minorities and vulnerable groups.32

pro-I.2.2 Obligations as a UN Specialised Agency

One of the common explanations given by scholars for the existence ofthe Bank’s human rights obligations stems from its status as a UNspecialised agency For instance, Tomasevski argues that as the WorldBank is part of the UN system, it is bound by the UN Charter whichproclaims the promotion of human rights as one of the main purposes ofinternational cooperation.33 Hunt also states that international humanrights obligations adopted by the UN should be extended to the WorldBank because the Bank is a specialised agency of the UN and a major

international actor whose policies have a profound impact on theenjoyment of social and other rights around the world Further, itsprogrammes affect the ability of States to conform to their own inter-national human rights obligations.34 Although not a legal argument,politically this argument is very important.

Not everyone agrees, however; various legal scholars have put forward

a different view For instance, Yokota argues that since the UN Charter is

a treaty, only member countries and organisations established by thetreaty are bound by it Specialised agencies would not be bound by theCharter because they are neither member countries nor organisationsestablished by the Charter – a legal relationship between the UN andspecialised agencies is established by an agreement between them.35

Thus, Simma also concludes that “before the beginning of the ship, a specialised agency does not yet have rights and duties of its owntowards the UN.”36 Judging from this argument, assigning the WorldBank human rights obligations based on its status as a UN specialisedagency may not be legally persuasive However, it can also be said thatthis shows another example of the limitations of the current internationallegal regime which does not deal with non-state actors in the same way

relation-as States

Contrary to such “traditional theories of international law”, Skoglyargues that if there are any legal implications arising from the relation-ship agreement, then as a commentator and the Special Rapporteur on thedraft Convention on the Law of Treaties between States and InternationalOrganizations state,37 the World Bank (and the IMF) are “legallyobligated not to conduct actions contravening principles and purposes ofthe UN Charter, and also to respect the Charter, including the humanrights provisions.”38 Skogly develops this argument based mainly on thediscussion by the International Law Commission (ILC) regarding the

34 P Hunt, Reclaiming Social Rights: International and Comparative spectives (Dartmouth 1996) 199.

Per-35 Y Yokota, Kokusaikiko no hou kouzou (Legal Structure of International Organisations) (Kokusai Shoin 2001) 227, 228.

36 B Simma (ed.), The Charter of the United Nations: A Commentary

(Oxford University Press 1994) 799

37 Skogly notes that “Amerasinghe claims that international organisationsmay, in certain circumstances, assume obligations under treaties without being aparty to them.” In addition, she quotes the statement of the Special Rapporateur:

“… it would be rather difficult to accept that international organisations, the vastmajority of whose members are State Members of the United Nations, coulddisregard the rules of the Charter”, quoted in Skogly (n 10) 101

38 Ibid 101

Vienna Convention on the Law of Treaties between States and national organisations Accordingly, the ILC concludes that Article 103

inter-of the UN Charter which provides for the supremacy inter-of the UN Charterover any other international agreement, prevails in relation to treaties,first between States and international organisations, and secondlybetween international organisations Skogly observes that the first pointwas also confirmed by the General Counsel of the World Bank.39 Thispoint can be used to argue that agreements the World Bank enters intowith its member countries, which are also UN member countries, will besubject to Article 103.40Regarding the treaties concluded by internationalorganisations, the UN Charter also takes precedence.41 This reasoningcan be applied to any international organisations, including ADB.42

The World Bank’s independence from the UN is another importantissue Article 1(2) of the Agreement between the UN and the WorldBank43 states their relationship: “By reason of the nature of its inter-national responsibilities and the terms of its Articles of Agreement, theBank is, and is required to function as, an independent internationalorganisation.” Further, Article 4(1)(2) of the Agreement states:

1 The United Nations and the Bank shall consult together and exchangeviews on matters of mutual intent

2 Neither organisation, nor any of their subsidiary bodies, will present anyformal recommendations to the other without reasonable prior consult-ation with regard thereto Any formal recommendations made by either

39 Quoted in Skogly (n 10) 101 See also, I Shihata, The World Bank in a Changing World Selected Essays (Vol.1, M Nijhoff Publisher 1991) 102.

