Only days after a Guatemalan appeals court emitted an historic ruling strengthening the domestic jurisdiction of Convention 169 of the International Labor Organization (ILO 169), a leaked draft of the World Bank’s new Safeguard Policies revealed proposed changes to the Bank’s lending policies that could undermine international laws in place to protect the rights of indigenous communities.

A Guatemalan appeals court ruled in favor of the Sipakapense People’s Council,
mandating that the government must respect international human rights laws.
Photo: CPO

The draft, “Review and Update of the World Bank’s Safeguard Policies-Proposed Environmental and Social Framework”, outlines a proposal to alter the Bank’s Safeguard Policies following a two-year long internal review of their efficacy and application. According to the Bank these policies are designed to “prevent and mitigate undue harm to people and their environment” which may result as unintended negative externalities of Bank funded projects. However in accordance with the draft, new policies would strip environmental and social protection afforded under previous lending guidelines, leaving communities and the environment vulnerable to suffer negative consequences of mega-development projects.

The new lending policies aim to increase the Bank’s competitiveness in a saturated international market for large development loans, streamlining the lending process by cutting red tape and minimizing bureaucratic oversight. However, the proposed changes do little to establish standards regarding social and environmental oversight or clear processes to complete them, and instead present flexible guidelines with ambiguous implementation and enforcement mechanisms. Under the drafted policies the Bank absconds from its responsibilities to oversee the socially responsible and environmentally ethical use of its funds, promoting its own avaricious ambitions over its stated mission of reducing poverty.

World Bank Group headquarters in Washington, D.C.
Photo: Vanguard

If the new policies are approved, borrowing governments will be allotted unprecedented privileges in addressing the risk for social and environmental consequences of Bank funded projects. States would conduct their own independent social and environmental risk analyses for development projects according to their own domestic laws, and would not be required to adhere to previously used protection standards or international law. This decentralized approach to evaluating the potential for negative externalities of loans presents a clear conflict of interests as states seeking loans can downplay potential risks in order to increase their chances of receiving funding.

Furthermore, borrowing governments would be allowed to opt out of existing World Bank protection policies such as the Indigenous People’s Standard, which ensures protection of land and resource rights of indigenous communities impacted by Banks loans. The failure to uphold these rights, including the right of indigenous communities to be consulted before mega-development projects are constructed on their traditional territories, represents a clear violation of international human rights law such as Convention 169 of the International Labor Organization.

The proposed policies are of particular concern in the Guatemalan context, where developing judicial systems have struggled to establish and maintain the vigilance of international human rights law in domestic courts. This is particularly relevant to the rights outlined in ILO 169, which help to mitigate social conflict, violence, militarization and the criminalization of human rights defenders by affording communities the right to be consulted before such projects are constructed on their territories. If codified into national law, the rights outlined in ILO 169 would serve as a powerful tool for both communities and the state to allay conflict. In allowing governments to opt out of obligations stipulated under international human rights law such as ILO 169, the proposed Safeguard Policies use the leverage of large development loans to undermine rulings dictated by the Guatemalan judiciary aimed at strengthen the standing of international law.

The Chixoy Reservoir, created by the World Bank funded Chixoy Dam
Photo: James Rodríguez

The Bank’s attempt to abscond from its responsibility to ensure the social and environmental rights of the projects it funds is furthermore worrying in the Guatemalan context given the Bank’s history of funding projects that have brought egregious outcomes to local communities. Notably, the Bank’s funding of the Chixoy Dam played a central role in the massacres of Rio Negro in the early 1980s, when government security forces and paramilitary groups murdered over 444 men, women, and children near the dam construction site. More recently, the Bank granted Canadian mining company Goldcorp with a $45m loan for the operation of the Marlin Mine, seemingly without concern for the vast human rights violations associated with its operation, including the pollution of local water supplies, public health concerns, and the failure to respect the results of a community consultation that voted against the project. In 2010, both the International Labor Organization of the United Nations and the Inter-American Commission of Human Rights called for the immediate suspension of mining activities at the Marlin Mine, however to date, and thanks to funding from the World Bank, the mine continues to operate.

Local communities have been devastated by the environmental
impacts of the Marlin Mine, located in San Miguel Ixtahuacán.
Photo: Allan Lissner

On July 30, the World Bank’s board of directors declined to amend the drafted Safeguard Policies despite strong objections from civil society and international rights groups. The draft will continue to be reviewed internally, and a decision regarding its implementation is not expected until early 2015.