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World Bank, When Will It Be Human Rights First, Articles of Agreement Second?

One of the United Nations agencies is currently reviewing their social and environmental safeguard policies – the World Bank (‘the Bank’).  You might think then, as a UN ‘Specialised Agency’, that the World Bank is considering how to update their policies to keep up to date with the latest human rights developments.  If you thought this about this particular UN agency, you’d be quite wrong. The World Bank hasn’t even adopted specific human rights policies, and doesn’t recognize that it has organizational responsibilities to abide by international human rights law.

As Bank watchers are well aware, debate about the relationship between the World Bank and international human rights obligations has had a rich history – inside and outside the organization.  With the process of review of the World Bank safeguards now well and truly underway, it is worth considering two things – the historical background to the current status quo, and the options available to the World Bank for making real progress on human rights.

Historically, there are two distinct debates to consider.  Both reveal interesting avenues of an updated push for ‘realization’ or ‘adoption’ (depending on your perspective) of a more comprehensive understanding of the Bank’s human rights responsibilities. The point of origin for both discussions is the establishment of World Bank entities in accordance with Articles 57 and 63 of the UN Charter.

Internal push within the Bank to adopt Human Rights principles

For the internal push for greater adoption of human rights into World Bank considerations, the key consideration is the type of activities that the World Bank can undertake, according to their Articles of Agreement. The International Bank for Reconstruction and Development (IBRD) was the first institution of what has now become a group of financial institutions known as the World Bank Group (WBG).  Once established in 1944, in Bretton Woods, through an agreement signed by the UN General Assembly in November 1947, the IBRD was left to be governed by their Articles of Agreement.  Other WBG institutions were developed in similar fashion and it was from this origin that the WBG has considered itself free of any direct legal responsibilities beyond these articles – not to the UN Charter from which it stems, nor other areas of international law.  From this perspective, only the interpretation of the meaning of the Articles of Agreement is what matters.  The World Bank Board of Executive Directors is responsible for interpreting the meaning of these documents, which are quite vague, and the Board in turn has relied on General Counsel for authoritative interpretations – and therefore also the justifications for taking progressive steps.

The Articles make plain that nothing political shall feature in the Bank’s considerations, ensuring “only economic considerations shall be relevant”.  This meant the culture of the IBRD from the start was phobic of human rights considerations.  The Articles of Agreement for IBRD were echoed in the same governance documents of other Bank institutions that have subsequently been established, to form what is known today as the World Bank Group (WBG) – the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID).

Within the internal discourse of the Bank, human rights remained off limits until the 1980s. At that time, as Daniel Bradlow and others have documented, there was recognition within the WBG that ignoring governance issues was having a detrimental effect on the work of the Bank. This re-evaluation cast a new light on the potential for human rights to help overcome some of the ‘governance’ challenges that had undermined the full effectiveness of World Bank projects – reflecting a practical, not moral or legal, consideration.

In the 1990s public views of the Bank began to shape an emerging picture of how internal dialogue was shifting.  In 1991 the WBG General Counsel, Ibrahim Shihata stated that “no balanced development can be achieved without the realization of a minimum degree of all human rights”, and 1998 saw the release of “Development and Human Rights: the Role of the World Bank”. The next decade saw other marginal progress, with then-WBG President James Wolfensohn forming a human rights task force. The strategy paper the task force was mandated to develop recommended the Board adopt human rights principles. However, the report was not adopted.

Then in 2006 Roberto Dañino, the General Counsel following Ibrahim Shihata, internally released a “Legal Opinion on Human Rights and the Work of the World Bank”. This legal opinion represents the most progressive internal interpretation to date of the human rights responsibilities of the Bank.  Dañino’s interpretations went far beyond what had been said before, by including conclusions such as: “the articles of agreement permit, and in some cases require, the Bank to recognize the human rights dimensions of its development policies and activities since it is now evident that human rights are an intrinsic part of the Bank’s mission”. He qualified this by adding that “human rights may constitute legitimate considerations for the Bank where they have economic ramifications or impacts, and it confirms the facilitative role the Bank may play in supporting its members to fulfil their human rights obligations”.  Previously, the Board relied on opinions of their General Counsel as authoritative interpretations of their human rights responsibilities when this had proved convenient. In this case, the Board never openly discussed Dañino’s legal opinion.

As noted by others, it was left to the next General Counsel, Ana Palacio, to ‘clarify’ the meaning of Dañino’s perspective.  Her approach was neither a ringing endorsement, nor a shying away from progress. Nine months after the release of Dañino’s legal opinion, Palacio emphasized a middle ground, stating that:

[Dañino’s legal opinion] marks a clear evolution from the pre-existing restrictive legal interpretation of the Bank’s explicit consideration of human rights. It is ‘permissive’: allowing, but not mandating, action on the part of the Bank in relation to human rights. It…gives the Bank the necessary leeway to explore its proper role in relation to human rights…It …enables the Bank to take these issues into account where they are relevant.

