Jim MacNeil's response to Mallaby's "NGOs Fighting Poverty Hurting the Poor"

Friday, October 1, 2004

To: Editor, Foreign Policy
RE: Response to Mallaby’s "NGOs Fighting Poverty Hurting the Poor"
From: Jim MacNeill

[NOTE: Jim MacNeill was the Chairman of the World Bank’s Inspection Panel from March 1, 1999– December 31, 2001]

Given Foreign Policy’s reputation, I was surprised to see Sebastian Mallaby’s "NGOs: Fighting Poverty, Hurting the Poor" in your October 2004 edition. I am not averse to reading an obviously one–sided polemic; if well done, it can be entertaining. However, the growing role of civil society in international affairs presents us with a novel set of fascinating issues and I would have expected Foreign Policy to provide us with a rigorous fact–based analysis of them. It didn’t, at least not on this occasion.

Mallaby claims that all things considered, World Bank projects and the poor they aim to help would be better off without NGO intervention, the Bank’s "safeguard policies" and a Panel to investigate non–compliance with those policies. Efforts to roll back global poverty, he says, are being blocked by "waves of punishing assault" from unrepresentative western international NGOs pursuing their own narrow goals. These same NGOs have captured the Bank’s Board and government’s in the "world’s rich capitals... especially in Washington" where they are effectively able to decide public policy.

I personally find this a very long reach, to say the least, but as the former Chairman of the World Bank’s Independent Inspection Panel mentioned by Mallaby, which was asked to undertake investigations of the Qinghai and Bujagali projects, I am most concerned about the way he uses these two projects to demonstrate his claims. Apart from his evident bias, his work is marked by shoddy research and unremitting failure to get his facts straight.

Mallaby is clearly uncomfortable with NGOs. He finds their accountability "murky" and asks, in effect, who do these people represent? Anyone who has spent a major part of his life as a senior official in international intergovernmental organizations as I have must admit to having asked that question many times. I’ve asked it not only of NGOs facing me across the table but also of business associations seeking policy change and, frankly, of those authoritarian governments on the boards to which I reported who gained and maintain office by force and repression. It’s a relevant question but the fact is that from small neighborhood groups to larger activist organizations like Amnesty International and Greenpeace and service providers like CARE, NGOs now number in their millions and they are here to stay. And that is largely a good thing.

NGO’s have strengthened the fabric of democracy in many fragile states, as I have witnessed personally in parts of Africa, Asia and, more recently, the Caucasus. They are indispensable agents of broader public participation and greater openness in private sector and government decision–making. In many countries they deliver essential services that weak governments will not or can no longer manage. And, yes, thanks to the computer, they are now able to network across borders and sometimes exert enormous influence. In the case of the Bank, local NGOs can enable the poorest and weakest of those affected by a Bank–funded project to voice their concerns and, through the Panel, the Bank’s Board has provided a vehicle to investigate their claims while respecting the rights of all parties involved. International NGOs can augment local voices, strengthen local NGOs, and provide the sometimes much needed protection of a global spotlight.

Qinghai is a good example. It was one of the most controversial projects in the Bank’s then 56 year history. In 2000, after a comprehensive investigation by the Inspection Panel and episodes of serious stress between the Bank, China, its largest client, and several western shareholders led by the US, China withdrew the project in a board meeting memorable to all who were present. The Panel’s report did play a part in this but Mallaby’s picture of the Panel and its role is unrecognizable.

Mallaby claims, for example, that following a desperate struggle with an international coalition of NGOs, aided by Hollywood movies stars and elements of the US Congress, Bank President Jim Wolfensohn referred their claims to the Inspection Panel. Not so. As I am sure Mr. Wolfensohn would be the first to point out, the Inspection Panel is not at the Bank President’s beck and call. The Panel is independent and reports directly and exclusively to the Bank’s Board which created it in 1993.

If not Wolfensohn, then who did submit a claim for inspection? This is a critical question. Under the Board’s rules governing the Panel, affected people may submit a request for an inspection if they feel they may be harmed by a Bank–supported project and if they further believe that this harm stems from Bank Management’s failure to comply with Bank policies and procedures. In the case of Qinghai, the Panel received such a claim. It was carried from Qinghai to the Panel via a chain of Tibetan monks. The Chinese authorities demanded the identities of the claimants but they were and remain confidential to the Panel. Given their threatened circumstances, the International Campaign for Tibet (ICT) acted on their behalf and filed a claim. The Panel assessed this claim to determine if it was eligible under the Board’s criteria, found that it was, and recommended an investigation. To approve the Panel’s recommendation, the Board would first have to decide whether it was appropriate for the local people to be represented by a foreign group; i.e. the ICT. Rather than do that and thus embarrass the Chinese, the Board itself asked the Panel to undertake an investigation and gave it terms of reference that encompassed all of the claims made by the locals and the ICT.

