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International Financial Institutions

The international financial institutions should also help integrate human rights into the global economy by promoting the creation of national institutions to enforce rights and insisting on progressive improvement in respect for rights as part of loan packages. Their frequent failure to play this role has made the World Bank and the International Monetary Fund the focus of much of the protest against globalization.

These protests are understandable because, until recently, these institutions pursued a conception of economic development that was largely insensitive to human rights. For years, Nobel Prize economist Amartya Sen and others have demonstrated that abuse of human rights impedes economic development -- that unaccountable governments are more likely to indulge corruption or misguided economic projects and less likely to distribute the benefits of development to those most in need. Yet the World Bank and the IMF insisted that human rights were a purely"political" matter outside their economic mandates. Because of the influence of these institutions, governments and private investors often followed suit. The funds they plowed into authoritarian governments were frequently wasted or misspent, while debts piled up that now thwart successor governments' efforts to lift their people from poverty.

Many of these problems remain today. But the World Bank in particular has begun to change this sorry legacy. Under the leadership of James Wolfensohn, the bank's efforts to combat corruption, reduce poverty, and promote good governance and the rule of law have led it, in some countries, to show greater sensitivity to human rights. Yet much of this attention is ad hoc. Additional progress is needed to institutionalize human rights as an essential foundation of the bank's development work if the bank is to help enforce human rights in the global economy.

The bank's approach to Zambia, Indonesia, and other countries in Asia illustrate some of the positive steps it took in 2000 to address human rights issues:

  • In advance of the World Bank-convened donors conference for Indonesia in October, Wolfensohn sent a personal letter to Indonesian President Abdurrahman Wahid urging action to halt the violence in West Timor. Without directly threatening to suspend funding, he warned that donors would raise this issue at the conference.

  • The donors conference convened in Zambia in July was the first in Africa to be wholly transparent. All deliberations were open to independent human rights activists and other representatives of civil society, and the human rights performance of the government was freely discussed as an integral part of development plans.

  • In Asia, civil society input on bank projects and at donors conferences was actively sought in Cambodia, Indonesia, East Timor, and elsewhere. However, during the bank's consultative process in Kyrgyzstan, the government excluded NGOs seen as linked to the political opposition, suggesting the need for rules based on international human rights standards to ensure participation by all elements of civil society.

In fighting corruption, the World Bank has also begun to pay more attention to human rights-related concerns. It has promoted greater transparency in bank projects and encouraged civil society to scrutinize these transactions. But it could still do more to support whistle-blowers, journalists, and nongovernmental monitors who are arrested or abused for exposing corruption. It should also do more to promote the basic legal and judicial reform needed to achieve access to justice for all. This would help to root out and prosecute corrupt police and public officials -- steps that would improve official accountability for all sorts of human rights abuse.

The IMF, for its part, under the new leadership of Horst Köhler, has also begun slowly to change in ways that will help integrate human rights in the global economy. It was at its most innovative in Angola, where it secured the government's agreement to allow World Bank monitoring of oil revenues to ensure that they went toward development needs and were not mismanaged. It began negotiations for a similar audit of diamond revenues. Such transparency, coupled with stringent auditing, could become a model for extraction industries operating in countries ruled by abusive governments, such as Sudan, Turkmenistan, or Burma. Until now, the vast government revenues generated meant that these companies almost inevitably risked complicity in serious abuse by funding the machinery of repression. This new model of transparency should become a minimum requirement for companies entering into substantial revenue-producing joint ventures with repressive governments.

Yet the international financial institutions were hardly uniform in their attention to human rights. At the height of Russia's atrocities in Chechnya, the World Bank advanced Moscow U.S. $450 million in structural adjustment loan payments without any linkage to Russian conduct in the breakaway republic. The IMF continues to freeze new loans to Russia, but it denies Russian claims that Chechnya is the reason and insists that the only cause is the slow pace of economic reform. The World Bank gave U.S. $1.6 billion loans to China in fiscal year 2000 despite rampant corruption and restrictions on basic freedoms that made any genuine consultation with people affected by projects close to impossible. The bank vowed to expand the role of civil society in China's development but its intervention on human rights cases was selective.

The international financial institutions' new openness to incorporating human rights into their mandates at least sometimes has produced an ironic new problem of appearing impermissibly "political." The problem arises not because of these institutions' attention to human rights --a natural focus of their development work -- but because of their inconsistency. A steadier commitment to human rights is needed.

A useful model might be the European Bank for Reconstruction and Development. Founded in 1991 to assist the countries of Eastern Europe and the former Soviet Union, it operates under a charter that reflects recognition of the link between governance and development. The charter permits assistance only to governments that are "committed to and applying the principles of multiparty democracy, pluralism, and market economics." In 2000, the EBRD cut off public sector lending to Turkmenistan in part because "there has been no progress towards a pluralist or democratic political system." However, the bank's enforcement of its charter has also been uneven. Moreover, its options should include not only suspending assistance but also aiding in the development of institutions to protect human rights.


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