Monitoring International Financial Institutions: An Interview with Flavia Barros

Human Rights Dialogue 2.9 (Spring 2003): "Making Human Rights Work in a Globalizing World"

June 19, 2003

Rede Brasil, founded in 1995, is a network of social movements, NGOs, and civil society organizations; it monitors the social and environmental impacts of projects and policies that international financial institutions (IFIs) such as the World Bank, the Inter-American Development Bank, and the IMF are financing or implementing in Brazil. The sixty-four organizations that are currently affiliated with Rede Brasil focus on a diverse range of issues, including urban development, land reform, agriculture, environmental protection, workers’ rights, and gender equity. By disseminating information and facilitating dialogue among these groups, Rede Brasil helps them to understand better the organizational and decision-making structures of international financial institutions, and provides a forum for them to share experiences and design common strategies to address more effectively the problems that projects financed by IFIs sometimes present. As with any large and diverse group of organizations, disagreements naturally arise among member groups. The framework for dialogue that Rede Brasil provides to its affiliated organizations has helped to build a substantial consensus concerning the impacts of the policies and programs of IFIs, and the best strategies for addressing them.

Dialogue: Are you using a human rights framework or human rights language in your work?

Barros: Rede Brasil has not addressed the policies of IFIs explicitly in terms of human rights. The main obstacle to using human rights language in our work is the criticism from IFIs themselves. These institutions tend to argue that this is a “politicization” of their work. Instead of human rights language, they prefer concepts such as the “human face” or “social face” of development projects. For reasons of their own, they clearly don’t want to include human rights language in their work.

Our work in monitoring the social and environmental impacts of these institutions, however, provides valuable information for human rights assessment. Moreover, our advocacy for the right to information regarding the actions of IFIs, the need to improve communication between IFIs and those affected by their policies, and the importance of increasing participation by affected groups in the decision-making processes expresses our commitment to human rights. In the coming year we plan to begin addressing several issues more explicitly in terms of human rights, and are exploring the possibility of legal/judicial actions alongside political/legislative actions to address problems related to the activities of IFIs in Brazil.

Dialogue: What have been the primary challenges that Rede Brasil has faced in its work?

Barros: The primary challenge we face is one of developing strategies to remedy the lack of information regarding the activities of IFIs in Brazil. Other significant obstacles to our work include the lack of effective mechanisms in these institutions for enabling civil society groups to participate in their decision-making processes, and the fact that the Brazilian government (like the governments of other developing countries) remains largely unaccountable for the impact of IFI policies and projects to which it has “agreed.”

Dialogue:: What kinds of strategies have you used to hold IFIs to account for their role in causing social problems? Has your work proven to have an impact in the decision-making of these institutions with respect to their work in Brazil?

Barros: We make use of several mechanisms that exist within these institutions. The World Bank’s Inspection Panel, for example, is a mechanism through which complaints concerning projects can be lodged. If a complaint is accepted, this panel requires an investigation of the implementation of the related projects financed by the World Bank. With the help of Rede Brasil, our country has brought more complaints before the panel than any other. The Inter-American Bank’s Independent Investigation Mechanism works much less efficiently than the World Bank’s panel, and we presented a complaint through it for the first time last year.

The use of mechanisms provided by these institutions is not sufficient to monitor them effectively. Both the World Bank’s Inspection Panel and the Inter-American Bank’s Independent Investigation Mechanism are still far from being autonomous with respect to the major interests and policy directives of their institutions. The decision to consider a complaint is still decided by board members of these organizations; board members also influence selection of the staff who carry out these investigations. The official procedures required to file a complaint against the institutions are very complicated, and the communities affected by the projects often lack the expertise to understand them or negotiate them successfully.

Dialogue:: What are some of the other ways you monitor these institutions?

Barros: We focus a great deal of our attention on monitoring the process of negotiation between the Brazilian government and the IFIs. We hold the IFIs accountable by lobbying the Brazilian government to make responsible decisions concerning agreements with these institutions, taking into account the full impact of its decisions on Brazilian society. The Country Assistance Strategy—official country reports by which the World Bank determines its credit strategies in each country for several years––was, for example, treated as confidential and kept from public scrutiny in the past. Recently, however, the Brazilian report has become publicly accessible due to our pressure on the government. The World Bank itself has subsequently decided to publish the Country Assistance Strategy reports on its Web site.

Dialogue:: In the process of monitoring international financial institutions what kind of relationship have you had with the Brazilian government?

Barros: Our relationship with the Brazilian government has changed as the government itself has changed. In the beginning, much of our work depended on the support of international NGOs. In order to influence decisions by IFIs concerning our country, we would build partnerships with international organizations and NGOs from the North, especially the United States. Through their pressure on the U.S. Congress, we could see the impact of our pressure. Our influence was therefore indirect. As democracy has deepened in Brazil, we have built more direct channels of communication and advocacy to our government regarding the policies of IFIs.

During the period of the Cardoso administration, our representatives in these institutions built alliances and agreements according to the vested interests of the political and economic elite. Therefore, the priorities of development projects and policies were not the ones we needed. Last year the Cardoso administration entered into agreements with the IMF and made commitments to sustain the actions required by it, and a new agreement was approved without any deliberation by the Brazilian parliament. This was a clear violation of our constitution. The Senate has a legal obligation to participate officially in any process that can lead to the approval of such agreements. In this case, however, it was completely bypassed by the executive power. We denounced this to the public prosecution office, but, unfortunately, we learned that the current government is nevertheless legally bound by the agreement entered into last year—even without the approval of the national parliament. These agreements will have a major adverse macroeconomic impact on our country—one that will affect the poor especially.

Another important issue is that the majority of the resources loaned by the institutions to Brazil is still made conditional upon the acceptance of structural adjustment reforms. Our current government has no power to change this, even though these resources should really be allocated for social policies. The World Bank is in the process of approving a new adjustment program for Brazil—one that does not respond to the priorities defined by our new government. Yet right now there is very little publicly available information on this new program, and we are pushing the World Bank to disclose more about it. One of our main obstacles, however, is that our government does not have a great deal of power within the IFIs. We hope we will have the chance to discuss our representation on the boards of these institutions with the new government and can participate in creating new mechanisms of accountability.

Dialogue: What are the most promising strategies for holding international financial institutions more accountable in the future?

Barros: Even if there are channels for civil society organizations to participate directly in these institutions, the best way to monitor IFIs is through our government. We are presently assembling a group of parliamentarians to discuss and monitor the action of IFIs and, through this group, we expect to reinforce the process of building a sovereign relationship with these institutions. We believe that by strengthening our government we will be better able to influence IFIs. It is time to reverse the strategy of thinking globally and acting locally. We need to think locally and act globally.