This was acknowledgement of the evolution of incremental progress, but not a transformative step towards recognition of binding international legal obligations on the Bank. Overall, she wrote, “it is now clear that the Bank can and sometimes should take human rights into consideration as part of its decision-making process”. Although, all the while “the Bank must also respect the legal limits imposed by its Articles of Agreement”.  In short, human rights can be ‘considered’, but the Articles of Agreement are binding.

External pressure for greater Bank recognition of Human Rights responsibilities

At the same time, external pressure has also grown for the Bank to put the Articles of Agreement in wider perspective and recognize the primacy of human rights obligations.  As such, the premise of this approach is that as a specialized agency of the UN, with their own legal personality as an international organization, the Bank must realise it has binding obligations to the UN Charter (and the human rights therein) that go beyond the Articles of Agreement. This perspective was laid out most clearly in the Tilburg Guiding Principles. The sixth Tilburg Guiding Principle states that:

The two IFIs are also Specialised Agencies, having entered into Relationship Agreements with the United Nations in accordance with UN Charter Article 63. This is another indication of their international legal personality separate from their members, which carries with it rights and obligations according to international law. According to the Relationship Agreements the organizations are, and are required to function as, independent international organisations. It provides an organisational independence from the UN, not from international law.

This final observation is the critical one for the ‘realization’ approach coming from external actors – while the Relationship Agreement provides autonomy from the UN, it does not provide autonomy from international legal obligations.

After all, it has been a settled matter of international law for at least sixty years, stemming from UN Conventions, and then later confirmed in the findings of the International Court of Justice, that international legal organizations such as the Bank are capable of holding obligations under international law.  Security Council resolutions are a clear example of this, as demonstrated by resolution 757 (30 May 1992) which established an embargo on Yugoslavia. The text expressly required adherence by “all states…and all international organizations”.

While the Bank might argue that none of this really matters, not even their Articles of Agreement can help them evade responsibility for upholding customary international law. Customary law relates to “principles and rules concerning the basic rights of the human person”, as stated by a 1970 ruling of the ICJ.  The full range of what constitutes customary international law might not be a settled notion – some more recently have argued that the Universal Declaration of Human Rights can be included, although others disagree. What’s important for the Bank to realise now though – even if it is not listening – is that international law now clearly states that it has international legal obligations, and these include at a minimum the basic rights of the human person.

There is a second important human rights law consideration for the Bank, as it considers updating its safeguards. The members of the Bank are States.  These States have obligations to the human rights treaties to which  they are party. The Bank has acknowledged this already.  In 2000 the then-General Counsel stated plainly in the World Bank Legal Papers that “the Bank cannot reasonably place its members in a situation where they would be violating their obligations under the UN Charter if they agree with a proposed action by the Bank”. After all, the UN Charter has supremacy in this situation, by virtue of Article 103: “In the event of a conflict between the obligations of the Members of the United Nations under the present Charter and their obligations under any other international agreement, their obligations under the present Charter shall prevail”.

So how can there be progress during this review?

With the Safeguards Review in full swing, once again the Bank and the international community are in yet another moment of consideration of the relationship between the Bank and human rights. There are a few conceivable ways forward – no matter which path the Bank chooses.  The Bank could itself acknowledge external pressure on it to recognize its international obligations as an international organization under international law – paving the way for robust policies that ensure the Bank refrains from violating human rights through its policies and conduct.

Other options, reflective of the evolving (practical) ‘adoptions’ approach they have pursued so far, is for the Bank to continue expanding its understanding of the spectrum of cases where it might be required to recognize the human rights dimensions of its development policies and activites. This would still fall within the rubric of a progressive understanding what the Articles of Agreement may conceivably permit.  An expansion of this kind may involve freeing the Bank of the express need for ‘economic ramifications’ to feature in these cases before it deems itself required to act.

In other concrete ways, progress in policy reform could follow the path of other international organizations, such as the Organisation for Economic Cooperation and Development (OECD), by mainstreaming human rights due diligence requirements within their lending practices. A better step would be adoption of human rights due diligence requirements that are one feature of an overall human rights policy and strategy for the entire WBG.  The Bank has taken similar steps with regard to climate change, energy and the environment.  Other groups have made these calls for modest progress, by developing an ‘overarching human rights strategy’ that ensures coherence among the relevant activities across WBG insititutions, including the IFC and others.

The exact contours and application of what this or other similar suggestions might look like overall would be the subject of much debate – but debate that is actually about taking concrete steps in the right direction.  If there is one thing this review process must not be about it is more talking and no action. Whichever path the Bank walks after this review process is over, it is beyond doubt that it is time for the Bank to join the march towards integrating and operationalising human rights standards, creating Bank-wide policies with real teeth that will help all involved – themselves included – to seriously play their part to respect, protect and fulfill human rights.

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