Monthly Issue Update - May 31, 2007

SELECTED ISSUES on INTERNATIONAL FINANCIAL INSTITUTIONS

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Wolfowitz out, Zoellick in; Bank credibility AWOL

Speculation around Paul Wolfowitz’s successor as World Bank President quickly faded, as the US nominated Robert Zoellick, former US Deputy Secretary of State under Condoleeza Rice.

A few days prior to the announcement, an internal Bank inquiry found Mr. Wolfowitz guilty of breaking staff rules (see Issue Update, April 30, 2007). In light of this, the Bank’s Board questioned Mr. Wolfowitz’s ability “to provide the leadership needed" to carry out the Bank’s mission. Wolfowitz obliged by resigning, but not before the Board publicly stated that Wolfowitz had acted in good faith and admitted that it shared responsibility for the error.

Long before this conclusion to the story, focus turned to the Bank’s outdated process for selecting the head of the Bank (US prerogative) and IMF (European prerogative). In mid-May, the Center for Global Development launched a survey to canvas opinions about the selection process and found strong support for key reforms. Board Executive Directors even released a statement, albeit following the US announcement, identifying “key qualities for nominees”. Since the Board still has to technically approve the Zoellick nomination, the statement also invited additional nominations for the position until June 15.

The sincerity of the Board’s statement is questionable, however. Finance Minister Flaherty has already stated his support for another US candidate for the job, and just prior to the Zoellick nomination, indicated that the choice “will be good for Canada”. Europe also signaled earlier that they would drop the issue of selecting the next Bank head, in exchange for Wolfowitz’s.

CGD Survey Finds Strong Support for Reform of World Bank President Selection Process http://www.cgdev.org/content/general/detail/13760

Communication from the Executive Directors on the Selection of the President of the World Bank http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:21351595~pagePK:64257043~piPK:437376~theSitePK:4607,00.html

EDC, mining and the Congo

On May 24, Export Development Canada, together with the Canadian International Development Agency, hosted a multi-stakeholder workshop on “socially responsible mining practices in the Democratic Republic of the Congo.” The workshop’s stated objective was to engage stakeholders on the subject of “how to best support the mining industry in the DRC.” The Halifax Initiative participated in the workshop, together with representatives of Canadian mining companies, civil servants, IFIs, consultants and other civil society organizations.

Discussions focused on a range of issues including the process announced by the newly-elected government of the DRC to review mining contracts approved by the Transitional Government. The validity of these contracts, several of which involve Canadian companies, has been questioned, including by the World Bank’s chief mining expert. Participants also discussed the relationship between mining operations and security concerns. Particular attention was paid to the Kilwa incident of 2004 related to Canadian mining company, Anvil.

While EDC does not currently provide backing to Canadian mining interests in the DRC, the crown corporation is now considering that option.

Mining in the DRC
http://www.raid-uk.org/

New WB health plan – reproductive health barely intact

As the Bank look set to adopt its new Health, Nutrition and Population Strategy, civil society raised a number of concerns with World Bank Executive Directors, including around language that would have effectively rescinded Bank funding commitments for family planning and lowered the priority of sexual and reproductive health in the strategy. As a result, the United States withdrew its opposition to restricting access to reproductive services in the final plan. However, the strategy still minimizes the issue of reproductive health, relegating it to the end of the plan, where it receives scant mention, in contravention of the Bank’s gender policy to prioritize and mainstream the issue.

In a letter (see “Notice Board”, April 2007) sent to Canadian Executive Director Samy Watson, civil society groups also raised concerns around the Strategy’s approach to user fees, lack of attention in the plan to non-communicable diseases, failure to address human resource shortages in the health sector, and the role of the private sector in the provision of services. With respect to user fees, the Strategy reverses previous Bank positions around eliminating them, and in fact legitimizes their application.

Mr. Watson responded to the letter, indicating that he shared a number of the concerns raised and had engaged with Bank management to try to strengthen the strategy.

Healthy Development – The World Bank Strategy for Health, Nutrition and Population Results http://www.worldbank.org/hnp

Notice Board

  • In late April, Ecuador's new President, Rafael Correa, expelled the World Bank’s representative over of a decision the Bank made in 2005 when Correa was Finance Minister. At the time, Correa says the Bank suspended a $100 million credit to the country to “punish” him for trying to set up a fund from oil revenues to buy back Ecuador’s sovereign foreign debt. Bank officials said the suspension occurred because Correa changed the program for which the loan was intended. This action is part of trend to distance Ecuador from the Bank and Fund. (See last month’s Notice Board)
  • Following a highly politicized announcement last month that it had repaid all of its outstanding debts to the IMF and World Bank, President Hugo Chavez announced at the end of April that Venezuela would be withdrawing from the institutions.
  • Just as Canada is considering joining the World Bank’s International Center for the Settlement of Investment Disputes (ICSID), Bolivia, Nicaragua and Venezuela have elected to withdraw from the Center, condemning it as a tool for multinational companies to undermine national sovereignty
  • The International Finance Corporation (IFC) released the final versions of the Environmental, Health, and Safety (EHS) Guidelines and 55 sector specific guidelines. The EHS are the technical, sector-specific accompaniment to the IFC’s 2006 Performance Standards. http://www.ifc.org/ifcext/enviro.nsf/Content/EnvironmentalGuidelines

New Publications

  • WEB SITE: “Dirty Business, Dirty Practices – How the Federal Government Supports Canadian Mining, Oil and Gas Companies Abroad”, May 2007, http://www.halifaxinitiative.org/dirtypractices/
  • “Human Rights Impact Assessments for Foreign Investment: Learning from community experiences in the Philippines, Tibet, Democratic Republic of Congo, Argentina, and Peru – Vol. I”, Rights & Democracy, May 2007. The report includes a draft methodology to assess the impact of companies on the human rights of communities. http://www.dd-rd.ca/site/_PDF/publications/globalization/hria/full%20report_may_2007.pdf
  • “Development without conflict: the business case for community consent”, World Resources Institute, May 2007. This report examines the premise that obtaining the informed consent of a community affected by development projects makes good business sense. It argues that the risks created by not obtaining community consent are significant and quantifiable, as are the benefits obtained through meaningful consultation. http://pdf.wri.org/development_without_conflict_fpic.pdf
  • “Examining the African Development Bank: A Primer for NGOs”, Bank Information Center, May 2007. This primer helps provide civil society with a better understanding of the structure, governance and operations of the African Development Bank Group. http://www.bicusa.org/en/Article.3320.aspx

Upcoming Events

Who is Robert Zoellick?

Robert Zoellick’s career as a civil servant has included several important posts in both of the Bush administrations. During the presidency of Bush Senior, Zoellick was appointed White House Deputy Chief of Staff and Assistant to the President.

In February 2005, under Bush Junior, Zoellick became US Deputy Secretary of State, second in command behind Condoleezza Rice. He held this position until June 2006, when he resigned and became a managing director at investment bank Goldman Sacks.

Much of Zoellick’s work in the civil service has focused on furthering the American free trade agenda. Zoellick led the State Department in negotiations on the North American Free Trade Agreement and at the Uruguay Round of the World Trade Organization. From 2001 - 2005 he served as U.S. Trade Representative, negotiating a number of bi and multilateral free trade agreements, including the hotly-contested Central American Free Trade Agreement (CAFTA).

Mr. Zoellick is known for his short temper and aggressive, strong-arm tactics. He has been criticized for coercive dealings with the governments of lesser developed countries during trade negotiations, and for his relentless promotion of US economic and political interests.

World Bank President
http://www.worldbankpresident.org