This month we examine 'odious investment' - Mongolia Undermined; (Mis)Investment in Agriculture; More than Bricks and Mortar; and the Canada Pension Plan Investment Board.

Climate finance: the World Bank, Export Development Canada and the Canadian government. Plus Rio+20 postmortem.

Energy poverty, climate change and the World Bank; Durban postmortem.

The role of the World Bank in climate finance; Europeans raise the bar on export credit disclosure; the FTT; glacier protection in Argentina; new UN working group.

IMF misses global financial crisis; Colombian government puts breaks on World Bank-financed mine; Wikileaks: Canadian embassy promotes mining industry in Argentina; Guatemalans sue Hudbay.

Ruggie guidelines stir debate
In 2008, the UN Human Rights Council extended Special Representative John Ruggie’s mandate on business and human rights. Among other things, the Council asked Mr. Ruggie to identify “concrete and practical recommendations on ways to strengthen the fulfilment of the duty of the State to protect all human rights from abuses by or involving transnational corporations.”

Financial Transaction Tax feasible, says report
The Leading Group for Innovative Financing for Development, an inter-governmental organization gathering 55 member states, released a report on 16 July announcing the feasibility of taxing financial transactions. The report, commissioned by 12 of the group’s member states, was conducted by a team of international financial experts and focuses on foreign exchange transactions. The report finds that as currency transactions between banks are processed via high–security international systems, which collect a per transaction fee on interbank exchange, it would be relatively easy to implement a foreign exchange tax into the system. The report calculates that introducing a small tax of 0.005% would generate USD$33 billion per year, which could be used to finance development activities such as poverty reduction and sustainable development.

IMF, European Union look to bail out Greece
Greece’s debt crisis is finally coming to a head, with International Monetary Fund (IMF) loans to deal with the country’s deficit and heavy debt load being hammered out in Athens. The European Union and the IMF are negotiating the terms of a bailout as fears mount that Greece’s crisis could soon spread to other countries in Europe and beyond. Other nations carrying significant debt loads, including the United States, are concerned that the Greek crisis is a harbinger of things to come, closer to home.

Government accountability bill returns to the House
On March 3, the Governor General will open a new session of Parliament, ending the recess created when the Harper government prorogued the previous session in December. All legislation that was under consideration at that time was extinguished, with the exception of private members’ bills, which return to the House, unscathed. These bills begin anew at whichever stage of the legislative process they had reached before the plug was pulled on Parliament.

Corporate Accountability Hearings Heat Up
Things were hopping this month in Parliamentary hearings on Bill-300, An Act respecting Corporate Accountability for the Activities of Mining, Oil or Gas in Developing Countries (see IU February 2009). The Bill was presented before the Parliamentary Standing Committee on Foreign Affairs and International Development by MP John McKay on May 25. This month Committee members heard riveting testimony from diverse witnesses (see JUST THE FACTS). Speakers included: Romina Picolotti, former Secretary of the Environment for Argentina and winner of the prestigious Sophie Prize for environment and sustainable development; Stephen Hunt, former mine worker and current Director at the United Steelworkers union; Marketa Evans, the federal government’s new Corporate Social Responsibility Counsellor; and mining companies Barrick Gold, Goldcorp and Kinross.

G8 down, but not out, as G20 makes pledges on crisis
If the big headline for April’s G20 Summit (See IU April 2009) was the $1.2 trillion pledged to tackle the financial crisis, this month’s showcase was the G20 itself, as the 20 countries crowned themselves the premier fora on global finance. Next year’s G8 in Canada will in fact be preceded by a G20 meeting, which Ottawa will co-host with 2010 G20 chair Seoul. Earlier this month, Liberal opposition leader Michael Ignatieff went one step further, suggesting that the G8 not bother meeting any more, and calling for a permanent G20 secretariat in Canada.