40 Skogly (n 10) 102 In this context, the reasoning regarding World Bank’shuman rights obligations is based on member countries’ obligations under the

UN Charter (indirect approach)

41 Ibid 102

42 It is worthy of notice that although regional financial institutions are not

UN specialised agencies, in the Vienna Declaration, the UN suggests that bothinternational and regional financial institutions conducts human rights impactassessments; “the World Conference on Human Rights calls on regional organ-izations and prominent international and regional finance and developmentinstitutions to assess also the impact of their policies and programmes on theenjoyment of human rights.” UN General Assembly (GA), “The Vienna Declar-ation and Programme of Action”, UN Doc A/CONF157/23 (1993) Part II,para 2

43 “The Agreement between the United Nations and International Bank forReconstruction and Development” (signed 15 April 1948) For text see UN Doc

A/349, United Nations Treaty Series, 16 (1949) 342–357, or (1948) 2 national Organization 1, 198–201.

Inter-organisation after such consultation will be considered as soon aspossible by the appropriate organ of the other.

Yokota argues that these Articles do not put the UN in a higher positionthan the Bank but rather create equal relations between the two organ-isations The same also applies to the relationship between the IMF andthe UN.44 He argues that the World Bank and the IMF enjoy relativeindependence from the interference of the UN, and that this makes itdifficult, if not impossible, for the UN to monitor or coordinate theiractivities in the same way as it does those of other specialised agencies.45

Regarding this point, Skogly argues that although the Bank is moreindependent from the UN than many other specialised agencies, there aresome specialised agencies with even looser ties.46

According to Skogly, the independence mandated by the Agreement isfrom interference by the UN, not from international law as representedthe UN Charter.47 Moreover, Skogly argues that the motive of Article63(2), which provides that the Economic and Social Council “mayco-ordinate the activities of the specialised agencies through consultationwith and recommendations to such agencies and through recommenda-tions to the General Assembly and to the members of the UN”, was togather all possible resources for the promotion and fulfilment of thepurposes of the organisation The independent status of the World Bankdoes not change this aim, and should not be interpreted as lessening theobligation of the Bank to observe the principles and purposes of the

UN.48She concludes that “this independence is limited to the UN ability

to direct the work of the two institutions, and not a ‘legal independence’

in terms of not being bound by the general principles and purposes of theCharter.”49

44 Yokota (n 35) 93

45 Y Yokota, “Note for comments on ‘the World Bank, the International

Monetary Fund’” by S Skogly at the conference of International Project on the Right to Food in Development Operationalising the Right to Food and Nutrition

(21–22 August 2000) Geneva (unpublished paper)

46 Skogly cites Simma’s argument, which divides agreements between the

UN and its specialised agencies into three groups Here the relationship betweenthe UN and the IMF and the World Bank is categorised as “relatively loose”,while that of the UN with most of the specialised agencies is “a closerelationship” and that with the old agencies such as UPU and ITU is “less close”

Skogly (n 10) 104

47 Ibid 105

48 Ibid

49 Ibid 109

I.2.3 Obligations through Mandates and Commitments of the World Bank and ADB

The above discussion focuses on scholars’ debates concerning the directapproach To these arguments, I would like to add the mandates andcommitments of these institutions as other potential sources of theirhuman rights obligations The World Bank’s Articles of Agreementproclaim that one of the purposes of the Bank is “the encouragement ofthe development of productive facilities and resources in less developedcountries.”50ADB has an equivalent mandate, which aims “to contribute

to the acceleration of the process of economic development of thedeveloping member countries in the region, collectively and individu-ally.”51 Development is an important aspect of both mandates Theindivisible relationship between development and human rights has beenemphasised by many UN resolutions, notably by the Declaration of theRight to Development.52 Therefore, if they are to fulfil their mandate topromote the “encouragement of development”, these Banks cannot ignorehuman rights considerations in their operations

As is well known, the World Bank and the IMF adopted PovertyReduction Strategy Papers in 1999 ADB also adopted poverty reduction

as its “overarching goal” in the same year.53 As a policy, povertyreduction is not legally binding, but it is a compelling element of theiractivities There has been an increasing recognition of the negativeimpact of poverty on people’s ability to enjoy basic human rights andfreedom since the late 1990s, when the UN system started to examineextreme poverty as a human rights issue.54Not only is poverty reduction

50 World Bank, “Articles of Agreement of the World Bank”, Article 1(i) For

full text, see (1956) 5 International Governmental Organization Also

Inter-national Bank for Reconstruction and Development (IBRD) Articles of ment (amended in 1989) is available at http://go.worldbank.org/W01PGBIFM0(last accessed 25 May 2012)

Agree-51 ADB, “Agreement Establishing Asian Development Bank” (came intoforce on 22 August 1966), Article 1 Full text is available at http://www.adb.org/

Documents/Reports/Charter/default.asp (last accessed 25 May 2007)

