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UN experts urge World Bank to amend its constitution to effectively advance human rights
by OHCHR, ITUC, University of Johannesburg, agencies
June 2018
International Monetary Fund (IMF) and its impact on social protection
2018 report of the Special Rapporteur on extreme poverty and human rights, Philip Alston, prepared pursuant to Human Rights Council resolution 35/19, focusing on the International Monetary Fund (IMF) and its impact on social protection.
The majority of low-income developing countries are already included in IMF programmes or are likely to be so in the near future, yet fewer than one in five of the poorest 20 percent of people in those countries is covered by any form of social protection. And any assistance they receive will only cover a mere 13 per cent of their consumption needs. Even in lower middle-income countries, fewer than half of those living in poverty receive such assistance.
Since the vast majority of the hundreds of millions of people thus living in penury and without any form of social protection are unable to enjoy most of their human rights, the question arises as to what their own Governments are doing in response, and what role the international community plays.
No international institution exerts greater influence than the IMF over issues such as Government financial distribution, including social protection. But for many years, it took the position that these issues were not its concern; it could take account only of macroeconomic issues narrowly defined. Other institutions were left to pick up the pieces in the social area, but could only do so within the confines of the fiscal space, if any, left open after IMF prescriptions had been adopted. The IMF has long been criticized for its disregard of “social issues” and its impact hereon. This 20 page report examines the impact of the IMF on the human rights of the poor through its work on social protection.
* Access the report:
The World Bank should scrap ideologically-driven business regulation ratings. (ITUC)
Following an acknowledgment by the World Bank’s chief economist that the institution’s “Doing Business” (DB) report unjustly downgraded the policies of the outgoing Bachelet government in Chile, ITUC General Secretary Sharan Burrow called on the Bank to end its association with the controversial report:
“Doing Business has led to the adoption of damaging measures to weaken or eliminate business regulations in many countries, including those that protect workers and provide social protection. It has been used to pressure governments that don’t buy into the report’s pro-deregulation agenda. It is entirely inappropriate for the World Bank, as a publicly-funded multilateral institution, to endorse and promote a right-wing platform of weakened regulations and reduced taxation on business around the world.”
World Bank Chief Economist Paul Romer apologised to Chile for changes to the DB methodology that resulted in the country receiving considerably worse rankings while the socialist government of President Michelle Bachelet was in power than these allocated during the preceding conservative government. According to media reports quoting Romer, the changed DB rankings did not reflect modifications in Chile’s regulations but rather, “had the appearance of being politically motivated”. The outgoing government was criticised by the conservative opposition for supposed anti-business regulations during last year’s election campaign, which the conservatives won.
Originally inspired by the “Index of Economic Freedom” developed by the conservative Heritage Foundation in the 1990s, DB has been mired in controversy for its anti-regulation policy bias since it began in 2003. The first edition encouraged countries to take part in the “deregulation experience” through actions such as the “reduction of the scope of employment regulation”.
The ITUC, many other organisations and some governments criticised the Bank for using DB to pressure governments to adopt measures such as lower minimum wages and elimination of obligations to give advance notice of mass dismissals. During the Great Recession in 2009, the Bank accepted to suspend the publication’s labour market flexibility indicator, although DB continues to compile and publish data for it.
Romer is not the first critic to call attention to the appearance of manipulation of the DB country scores. The International Labour Organization, academic analyses and even a 2011 IMF working paper have pointed out the “subjective nature” of the indicators and their susceptibility to manipulation by the corporate law firms that provide the data from which the scores are calculated. The firms on which DB relies have included such dubious actors as the Mossack Fonseca group, made famous during the Panama Papers scandal in 2016.
In 2013, an independent panel established by the World Bank’s executive board recommended several changes to DB and its status within the Bank, including the elimination of country rankings and permanently deleting both the labour market flexibility indicator and the tax rate indicator. The latter penalises countries that require business to pay taxes or make contributions to pensions and other social protection schemes that exceed a low threshold. However, Bank management rejected almost all the recommendations made by the independent panel.
The only recommendation the Bank accepted was to transfer supervision of DB from the private sector development department to the development economics group, in the hope that Bank’s research unit would result in more professional rigour, but that turned out to be a vain hope.
For example, the latest edition of DB includes the claim that labour market deregulation “can be particularly beneficial to employment creation”. This assertion flies in the face of the findings of the Bank’s “World Development Report 2013: Jobs”, which includes an extensive analysis of research on the claimed impact of employment protection and minimum wage rules on job levels. It found the impact “to be insignificant or modest”.