Italian G8 serves primi piatti for 2010 G "?" in Canada
Key among the issues addressed at the recent G8 summit in L'Aquila, Italy, were food security, global warming, the Millennium Development Goals (MDGs) and accountability. One of the key outcomes was a three year US$20 billion pledge made by the G8 countries and international institutions, including the World Bank, to boost agricultural production in developing countries. This is seen as one of the biggest aid shifts in decades, to an issue that has been neglected for far too long. But a history of broken promises still has NGOs and civil society on their guard - the G8 pledge at Gleneagles in 2005 of $50bn in development aid by 2010, with half to Africa, is still short by $15bn. G8 leaders also agreed, as developed countries, to reduce their greenhouse-gas emissions by 80 per cent as of 2050, although the Canadian government indicated after the Summit that it would not be budging from its commitment to reduce emissions by 60 to 70 percent by 2050! On poverty, with many of the MDGs - such as reducing the number of women dying in childbirth - already way off track, the summit agreed to a proposal by Gordon Brown to provide an assessment at the 2010 Canadian G8 summit on how the MDGs could be attained in time. Finally, on accountability, the G8 leaders agreed to develop a comprehensive framework to monitor progress on G8 promises, strengthen the effectiveness of their actions, and publish a full report in time for 2010.

Tensions build as UN conference on crisis postponed
June 24-26 now mark the new dates for the UN Conference on the World Financial and Economic Crisis and Its Impacts on Development, postponed from the beginning of the month as many European heads of state had said they could not participate because of European Parliamentary elections. The postponement is welcome relief to a process that began last October and has been tense ever since, exposing clear lines between those who favour a truly global response to the current crisis with a real rethink of how the global economy is governed vs. the newly crowned G-20 and their proposal for a status quo plus approach.

Government response on CSR and extractives: Fool’s Gold
For two years, parliamentarians, civil society, industry and the Canadian public have waited for the Government of Canada to issue a response to the ground-breaking consensus report from the National Roundtables on Extractive Industries (see IU March 2007). Against great odds, that process produced a consensus document, endorsed by industry and civil society, on a program of policy reform regarding the overseas operations of Canadian extractive companies that would make Canada a leader on the world stage. 

Europe looking to lead on response to financial crisis
A warning against US (and Canadian?) opposition to a new international architecture of institutions and tighter regulations to manage a more “moral” form of global capitalism, a flexible Economic Council within the United Nations, and an economic sustainability charter that establishes the rules for global financial governance, were three of the key themes raised by German Chancellor Angela Merckel and French President Sarkozy at a high-level symposium hosted by Sarkozy and former British Prime Minister Tony Blair in Paris this month.

G-20 Summit – financial response to a development crisis
With the global economy continuing its downward spiral, ambitions for the first Group of 20 (G-20) “Summit on Financial Markets and the World Economy” in Washington were sky high. In contrast, expectations in terms of concrete outcomes, with diverging opinions on key issues going into the meeting and a pretender at the throne in DC, couldn’t have been lower.

Bank pulls out of disastrous Chad-Cameroon pipeline

In early September, in a rare move, the World Bank pulled out of the $4.2 billion Chad-Cameroon pipeline due to ongoing tensions with Chad over oil profits the government had promised to spend on social programs. The exit was finalized when Chad prepaid the outstanding $65.7 m balance of its $140 m loan.

Business and human rights - protect, respect and remedy
Last month, members of the United Nations (UN) Human Rights Council unanimously endorsed the policy framework identified in April by John Ruggie, the Special Representative of the Secretary-General (SRSG) on human rights and transnational corporations. The Council also extended Mr. Ruggie’s mandate for three years.

NGOs applaud adoption of “better aid bill”
Two and a half years after it was first introduced, and after a tense year sitting in the Senate for its final reading, Bill C-293 or the “better aid bill” was finally unanimously approved in Parliament on May 9 to loud NGO approval. It received royal assent yesterday, May 29, which now makes it law.