52 UNGA Res 41/128 (4 December 1986)

53 ADB “Poverty Reduction – ADB’s Overarching Goal”, available atwww.adb.org/Poverty/ (last accessed 11 September 2007)

54 UNCHR, “Human Rights and Extreme Poverty: Report of the IndependentExpert, Arjun Sengupta”, UN Doc E/CN.4/2006/43 (2000), para 2 In 1998, theCommission on Human Rights established the mandate of the independent expert

on the question of human rights and extreme poverty For the first expert’sreport, see e.g., “Human rights and extreme poverty: Report submitted by

a method for achieving the realisation of human rights for the poor,human rights friendly development projects or policies are essential foreffective poverty reduction World Bank former Senior Vice Presidentand General Counsel Danino also notes that “this conception of thealleviation of poverty has an especially strong human rights dimen-sion.”55

The World Bank and ADB also adopted the Millennium DevelopmentGoals (MDGs) Although the MDGs are not framed in terms of humanrights, they are closely related to them56and therefore, “Economic, socialand cultural rights are at the heart of all the millennium developmentgoals.”57 Danino also recognises that “each MDG can be traced to thefurtherance of one or several core human rights” and points to humanrights provisions to explain the link with each of the MDGs.58Althoughthe MDGs are not enshrined in an international treaty, Alston argues thatjudging from the large number of States committed to the MDGs, there isgood reason to assume that elements of the MDGs are customary law.59

Although further analysis may be needed before insisting that theWorld Bank and ADB have legally binding human rights obligationsarising from these mandates and commitments, at least one can firmly

Ms A.-M Lizin, Independent Expert, Pursuant to Commission Resolution2000/12”, UN Doc E/CN.4/2001/54 (2001) For a second expert, Sengupta’s firstreport, see UN Doc E/CN.4/2005/49 (2005) See also, UNCESCR, “Statement

on Poverty and the International Covenant on Economic Social and CulturalRights”, UN Doc E/C.12/2001/10 (2001)

55 R Danino, “The Legal Aspects of the World Bank’s Work on Human

Rights” (2006) 8 Development Outreach 30, 30.

56 For instance, Hunt, Special Rapporteur on the right to health, examinesMDGs and right to health in his reports, “The Right of Everyone to theEnjoyment of the Highest Attainable Standard of Physical and Mental Health”,

UN Doc E/CN.4/2003/58 (2003) paras 49–55, UN Doc A/59/422 (2004) paras5–54

57 UNGA, “Road Map Towards the Implementation of the United NationsMillennium Declaration (Secretary-General Report)”, UN Doc A/56/326 (2001)para 262

58 R Danino, “The Legal Aspect of the World Bank’s Work on HumanRights: Some Preliminary Thoughts ” in Alston and Robinson (n 10) 509–524 at

521 However, the World Bank’s understanding of human rights is not always thesame as what international human rights law expects This point will bediscussed in Chapter 1

59 P Alston, “Ships Passing in the Night: The Current State of Human Rightsand Development Debate Seen Through the Lens of the Millennium Develop-

ment Goals” (2005) 27 Human Rights Quarterly 755.

argue that for the realisation of their mandates and formal commitments,these Banks need to take human rights into consideration.

I.3 HUMAN RIGHTS ANALYSIS OF POLICIES AND DIRECTIVES

I accept that the direct imposition of legal human rights obligations onthe World Bank and ADB may as yet be undeveloped in internationalhuman rights law However, considering the influence of these powerfulinstitutions, it is essential to develop this approach as well

At the same time, in reality, “although international organizationsclearly have a legal existence that is independent from their MemberStates, their governance and thus their decision-making, is formallydominated by their Member States …” 60 The power balance betweenIFIs and Member States is not clear, thus direct and indirect routes areinterlinked and not clearly separated

As can be seen above, there has been some legal discussion about thehuman rights obligations of IFIs However, the behaviour of theseinstitutions has not been analysed much, either in terms of human rightsnorms and standards per se, or the evolving scholarly critics Given theincreased importance of IFIs, it is necessary to examine their obligationsand behaviours, applying relevant standards

The World Bank and ADB have Policies and Operational Manuals orDirectives which are internal binding documents Although the directapproach needs more theoretical development, there is the possibility ofapplying international human rights standards directly to IFIs By includ-ing international human rights standards in the Banks’ own bindingpolicies or directives, in theory, the possibility of applying such standardsdirectly to these institutions exists In fact, the Banks have been reacting

to movements which seek to incorporate human rights standards withinpolicies, and they have made an improvement to some extent This bookwill analyse the Banks’ behaviour in this regard and efforts to improvepolicies, and the challenges that remain

