Big infrastructure – specifically mega-projects in the energy, water, transport and information communications technology (ICT) – dominates the current development policy agenda. Although infrastructure is desperately needed, the current fad – driven by the Group of 20 (G20) and the BRICS -Brazil, Russia, India, China and South Africa — has strong biases that create dangers for human rights. The biases favor: 1) mega-projects rather than “appropriate scale” for the purposes served; 2) public-private partnerships (PPPs) rather than the most cost-effective modality for citizens; 3) systems of environmental and social standards that serve the bottom line of investors rather than the needs of citizens; 4) exclusion of citizens – especially affected communities — from participation in all phases of the project cycle.
Human rights depend for their implementation on adequate infrastructure, but the infrastructure development process should not favor investors’ rights over citizens’ rights. Yet, the new drive for infrastructure is unfolding not only with these biases, but also as a scramble for natural resources. These dynamics foreshadow great risks for human rights.
In our article, Francis Kornegay of the Institute for Global Dialogue (associated with the University of South Africa) and I argue that in this new drive for infrastructure, safeguards for sustainability could become a major casualty with significant political and economic backlash. Such social and environmental safeguards of the World Bank and other development finance institutions are imperfect, but they represent one of the most important defenses against human rights impacts of ill-conceived projects in the global governance system. Yet, it appears that in the coming year, the “teeth” will be extracted from these safeguards, leaving citizens without important avenues of recourse for damages.
This is especially problematic given the rising tide of infrastructure finance. At the July 2014 BRICS Summit, Leaders announced a New Development Bank (NDB) for infrastructure and sustainable development. In the same timeframe, China will join with its allies to launch a new Asian Infrastructure Investment Bank (AIIB). These initiatives provide a counter-point to the U.S.-led World Bank and the Japan-led Asian Development Bank. The World Bank aims to double its lending operations within the decade, including an expansion of infrastructure operations and the launch of a Global Infrastructure Facility (GIF) this year. While an initial GIF pilot program will be modestly funded, it has outsized ambitions for mobilizing global pension and sovereign wealth funds to invest in infrastructure as an “asset class.”
In this context, the World Bank’s draft revision of its safeguards (subject to consultation for another year or so) already signals a worrying “race to the bottom” in the competitive arena of development financing. (For instance, client governments could be left to self-police the enforcement of weakened safeguards.) The US-led World Bank (and its regionals) is being deregulated to compete with emerging market countries, especially China and the other BRICS — particularly in the quest to mine, move, and export natural resources.
While the public and the media focus on the rising supply of infrastructure finance, there is little attention to the demand-side dynamic—namely, “project pipelines” and any pretense to foolproof their design and implementation against human rights concerns. The pipeline of the Program for Infrastructure Development in Africa (See PIDA maps in Annex 1), for example, has a $360 billion pipeline of mega-projects in energy, transportation, water, and ICT for implementation until 2040. Elsewhere in the Global South, there are project pipelines for the Initiative for the Integration of the Region of South America (IIRSA) and the ASEAN Infrastructure Fund (AIF) in Asia, among others. The G20 has promoted the establishment of Project Preparation Facilities (PPFs) for the “pipeline” of “bankable” mega-projects in each region of the world.
The role of the G20 is key because it not only perpetuates the biases throughout the DFIs and establishes the project preparation system, but also mobilizes long-term finance. That is, once projects are “de-risked”, the G20 mobilizes institutional investors, such as pension funds, which can provide long-term capital while capturing high returns. These private investors depend on hefty public contributions from their host countries (taxpayers and users) to offset their risks. This system can pit investor rights against human rights. Will access to essential services be sacrificed in order to ensure the promised revenue streams for infrastructure investors? Will public funding necessary to fulfill basic human rights be at placed at risk via generous public guarantees to keep investors happy? For instance, will financing for mega-projects squeeze financing for health, education and other rights of citizens? What demands on deregulation and limitations to constitutional guarantees for participation, freedom of assembly and expression, and so on, will we see investors demand in order to consider their investments “safe”?
These are not abstract questions but, as our recent book documents, they are very pressing and real concerns clouding the future of entire populations and communities. In 1986, the Declaration on the Right to Development reaffirmed that “the human person is the central subject of development and should be the active participant and beneficiary of the right to development.” It is not too late for States to put this basic tenet at the heart of infrastructure development, but it requires new alliances and political muscle to confront a new model that is a menace to human rights.
Nancy Alexander is Director of the Economic Governance Program, Heinrich Boell Foundation-North America. Click here to read the full article on which this blog is based.