Sharan Burrow stated: “The World Bank should be embarrassed that its ‘flagship’ report, Doing Business, rejects evidence-based analysis and, by all appearances, has allowed itself to be manipulated for political ends. Bank management should decide once and for all that Doing Business has no business in the World Bank.”
UN expert urges World Bank to amend its constitution to effectively advance human rights
The World Bank’s commitment to development can and should go beyond financing mega-projects and proactively support smaller, inclusive projects likely to create employment while advancing human rights and environmental protection, a United Nations rights expert has urged.
“Progress cannot be measured only by increases in Gross Domestic Product (GDP) but must also encompass the enhanced enjoyment of human rights and a higher standard of living,” said the Independent Expert on the promotion of a democratic and equitable international order, Alfred de Zayas.
“I have gathered numerous examples of human rights violations which have been alleged in connection with projects the World Bank has financed, including mass evictions and involuntary resettlements, land-grabbing, pollution, the destruction of livelihoods, forced and child labour, and sexual abuse,” said Mr. de Zayas, who has highlighted many such cases in his full report to the Human Rights Council in Geneva.
“The World Bank should stop financing projects that adversely impact people’s human rights, and should instead seek to combine economic growth with the promotion of food security, clean water, health care, education and employment, as well as the equitable distribution of wealth,” said Mr. de Zayas.
“The Bank must also assess the likely impact on human rights, health and the environment before any loans are approved, and strengthen the existing monitoring mechanisms.”
He added: “Financing should be suspended when serious human rights violations occur, victims must have access to effective recourse, and human rights defenders who raise concerns should not face intimidation or reprisals. No project affecting the lives and culture of indigenous peoples should be approved without the free, prior and informed consent of the peoples concerned.”
Mr. de Zayas said the Bank’s articles of agreement should now be updated to allow human rights to be mainstreamed into its practices and decisions.
“The Bank’s current articles of agreement prohibit it from political activity, which has often been interpreted as an obstacle to giving due weight to human rights and environmental concerns,” he said. “It is time to amend the articles - not least as they pre-date the Universal Declaration of Human Rights and the human rights treaties. The Bank should live up to its association agreement with the United Nations and deliver on its own human rights and environmental promises.”
Alongside amending the articles, the Board of Governors should issue directives that mainstream human rights into the Bank’s activities, he added.
“A revised mission statement that reconciles the Bank’s economic and financial priorities with human rights is necessary today and for the future,” said the expert.
Mr. de Zayas said the World Bank’s existing accountability mechanisms – the Inspection Panel and the Compliance Advisor Ombudsman – did very valuable work, but he regretted that their recommendations were not binding.
“The World Bank should take prompt and effective action consistent with the findings of these internal monitors and give their recommendations wide dissemination inside and outside the Bank. Moreover, it is imperative that victims are made aware of how to utilize these redress mechanisms,” he said.
Citing studies by academics and NGOs, the Independent Expert also highlighted that the public-private finance partnerships had lowered social protection in health and education. He noted that other violations had occurred after World Bank loans to intermediary banks, which had in turn lent to risky projects that would not ordinarily have received direct approval.
Concluding that the UN’s Sustainable Development Goals could not be achieved without the full commitment of international financial institutions, the expert also recommended that the Bank co-operate with international organizations, which have proposed plans of action to advance both development and human rights.
Report of the UN Special Rapporteur on extreme poverty and human rights on the World Bank and human rights
Summary: The present report begins with an analysis of the confusing approaches to human rights taken by the World Bank in its legal policy, public relations, policy analysis, operations and safeguards. The Special Rapporteur then seeks to explain why the Bank has historically been averse to acknowledging and taking account of human rights, argues that the Bank needs a new approach and explores what differences that might make.
The Special Rapporteur concludes that the existing approach taken by the Bank to human rights is incoherent, counterproductive and unsustainable. For most purposes, the World Bank is a human rights-free zone. In its operational policies, in particular, it treats human rights more like an infectious disease than universal values and obligations. The biggest single obstacle to moving towards an appropriate approach is the anachronistic and inconsistent interpretation of the “political prohibition” contained in its Articles of Agreement. As a result, the Bank is unable to engage meaningfully with the international human rights framework, or to assist its member countries in complying with their own human rights obligations. That inhibits its ability to take adequate account of the social and political economy aspects of its work within countries and contradicts and undermines the consistent recognition by the international community of the integral relationship between human rights and development. It also prevents the Bank from putting into practice much of its own policy research and analysis, which points to the indispensability of the human rights dimensions of many core development issues.