Innovative financing for development gets boost
As the World Bank, IMF and World Trade Organization are set to discuss innovative financing at their bi-annual High-Level meeting at the UN next month, and UN representatives address the issue in their review of Chapter IV of the Monterrey Consensus days later (see IU January 2008), innovative finance has gotten a series of unexpected boosts from various sides.

Corruption back on the Bank’s agenda?
Evidence of serious fraud and corruption has emerged in five Bank-funded health projects in Orissa, India. The $570 million for malaria, tuberculosis and HIV-AIDS control was implemented from 1997 to 2003. The charges emerged from a Detailed Implementation Review (DIR) of projects in India begun in 2006, a process itself triggered by evidence of corrupt practices by two pharmaceutical companies involved in another Bank health scheme. The Indian government has pledged to take “exemplary punishment” of the parties involved.
 

MPs, CSOs demand government response to Consensus Report on Extractives
Earlier editions of this publication reported on the National Roundtables on Corporate Social Responsibility and the Canadian Extractive Industry in Developing Countries (See IU Vol. I No 10; Vol. II Nos 6, 9, 11; Vol. III, Nos 3 and 6). The cross-country consultation process was a constructive, multi-stakeholder dialogue on the overseas operations of Canadian oil, gas and mining companies. Remarkably, it culminated with the release of a consensus-based action plan for the Canadian government to improve the accountability of Canadian extractive companies overseas. The plan, which is outlined in the Advisory Group Final Report, was endorsed by participating representatives from industry, civil society and academia. That was in March. Eight months later, there is still no response from the federal government.

People’s Tribunal Examines World Bank Influence in India
Over sixty social movements, unions, academics, and local NGOs gathered for four days in New Delhi to examine how decades of World Bank policies and projects have affected the country’s economic and social landscape. Testimony, evidence, and research were heard by a 15 member jury of prominent activists, community leaders, retired justices, and academics in an effort to comprehensively assess the costs and benefits of World Bank assistance.

Selecting a New IMF Director: Another One-Man Race?
Following the recent, controversial appointment of World Bank President Robert Zoellick - who was hand-picked by the US, despite calls for a more democratic selection process - all eyes are on the International Monetary Fund as it prepares to select a new Managing Director in September. At this early stage, US and EU support for the candidacy of former French Finance Minister Dominique Strauss-Kahn reveals their intent to preserve a selection process that all but guarantees the appointment of a European to the top post.

Wolfowitz & World Bank in the spotlight over scandal
While the World Bank's executive directors have yet to make a decision on the future of president Paul Wolfowitz, calls for the former U.S. deputy defence secretary’s resignation are gaining momentum. The Bank’s Independent Evaluation Group (IEG), which assesses the degree to which the Bank's work meets its stated objectives, issued a formal statement described by the Financial Times as a “searing indictment of Paul Wolfowitz's leadership.”

UN Special Representative explores human rights obligations of financial institutions
There is growing consensus that human rights rank high among the pressing challenges that face both the private sector and its financiers. On February 16, the UN Secretary General’s Special Representative on Human Rights and Transnational Corporations, John Ruggie, and the Office of the High Commissioner for Human Rights convened a consultation on human rights and the financial sector in Geneva. The meeting included representatives from a number of export credit agencies (ECAs), the World Bank’s International Finance Corporation, several Equator Principle banks, academia and civil society.

Norway “seeks the truth” on Bank conditionality
The Norwegian government, whose aid money cannot be spent on programs that require trade liberalization and privatization, hosted an inter-governmental meeting in November to assess the extent to which the World Bank and IMF still require developing countries to pursue privatization and liberalization as a condition of support. An independent study commissioned for the meeting, determined that while the World Bank and IMF are still pushing privatization and trade liberalization in their development policy lending, it is less pervasive than in the past. It also concluded that governance conditions are increasingly taking the place of economic policy prescriptions, and that developing government “ownership” over Bank and Fund policies is still weak.