The Panel conducted the most comprehensive investigation it had yet undertaken. Over a period of a few months, it reviewed all of the available documentation on the project, consulted academics, interviewed NGOs and virtually everyone in the Bank who had been associated with the project, took a team to Beijing and, with its own interpreters, met with resident World Bank staff, Chinese government officials in a host of agencies as well as staff of foreign aid missions involved in poverty alleviation efforts in Qinghai. In Qinghai province, the Panel again met with government officials and institutes to talk with those involved in project planning and, of course, we spent considerable time talking with Tibetan, Mongol, and Han villagers in or near the proposed project site as well as Mongol herders encamped at the proposed irrigation site.

Contrary to Mallaby’s implications, the Panel’s conclusions were not pre–ordained by the NGOs. The Panel gathered the evidence, marshaled and analyzed it and drew its own conclusions. In brief, the Panel found that Bank Management had failed to comply with seven out of ten of the Bank’s major safeguard policies. None of these failures, including those mentioned by Mallaby, were trivial. Take the basic question he raises of whether the project should have been assigned an "A" rather than a "B" category for environmental assessment. Our report notes, but Mallaby doesn’t mention, that during the investigation many senior Bank staff conceded that the "B" classification was a central error which resulted in many critical studies and analyses not being done; an error from which other failures followed.

Mallaby’s claim that the Panel "was more interested in finding technical infringements of bank policies than in asking big questions" about poverty is simply wrong. Noting that its stay in Qinghai allowed it "to witness first–hand the urgent need for ... poverty alleviation programs," the Panel elaborated at length on the need to comply with policies in this regard.

Moreover, his assertion reflects a total misunderstanding of the rationale for the Bank’s safeguard policies. Policies on Resettlement, for example, or Indigenous Peoples, are designed to ensure, among other things, that peoples affected by a project do not suffer harm and are assisted in their efforts to rise out of poverty. A failure to implement significant elements of these policies does not add to local welfare; on the contrary.

Mallaby cites a 2001 Bank study to claim that "environmental and social safeguards" inflate the overall cost of Bank projects by over $200 million annually. Wrong on two counts. First, environmental and social safeguards make up only a small fraction of the $200 million. Second, Mallaby doesn’t mention the costs of not implementing these policies. Isn’t he aware that the Bank’s own Operation Evaluation Division has concluded that a majority of Bank projects fail to reach their objectives. In light of this, I submit, one can safely assume that the costs of ignoring safeguard policies would be enormous and would represent a continuing burden on the economies of the borrowing countries concerned.

Strangely, in discussing the proposed Bujagali Hydropower Project, Mallaby doesn’t mention the Panel or its investigation. In this case, the request for inspection was made by the same National Association of Professional Environmentalists that he met, as well as other local institutions and individuals, who claimed that the Bank was not in compliance with a number of its policies. Again, the Panel conducted a comprehensive investigation of the project following a process similar to that described above. I won’t go into it except to note two things. First, we had no difficulty meeting with dozens of representatives and supporters of the claimants, including a large group of academics at the University of Kampala and several parliamentarians. I find it odd that Mallaby was able to find only one, the secretary of the Association. Second, and more importantly, after marshalling and analyzing all of the evidence, the Panel found that in the case of Bujagali Bank Management was in compliance with most of the significant safeguard polices. Management undertook to correct the comparatively few instances of non–compliance. Odd that Mallaby didn’t mention this. Could it be that doing so would have undermined his overall thesis?

Finally, Mallaby claims that, like Qinghai, the Bujagali project was the victim of an international campaign of NGOs. In fact, in July 2002, the Bank Board interrupted its consideration of the project when suspicions of corruption arose. Later, in 2003, AES Corp., the Arlington–based global power company sponsoring the project, decided to pull out when it was forced to cut its capital spending.

The development of a vigorous civil society, interconnected through the web, does raise novel questions of governance that merit serious study. It is conceivable, for example, that a multiplicity of single purpose groups in a given jurisdiction could so fragment the public will that democratic governance is threatened. A rigorously balanced analysis is needed. Perhaps Foreign Policy should help to provide it.

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