Many obligations developed in the framework of State responsibilities

do not fit neatly into the obligations of IFIs With this in mind, Idistinguished several obligations most necessary to protect people fromthese powerful organisations and ‘customise’ them for the purpose of

60 D Bradlow and D Hunter, “Introduction” in D Bradlow and D Hunter

(eds) International Financial Institutions and International Law (Wolters Kluwer

2010) xxvi

governing the activities of IFIs Even if the full range of responsibilitiesare not yet accepted in international human rights law, there is a

compelling reason for arguing that IFIs ought to bear these

responsibili-ties, and that designing obligations to “fit” is therefore important for thefuture development of international human rights law

Later in the book I will argue that the IFIs should not only have ahuman rights responsibility in choosing projects, but should also adhere

to human rights standards in the delivery of their projects, notably in their

assessment of the impact of projects on local populations and on theevaluation and inspection of their operations

As already noted, some work has been done regarding the inadequacy

of international human rights mechanisms and non-State actors Thisbook builds upon these arguments and insights In my opinion, IFIs havehuman rights obligations, although legal analysis of this issue is not themain purpose of this research This book goes further and aims to assessthese organisations’ policies through the prism of international humanrights standards and to suggest how these policies could and should beimproved

Although there are many human rights issues regarding these Banks,

an attempt to deal with all of them in one book is unrealistic Therefore,

I have chosen to focus on three human rights: the right to accessinformation, the right to participation and the right to access to justice(especially the right to a fair trial, which is a form of accountability) Byobserving these Banks’ activities, one realises that the Banks’ lack of theguarantee of transparency, participation and accountability often hasserious negative influences on people’s lives Therefore, ensuring thatthese rights are protected provides a foundation for the guarantee of otherrights

In the area of international environment, in Principle 10 of the RioDeclaration on Environment and Development (1992),61 these threeelements (transparency, participation and accountability) are emerging ascritical principles in the context of sustainable development.62The WorldBank and ADB have also been paying attention to aspects of these rights

The World Bank officially states, “… we have been supporting some key

61 UN Doc A/Conf.151/26 See Section 2.1, Chapter 2 of this book

62 D Hunter, “International Law and Public Participation in Policy-Making

at the International Financial Institutions” in Bradlow and Hunter (n 60) 199–238

at 213–215 He also cites “Convention on Access to Information”, or “AarhusConvention” (1998) of the UN Economic Commission for Europe, “AlmatyGuidelines on Promoting the Application of the Principles of the AarhusConvention in International Forum” (2005)

principles which underlie human rights, namely transparency, ability, participation…”.63The ADB also declared that it will bring theseelements “deeper into the mainstream of its operations and activities.”64

account-Access to information is a fundamental human right and “the stone of all the freedoms to which the UN is consecrated”, as the UNGeneral Assembly declared in its first session.65 This human right is aprerequisite for the guarantee of other rights in IFIs’ operations Recently,the World Bank and ADB have revised and improved their informationdisclosure policy (in December 2009 and November 2011 respectively)

touch-Participation is closely linked to access to information The cance of participation in the development process as a human right hasbeen stressed in the UN human rights arena.66A participatory approach

signifi-to development has also been emphasised by both Banks

As a response to serious criticism of its projects, the World Bankestablished the Inspection Panel in 1993 through which affected peoplecan appeal the Bank’s projects ADB followed suit in 1995 and havealready revised the mechanism twice: the latest revised policy wasadopted in February 2012 These appeal mechanisms are one of theinstruments for improving their accountability, and this book assessesthem through the prism of human rights As will be seen later, these arenot judicial bodies, but are quasi-judicial or administrative mechanisms

Since the purpose of this book is to assess the policies of theseinstitutions through the prism of human rights standards for their furtherimprovement, applying the right to access to justice, which encompassesthe right to a fair trial and the right to an effective remedy, serves as anappropriate benchmark with established compelling rationale and recog-nised key elements While this may be considered a high standard, thisseems appropriate given the power and importance of the Banks

In order to assess both Banks’ policies related to these human rights,first, I aim to set out the international human rights standards of theserights on the basis of scholars’ work, case law and studies by the UN and

63 See http://web.worldbank.org/WBSITE/EXTERNAL/EXTSITETOOLS/

0,,contentMDK:20749693~pagePK:98400~piPK:98424~theSitePK:95474,00.html(last accessed 13 February 2006)

64 ADB (n 7) para 32

65 UNGA Res 59(1)(14 December 1946), available at http://daccessdds

un.org/doc/RESOLUTION/GEN/NR0/033/10/IMG/NR003310.pdf?OpenElement(last accessed 21 May 2007)

66 For example, see UN Declaration on the Right to Development (GAresolution, 41/128)

NGOs.67 After considering these policies, in the final chapter, theimplementation of these rights will be examined through controversialprojects of both Banks, and I will suggest how human rights standardscould have been applied By this exercise I would like to demonstrate apractical approach to implementing human rights standards in the devel-opment field.

