MLIs have to apply transparency, good governance to themselves

by Chakravarthi Raghavan

Geneva, 9 Aug 2001 - - The World Trade Organization, the World Bank and the IMF need to apply to their own working, the principles of transparency, accountability and good governance that they promote in their members, human rights jurists have said.

In their progress report on ‘Globalization and its impact on full enjoyment of human rights,” two special Rapporteurs of the UN Sub-Commission on Promotion and Protection of Human Rights (Mr. Joseph Oloka- Onyango and Ms. Deepika Udagama), have stressed the over-riding character of international human rights law over international economic law and institutions, and need for the multilateral institutions to recognise their obligations and promote policies to further them.

On the World Bank and the IMF, the Special Rapporteurs note that in the wake of the demise of the Washington Consensus (the package of shock-therapy policy reform measures in place throughout most of the 1980s and 1990s) there appeared to be a new wind blowing at the premier MLIs, with a priority focus on the issue of poverty reduction.

Referring to some recent IMF statements on poverty and the World Bank’s expressions of concern over the situation of global escalating poverty and growing inequality, the rapporteurs say: “The question that must be asked is whether these developments represent a wind of change, or simply a change in the wind? In particular, are the debt reduction initiatives taken by the two institutions sensitive to basic concerns for the promotion and protection of human rights?

In the contemporary context of increasing marginalisation around the world, there could be little doubt over the importance of the issues identified under the New Poverty Agenda (NPA) of the MLIs (good governance, functioning legal and judicial systems, education and health care initiatives, the fight against corruption, and the issue of debt reduction), to the overall struggle to foster and ensure global conditions of equity.

But does the mode in which these issues are being approached go far enough? Can these be discussed in pristine isolation from their connection to human rights?  For such approaches to be genuinely rights-sensitive, poverty must be seen to include, ‘the more immaterial aspects of life, such as lack of personal security, access to information, and the ability to influence political decisions.’ Such a perspective would thus address both the improvement in livelihood, plus, ‘access to resources, expansion of knowledge and increased empowerment.’

Unfortunately, say the two Special Rapporteurs, the NPA has nothing to say about the dimension of the struggle relating to the functioning and policies of the MLIs, and not simply about the states at which the strategy is directed.

Consequently, issues such as greater transparency in the formulation of policies, the governance structures under which they operate, and the all-important issue of the accountability of MLIs for the policies they design, are not given any attention. The limitations inherent in such an approach are evident: “without a concerted effort at internal reform and reorientation, focussing on governance issues alone particularly in an instrumentalist manner addresses only one part of the problem.”

Criticising the initial thrust of the HIPC strategy and complexity of the process, and its modification in 1999 in recognition of the deficiencies of the first strategy, with its new dimension of “participation” of civil society actors, the two jurists point out that the format for such participation, usually workshops, and non-discussion of conditionality,”render the process somewhat cosmetic.” The notion of ‘ownership’ guiding such participation was also rather perfunctory - “ownership by the state, or by the community?”

Thus for many observers, HIPC and the PRGF are “basically old wine in new bottles,” particularly since the basic principles and value systems underlying the HIPC poverty reduction strategy are the same as those under the structural adjustment programs (SAPs and ESAF) that preceded it. Also, they still suffer from the lack of sufficient resources necessary to produce real change. And a recent audit of the initiative revealed that the Bank and the Fund themselves also believe that the initiative does not reduce debt to a low enough level, that the predictions of export growth were too high, and debt levels may rise again due to the HIV/AIDS problem.

However, add the Rights experts, the major problem is that macro-economic assessments assume the same priority as they did with the SAPs/ESAF, and under the PRGF they are beyond discussion. This translates into priority being given to macro-economic assessments.

Under the PRGF, it is still the staff of the Fund and the Bank who retain supervision over whether the conditions are being met. It is the institutions that have the final say over the PRSPs, effectively negating the claims of local ownership and participation, and the claim that the IMF has also developed a social conscience.

