print    send   Correct 

The Cancun Declaration comprises ten items and a global framework to evaluate the institutional reforms agreed as part of the Bank’s Ninth General Capital Increase. These items partially address some of the concerns raised by different civil society organizations from all over the continent working on the follow-up to IDB policies and on making the impacts of its projects in the region visible. Nevertheless, from these same organizations we believe that there still remain items to be reinforced and challenges to be undertaken by the Bank’s management.

Upon closing the 51st Annual Meeting of the Inter-American Development Bank (IDB) held in Cancun, Mexico, on March 19-23, 2010, IDB Governors (Economy, Finance or Planning Ministers of members countries) approved the Cancun Declaration(1). This document establishes a $70 billion capital increase and the cancellation of Haiti’s debt with the IDB as main agreements.

The declaration comprises ten items and a global framework to evaluate the institutional reforms agreed as part of the Bank’s Ninth General Capital Increase. These items partially address some of the concerns raised by different civil society organizations from all over the continent working on the follow-up to IDB policies and on making the impacts of its projects in the region visible. Nevertheless, from these same organizations we believe that there still remain items to be reinforced and challenges to be undertaken by the Bank’s management.

Capital increase and consultation process

The IDB capital increase proposal was presented by its president, the Colombian Luis Alberto Moreno, at the Meeting of the Board of Governors held in Medellin, Colombia, in 2009. The Bank’s management presented a request for a $180 billion increase – by far the largest in IDB history and more than four times the volume of any prior request.

Since then, different civil society organizations have requested information and brought different proposals. Along general lines, it was understood that the Bank lacks an adequate evaluation system based on the results of its management and that a capital increase without the necessary transparency and essential accountability, and without an increase in safeguards, would only result in more indebtedness for the countries in the region and in increasingly high socio-environmental costs of its policies and projects.

The pressure exerted by civil society through successive documents resulted in the convening of a consultation process with social organizations in the region, which is an unprecedented move in the recapitalization processes of multilateral financial institutions. However, the consultation process turned out to be insufficient in terms of full access to information and feedback on the proposals of social organizations.

In view of this, during the weeks preceding the Cancun summit, social organizations sent a letter(2) to IDB Governors, Executive Directors and management of the institution. The document includes 27 proposals, divided into four categories: climate change and renewable energy, regional integration, sustainable transportation and safeguards, incentive and results framework, and governance policies.

Civil society proposals

As regards climate change and renewable energy, social organizations call for increased Bank leadership vis-à-vis donor countries in order to reduce energy consumption, acknowledging differentiated responsibilities between North and South in the causes of climate change; and vis-à-vis member countries in order to reduce the support to fossil fuel extraction projects and the increase of low-carbon emission projects to 40 per cent of the IDB’s energy portfolio. Thus, priority is given to the need to provide people in the region with less energy resources having low greenhouse gas emissions. They also demand the Bank to reduce funding of megaprojects and large dams, and incorporate social and environmental impacts such as the replacement of subsistence crops or forests for plantations, human displacements or property rights. Likewise, organizations indicate the essential inter-sectoral nature of this issue, improving the vision of projects, by means of the incorporation of Mining, Hydrocarbons or Infrastructure ministries to work with the Bank. Consultation on areas that are suitable for biofuels should be made with the participation of local communities and organizations; goals and indicators of deforestation reduction and biodiversity loss should be set; climate change adaptation funds should be increased, at least to the level suggested by the Intergovernmental Panel on Climate Change (IPCC), as well as non-reimbursed funds for the poorest countries.

With respect to regional integration, a conceptual shift in the integration approach is requested from the Bank’s management. Such shift should be from a critical perspective regarding the simplification and equalization of the concept of integration vis-à-vis those of trade and infrastructure – the non-renewal of the IDB mandate in the Initiative for the Integration of Regional Infrastructure in South America (IIRSA) thus becoming of vital importance, as well as an immediate analytical and critical assessment of the Plan Puebla Panama (PPP). It is essential to focus the transportation infrastructure (roads, waterways, railways) on a domestic physical integration that favours local economies; to ensure the sustainable management of protected areas affected by projects, according to international standards (adequate budget per hectare; conflict level; implementation of handling, monitoring and social control plans); to include environmental clauses in each sustainable transportation operation that fulfill social and environmental standards and criteria, as precondition for future operations, and to put a monitoring and evaluation system into place including specific indicators to measure the impact of their implementation. It is also essential to define quantitative and qualitative reference frameworks to evaluate results, to measure and report the greenhouse gas emissions (carbon footprint) attributed to each project, as well as deforestation and forest degradation levels, without forgetting about the ongoing reinforcement of the necessary internal capacity to ensure the application of high quality safeguards, also taking into account that in all operations with multiple funders, the safeguards to be applied should have the highest social and environmental standards.