I emphasise that the human rights community must develop specifichuman rights standards with regard to development because, in spite ofthe emphasis on human rights approaches to development, the humanrights community has not made much progress moving the discussion

“from abstract to specific”.68 Hunt rightly observes that since thearguments in favour of human rights have been stronger on slogans thanpractical measures, “The human rights community has to shoulder some

of the responsibility for the failure of development practitioners toconsistently use human rights.”69 The former Special Representative ofthe World Bank to the UN also mentioned that although he understandsthe importance of principles of human rights, it is a task of the humanrights community to explain how to implement and apply them to theIFIs’ operations.70This book seeks to respond to this challenge

I also stress that the human rights community, whose work in this areahas been limited to the World Bank and the IMF, should widen its scope

to include regional IFIs as well The regional IFIs have mandates similar

to the World Bank and cause similar human rights problems, as will beseen in the ADB case study later in this book However, very little humanrights attention has been paid to ADB or other regional IFIs Generally,

as Clark says about the World Bank, “On paper, the Bank’s policies are

67 As for case law, regional human rights jurisprudence, especially theEuropean Court of Human Rights, will be cited European human rightsjurisprudence is compelling, persuasive and influential beyond Europe Since thepurpose of this book is to assess policies of the World Bank and ADB throughinternational human rights standards, it is relevant to cite European human rightsjurisprudence

68 Robinson mentions that one of the criticisms of human rights by thosewho work in the development field is that human rights are abstract and cannot

be applied practically M Robinson, “What Rights Can Add to Good ment Practice” in Robinson and Alston (n 10) 25–41 at 34, 35

Develop-69 P Hunt, “Using All the Tools at Our Disposal: Poverty Reduction and the

Right to the Highest Attainable Standard of Health” (2006) 8 Development Outreach 21, 21.

70 Interview with a Special Representative of the World Bank to the UN andWorld Trade Organization in Geneva (14 August 2002 Geneva)

considered to be among the most comprehensive in the world”.71

However, as will be seen later, ADB’s revision of policies on ability (2003) and information disclosure (2005) made them moreadvanced than those of the World Bank at that time As some staffmembers of ADB say, these Multilateral Development Banks (MDBs)72

account-are sensitive to what other MDBs account-are doing, and it is easier to persuadeADB management, or other staff, to accept a higher standard of policies

if the World Bank or other MDBs are doing better.73I hope this book willcontribute to stimulating such constructive competition among MDBs

In Chapter 1, the relationship of both the World Bank and ADB tohuman rights will be examined Here, special attention will be paid to theBanks’ attitudes towards human rights In Chapter 2, both the Banks’

information disclosure policies will be analysed through the prism ofhuman rights Similarly, Chapters 3 and 4 will analyse both the Banks’

participation policies and inspection mechanisms, respectively throughinternational human rights standards Finally, in Chapter 5, the WorldBank’s China Western Poverty Reduction Project (CWPRP) and ADB’sSamut Prakarn Wastewater Management Project will be examined based

on the human rights standards of the right to access information, the right

to participation and the right to access to justice The CWPRP and SamutPrakarn were among the most controversial projects and as a result had asignificant impact on the Banks

71 D Clark, “Boundaries in the Field of Human Rights: The World Bank and

Human Rights: The Need for Greater Accountability” (2002) 15 Harvard Human Rights Journal 205, 205 She continues, however, “there is a gap between the

rhetoric and the implementation of the policy framework.”

