Memorandum submitted by Christian Aid
INTRODUCTION
1. Christian Aid is the official development
agency of over 40 British churches and works for social justice
and poverty reduction with local organisations in 57 countries.
It has campaigned for debt relief to the world's most highly indebted
and poor countries for over 10 years, and since 1999 has critically
engaged with Poverty Reduction Strategy processes.[37]
It is an on-going priority for Christian Aid to monitor the activities
of the World Bank and IMF.
2. Christian Aid's Chief Economist attended
the September 2003 World Bank and IMF Annual Meetings held in
Dubai. Prior to the meetings Christian Aid met with the Secretary
of State for International Development, and UK officials, to share
respective agendas, and with other NGOs to co-ordinate activities.
Christian Aid's objective in attending the meetings was to monitor
discussions and outcomes, and to lobby specifically around the
issue of developing country "voice" in the governance
structures of the institutions. We outline below our main concerns
and the position of the UK Government on these issues.
DEVELOPING COUNTRY
"VOICE"
3. Christian Aid published a report in September
2003 to coincide with the World Bank and IMF Annual Meetings that
argued significant steps should be taken to democratise the institutions.[38]
This built on a policy document produced earlier in 2003 that
we submitted to DFID, HMT, and the institutions themselves, in
an effort to influence their deliberations on how to improve the
representation of developing countries.[39]
4. Christian Aid believes that both institutions
can play a role in supporting growth and development around the
world. But it is calling for a change in the way in which they
work, bringing them into line with what we expect from modern,
international organisations.
5. Christian Aid believes that the way in
which the institutions are currently governed is both unfair and
inefficient. We take as our starting point the right of developing
countries to be represented in decisions that substantively affect
their prospects. But we also believe that better representation
would lead to more appropriate, and better-informed, decision-making
and ownership.
The problem
6. The World Bank and the International
Monetary Fund (IMF) call for democracy, openness and accountability
in the developing countries where they work. But their own activities
fall far short of such an ideal. The loans that they make to poor
countries lack transparency, and their board structures are far
from democratic. Their leaders are only selected from the United
States and Europe, and never from the developing world.
7. Instead of one country member, one vote,
power is allocated according to how wealthy the countries are.
This means that poor nations—where the World Bank and IMF
wield the most power—have the least say in the way the institutions
are run and the decisions they take. The US is the only country
with enough votes to block board decisions on its own. By contrast,
the world's poorest countries cannot block a decision even if
they all join together.
8. Many of the richest countries—including
the US, UK, Germany, France and Japan—each have a seat to
themselves on the boards. Meanwhile, poor countries are bundled
together in large groups represented by one individual. For example,
in each of the boards of the World Bank and IMF, just two board
members represent a total of 44 African countries. It is a near-impossible
job to be familiar with, let alone adequately represent, all the
issues that are important to all the countries they speak on behalf
of.
Christian Aid recommendations
9. Strengthened accountability: Currently
the populations of poor countries have little information about
negotiations between their governments and the World Bank and
IMF, and no way of knowing which government policies have been
influenced by World Bank and IMF advice, and which are genuinely
those of their elected government. These negotiations need to
be more open and transparent to enable ordinary people to know
how their interests are being represented, and who to hold accountable
for the outcomes. Executive directors should also publicise their
voting patterns and policy positions, so that they can be held
to account for them. Parliamentary oversight committees should
be developed in all countries to oversee executive directors'
activities, and parliamentarians should be better informed and
resourced to engage in these discussions. Executive directors
should make regular presentations to national parliaments on their
activities in Washington. Details of World Bank and IMF activities
in each country must be better communicated. The media and general
public should be able to access the minutes of relevant board
discussions, and civil society groups should engage in monitoring
policy on World Bank and IMF-related areas.
10. Transparent decision-making: The
World Bank and IMF must place information on how decisions are
made at their highest levels in the public domain, because the
outcomes of such decisions have enormous implications for ordinary
people around the world. Board discussions should be written up
in detail and published within two weeks, including being posted
on the web, so that people in affected countries can easily access
them. Executive directors should also publish the statements they
make to these meetings, to enable constituencies to track how
they are being represented. Formal voting should replace the current
consensus system, and the results of votes should be made public.
11. Open and transparent recruitment
procedures: The heads of the World Bank and IMF must no longer
be selected through a carve-up between the US and Europe. It is
essential that candidates for such influential positions be recruited
through an open and transparent selection process. All countries
should be able to put candidates forward for these posts and have
a say in their selection. Women should be actively encouraged
to apply for these posts.
12. A more equal distribution of votes:
The voting system in the World Bank and IMF should be re-balanced
to give developing countries a bigger say. The basic vote allocated
to each country should be significantly increased, which would
raise the voice of poorer and smaller countries. The rest of the
voting allocation should be allocated according to a fairer and
more transparent formula, based not just on economic strength,
but also on population size and the importance of each country
as a borrower. No single country should have power of veto.
13. A fair distribution of seats: In
order to bring about a better balance of seats on the boards of
the World Bank and IMF between rich, poor and middle-income countries,
there needs to be a substantial increase in the seats for poor
countries. In addition, a more realistic number of countries needs
to be allocated to each representative. Europe is over-represented
on the boards and its seats must be rationalised. Finally, no
single country should have the privilege of a board representative
to themselves.
14. Increased capacity for poor-country
representatives: Developing country constituency offices need
additional staffing and greater access to independent technical
expertise. Representatives of the poorest countries currently
have the largest workload and the fewest resources and staff.
