Drug eradication: Afghanistan must sit in the drivers seat
Letters to the editor
Dealing with Somalialand
Letters to the editor
Holding the private sector accountable
D+C/E+Z 4/2006, p. 164
Jürgen Zattler and Qays Hamad believe that the update of the International Finance Corporations (IFC) environmental and social standards is an improvement. They stress that German concerns have been met. However, there was strong criticism by non-governmental organisations in the run-up to the new standards, which were also the topic of heated debate in the German parliament, with almost all political parties raising concerns.
The Federal Development Ministry (BMZ) maintains that the new IFC standards are more closely in line with international conventions and standards, and therefore strengthen the significance of international law. Indeed, they do include, mostly in footnotes, a few references to conventions, such as those of the International Labour Organisation (ILO). However, it is beyond comprehension how the BMZ might conclude that international law has been strengthened, given that the IFC rules serve to weaken its very norms.
The BMZ commends the Development Impact Reporting, a summary assessment of the impact and development contribution of IFC projects, which the IFC is to provide on an annual basis. NGOs such as the German environmental group urgewald had demanded, however, that the IFC review every project individually in order to assess compliance with rules. The reasons for the reluctance to publish such individual data probably lie in the fact that doing so would make apparent that particular projects do indeed encourage investments by major corporations, without, however, promoting the development of the country concerned.
The BMZ claims that the new standards match the quality of the World Banks environmental and social standards. Unlike the World Bank, however, the IFC does not subscribe, for example, to resettlement compensations for people without formal land titles. The IFC intends to provide compensation for loss of land only to those with officially registered or accepted claims. That provision is totally inadequate, as many developing countries are exposed to land use conflicts, which involve indigenous peoples, for example.
NGOs welcome the inclusion of the ILO core labour rules in the IFC standards. But the BMZ has apparently assessed this fact in such positive manner, that all other objections appear to become merely marginal. In reality, however, each standard is a separate matter and relevant to a particular issue. Compromises which set one standard against another are inappropriate. For a detailed criticism of the new IFC standards (in German), see : www.urgewald.de.
Knud Vöcking of urgewald, Sassenberg
by Qays Hamad of BMZ:
Knud Vöcking's criticism stems from the perspective of a single-issue organisation exclusively focussed on their particular concern. Unfortunately, the BMZ cannot afford such luxury. It is faced with the reality of development being a multi-dimensional, complicated and sometimes even contradictory process. In this complex context, countries have to make choices, deal with a multitude of options, and trade-off conflicting goals. In order to foster growth and jobs, countries need investments and the transfer of technology and knowledge they bring. On the other hand, countries must provide for social and environmental sustainability in protection of people's livelihoods. The IFC's new standards make valid steps in this direction, as environmental and social risks have finally been included as hard issues for project assessment - for the first time. Earlier, these issues were dealt with as mere epiphenomena.
Vöcking is stressing isolated details in an attempt to discredit the entire reform. Disappointingly, he does not seem to understand the core difference between the World Bank and the IFC. It should be obvious, however, that the private sector cannot meet the same conditionalities as a national government. Publishing company-related data on the project level would deter firms from participating in IFC projects for reasons of competition, without, however, providing much useful additional insight. What matters in BMZ's view, is that IFCs portfolio as a whole shows a clear developmental orientation. That purpose can perfectly be served by assessing aggregate data.
Vöcking's complaint that BMZ has merely managed to have the ILO Core Labor Standards included in the revision, once more shows the single-issue character of his organization urgewald. Official development assistance (ODA) only makes up a fraction of what foreign direct investment (FDI) ammounts to in developing countries, and those private funds must be utilised for the development process as well. The IFC is making valuable contributions to this process.