Norway cancels illegitimate debt
On October 2, in an unprecedented move, Norway's International Development Minister, Erik Solheim, announced that the Norwegian government would unilaterally and unconditionally cancel US$80 million (NOK520 million) of illegitimate bilateral debt held by Ecuador, Egypt, Jamaica, Peru and Sierra Leone. Acknowledging that these debts stemmed from a “development policy failure”, Oslo also accepted that as a creditor country it had a shared responsibility for the debts. Furthermore, the cancellation will not form part of Norway’s Overseas Development Assistance, meaning that it will be additional to current aid spending.

Singapore Meetings Emphasize “Civil” over “Society”
On September 19th and 20th, the World’s Finance Ministers will gather in Singapore for the traditional fall meetings of the World Bank and International Monetary Fund (IMF). Although the Bank and IMF will host their own Civil Society Forum, Singapore has banned the traditional outdoor protests that accompany the meetings – providing a designated protest lobby area instead. They have also been tightening border controls and stepping up border security.

Is Wolfowitz Gathering his Forces?
On June 16, 2006, former Spanish Foreign Minister Ana Palacio was appointed Senior Vice President and World Bank Group General Counsel. Ms. Palacio’s appointment is perhaps not surprising given her support for the US-led invasion of Iraq.  Her role under Spanish Prime Minister Jose Maria Aznar’s government in fact was essential to establishing good ties with the US.  But at the same time, her appointment is controversial because she continues a legacy of appointments made by President Paul Wolfowitz of a few close, like-minded allies that are forming an inner cabinet, and ostracizing other long-time and upper-level staff members from Bank decision-making (See Issue Update Vol 2, No. 1, 2006).  The appointment has sparked public debate on how senior management posts are filled.

► Spring Meetings at the World Bank and International Monetary Fund – Some Highlights

Reform of The International Monetary Fund (IMF) – As the IMF staggers through a budgetary and identity crisis (Issue Update 2, 2006), the IMF’s financial committee agreed to a number of changes to both IMF governance and its role. On governance, the Committee proposed reapportioning great voting power to fast-growing economies, such as South Korea, China, Mexico and Turkey, to reflect its place in the global economy. In terms of its role, it proposed the Fund look at how to be more effective in tackling spillover effects from individual country’s economic policies, by monitoring the impacts on the global economy of such issues as the US trade deficit, trade surpluses in Asia, and China’s pegging its currency to the dollar.

World Bank Fund Suspension in Chad: Local Implications for AIDS Work
The Chadian government recently amended their Petroleum Revenue Management Law for the Chad-Cameroon pipeline by removing the 'future generations fund' (10% of direct oil revenues are placed in an account for future use) to be able to access more oil revenues. This was due to a recent change in national priorities in favour national security and territorial administration, away from such issues as health care. The World Bank perceived this change as unacceptable and in January 2006 suspended their $124 million loan for eight active projects in Chad (See Issue Update Vol. II, No. 1). Three days of talks between the Chadian government and the Bank ensued. The discussions covered Chad's social spending and its critical budget shortfall, as well as the increases in border security to tackle the influx of refugees coming from the Darfur region of Sudan. Despite the changes made by the Chadian government, the Bank has maintained its suspension, and plans 'to safeguard the oil revenues intended for poverty reduction programs included in its original agreement with Chad.' A way forward is not clear.

Every month, the Halifax Initiative produces a two-page monthly update on various issues related to international finance. This month:

• IMF Board of Directors approve debt cancellation for 19 countries
• Guatemalans meet with World Bank President Wolfowitz about mining
• World Bank gets creative in accounting for its renewable energy investments
• New discussion papers
• Upcoming Meetings
• JUST THE FACTS - What are the IFC Safeguard Policies?
  

