Designing accountability, international economic organisations and the World Bank's Inspection Panel

Abstract

Over the last two decades, demands for greater international economic organisation (IEO) accountability have been both prominent and vitriolic. This article demonstrates how an influential IEO, the World Bank, took up concerns of its lack of accountability through creating the Inspection Panel in 1993, in response to civil society pressures and member state demands. Drawing loosely on John Campbell's argument that ideas operating in the ‘foreground’ and ‘background’ influence policy decisions, it traces how the idea of external accountability gained strength, leading to the Inspection Panel's emergence. This contrasts with competing rational design explanations that derive 16 conjectures to explain why states design the institutions they do. The article proceeds in four parts: first, the basis for examining IEO and World Bank accountability is outlined, before detailing how a rational design argument would apply to the establishment of the Inspection Panel. A constructivist account of how ideas of accountability emerged and shaped the policy formation process is then provided, which establishes a comprehensive explanation of how and why the Inspection Panel was created the way it was and not otherwise. The conclusion then reflects on the importance of the formation of external accountability mechanisms for IEOs and of ideas in shaping international institutions.

Notes

1. I would like to thank Len Seabrooke and Juanita Elias for hosting a workshop on the Sociological Turn in IPE in Adelaide in 2007 and to Len for organising a workshop on international organisations in Copenhagen in 2007. Finally I would also like to thank Diane Stone for organising a World Bank workshop in Bled, Slovenia in 2007 and to the fantastic World Bank staff that commented on this paper. The usual caveats apply.

2. While international institutions incorporate more than formal international organisations, this article focuses on the role of IEOs (on competing definitions of international institutions, see Duffield 2007; for a critique of the rational design definition of institutions, see Duffield 2003). Although Koremenos et al. (2004: 17) make it explicit that actors are not limited to states, in effect their research is geared towards interstate negotiations.

3. This study is based on interviews with current and former members of the Inspection Panel and activists involved in the accountability campaign undertaken in Washington, DC, in February and by telephone in March 2009, as well as primary and secondary documents.

4. The WTO only fits the final descriptive tag for IEOs, but it is an important one. The WTO is seen as having power because member states negotiate trade rules which they then enact in domestic legislation and accept WTO arbitration over non-compliance, compared with conditions attached to loans that borrowers may flout as is the case with the IMF, the World Bank and the RDBs.

5. The World Bank's affiliates, the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA), have also established an external accountability mechanism, the Compliance Advisor/Ombudsman (see Park 2009).

6. The Inspection Panel case is part of a larger study on the design of external accountability mechanisms for IEOs.

7. The WTO's dispute settlement mechanism is an internal process for member state arbitration and does not therefore provide external accountability.

8. Further, Jonathan Fox (2003: xv) argues that both the WTO and the IMF view accountability as borrowers being more accountable to the Fund in providing accurate economic data.

9. There have been similar calls for non-economic organisations. In 2005, Hoffman and Megret proposed an ombudsman to improve the accountability of UN peacekeepers in relation to human rights, despite the UN establishing one in 2002 to assess staff conduct in its headquarters and in the field (see UN 2009).

10. Again, this is for internal accountability and external public relations (see IEO 2009).

11. Bar the leadership process and minor differences between regional and non-regional members, the RDBs have the same structure as the IMF and the World Bank.

12. On the delegation chain between principal member states and international organisations as their agents, see Hawkins et al. (2006).

13. Research has demonstrated that IEOs like the IMF can and do interpret their own Articles of Agreement (Best 2005).

14. Importantly, Bank watchers also realise that Executive Directors tend to rotate every two years and are less knowledgeable about how the organisation operates than management and staff (Rich 1994). Rationalists point to this as information asymmetry between the principals and their agent (see Nielson and Tierney 2003). Board members may also be overwhelmed by the timing and flow of information given to them (Clark et al. 2003: 21, n. 26). A former Inspection Panel member also states that the President has less knowledge than senior staff about Bank operations (confidential interview, 24 February 2009).

15. For developing country calls to revise the World Bank's leadership selection process, see the Group of 20 website (<www.G20.org> [accessed October 2008]).

16. Weisband and Ebrahim (2007) call this ‘horizontal accountability’, where there are internal checks and balances, compared with the ‘vertical accountability’ of organisations being held responsible to powerful others such as principals.

