The International Finance Corporation (IFC), the private-sector arm of the World Bank Group, announced on December 23 that it would bow to complaints from civil society groups around the world and re-organize its controversial review of sweeping policy changes.

The review, which involved meetings with civil society in various cities, was widely criticized as hurried and incomplete by organizations around the world which mounted a boycott of the sessions. Among the central complaints was the IFC’s failure to release vital information in advance of the meetings as well as its rushed and secret invitation process.

World Bank and IFC standards have long been a subject of contention. A few decades ago, under pressure from civil society, which had mounted highly visible campaigns against dams and other destructive large projects, the World Bank Group decided to establish a set of social and environmental policies. These policies were ostensibly designed to protect people and the environment against the most harmful impacts of Bank projects. The policies include guidelines on resettlement, indigenous peoples, pollution and consultation.

But even when Bank guidelines set new international standards, the Bank’s implementation was generally shockingly weak. A 2003 internal evaluation of the IFC found “cases where the political importance of the deal meant that due diligence was rushed, corners cut, sponsors hurried, and effectiveness and impact compromised”. Rather than dealing with this institutional failure, the World Bank Group is now on a path to abolish its social and environmental policies altogether.

In September 2004, the IFC started a process of revising its environmental and social policies, as well as its technical pollution standards and information disclosure requirements. The importance of these policies is multiplied by the fact that they are slated to become the new benchmark for lending practices for a great number of private commercial banks as well as export credit agencies and other international financial institutions.

Numerous complaints from communities affected by IFC projects as well as official studies testify that the existing policies have been regularly violated, and may well have been inadequate altogether. However, the IFC opted to launch a review that would recognize and, what is worse, institutionalize this failure to implement standards as well as weaken them altogether. The IFC has proposed that the performance standards be voluntary rather than mandatory. And even those voluntary standards are weaker in a number of areas, amounting to a significant backsliding from the already-inadequate existing policies. This would mean that public money would be used to support private interests without providing any meaningful safeguards against abuses.

Communities and movements around the world protest against these proposals. The first public attack on the IFC’s review process was a letter sent by 180 civil society organizations in September 2004 demanding more time, more translation, more explanation and more clarity for the process. When the IFC did not meet these requirements, groups around the world decided not to participate in the various meetings and called a boycott. The groups formed a firm, determined and united front in defense of their rights.

Boycott of the IFC consultations – an overview

Rio de Janeiro, Brazil, September 27-29, 2004
In Rio de Janeiro, the Brazilian Forum of NGOs and Social Movements, which represents over one thousand national and local organizations all across Brazil, decided to withdraw from the consultation. The Director of the Forum delivered a statement explaining why they walked out of the meeting. He stated: “Our member organizations, after careful analysis of the current scenario, evaluated that our presence in this meeting would be useless and likely to be used to allege that IFC keeps a dialogue with civil society.”

Manila, the Philippines, October 27-29, 2004
Around 500 people marched during the IFC consultation in Manila. They stopped near the Westin Plaza Hotel where the consultation was held. Several persons affected by IFC projects spoke on key issues. The group marched in front of the hotel chanting "IFC get out of the South!" Two activists gave copies of a statement to the IFC officials and raised issues on the projects sponsored by the IFC in the country. The statement reads: “This boycott, decided independently by each organization expresses the collective condemnation of the World Bank's refusal to heed the calls and demands of civil society movements in many countries for it to stop promoting and financing projects and policies that harm communities, the environment, and undermine the right of people to sustainable and equitable development.”

London, United Kingdom, November 1, 2004
London-based NGOs issued a press release protesting the flawed process. They received a fair bit of media attention. Only two NGOs showed up for the meeting. On the same day an action was announced for the next consultation in Berlin. The IFC made repeated calls to NGOs in Germany, pleading with them to participate. When groups stood firm, the IFC decided to postpone the consultation in Berlin.

Nairobi, Kenya, November 29-December 1, 2004
In Africa, 29 environmental and social NGOs issued a statement declining to officially participate in the IFC consultative process for Africa. They demand that the IFC improve the consultation process by providing a sufficient and adequate timeframe. The statement also reads: “We feel strongly that by this choice IFC has subordinated public interest to corporate interest and we feel obliged to spend our time, energy and resources in alternative important endeavors.”

Paris, France, Dec 3, 2004
Friends of the Earth France decided to boycott the meeting organized by the IFC in Paris, France. In the week running up to the meeting, FOE France was contacted daily by the IFC with the request to attend the meeting, but they refused. In the end, only two NGOs were present for the meeting, and more than ten supported the proposal to boycott. The groups raised a banner in front of the meeting room reading "No corporate power," and distributed press releases and the demands to every person who came in. The organizations also launched a statement on behalf of international platform that contains more than 200 groups. The platform calls for rights, rules and responsibilities for the IFC.

Istanbul, Turkey, December 13-15, 2004
Various groups issued a statement for the occasion of the consultation in Turkey. It reads: “This process gives us little hope that (…) the IFC Policies will be an effective tool to protect the interests of affected communities, to adequately address social issues, to protect human rights and the environment.”

What do we want?

In response to these actions, the IFC announced it would extend the process by six months, attempting to save the credibility of its review. While this is a welcome signal that the IFC took note of our concerns, we wonder why such an extension is now possible when it wasn’t before the boycott. Various concerns remain. Invitations for the consultations took place in a secretive manner and it remains unclear how any input will be processed. Now that we are halfway through the process and have ended the boycotted of oral consultations, it is difficult to see why one would decide now to spend time on this review.

The IFC’s current attempt to weaken all of its standards is unacceptable. The IFC is a public institution with the mandate to alleviate poverty through sustainable development. If it has no way of verifying that its projects are carried out in a responsible manner, and merely adheres to whatever transnational corporations consider adequate, the institution is obsolete and illegitimate.

The IFC’s history of low standards and poor implementation does warrant an overhaul of its policies. But the IFC should move beyond what is currently on the table. Public institutions should protect the rights of people and the environment, rather than wealthy corporations. If the IFC is to have any license to operate, its standards should: - be mandatory, detailed, unambiguous and enforceable; - support international law and agreements, notably those on human rights, labor, indigenous peoples and the environment; - recognize local communities’ right to consent and to self-determination; - acknowledge the importance of cultural and natural diversity; - support international right-to-know principles; - include an action plan to shift away from mining and fossil fuel financing towards sustainable renewable energy, excluding large hydro dams and nuclear energy; - recognize and clean up its legacy of ecological and social damage.

More than 200 civil society groups, networks and socially responsible investors, from 53 countries, called on the IFC to protect the interests of the poorest and the public when setting rules governing global private investment. More information, including the ‘Platform for Rights, Rules and Responsibilities’ can be found at www.grrr- now.org. Photos of the various protests are up at www.foei.org/ifi.