  SELECTED ISSUES on INTERNATIONAL FINANCIAL INSTITUTIONS

   

  ►IMF Board of Directors approve debt cancellation for 19 countries
  The IMF announced on December 21st that it would cancel the debts owed to it by nineteen highly indebted countries, early in 2006. The G8 last June had promised full debt cancellation for countries that had reached the completion point of the World Bank/IMF Heavily Indebted Poor Country Debt Initiative. (See Issue Updates 7,8 and 9, July, August and September 2005, respectively, for more info). Over the past two weeks, the IMF had threatened to delay implementation of the debt write-off for six countries on the pretext that their economic policies are "off-track" in relation to IMF conditions. Only Mauritania will have its debt cancellation delayed. It thus appears that the IMF has backed down from its threat to delay debt relief to the other countries in the face of a last-minute but intensive international campaign led by campaigners in favour of full and unconditional debt cancellation. The 19 countries that qualify as a result of today's assessment include: Benin, Bolivia, Burkina Faso, Cambodia, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tajikistan, Tanzania, Uganda and Zambia. The IMF added non-HIPC countries, Cambodia and Tajikistan, because of their low per capita income.

   

  • IMF Press Release: http://www.imf.org/external/np/sec/pr/2005/pr05286.htm
  • Letter to Finance Minister Goodale from the Halifax Initiative Coalition: http://www.halifaxinitiative.org/index.php/Home/653

   

  ►Guatemalans meet with World Bank President Wolfowitz about mining

  Two delegates from Guatemala traveled to Washington D.C. to voice their concerns and demands regarding the Marlin mine directly to World Bank President Wolfowitz on December 9th. Glamis Gold, a US-based, Canadian registered mining company owns Marlin mine, which was built with the help of a World Bank loan. Mario Tema, an indigenous leader from Sipacapa, and Magali Rey Rosa, a representative of the Guatemalan environmental NGO, Colectivo Madre Selva formed the delegation. Mr. Tema presented Mr. Wolfowitz with a statement from numerous Sipakapense leaders, outlining their demands regarding operation of the Marlin mine. Mr. Tema also presented President Wolfowitz with a statement from the community of San Miguel Ixtahuacán.  The delegate from San Miguel was unable to participate in the meeting as he was denied a US visa. Both Sipacapa and San Miguel are affected by the Marlin mine.

  Additional Information

  • Halifax Initiative case study on the Marlin mine http://hi2.openconcept.ca/updir/Glamis-Final.pdf 
  • Halifax Initiative and Friends of the Earth Canada joint statement on Marlin mine:  http://www.foecanada.org/index.php?option=content&task=view&id=228&Itemid=113 

  ►World Bank gets creative in accounting for its renewable energy investments

  The World Bank revised its own figures upwards in regards to investments in renewables and energy efficiency (RE & EE), in time for the inter-governmental meetings on climate change in Montreal that ended early this month. The Bank’s latest report shows that 60 per cent of its support for renewable energy and energy efficiency (RE & EE) is in fact for big hydro projects.

  The World Bank claims in a November 30 press release that it more than doubled its investment in RE & EE from fiscal year 2004 to FY 2005. The press release compares 2005 lending with its commitment to increase RE & EE support by an average of 20 per cent per year from 2005 to 2009. The Bank made this commitment at the June 2004 international conference on renewable energy held in Bonn, Germany.

  The Bonn target excluded large hydro (greater than 10MW) and loans and guarantees from the Bank’s private sector and insurance arms (IFC and MIGA).

  Additional Information:

  • Friends of the Earth USA, Power Failure: How the World Bank is Failing to Adequately Finance Renewable Energy for Development: http://www.foe.org/camps/intl/institutions/renewableenergyreport10242005.pdf
  • International Rivers Network, Friends of the Earth International release: http://www.irn.org/programs/greenhouse/index.php?id=051205leap.html

  *     *     *

   New discussion papers (HI Members or Associates, government) on IFI issues:

  • Power Failure: How the World Bank is Failing to Adequately Finance Renewable Energy for Development - http://www.foe.org/camps/intl/institutions/renewableenergyreport10242005.pdf
  • Comments submitted by stakeholders on the revised IFC Safeguard Policies http://www.ifc.org/ifcext/policyreview.nsf/AttachmentsByTitle/November+25+Stakeholder+Comments/$FILE/60+day+Comments+All.pdf

   Upcoming IFI-related conferences or meetings

  • World Social Forum, end of January 2006 in Bamako, Mali, Caracas, Venezuela and Karachi, Pakistan.

