Memorandum submitted by the One World
Trust
EXECUTIVE SUMMARY
1. The One World Trust[96]
submission will consider the World Bank's internal governance,
and areas for its reform. In order to increase its credibility
and effectiveness the World Bank must systematically and fundamentally
change its internal governance mechanisms. The Bank must seek
to empower developing countries, foster transparency, improve
the presidential appointment process, increase engagement with
external stakeholders, and ensure that it is not usurping the
democratic role of national governments and parliaments.
2. In order to achieve these changes the
Bank should: strengthen the voice of developing countries in the
Bank's decision making and reform processes that affect their
countries; improve transparency by reforming the information disclosure
policy by strengthening the narrowly defined conditions for non-disclosure;
develop a more transparent process for senior appointments which
safeguards the Bank against undue political influence and conflicts
of interests; and respect the national democratic processes in
both donor and developing countries by separating the work the
Bank does to strengthen parliamentary capacity from any efforts
it undertakes to promote projects it wishes to undertake.
The relationship between the World Bank's internal
governance and transparency and its credibility and effectiveness
3. For the purposes of credibility, effectiveness
and accountability, internal governance in the World Bank is inseparable
from composition of the Board of Executive Directors. The composition
of the Board of Directors reflects the political power relationships
within the Bank; as such it is a key issue to address in any reform
of the Bank's internal governance.
4. The World Bank's internal governance
mechanisms reflect the political and power relations which dominated
world politics in the decades following World War II. The five
largest shareholders in the Bank—the United States, Japan,
Germany, the United Kingdom, and France—maintain more than
two-thirds of the voting power, effectively ensuring that decisions
reflect the policy views of America and Western Europe. Developing
country influence on the Board of Executive Directors is limited.
The remaining 16 Board seats are split among 177, this leads to
these Executive Directors representing constituencies consisting
of large numbers of individual countries.
— The World Bank should seek to
address this disparity through reform of the Board of Executive
Directors.
5. Reform of voting rules can help address
power imbalances on the Board of Governors and the Board of Executive
Directors. For example, a "state-weight double majority"
as introduced by the One World Trust and Bretton Woods Project
in, Bridging the Democratic Deficit—Double Majority Decision
Making and the IMF, promotes a double majority voting system for
the International Monetary Fund (IMF).[97]
Such a system could also be employed in the World Bank where decisions
would be decided by two majority votes—one respecting economically
weighted voting and one based on one-country, one-vote principles.
— The World Bank should implement
a state-weight double majority voting system for all issues at
the Board of Executive Directors.
6. The limited influence of developing countries
in the Bank is compounded by a lack of resources available especially
to these Executive Directors to effectively engage with the stakeholders
that they represent. Without appropriate research and engagement
they cannot develop the necessary basis for a proper assessment
of the multitude of projects which affect their constituency,
and on which they eventually take decisions at Board level.
— The World Bank should seek to
provide especially those Executive Directors who represent larger
constituencies of countries with the staff and resources needed
to effectively engage with and ascertain the needs of constituents
in order to adequately represent them at the Board of Executive
Directors.
TRANSPARENCY
7. While the Bank's internal governance
structures minimize the ability for developing countries to engage,
the lack of transparency in decision making reduces the effectiveness
of external stakeholders to engage in Bank affairs. The lack of
disclosure of Board transcripts leaves stakeholders with no way
of knowing where individual Executive Directors stood on issues.
This reduces their ability to effectively advocate their position.
While the Bank makes minutes of Board meetings available, the
discussions leading to decisions as well as the identification
of who supported or did not support certain decisions or policies
must be disclosed as well.
— Full transcripts of Board proceedings
should be published as soon as practicable after the Board meetings.
8. The Bank's information disclosure policy
approaches transparency in principle in the right way—employing
a "presumption of disclosure"—but lacks the necessary
conditions that describe reasons for not disclosing information.
Narrowly defined conditions for non-disclosure are vital for ensuring
an open and transparent operating environment. For example, the
policy states that documents can be withheld on an ad hoc basis
when issues may be detrimental to the interests of the Bank.[98]
A narrowly defined condition would explicitly state which documents
would not be made available along with the specific harm disclosure
would bring—in this case how disclosure would be detrimental
to the Bank's interests.
— The World Bank's information
disclosure policy should include narrowly defined conditions.
A "narrowly drawn set of conditions" identify the specific
harm that would come from disclosure. For instance, conditions
that state that no information related to the "deliberative
process" will be disclosed are NOT narrowly drawn. However
conditions that state that certain information related to the
deliberative process will not be disclosed because of the harm
that it will cause—and they are specific about what this
harm is—are narrowly defined.
SELECTION OF
THE WORLD
BANK PRESIDENT
9. The selection of the World Bank President
is a political appointment. While technically the Board of Executive
Directors selects the President, in practice the head of the Bank
is selected by the United States while the head of the IMF is
selected by Europe. This gentleman's agreement between the US
and Europe reduces the legitimacy and credibility of the World
Bank. No clear procedures exist for ensuring the qualifications
of a candidate, nor does a process exist for other member states
to review and question appointments. The World Bank President
should be selected through an open and transparent process.