The Special Rapporteur argues that what is needed is a transparent dialogue designed to generate an informed and nuanced policy that will avoid undoubted perils, while enabling the Bank and its members to make constructive and productive use of the universally accepted human rights framework.
What the World Bank’s shift from public to private funding means for development, by Steven Friedman. (University of Johannesburg)
Making economies work for more people is a political task, not a technical exercise. The World Bank has just conceded this – without meaning to do so.
The bank has taken a new direction which, its critics say, means that it has given up on making economies work for the poor.
In theory, they are right. In practice, the bank may be recognising that the politics which shape it made it impossible for it to achieve the development which it promised for the poor.
The change was outlined in an April speech by bank President Jim Yong Kim, and is discussed in a recent document spelling out the bank’s vision for 2030. It’s meant to change it from a lender for development into a broker which will unlock “trillions” of dollars in private investment. It will seek to help countries by advising them on the policy and governance changes they need to make to attract the money. So the Bank will become a conduit for private investment, not public development funding.
The Bank does not say it is giving up on public funding. But its document declares that: ''Only where market solutions are not possible … would official and public resources be applied''.
So public development funding will be used only where it cannot attract private investors to poorer countries. Since Kim insists it can unlock “trillions” of dollars which can transform developing countries, it seems unlikely to reach for public funding in a hurry. So it seeks now to act as a broker for private investment, not public development.
The bank’s critics point out that private funding wants returns, not less poverty. They warn that relying on it for development will increase poverty and conflict. Ironically, they are repeating criticism that Kim made when he was a development practitioner – that development was being shaped by the agendas of private funders.
In principle, the shift does abdicate the World Bank’s mandate. It was a product of the 1944 Bretton Woods conference where its architects, John Maynard Keynes, Henry Morgenthau and Harry Dexter White, all saw an important public sector role in correcting some of the market’s impact. The bank was an instrument of that public role - one of its functions was “counter cyclical” public funding to stimulate economic activity when dips in the business cycle depressed markets.
The bank’s shift abandons this role and places the fate of the global poor largely in the hands of private wealth. It seeks not to find ways in which private money can serve public needs but how public needs can shift to meet the demands of private money. It could be seen as the final abandonment of wealthy countries’ obligation to the rest of the planet.
The role the World Bank’s architects had in mind may describe what it did at the beginning when it funded the revival of war-torn Europe. But, when it began to fund development in poor countries, it gave a role to markets well beyond anything its inventors would have endorsed.
In Africa, it demanded Structural Adjustment Programmes which cut back sharply on public welfare and, in the view of critics (such as Kim in his previous incarnation), caused great suffering. Its determination to ensure that funds went only to the most desperate (cutting the funding burden) once prompted it to recommend, in Tunisia, a biscuit so unpleasant that only the very hungry would eat it. The World Bank’s private finance arm, the International Finance Corporation (IFC), whose role will be strengthened by the shift, was fingered as the chief cause of that suffering.
So the bank behaved in much the same way and for much the same reasons as its critics fear it will behave now.
It and its supporters insist it made a positive impact: they cite data showing a marked drop in global poverty and say it contributed to this. But the figures are hotly debated. Even if they are accurate, there is no clear evidence that the bank helped make them happen. Nor has it created a world in which many more people find a settled role in the economy.
So the bank’s new role may, therefore, be simply its old one, but now with an accurate product description.
This may overstate the case: the bank has, at times, made a serious attempt to listen to critics and to become a conduit of development, not pain. But it was never able to adjust as an organisation – it would often endorse criticisms in theory but not translate them into practice. And so it did not become an effective development engine. The bank’s current shift has probably been prompted by its declining role as a development funder, as poorer countries discover other sources of finance.
The bank failed to do what it promised because it reduced development, a political task, to a technical exercise. It did this because its own political constraints ruled out an effective role.
Effective campaigns against poverty and inequality happen for one of two reasons. Either elites decide it’s in their interests to fight them or, in democracies, poorer citizens use their vote and their rights to achieve change. Neither condition applied to the World Bank.
Its decisions are not made democratically because votes are allocated in proportion to capital invested, not the number of people a government represents. America always appoints the bank president because it provides most of the capital and has most of the votes.
