Accountability as justice for the Multilateral Development Banks? Borrower opposition and bank avoidance to US power and influence

ABSTRACT

In 1993, the World Bank created its Inspection Panel, unprecedently opening itself up to being held to account by people negatively affected by its development projects. Within a decade, the other Multilateral Development Banks (MDBs) – the Asian, African, Inter-American Development Banks, the European Bank for Reconstruction and Development and the rest of the World Bank Group would too. The creation of these accountability mechanisms embodies a norm of ‘accountability as justice’ that provides recourse for damaging behaviour through a formal sanctioning process. This article makes two arguments: first, the United States built on its history of using ‘accountability as control’ to advocate using accountability for justice for the MDBs during debates over maintaining their efficiency and effectiveness. As the predominant MDB shareholder, the United States used its power (of the purse) and influence (through its voice and vote) to garner support for the norm despite opposition from borrowers and the Banks. Second, the United States had to resort to these same levers to demand the MDBs reformulate the mechanisms when borrower resistance and Bank avoidance hindered their effectiveness. The United States successfully created the norm but Bank recalcitrance meant the United States had to use the same levers to ensure its effectiveness. The article concludes that change within the Banks is evident but incremental: the spread of the norm amongst the MDBs has changed their governance to include recourse for project affected people with structures in place to strengthen them over time.

KEYWORDS:

• Accountability
• justice
• norms
• international organisations
• constructivism
• Multilateral Development Banks
• African Development Bank
• Asian Development Bank
• Inter-American Development Bank
• European Bank for Reconstruction and Development

Acknowledgments

The author would like to thank the Australian Research Council for funding this research and for the many people that have supported this project.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. The institutional accountability narrative would be impolitic for the United States to use: to demand recourse for PAP through demanding their greater representation through a delegation chain, when developing countries on the MDB Boards retain the sovereign right not to be responsive to their people. The accountability metric narrative would also be difficult to push: what are the best metrics to demonstrate evidence of non-harm?

2. The Banks are detailed in chronological order of the MDBs establishing their accountability mechanisms except the EBRD, where the United States could not rely on the power of the purse but used its voice and vote.

3. Chile and Malaysia were also facing public protests around harm from big development projects and wanted a means to deal with them (see Park unpublished manuscript, 66).

4. The US domestic political system enables greater input from NGOs and interest groups to directly influence Congress, which shapes the US’ position on the MDBs compared with other Western states. The US power in the MDBs enables those ideas to change the Banks (Babb 2009; Lavelle 2011).

5. Author calculations based on publically available data on the number of projects financed by the Banks annually and the number of claims submitted to the MDB accountability mechanisms.

6. See the MDB websites for details.

7. Figures from: for World Bank, IFC and MIGA from http://www.worldbank.org/en/about/leadership/votingpowers; accessed 9 June 2016. Last Updated: 31 March 2016.AfDB figures from AfDB: http://www.afdb.org/fileadmin/uploads/afdb/Documents/Boards-Documents/AfDB_Statement_of_Voting_Power_as_at_31_December_2015.pdf; accessed: 9 June 2016.ADB figures from ADB 2015 Annual Report 2015. Accessed: 9 June 2016. Cited: http://www.adb.org/sites/default/files/institutional-document/182852/oi-appendix1.pdfEBRD authors own calculations based on subscriptions: http://www.ebrd.com/shareholders-and-board-of-governors.html Accessed: 9 June 2016. IDB figures from: IDB, 2015 Annual Report 2015: table IV, p. 29.

Additional information

Funding

Australian Research Council [grant number DP140100868].

Notes on contributors

Susan Park

Susan Park is an associate professor in international relations at the University of Sydney. She focuses on how state and non-state actors use formal and informal influence to make international organisations, particularly the Multilateral Development Banks, greener and more accountable. She is co-convenor with Dr Teresa Kramarz of the Earth Systems Governance Task Force ‘Accountability in Global Environmental Governance.’