The fundamental problems remain, that of the MLIs looking at the problem through the wrong lenses, with the NPA’s thinly disguised conditionality still failing to take on board a critical human rights perspective to the issue of debt reduction.

“We thus return back to nearly square one.”

To ensure that the MLIs aren’t in violation of international human rights, the international community, the Special Rapporteurs say, must take measures for a restatement of international human rights law and its applicability to the MLIs including the WTO.

The rapporteurs said they planned to make some suggestions in their final report.

It is quite clear that apart from TNCs, the policies and operations of multilateral institutions (MLIs) such as the World Bank, the IMF and the WTO have the most significant implications for the full observation and protection of human rights in the era of globalization.

With respect to TNCs, the United Nations, MLIs such as the OECD and the ILO, and the Sub-Commission itself have considered the need to elaborate codes of standards or conduct that conform to international human rights, and indeed such instruments exist in abundance. In contrast there has not been a similar attempt to clarify and codify the human rights obligations of MLIs.

The World Bank’s Inspection Panel, established in 1993, and the 1998 guidelines on Development and Human Rights were positive steps in the right direction.  Nevertheless both were limited in their potential - the Panel in terms of its operational rules and scope of coverage, and the latter in respect of the selectivity of rights given attention.

In a welcome change from its erstwhile orthodoxy and secrecy, the Executive Board of the IMF had produced a document outlining certain views on Good Governance. But on closer scrutiny however, one can discern only an oblique connection to human rights in a document that is essentially about effective financial accounting and management. The basic concern was the promotion of good governance in member countries, and not applying the same standards of operation at the Fund. The endorsement of greater openness and clarity at the Fund over its programs is also welcome, but clearly limited in terms of guaranteeing that the Fund can be made genuinely accountable to the people on whom their policies have the most adverse impacts.

The rapporteurs also welcome the steps being taken at the WTO, since Seattle, to improve its internal and external transparency. However, given the nature and character of these MLIs, and their growing influence on the realization of international human rights, much more needs to be done. Principally there is need for a systematic elaboration of the manner in which MLIs are bound by the Universal Declaration, the covenants, and other human rights instruments.

“In short, there is a need for a restatement or codification of the law, in its applicability to MLIs, (more so because) they seem initially to have had particular difficulty in coming to terms with the notion that they too are bound by international human rights principles.”

The main issue at stake is not about what individual Members do in implementing the rules, regulations and policies of an international organization, but rather the policies themselves and their impact - whether the WTO institutionally recognizes that it is under an obligation to respect the basic tenets of international law spelt out in the UN Charter, principles of customary international law and, indeed, principles of jus cogens? As an international organization, the WTO is not merely an aggregate of the legal personality of its Member units. It enjoys separate legal personality, and thus not only has rights, but also international obligations. This is a fundamental principle of public international law recognized in Article VIII of the WTO Agreement. The assertion that it is up to individual members to respect human rights lacks sufficient merit. The WTO qua an international organization, created and functioning under general principles of international law, is bound to respect fundamental principles of international human rights law which form part of those general principles of law.

A full reading of the WTO Agreement makes clear that the Parties thereto did not intend to adopt a trade regime merely for its own sake. Rather, they recognize that their relations in the field of trade and economic endeavour should be conducted with a view to, inter alia, raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand.

Human development and well being is a central concern of the trade regime under the WTO, and accepted in full in the statement made by the WTO representative at the 2^nd session of the UN Working Group on the Right to Development held in Geneva from 29 January to 2 February, 2001. The WTO said then that the WTO process of multilateral negotiations was an effort to operationalise the right to development. Taken to its logical conclusion, this position recognized that policies and activities of the WTO, not according with such developmental obligations, were against the objective and purpose of the Marrakesh Agreement.  Even though the Agreements per se do not specify obligations between States and individuals, the objective and purpose of their enforcement has the individual as a central concern.