The response of the UK, the World Bank and IMF
15. The UK has been sympathetic to the issue
of improving developing country voice in the institutions, and
Clare Short was particularly vocal on the issue of transparent
and meritocratic recruitment procedures for the head posts.
16. At the meetings in Dubai, when asked
a question on the "voice" issue, Gordon Brown responded
by saying: "We are looking at this over the next year, and
there will be a big debate on this, but I do think the principle
that should guide our actions is not who happens to be richer
or poorer at one particular time. It's not because either the
North is lending more to the South or the South is lending more
to the North. It's a basic right that people's voice should be
heard . . ."
17. European countries are especially over-represented
on the governing bodies of the institutions. A substantive re-balancing
of the structures in favour of developing countries would entail
European countries—including the UK—ceding some of
their current influence as encapsulated in their current seat
and vote allocation. Yet despite their sympathy with the issue,
the UK has appeared reluctant to proactively pursue a co-ordinated
European approach to lessening the combined influence of European
states.
18. In this, the UK is certainly not alone.
By far the majority of rich countries that are "over-represented"
on the Boards are also reluctant to cede any of their influence.
This can be seen for example by the muted reaction—including
from the UK—to a German proposal floated in the summer to
consolidate European presence on the Boards.
19. As a result, most countries that have
pursued an agenda of strengthening the representation of developing
countries have focused on reducing the capacity constraints faced
by under-resourced constituencies, and have not addressed structural
issues such as the make-up of the Boards. Some positive steps
have been agreed to reduce these capacity constraints, such as
increasing staff capacity in some offices.
20. The UK is in many ways a progressive
and influential voice in the Boards. Improving developing country
representation by reducing UK influence would perhaps threaten
this progressive influence in the Boards, at least in the short
term. There are two responses to this argument. Firstly, and as
Gordon Brown himself argues, it is a basic right that people's
voices should be heard on decisions that will affect their lives.
Secondly, the institutions' responsiveness to poverty could also
be underpinned by strengthening accountability structures in recipient
countries (eg parliamentary oversight committees that call for
evidence from a balanced cross section of interests). This work
can be taken forward in parallel.
21. Work on this issue by the UK over the
next year will be crucial. Trevor Manuel's continued role as the
Chair of the Development Committee offers a key opportunity, as
he is personally committed to the issue. In addition to this,
we would like to see the UK engage more systematically with other
key European shareholders, with a view to reducing their overall
level of votes and seats.
OTHER ISSUES
Gender and Poverty Reduction Strategy Papers
22. A recent study of Poverty Reduction
Strategy Papers in Tanzania, Bolivia, Malawi and Yemen, commissioned
by Christian Aid and the UK Gender and Development Network (GADN),
identified that in these papers poverty has not been analysed
as a gendered phenomenon. Gender considerations, which are so
fundamental to a full understanding of the causes of poverty and
to the identification of appropriate solutions, have not been
integrated into poverty policies or into accompanying spending
plans. It has become clear through this research that the "participatory"
processes of PRSP formulation have not been gender balanced and
that the voices of poor women have been rarely sought, and certainly
not heard. This is clearly disastrous for poverty reduction efforts,
as without a solid understanding of who is poor and why, and who
holds the power to make required changes, poverty will not be
reduced.
23. The UK's Department for International
Development (DFID) has been broadly supportive of the need to
make gender analysis central to PRSPs. However, lines of responsibility
on this issue within DFID are still not clear, which means there
is a real danger that gender in PRSPs will fall between departments
and receive less attention than it requires. The GADN calls on
the UK's DFID to:
— take the lead among bilateral donors
in making gender a high priority in its work on PRSPs;
— designate clear lines of responsibility
for ensuring that gender is fully integrated throughout its work
on PRSPs;
— discuss with its developing country
partners the critical importance of gender analysis to be central
to poverty reduction policy;
— use its influence with the World
Bank and the IMF to ensure that these institutions make gender
a fundamental pillar of their work on PRSPs.
Debt cancellation and the Millennium Development
Goals
24. Christian Aid also met with World Bank
officials at the Dubai meetings, and UK officials prior to the
meetings, to discuss the status of the Highly Indebted Poor Countries
(HIPC) initiative on debt cancellation. We again lobbied for debt
cancellation strategies—including the existing HIPC initiative—to
be designed so as to take the poverty goals of each country fully
into account. That is, rather than based on an ad hoc (and often
highly inaccurate) debt to exports criterion, we believe that
debt levels can only be assessed as sustainable if they safeguard
the necessary expenditures needed to promote growth, poverty reduction,
and the attainment of human rights.
25. In order to move towards this objective,
we are calling on the World Bank and IMF to include estimates
in their PRSP and PRGF[40]
documents of the resources needed to meet poverty goals for each
country that they have a programme with.
October 2003
37 In 1999, the World Bank formalised its approach
to poverty and participation through the introduction of a new
instrument-Poverty Reduction Strategy Papers (PRSPs). These are
intended to place poverty reduction at the heart of their national
programmes-and debt relief efforts-for the world's poorest countries. Back
38
Struggling to be heard: Democratising the World Bank and IMF,
Christian Aid, September 2003. http://www.christian-aid.org.uk/indepth/309worldbank/struggling.pdf Back
39
Options for democratising the World Bank and IMF, Christian
Aid, February 2003. Back
40
The IMF's Poverty Reduction and Growth Facility. Back
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