— Candidates should be evaluated
and assessed by constituents and the election by the Board of
Governors of the World Bank should be conducted openly.
The World Bank and Parliaments
10. Parliaments are an essential part of
any vibrant and effective governance system; from oversight of
government policy to an arena for national debate they can and
do play an important part in national political processes.[99]
Given the importance of governance for development,[100]
it is important that the role of parliaments be considered by
the World Bank.
11. The Bank should make the distinction
between the work of the Bank in strengthening Parliaments in developing
counties, and the relationship between the World Bank and Parliaments
as part of the Bank's internal governance. Although the two can
be mutually reinforcing, the distinction must be upheld.
12. For both donor and developing countries,
the issue is to ensure that there are access points in the Bank's
policy process so that parliaments can adequately engage and conduct
oversight. The practicalities of these access points differ.
13. For donor countries, the interest is
in seeking the opportunities to oversee the conduct of government
policy pursued by a country's representatives at the Executive
Board and Board of Governors.
— The Bank should allow senior
members of staff to appear before parliamentary enquiries to give
evidence.
— The Bank should also publish
full transcripts of Board proceedings and votes to ensure that
parliaments are able to monitor the actions of their representatives,
and therefore conduct oversight.
14. The initiative, in this area, does not
lie solely with the World Bank; governments and parliaments also
bear some responsibility. Governments should provide regular reports
to parliaments on their work at the Bank, covering both aims and
what was achieved. Such reports can then be a basis for oversight
by parliaments.[101]
Parliaments too must seek opportunities to oversee the work of
the government. To this end the International Development Committee's
annual evidence session on the World Bank is a good model, providing
a recurring opportunity for discussion of policy, monitoring of
progress and plans for the coming year.[102]
However, the DFID Annual Report on the World Bank, should become
more detailed, contextualised, and contain specific information
about votes. That DFID has not yet published its report on work
in 2006 is unfortunate. That information be provided is not enough,
it should also be provided in a timely manner.
— DFID should continue to publish
its Annual Report on work at the World Bank, seeking to incorporate
more information about aims and objectives for the year, and compare
progress with these targets.
— The International Development
Committee should continue its practice of an evidence session
after the Annual Meetings of the IFIs, using the opportunity to
review progress for the year.
15. For developing countries, where the
World Bank has projects, this concern about the ability of parliaments
to effectively oversee the work of their government in the Bank's
internal governance is equally applicable; and similarly needs
both the support of the Bank and the government to achieve this.
— As with donor countries the
Bank should support the attendance by Executive Directors and
senior staff at parliamentary sessions.
16. In addition to this oversight of the
institutional level policy processes, parliaments in developing
countries should also be concerned with oversight of World Bank
projects in their own country. In this case, throughout the project
development cycle and during implementation, the World Bank must
not only engage with government, but also with parliaments.
— Parliaments must be fully incorporated
into the project cycle, which at a minimum level requires the
provision of all relevant information, the willingness of in-country
project staff to provide formal evidence to parliament, and meet
informally with members of any relevant committees as well as
parliamentarians from all parties.
17. For in-country project cycles, what
the World Bank does not do is also important. It must not use
any of its parliamentary strengthening work to increase political
support for projects it proposes at national level. Not getting
involved in the domestic political process, the Bank should leave
the government to persuade parliament of the benefits of a project.
CONCLUSION
18. To ensure the World Bank operates in
ways consistent with the Department for International Development's
own objectives, reform must take place at the Bank to achieve
sufficient levels of transparency, accountability and parliamentary
oversight. An improved policy on information disclosure would
foster transparency and enable stakeholders to hold the Bank and
their representatives to account. Improved selection procedures
for the President alongside more equitable control among member
states on the Board of Executive Directors would expand ownership
of the organisation to developing countries thereby increasing
legitimacy and enhancing credibility and effectiveness. Improved
engagement with parliaments would help to ensure that national
democratic processes are not usurped by the World Bank.
11 October 2007
96 The One World Trust promotes education and research
into changes required in global governance to achieve the eradication
of poverty, injustice, environmental degradation and war. We develop
recommendations on practical ways to make powerful organisations
more accountable to the people they affect now and in the future,
and how the rule of law can be applied to all. We educate political
leaders and opinion-formers about the findings of our research. Back
97
Chowla, Peter, Jeff Oatham and Claire Wren, "Bridging the
Democratic Deficit-Double Majority Voting at the IMF", Bretton
Woods Project and One World Trust, 2007. Back
98
The World Bank Policy on Disclosure of Information, p 23. Back
99
Hudson, Alan and Claire Wren, "Parliamentary Strengthening
in Developing Countries", Overseas Development Institute,
2007. Back
100
DFID, Making Governance work for the Poor, Cm 6876, London:
HMSO, 2006. Back
101
Halifax Initiative, Analysis of the Report on Operations under
the Bretton Woods and Related Agreements Act 2004, 2005. Back
102
Wren, Claire and Michael Hammer, "Parliamentary Oversight
of the International Financial Institutions-The Experience of
the UK and the World Bank", One World Trust, 2007. Back
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