17. For the UN family, a Joint Inspection Unit exists ‘to conduct evaluations, inspections and investigations system-wide’, which was institutionalised in 1978 (see JIU 2009). The UN has also used independent commissions to investigate internal cases of corruption such as the Independent Inquiry Committee into the United Nations Oil-for-Food Programme in Iraq (see <www.iic-offp.org> [accessed 2 March 2009]).

18. Applying this approach to the creation of the Inspection Panel focuses on the rationalist design research agenda mapped out by Koremenos et al. (2004), which was originally a special issue of International Organization, 55(4), 2001.

19. The individual versus collective accumulation of benefits cleaves neo-realists from neo-liberal institutionalists (Baldwin 1993). Further, not all states that choose to engage in international institutions benefit (Gruber 2000).

20. This delimits the number of panel requests, which a number of interviewees criticised for not taking into account environmental and social problems that emerge after a project is completed.

21. This design feature has been criticised by two former Inspection Panel members (van Putten 2008; see also the introduction by Jim MacNeill).

22. Although the IEG does not specifically examine whether the Bank has met all of the Panel's recommendations—this is not monitored except in cases where the Panel has been asked by the Board to follow this up.

23. A number of interviewees expressed this opinion, both activists and former and current Panel members and staff.

24. Duffield (2003: 420–1) argues that 35 rather than 16 conjectures could be derived from linking the dependent and independent variables that the rational design framework uses.

25. Interview with former Inspection Panel member, 24 February 2009.

26. How the variables are to be interpreted is unclear (Duffield 2003: 424–5).

27. Interview with accountability advocate, 5 March 2009.

28. Rational principal–agent theorists make both of these assumptions also (see the introduction to Hawkins et al. 2006).

29. Interview with accountability activist, 4 March 2009; interview with accountability advocate, 5 March 2009.

30. Interview with accountability advocate, 5 March 2009.

31. This comes from the ahistorical nature of rationalist theorising.

32. Koremenos and Snidal (2003: 437) argue that beliefs are included in the conjecture on uncertainty but this is only one form that ideas take.

33. Seabrooke (2007) also uses this distinction between foreground and background ideas in relation to change within the IMF, although they are used differently here.

34. See <www.ebrd.com> (accessed 6 March 2009).

35. The main CSOs involved in pushing for the Bank's Inspection Panel include the Bank Information Center, the Center for International Environmental Law, the then Environmental Defense Fund, Friends of the Earth, the International Rivers Network, the National Wildlife Federation, the Natural Resources Defense Council, the Sierra Club and the Swiss Erklärung von Bern.

36. This proposal relied on the earlier draft procedures by Wold and Zaelke (1992; see interview with activist David Hunter, cited in van Putten 2008: 360).

37. Interview with accountability advocate, 3 March 2009. Activist David Hunter from the Center for International Environmental Law states that until then the Morse Commission and the push for IEO accountability were moving ‘in parallel’ (cited in van Putten 2008: 358). Influencing the US Congress to pressure the World Bank was a well-established process used by CSOs to change the Bank on environmental and social grounds (see Park 2009; Rich 1994).

38. Interview with accountability advocate, 5 March 2009.

39. Interview with Inspection Panel staff, 24 February 2009. According to a key activist, Ibrahim Shihata in the Bank's General Council's office had argued that an independent mechanism would never be feasible (interview, 3 March 2009).

40. Indeed, Chairman Frank provided a full-time staff member to assist CSOs in drafting a resolution. There was no real Treasury input in shaping the Inspection Panel resolution (interview with accountability activist, 3 March 2009).

41. Interview with accountability advocate, 5 March 2009. Notably, the Panel did include important provisions from the ombudsman idea, including independence from Bank management and complete access to Bank information (Udall 1997: 6).

42. Interview with former Inspection Panel member, 24 February 2009.

43. Although, once a claim has been filed, the Panel process then becomes ‘a black box’ for claimants as they do not need to be consulted or informed as an investigation progresses (interview with accountability advocate, 5 March 2009; interview with former Inspection Panel member, 24 February 2009).

Additional information

Notes on contributors

Susan Park

Susan Park is a Senior Lecturer in the Department of Government and International Relations at the University of Sydney. She is the author of The World Bank Group and Environmentalists (Manchester University Press, 2009) and co-editor of Owning Development (Cambridge University Press, 2010)