The Bretton Woods trio did not see that the New Deal, the US programme in response to the Great Depression in 1933, had worked partly because it had a solid base of democratic support and that democracy was essential to the development they sought. In the absence of democracy, the elites have decided what the bank should do. Since the focus shifted from Europe to the rest of the world, they have shown little interest in changing a state of affairs from which they benefit.
It’s this political context which has caught up with the bank, first reducing its role and then forcing it to give up on public funding to fight poverty. Ironically, the critics who insisted that it take politics seriously have been vindicated in a way they did not intend or expect. Challenged to recognise politics’ role in development, it has done so by concluding that the politics which govern how it works make an effective role in development impossible.
* Steven Friedman is Professor of Political Studies, at the University of Johannesburg

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Donors fail on pre-primary education funding
by Graca Machel
Theirworld, agencies
Children’s early learning is too often neglected, putting millions of children at a disadvantage before they even start primary school.
Investing in the first five years of a child’s life has been proven as critical in providing all children an equal chance at success, no matter who they are or where they are born. To allow the brain to grow and the child to develop to their full potential, children need quality nurturing care – including play, health, protection nutrition and early learning.
However, whilst progress is being made in some areas, children’s early learning is too often neglected, putting millions of children at a disadvantage before they even start primary school.
A pre-primary education has a significant impact on a child’s future prospects both in their education and adult life. Benefits of investing in pre-primary education are found to be the greatest for the most disadvantaged, who are often the least prepared when starting primary school and therefore most likely to be left behind.
In Mozambique, for example, children in rural areas who had enrolled in pre-school were 24% more likely to enroll in primary school and show improved cognitive abilities and behavioural outcomes compared to children who had not.
World leaders have recognised the key role the early years play in tackling inequality by agreeing a crucial target within the Sustainable Development Goals (SDGs), they agreed that by 2030 they would “ensure that all girls and boys have access to quality early childhood development, care and pre-primary education so that they are ready for primary education.”
But despite the evidence and rhetoric the data is telling a different story. Of the 193 countries that committed to the SDGs only 38 currently provide free, compulsory pre-primary education. And when it comes to international donors giving to pre-primary education the picture is equally depressing.
New research published this week by children’s charity Theirworld shows that overseas development assistance to Early Childhood Development has gone up in recent years – which is good news. The progress has been driven by increases in health and nutrition after dedicated campaigns to improve children’s start in life. This is something to support.
But at the same time only 1% of all early year’s aid goes to pre-primary education with a shockingly small number of donors supporting this crucial area. In 2016 only three donors disbursed more than US$5 million globally to pre-primary education. In contrast 29 donors disbursed more than US$5 million to health.
Both national governments and donors are perpetuating inequality in the education system and wider inequalities by failing to support pre-primary for all children, instead they are disproportionately investing in higher education, which favours children from wealthier income groups.
Currently international donor governments give 26 times more to scholarships to help students study in rich countries in 2015 than to pre-primary. Poor children missing out on early years education are much less likely to reach higher education. In sub-Saharan Africa, only 1% of the poorer half of the population will enter into higher education – but this sector receives disproportionately higher levels of funding.
A new approach to education funding is needed urgently if we want to tackle inequality, with a greater measure of funding going to children at risk of being left behind, those living in rural areas, those discriminated against, children impacted by HIV/AIDs, girls and those facing multiple disadvantages.
This means countries must increase the amount and the percentage of their total education spending towards free and compulsory pre-primary services – and ensure funds are targeted towards children who need the most help. International donors have to do the same, increasing their share of education spending going to pre-primary to 10%.
The establishment of the International Finance Facility for Education (IFFEd) - similar to the one that exists for funding global vaccines – will help to fund overall education spending and be able to better target resources to pre-primary education. International donors have an opportunity to come behind the launch of the fund at the G20 in Argentina later this year.
We have seen progress in health and nutrition with concerted global campaigns making breakthroughs in tackling preventable child deaths and malnutrition. Now is the time to build on this progress and deliver quality pre-school services to all children, no matter who they are or where they are born.
* Graça Machel if the founder and president of the Foundation for Community Development and the Zizile Institute for Child Development. She founded the Graça Machel Trust in 2010 where she focuses on child protection and development, women’s economic and financial empowerment, food security and nutrition, leadership and governance. Access the report via the link below.

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