【Devex】 For NGO leaders, safeguards can make or break AIIB, BRICS bank

    摘要:From left to right: IREX President Kristin M. Lord, OxfamInternational Executive Director Winnie Byanyima, Columbia University’s EarthInstitute Director Jeffrey Sachs and Global Water Partnership Chair UrsulaSchaefer-Preuss. Photo from various sources.

For NGO leaders, safeguards can make or break AIIB,BRICS bank

By Lean AlfredSantos@DevexLeanAS23November 2015

From left to right: IREX President Kristin M. Lord, OxfamInternational Executive Director Winnie Byanyima, Columbia University’s EarthInstitute Director Jeffrey Sachs and Global Water Partnership Chair UrsulaSchaefer-Preuss. Photo from various sources.

Multilateral organizations are adapting tochanging international development priorities by shifting from a growth-focusedapproach the past few decades to one more focused on sustainability —prioritizing people and the planet at the same time.

The World Bank and regional developmentbanks are intent on aligning their programs with sustainability principles andgoals, including reforming social and environmental safeguards policies sodevelopment is inclusive.

Yet, there have been struggles along theroad to sustainability and inclusiveness and many of the issues trace back tosafeguards.

The World Bank is still in the process offinalizing its revised safeguards policy that started almostthree years ago.Allegations of displacement and human rights violations have surfaced inCambodia,Laos andparts of Africa,among other regions. At one time or another, all the regional development bankshave attracted negative media attention over the implementation of appropriatesafeguards that are supposed to protect vulnerable people and the environment.

So it raised some eyebrows recently whenthe China-led Asian Infrastructure Investment Bank took less than a month toconsult civil society and other stakeholders on its own social andenvironmental safeguards framework.

Theunusually rapid process has alarmed some development leaders who say thatAIIB’s actual commitment to sustainable development will depend largely on aworld-class safeguards framework that member states and developmentpractitioners can agree on. The same applies to the $100billion Shanghai-based New Development Bank by Brazil, Russia, India, China andSouth Africa. As these banks ramp up operations, NGO leaders are watching.

It would be a “massive regression back tothe days of blunt, monolithic top-down ‘development’” if AIIB and NDB “eschewor water down vital environmental or social safeguards, or limit the options toredress available to people that could be harmed by lending,” said WinnieByanyima, executive director of Oxfam International.

“The devil will be in the detail,” shesaid, adding that safeguards should not be “risk mitigation” tools or mereboxes to be ticked at the end of a project, but a crosscutting element in theentire development process.

Lack of clarity

China’s history in developing countries isno doubt influencing the perceptions of the NGO community. And as a key plannerand financial supporter of AIIB and NDB, China will play a major role shapingthe safeguards of both banks.  

Wawa Wang, sustainable finance adviser ofmultilateral watchdog CEE BankwatchNetwork, said that AIIB and NDB management’s implementation of itssafeguards — and not just the depth of their pockets — can be the differencebetween success or failure of its existence once it becomes operational.

“We are deeply concerned that burden ofproblems — if projects or policies are not carefully guided by shareholders —will cause irreversible impacts to the livelihood of the affected communitiesand the ecosystem,” she said. “There’s concern from CSOs around the world aboutwhether AIIB will recognize the financing of high carbon-emitting projects isoften in conflict with development and climate change goals.”

Many questions remain unanswered, specificallyhow the bank intends to apply the vaguely worded environmental and socialstandards to its operations and the degree to which the bank will discloseenvironmental and social impact assessment results. International NGOs andlocal civil society are also questioning if and how AIIB and NDB plan torelease information to affected communities and concerned citizens. 51302919730510385

If the poor are to benefit from the two newbanks, NGO leaders stress that social and environmental safeguards and sustainabilitymust be built into the operations from the beginning and should be made clear.

Ursula Schaefer-Preuss, chair of theSweden-based Global Water Partnership, told Devex that one of the biggestchallenges in establishing the new institution would be installing a propersafeguards policy that examines the social, economic and environmental aspectsof development projects life cycle.

Failure to do this, the former ADB vicepresident shared, would otherwise pose a serious funding and legitimacy problemto AIIB and NDB, especially when member countries start monitoring andevaluating the way the banks are conducting business.

Jeffrey Sachs, renowned economist anddirector of Columbia University’s Earth Institute, told Devex that while thetwo China-based banks will add more money to the funding pool for the world’spoor, the way the money will be spent will be key as much as the number ofzeros in the checks the leaders of these institutions will sign.

“The question for these banks … is to fundtruly sustainable infrastructure,” he told Devex at the sidelines of a speakingengagement at the ADB headquarters in Manila in August. “If the funding ismerely funding more of what we’re doing right now, it will not beenvironmentally sustainable. The quality of their portfolios depends on a goodand accurate environmental strategy,” said Sachs.

Golden opportunity

But NGO leaders also highlight a “goldenopportunity” for AIIB and NDB to change the way the international developmentsystem currently works for the better.

“Emerging markets are frustrated at thepace of change at international financial institutions and they’re right to be— the World Bank and IMF have been too slow to reform,” Byanyima explained,revealing that the international financial architecture has been “rigged infavor of the United States and European interests for too long” so new playersshaking things up can be a breath of fresh air.

While the official reason for the emergenceof AIIB and NDB has almost always focused on the need for more developmentfinancing, some experts believe there are far-reaching reasons: that ofoperational inefficiencies and the need for more developing country influence.

Countries like China and Russia, forexample, have been lobbying for greater shareholdings and decision-makinginfluence in traditional multilateral institutions including the World Bank,IMF and the ADB, which are sometimes accused for falling short of expectations,particularly  in terms of providing sustainable solutions for the world’spoor.

Byanyima said the gaps open up a chance forthe newcomers to do things right. But she warned that the objectives of the newinstitutions should, in a way, remain on point: fast track and improve theworld’s achievement of crosscutting development goals.

“NDB and the AIIB will change thedevelopment landscape — I think that’s undeniable — but they must not repeatpast mistakes of leaving behind the poorest people,” she explained. “Everythingthey do must move us closer to achieving the Sustainable Development Goals.”

AIIB and NDB will both primarily focus oninfrastructure development to address the developing world’s majorinfrastructure shortfalls, but opinions are mixed on this specialized focuswill link and contribute to broader development strategies and impact.

Kristin Lord, president of Washington,D.C.-based nonprofit IREX,shared that while infrastructure may facilitate growth, it does not alwaystranslate to sustainable development, especially if the banks are to sidestepinternational standards.

“I think the concern is that typically,Chinese investment and foreign assistance has been steered largely towardsinfrastructure for it to play a role in economic growth,” she said. “However, Ithink that we in the development community have learned for many years that atleast it is important to invest in human development and the future.”

“The concern being that the new banks mayonly focus on infrastructure and would neglect this critical aspect of humandevelopment,” Lord added. “If they do shift their focus to be more abouteducation, governance, social engagement, and economic inclusion, then we wouldbe open to a conversation. But we have no reason to suggest that that’s wherewe’re heading right now.”

Byanyima concluded that the leaders ofthese new institutions “have an extraordinary opportunity to positively changethe shape of the world development … architecture. Make sure your bank istransparent and accountable both to citizens of these banks’ shareholders andto ordinary people in the countries you’re lending to.”