72 See footnote 1

73 Personal Communication with some ADB member staff (14 June 2004,London)

1 The World Bank, Asian Development Bank and human rights1

1.1 INTRODUCTION

This chapter examines the relationship between human rights and theWorld Bank and Asian Development Bank (ADB) Human rights issuesfacing the World Bank and the International Monetary Fund (IMF) havebeen discussed in several UN human rights meetings In reply to thosecriticisms, the World Bank has quoted from section 10 of the Articles ofAgreement Article IV, which specifies that “The Bank and its officersshall not interfere in the political affairs of any member … Onlyeconomic considerations shall be relevant to their decisions …” Thismeans the World Bank’s interpretation of the terms “political affairs” and

“economic considerations” affects its attitude to human rights issues

Both the World Bank’s interpretation of these terms and its attitudetowards human rights has changed dramatically during the past 50 years

This book sets out the development of the World Bank’s attitudetowards human rights from the 1960s to the present and submits that itcan be divided into four stages

During the first stage in the 1960s (when the issue of the World Bankand human rights was first raised in the UN) the World Bank avoided anyinvolvement in discussions on human rights At this point, the WorldBank saw human rights issues in the context of whether it should dealwith regimes which had a bad human rights record or become involvedwith those who had committed human rights violations (usually of civiland political rights) The World Bank used its Articles to fend off anycriticism around involvement with such regimes by classifying humanrights concerns as “political” and thereby something which should beexcluded from consideration

1 A part of this chapter was published previously as S Fujita, “Challenges

of Mainstreaming Human Rights in the World Bank” (2011) 15 International Journal of Human Rights 374–396.

During the second stage, the World Bank discovered a human rightsdimension to development due to external criticism of its activities,especially regarding the Structural Adjustment Programs (SAP) thatstarted in the 1980s The World Bank emphasised that it was the Statesthemselves who were responsible for any negative impact caused by theSAPs – it did not take any responsibility of its own The Bank started torealise that human rights included more than just civil and politicalrights; it recognised that SAPs could have a dramatic impact on eco-nomic, social and cultural rights However, this understanding had notmoved beyond the traditional idea that it was the States as duty-holderswho were responsible for the delivery of rights to their citizens.

During the third stage, in the 1990s, the World Bank recognised thelink between development and human rights and emphasised its contri-bution to human rights At this stage, the Bank understood “humandevelopment” to encompass economic, social and cultural rights as well

as civil and political rights, in that freedom and democracy were seen as

an essential part of development The Bank stressed its contribution tomaking lives better, but it is not wholly clear that it understood thisresponsibility included not only delivering the “goods” i.e the content ofrights, but also creating a framework which guaranteed that delivery

During the fourth stage, the World Bank began to talk more openlyabout human rights The approach taken by UN human rights agencieswas significant in bringing about this change Although, the Bankadmitted that protecting human rights was a part of its mandate, the Bankstill emphasised States’ responsibilities rather than subjecting its opera-tional processes to a human rights norm

None of these stages represents a complete transformation in the WorldBank’s attitude to human rights; the stages often overlap Thus, somefeatures of the second and third stages can still be recognised today

Since the World Bank is a large-scale institution with about 10,000working staff,2 there may be different understandings of this evolution;

nonetheless this chapter will analyse the Bank’s official position usingthis framework

Even now, although the World Bank has begun to understand that itsown mechanisms should be subject to human rights scrutiny, this policyhas not been implemented with any great rigour What is clear is that notjust the impact of the operations of both the World Bank and ADB should

2 J Wolfensohn, “Some Reflections on Human Rights and Development”

in P Alston and M Robinson (eds) Human Rights and Development (Oxford

University Press 2005) 19–23 at 21

be subject to human rights norms, but also the way the programmes aredeveloped, designed and delivered The World Bank still has somedistance to travel in its understanding of its human rights responsibilities,and the ADB even further.

In comparison to the World Bank, little research has been doneregarding ADB in the context of human rights This research is needed asADB is one of the largest institutions operating in the field of develop-ment in Asia and the Pacific, and “its role in recent years became biggerthan that of the World Bank.”3 ADB’s Articles of Agreement containsentences identical to those of the World Bank’s Articles of Agreement –declaring its non-political character In addition, ADB’s projects andpolicies have caused human rights problems similar to those caused bythe World Bank; receiving criticism from NGOs For instance, duringADB’s annual meetings, NGOs held protest demonstrations blamingADB for the negative impact caused by its activities.4 The complaintsmade by NGOs also focused on ADB’s failure to uphold human rights

Since Asia accounts for more than half of the world’s population and 600million of the world’s poor, such an institution should not be dismissed.5

Therefore, it is vital to analyse ADB through the prism of human rights

Even though there has been little study in this area, the research that hasbeen done shows that ADB’s attitude to human rights in some respectslags far behind that of the World Bank

The involvement of ADB in human rights discussions can contribute tothe improvement of other MDBs’ policies As has been mentioned,according to ADB staff (past and present), it is easier to persuade ADBmanagement or other staff to accept higher policy standards if the WorldBank or other MDBs are meeting these standards In fact, all regionalMDBs went on to establish an inspection mechanism following theexample of the World Bank; these institutions are sensitive to other sisteragencies and emulate each other In this context, ADB can play animportant role When ADB revised its information disclosure policy in

