Problem

Unaccountability of international financial institutions

Other Names:
Secrecy in international development banks
Unaccountability of international aid institutions
Incidence:
In 1992, the World Bank decided to continue supporting the Indian Sardar Sarovar dam and irrigation projects, despite overriding calls for a suspension of loan disbursements from Canada, the USA, Japan, Germany, Australia and Norway. An independent review team had called the project "flawed" and argued for a halt to construction while a thorough re-evaluation is undertaken. The review report also said the Bank routinely failed to make India carry out proper environmental impact assessments and resettlement plans, as the 1985 loan agreement required. Legal covenants were flagged and then forgotten, and conditions relaxed and discarded when the Indian Government failed to comply. Some thousands of the 240,000 villagers threatened with displacement have formed "drowning squads" and are refusing to move. Constitutionally the bank is unaccountable and legally immune for the people affected by its projects.

Policies of the International Monetary Fund which affect the lives of a billion people are negotiated in secret, with key conditions not released to the public. The people who bear the burden of these policies often do not even have access to the agreements which have been negotiated.

The corporations in the top 200 list of 2001 reflect current global economic trends. Reforms made by the World Bank and the International Monetary Fund have eroded the dominance of manufacturing and natural resource-based companies.

Claim:
The most fundamental factor undermining the success of foreign aid projects, and the reason why aid projects so often cause environmental damage, is the extraordinary level of secrecy under which most aid agencies operate. A complex of diplomatic conventions, legal roadblocks and bureaucratic liberties have allowed international aid institutions to operate beyond a level of public scrutiny essential for the proper and fair functioning of any other public institutions, and essential if environmental mistakes are to be discovered before it is too late. Aid institutions operate in isolation. They are laws unto themselves. They vigorously resist public scrutiny of their activities and lock out attempts by their funders and recipients to set guidelines for their operation. Increasingly the developing countries who are recipients of such aid are found to be opposed to it in the form in which it is given, namely that despite the best intentions of the donors, the effect of the aid is to finance developing country governments against their own people.
Problem Type:
F: Fuzzy exceptional problems
Date of last update
01.02.2001 – 00:00 CET