Against this background, aver the two jurists, it is necessary to revisit the issue of the duties and obligations of MLIs with respect to human rights. While duly acknowledging the distinct character of each of the three institutions, there are sufficient similarities to begin to approach the issue of their obligations from a common point of commencement, namely, not only the duties to respect, protect and fulfil, but the duty to recognize, which, “not only imposes an obligation on states to ratify human rights treaties, but also on non-state actors to accept human rights responsibilities.”

In the context of discussions about globalization and the place of MLIs, the duty to recognize assumes a particularly high profile, a duty to recognize cuts across the board and relates to civil and political rights too. Given the ambivalence of MLIs of the duty to recognize, this must indeed be the necessary first step, “without qualification or selectivity.”

There are at least two dimensions from which the issue of human rights recognition can be approached: (I) should it (the World Bank) impose human rights conditionality, or (ii) what is the effect of the Bank’s policies on domestic human rights contexts? As pointed out in their last report, the principle of human rights conditionality, is generally not an option that should be given further consideration or support. “But certainly, it should be incumbent upon MLIs to avoid adverse human rights effects resulting from the institution’s own policies... (it) would mean an obligation.... for the organization to actively search for alternative ways to achieve the economic purposes of its policies... alternatives that would have to be in compliance with well articulated human rights standards... “any actor should ... be held accountable for the effects of its own actions.”

There are a number of ways in which the restatement of the human rights obligations of MLIs could be formulated: firstly, the assertion that all human rights must be recognized and protected during the process of development.  Secondly, the incorporation of a non-retrogression principle, the duty of MLIs not to take measures that would cause a reversal of existing social achievements in the particular countries to which their policies and operations are applied, (and their need) to take pro-active measures in support of the promotion of those sectors of the economy in which such achievements e.g. health, education, and shelter, inter alia, have been made. “If those achievements are placed under threat by the application of their policies, the obligation should exist to review those policies, entailing a more aggressive and well-articulated approach within the MLIs to Human Rights Impact Assessments (HRIAs). The Poverty eradication rhetoric now in vogue at the MLIs eeds to be matched by critical assessments of whether the macro-economic policy measures that continue to be applied are compatible with the goals of poverty eradication.

In restating the law, it is necessary to see whether the ‘Violations Approach’ could be applied to the policies of MLIs, the application of the ‘good governance’ principles to their own practices, policies and structures, issues such as institutional accountability (incorporating notions of transparency, independent (and external) evaluation of policies and sufficient and effective remedies. “In short, we are calling for a renewed commitment to social responsibility, informed by the well-known standards enshrined in the international human rights instruments.... the application of human rights standards should be the commencement point from which the MLIs embark upon the formulation of their policies, rather than a point of reference when things have gone wrong...”

The Special Rapporteurs have also asked civil society to revisit some of its tactics. “Although the WTO and TNCs have become a major preoccupation of their campaigns, sight should not be lost of the role and place of states particularly the powerful ones among them in driving and shaping the global economy... some time and energy must directed towards pressurizing member governments to develop rules and regulations that include, or at a minimum, are sensitive to broad human rights concerns.”

The MLIs have come round to recognizing that such actors are fundamental to the overall acceptability and domestic ownership of their programs, as well as to their potential for success in the long run. Nevertheless, civil society must always be cautious that they are not simply being used for the purposes of legitimizing the actions of the MLIs, when the substance of the programs they are endorsing remains very much the same.

Civil society organizations must also utilize different and novel strategies to confront the pernicious effects of globalization, whether at the macro- or the micro-economic level, including resort to courts - where in countries as diverse as South Africa, India and the Philippines show how much can be done by them in the quest to eradicate poverty and the debilitating consequences of globalization.

The emerging trend in some developed countries to hold TNCs responsible for extra-territorial abuses is also one that deserves support - as in the case of  Doe vs Unocal, in the US Federal Court, over Unocal’s involvement in a pipeline construction project in Burma linked to serious human rights abuses. – SUNS4954

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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