3 D Guerrero, “Introduction: The Asian Development Bank and its Role in

Asia’s Development: Between Honesty and Hope” in Asienhaus, Focus Asien: A Handbook on the Asian Development Bank (Number 16, Asienhaus 2003) 3–6

at 4

4 For example, about 600 protesters staged a peaceful march against ADBprojects during its annual meeting in Hawaii in 2001 ADB “President ChinoMeets Protesters”, available at http://adb.org/AnnualMeeting/2001/Media/chino_

protesters.html (last accessed 18 April 2007)

5 Guerrero (n 3) 4

2005, it was the most progressive among all the MDBs, and the WorldBank followed ADB’s lead with its own revision in 2009.

Section 1.3 of this chapter will trace the stages of ADB’s attitude tohuman rights and examine ADB’s involvement in human rights, drawingfrom, inter alia, interviews with ADB staff members The author’sresearch focuses on the World Bank and ADB, but illustrative reference

to the IMF is occasionally made for comparative purposes

1.2 THE EVALUATION OF THE WORLD BANK’S ATTITUDE TO HUMAN RIGHTS

1.2.1 Stage 1: Non-Political Character and Human Rights 1.2.1.1 The case of Portugal and South Africa

Article IV, section 10 of the Articles of Agreement of the World Bankstates:

The Bank and its officers shall not interfere in the political affairs of anymember; nor shall they be influenced in their decisions by the politicalcharacter of the member or members concerned Only economic consider-ations shall be relevant to their decisions, and these considerations shall beweighed impartially in order to achieve the purposes stated in Article 1.6

This Article is based on the principle of non-interference in domesticpolitics and the functional approach7 international organisations, whichemphasise that international specialised agencies should not be concernedabout political issues An early World Bank interpretation of this politicalprohibition can be seen in the Portuguese and South African loancontroversies

In mid-1964, a special committee was appointed to examine theapplication of the Declaration on the Granting of Independence toColonial Countries and Peoples and to make recommendations on itsimplementation At the committee’s request, the UN Secretariat wrote tothe World Bank seeking information about bank loans to Portugal andasking about the possibility of Bank representatives appearing before thecommittee in order to provide clarification The Bank sent the requested

6 5 International Governmental Organization (1956) Also IBRD Articles

of Agreement (amended in 1989) is available at http://go.worldbank.org/

W01PGBIFM0 (last visit 18 April 2007)

7 D Mitrany, “The Functional Approach to World Organization” (1948) 24

International Affairs 350, 359.

information but ignored the invitation When the Secretariat later askedthe Bank to comment on the invitation, it replied that it had no plan tosend any representatives.

No further steps were taken until June 1965, when the specialcommittee passed a resolution which requested the World Bank and IMF

“to refrain from granting Portugal any financial, economic or technicalassistance so long as the Portuguese Government fails to renounce itscolonial policy, which constitutes a flagrant violation of the provisions ofthe Charter of the United Nations.”8The UN General Assembly adoptedsimilar resolutions concerning Portugal and apartheid in South Africa,making specific reference to the role of the specialised agencies Theseresolutions were promptly forwarded to the World Bank by the UNSecretariat In response to these resolutions, Woods, the president of theWorld Bank, made a statement to the World Bank Executive Directors inMarch 1966 He stated that although the Bank and its officers could notinterfere in the political affairs of member countries, he was aware thatthe political situation could affect the economic development of thesecountries Therefore, it was necessary, in reviewing their economicconditions, to take account of the situation as it developed.9

In the same year, the General Counsel of the World Bank responded tothe UN’s invitation to explain the Bank’s loan policies and legallimitations In the Fourth Committee of the General Assembly, he notedthat Article IV of the relationship agreement between the UN and theBank required that consultations take place before formal recommenda-tions were made to either organisation by the other The opinion of theWorld Bank was that these consultations had never taken place Accord-ingly, the Bank had not treated the communications from the UN asformal recommendations Furthermore, he observed, the Bank’s positionwas that, under section 10 of Article 4 of the World Bank’s Articles ofAgreement, the Bank was not permitted to act on the recommendationsbecause of its non-political character.10

Broches, the General Counsel of the World Bank, stated in the UN thateconomic considerations, such as credit-worthiness or the ability to repay

a loan, could be used in the lending decisions.11 Moreover, he stressed

8 S Bleicher, “UN v IBRD: A Dilemma of Functionalism” (1970) 24

International Organization 31, 32.