As regards the incentive and results framework, social organizations point out that the Bank should be able to measure and show the results of its management. An effective results framework should reflect a conceptual shift that is consistent with institutional priorities, particularly in the areas of inequality, climate change and integration. A comprehensive programme is needed to face inequality and such programme should become a transversal focal point instead of being reduced to a simple indicator. Social organizations also underscore the fact that it is important for the institution to have a results-based budget and to strengthen the role of the Office of Evaluation and Oversight (OVE) in terms of budget, approach, greater dissemination of its products and decentralization matters. OVE’s recommendations should be taken and incorporated in a systematic and transparent way, rather than in the discretionary way they have been taken until now.

Finally, and focusing on the Bank’s operation policies, social organizations lay special emphasis on transparency, as a concept that is intrinsically linked to democracy, through a process based on its three dimensions: access to information, accountability and participation of civil society in public management.

Cancun Declaration

The declaration partially address some of the concerns raised by different civil society organizations from all over the continent working on the follow-up to IDB policies. It acknowledges that “the Bank must not simply become larger but it must also become more effective at achieving its mandates”, and mentions among the reforms to be implemented to improve transparency and accountability, to update environmental and social safeguards according to international standard practices, and to establish sustainable development, renewable energy and climate change among its institutional priorities. This document represents a positive step in the path of the institution towards becoming a better bank.

Nevertheless, social organizations underline the fact that there still remain items that should be reinforced and doubts as
to how to ensure the implementation of reforms so that they not remain – like the 1994 capital increase – just as simply good intentions to improve the Bank’s institutional image. The annex to the declaration contains 13 items with recommendations the Bank will have to incorporate to its final document on capital increase, which must be approved by the Board of Governors within 60 days.

Likewise, many issues were not addressed, such as the revision of concepts established as to how to promote development in the region, the Bank’s accountability regarding its effective contribution to development, the environmental and social impacts of its operations, particularly its operation policy regarding indigenous peoples (the most affected by the Bank-funded “development” projects), the results of the 1994 capital increase, the shameful losses owing to its engagement in speculative practices in 2008, the Bank’s co- responsibility in the impact on human rights and the environment of IDB loans and policies that promoted the primary export model, the reduction of the State’s role, the effects of liberalization and privatization in the countries of the region.

In spite of these negative aspects, the IDB still plays a key role in financing the development programmes of countries in the region. Therefore, the participation and follow-up to the design of these strategies and policies is of utmost importance for civil society organizations since, in spite of the fact that Bank representatives publicly deny the power of IDB conditionalities, alleging the exercise of sovereignty by countries, the policies and strategies promoted by the institution have special relevance to define orientations and priorities on the political and economic agenda of our countries.

Next steps

The recapitalization process will take at least two years before it becomes effective, i.e., the first disbursement is expected by 2012, once the proposal is approved by the Board of Governors and the legislatures of donor countries approve their participation in the capital increase in the form of public debt. Then, the capital increase is expected to be certified by 2015, i.e., three years after being approved.

The civil society organizations that were present in Cancun(3) will continue to put a spotlight on the IDB(4), and therefore our advocacy efforts will be aimed at including and implementing the civil society proposals contained in the letter of February 17 within the process of IDB institutional reform. And within a framework of accountability, we will continue monitoring their proper fulfillment.

These proposals are obviously part of a broader debate among financing for development (the financial institutions that participate in the process), human rights and democracy, whenever each one of these dimensions implies a condition to advance in the other ones. Based on the fact that there are different concepts and paradigms between a financial institution such as the IDB and the people development projects are aimed at, our task is to be watchful and exert social control to achieve a real development and integration from and for the peoples in the South American region.

Katu Arkonada is an expert researcher on IIRSA and integration at the Centro de Estudios Aplicados a los Derechos Económicos, Sociales y Culturales (CEADESC, Bolivia) and María José Romero is an expert on financial institutions at the Third World Institute (ITeM, Uruguay).

Notes:

(1) Cancún Declaration
(2) CSOs Letter to IDB Governors
(3) The organizations present in Cancun were Amazon Watch (United States), Bank Information Center (United States), Centro de Análisis e Investigación (FUNDAR, Mexico), Centro de Derechos Humanos y Ambiente (CEDHA, Argentina), Centro de Derechos Económicos y Sociales (CDES, Ecuador), Centro de Estudios Aplicados a los Derechos Económicos, Sociales y Culturales (CEADESC, Bolivia), Derecho, Ambiente, y Recursos Naturales (DAR, Peru), Grupo Semillas (Colombia), Instituto de Servicios Legales Alternativos (ILSA, Colombia), Third World Institute (ITeM, Uruguay), IRC Americas (Mexico), NALAAC (United States, Mexico and the Caribbean) and the Latin American Network on Debt, Development and Rights (Latindadd).
(4) "IDB Watch", is the title of the publication distributed by civil society organizations during the Cancun meeting (Spanish language)

print    send   correct