  JUST THE FACTS – Safeguard Policies The policies were developed at the World Bank Group, largely due to donor and NGO pressure to reduce the social and environmental consequences of World Bank lending. The objective of these policies is to prevent and mitigate undue harm to people and their environment. These policies provide guidelines for bank and borrower staffs in the identification, preparation, and implementation of programs and projects.  World Bank Group Safeguard Policies include policies on environmental assessment, indigenous peoples, cultural property, forests, pest management and involuntary resettlement.  The government lending arms of the World Bank Group and the private sector lending arm have different standards and different accountability mechanisms.   For more information see: http://www.ciel.org/Ifi/IFIs_Social_Environmental.html

   

   
  Additional Information

   

Stale Government Response to SCFAIT Mining and Human Rights Recommendations
"Balderdash!" summed up New Democratic Party MP Ed Broadbent's thoughts on the government's response to a set of recommendations made by the Standing Committee on Foreign Affairs and International Trade (SCFAIT) on the issue of Mining and Human Rights. Although the Government's response, released October 18th, acknowledged a need for action to address the often devastating impacts of the mining sector, it dismissed the majority of the Committee's recommendations. Citing a number of challenges that prevent more concrete action, the government focused on purely voluntary measures.

A leaked internal audit assessing the World Bank's involvement in a controversial Canadian gold mine in Guatemala has exposed glaring deficiencies in the due diligence undertaken by the International Finance Corporation (IFC), the Bank's private sector lending arm, prior to approving a $45 million loan for the mine.

Glamis Gold's Marlin mine in the Western Highlands of Guatemala has been plagued with controversy since the outset (See Issue Update 1 Jan 05). In March, the internal auditor, the Compliance Advisory Ombudsman (CAO), began an investigation after receiving complaints from Guatemalan citizens.

G8 Finance Ministers' finalize debt proposal.
On June 11, Finance Ministers from the G8 countries announced a debt proposal that would cancel multilateral debts owed to the World Bank (WB), the International Monetary Fund (IMF) and the African Development Bank's African Development Fund (AfDF) by 18 low-income countries. While the deal is a major step forward in terms of debt cancellation, the deal also has a number of significant limitations (highlighted in an analysis done by the Halifax Initiative and Kairos, summarized below in 'Just the Facts'')

Just two days prior, the Halifax Initiative Coalition and the MakePovertyHistory campaign held a 'White Band Event' at Finance Canada. Wearing white shirts, hundreds of people formed a white band around the Finance building, and called on Minister Goodale to call for 100% Unconditional Cancellation of the Debts of the Poorest Countries.

Wolfowitz Nomination - Who's Afraid of the Big Bad Wolf?
On March 31, the World Bank's Board unanimously appointed Paul Wolfowitz as the next President of the Bank. Mr. Wolfowitz is the US Deputy Secretary of Defense, and is often cited as the key architect and advocate behind the invasion of Iraq in 2003. Citing his role as Ambassador to the US Embassy in Indonesia, the State Department, and the Pentagon, US President George Bush said Wolfowitz would bring experience to the position of President both as a "skilled diplomat" and experienced manager.

Chirac Proposes International Taxes to Fight Poverty
French President Jacques Chirac, speaking at the World Economic Forum in Davos, Switzerland, called on all developed countries to substantially increase aid budgets to meet the Millennium Development Goals (MDGs). Taxes designed to skim some of the wealth generated by globalization include levies on crossborder financial transactions, taxing aviation and shipping fuel, environmental taxes and air travel charges.