9 Cited in UNGA “Twenty-First Session, Fourth Committee, 1645th

meet-ing (November 28, 1966)” in UNGA, Official Records (UN 1966) 318.

10 Bleicher (n 8) 33

11 UNGA, “Twenty-First Session, Fourth Committee, Provisional SummaryRecord of the 1645th meeting”, UN Doc A/C.4/SR.1645 (1966) 16

the “technical and functional character” of the Bank established by theArticles of Agreement:

The purposes of the Bank set forth in Article I of the Articles of Agreementare limited and the Bank must be guided in the exercise of its functions bythose purposes alone The member governments of the Bank have not deemed

it appropriate to grant the Bank a larger function in the internationalcommunity, and the characterisation of the Bank as a financial and economicagency and not a political one was explicitly recognised by the UnitedNations in its Relationship Agreement with the Bank.12

The World Bank refused to follow the recommendation by the GeneralAssembly on the grounds that it was a non-political, functional organ-isation without any authority to impose sanctions upon members forconduct unrelated to its purposes

The controversy over the resolution regarding South Africa and gal ended with the World Bank maintaining its position that it wasprohibited under its Articles from interfering in the political affairs of itsmembers but stating that it would review the economic considerationsand prospects of these two countries to take account of the situation as itdeveloped.13 Since 1966, the Bank has not provided loans to SouthAfrica, as no application has ever been received, and it suspendedlending to Portugal for a long time on the grounds that the country hadhigh reserves, could otherwise borrow on reasonable terms and, duringthat time, lacked positive development policies.14

Portu-As previously mentioned, the Bank has been criticised for providingaid to countries committing human rights violations On the other hand,there are criticisms for withholding aid in general because these countriestend to be poor and withholding aid can perpetuate the poverty whichviolates people’s human rights Even though the intention is to stophuman rights violations by a dictatorial regime, withholding/reducing aidmay make people in the country suffer because of the lack of inter-national financial support For instance, there are examples which showthat withholding aid has a negative impact on people’s access to healthand education.15

12 Ibid 42

13 I Shihata, The World Bank in a Changing World Selected Essays (Vol 1,

Martinus Nijhoff Publishers 1991) 104

14 Ibid

15 E.g., see E.Gibbons, “The Impact of Economic Sanctions on Health and

Human Rights in Haiti, 1991–1994” (1999) 89 American Journal of Public Health 1499.

There are ethical issues surrounding the general withholding/reducing

of aid As Kreide argues, aid needs to be offered with a view to theindividual and not the whole collective Those in need should not bepunished for the faults of others (i.e the dictatorial regime and/or thepopulation supporting the regime) Social and economic human rights areunconditionally valid for everyone, and people should not be deprived ofthese rights simply because of a situation for which they are notresponsible.16 One should consider how money can reach these peoplevia civil societies (etc.) rather than be sent directly to a regime

1.2.1.2 Criticisms of the World Bank’s non-political character

At the time of the controversy over the South African and Portugueseloans, the World Bank maintained a severely limited interpretation of itsown mandate The UN replied that the Bank was interpreting “political”

too broadly Stavropoulos, legal counsel for the UN, stated:

It seemed doubtful that the first sentence of that section was intended topreclude the considerations dealt with in the relevant General Assemblyresolutions which involved international obligations under the Charter of theUnited Nations.17

However, a decade later, the Bank still emphasised that it could not beinvolved in the political issues of member states In 1978, McNamara,president of the World Bank said:

What we are not capable of is action directly related to civil rights Suchaction is prohibited by our Charter; it would require information andcompetence which we lack, and there is no agreement among our membergovernments on acceptable standards of civil rights…18

16 R Kreide, “Neglected Injustice: Poverty as a Violation of Social

Autonomy” in T Pogge (ed.) Freedom from Poverty as a Human Right: Who owes what to the very poor? (Oxford University Press 2007) 155–181 at 168,

169

17 UNGA, “Twenty-First Session, Fourth Committee, Provisional SummaryRecord of the 1653rd Meeting”, UN Doc A/C.4/SR.1653 (8 December 1966)para 14

18 “McNamara on the largest issues: World economy” New York Times (2

April 1978) quoted in K Tomasevski, “The World Bank and Human Rights” inCHR Michelson Institute, Norwegian Human Rights Institute and The Nether-

lands Institute for Human Rights, Human Rights in Developing Countries 1989 Yearbook (N.P Engel Publisher 1989) 75–102 at 83.