ADMINISTRACIÓN DE LA CAPACIDAD A LARGO PLAZO

(a) Th e Bank

Th e World Bank and its private fi nance arm the International Finance Corporation (IFC) fund long-term capital loans to promote structural reforms that will lead to economic growth in developing countries or that support reconstruction and devel-opment projects. Th e states contributing most to the Bank’s capital appoint fi ve of its twenty-two executive directors, and it is predominantly controlled by the developed industrialized economies. Some of its more grandiose projects, such as the funding of power stations, dams, pipelines, or the building of roads through forests, have caused serious environmental harm and dislocated the lives of many local people. Largely through strong NGO and US Congressional pressure the Bank has become increas-ingly responsive to these environmental side-eff ects.¹⁹³ Its mandate, like that of most of the regional development banks, requires it to be guided exclusively by economic considerations.¹⁹⁴ Only the European Bank for Reconstruction and Development has an explicit obligation to promote ‘environmentally sound and sustainable development’.¹⁹⁵ Nevertheless, like other agencies within the UN system, the Bank’s programmes are expected to promote sustainable development in accordance with Agenda 21 and to incorporate the principles of the Rio Declaration.¹⁹⁶ In practice, it has proved politically essential to take account of the needs of sustainable develop-ment, environmental protection, and human-rights concerns in its lending decisions.

Current World Bank policy is to structure and condition loans in such a way that development which it funds is ecologically sound. Environmental Action Plans outline the borrower countries’ environmental problems and strategies for addressing them.

Environmental assessments are aimed at ensuring that development proposals take account of environmental factors. Of particular note is the policy of the IFC which for-bids the fi nancing of new business activity that cannot meet the IFC’s environmental

193 See Fox and Brown (eds), Th e Struggle for Accountability: the World Bank, NGOs and Grassroots Movements (Cambridge, Mass, 1998).

194 World Bank, Articles of Agreement, Article V(10); Inter-American Development Bank Agreement, Article VIII(5); Asian Development Bank Agreement, Article 36(2); African Development Bank Agreement, Article 38(2). See generally Handl, Multilateral Development Banking (Th e Hague, 2001).

195 Agreement Establishing the EBRD, Article 2(1).

196 UNGA Res 47/190 and 47/191 (1992) paras 21–3; See World Bank, Th e World Bank and the Global Environment (Washington DC, 2000). Handl, Multilateral Development Banking, 25, argues that the incorp-oration of environmental and sustainable development considerations represents subsequent practice which interprets or modifi es the Bank’s mandate. See also id, 92 AJIL (1998) 642 and Muldoon, 22 Texas ILJ (1987) 1.

and social performance standards.¹⁹⁷ Th ese standards require inter alia compatibility with the following MEAs:

1971 Convention on Wetlands of International Importance

1972 Convention Concerning the Protection of World Cultural and Natural Heritage

1973 Convention on International Trade in Endangered Species 1973 Convention on Conservation of Migratory Species 1979 Convention on Long-range Transboundary Air Pollution

1989 Basel Convention on the Control of Transboundary Movements of Hazardous Wastes

1991 Espoo Convention on Environmental Impact Assessment in a Transboundary Context

1992 Convention on Biological Diversity

1998 Rotterdam Convention on Prior Informed Consent for Certain Hazardous Chemicals and Pesticides in International Trade

2001 Stockholm Convention on Persistent Organic Pollutants.

It is open to the Bank and its agencies to set the conditions applicants must meet. In doing so it is not limited to ensuring compatibility with applicable national or inter-national law. Some of the above treaties are European regional agreements and not all World Bank members are parties to all of the global treaties. Nevertheless, when Finnish developers sought IFC funding for a new pulp mill on the River Uruguay, Uruguay’s ability to meet the requirements of all of the above treaties was assessed, even those not applicable in Latin America (e.g. the EIA Convention). Th e IFC’s deci-sion to fund the project was made only aft er it concluded that all the requirements set out in those standards were satisfi ed.

An Inspection Panel has been created with the object of providing aff ected groups or communities with some means of challenging any failure by the Bank to observe its own operational policies and procedures.¹⁹⁸ Th is is an innovative and so far unique method for introducing a measure of public accountability to the operations of an international organization. Th e IFC’s equivalent body was involved in assessing complaints during the Pulp Mills dispute between Uruguay and Argentina.¹⁹⁹ It has also been argued that all the development banks have an obligation in international law to avoid causing harm to other states and to refrain from funding activities that

197 International Finance Corporation, Policy on Social and Environmental Sustainability (2006) para 17.

See Morgera, 18 Colorado JIELP (2007) 151.

198 Res No 93/10 (1993) in 4 YbIEL (1993) 883. See Schlemmer-Schulte, 58 ZAÖRV (1998) 353;

Orakhelashvili, 2 Int Orgs LR (2005) 57; Nurmukhametova, 10 Max Planck YbUNL (2006) 397.

199 Th e Compliance Advisor/Ombudsman (CAO) who is independent of IFC management and reports directly to the President of the World Bank Group.

undermine international environmental agreements.²⁰⁰ Th e Bank’s policies require that possible harmful impacts on neighbouring states must be assessed,²⁰¹ and it is most unlikely to fund projects which would be likely to cause signifi cant transbound-ary harm. However, despite all these changes and constraints, one study concluded that the Bank’s approach to incorporating environmental concerns remains inad-equate, and ‘has demonstrated that environmental sustainability cannot be added on [to] the business-as-usual approach to development’.²⁰²

(b) Th e Global Environment Facility

Th e World Bank acts as trustee for the Global Environment Facility (GEF), which provides additional funding to developing states and has become an important envir-onmental institution in its own right. Th e GEF was established in 1991 by the World Bank, UNEP, and UNDP. Following decisions taken at UNCED to restructure the GEF in accordance with principles of ‘universality, transparency and democracy’, a new instrument was adopted by the three implementing agencies and further revised in 2002.²⁰³ Th e GEF’s general function is to provide funds to enable developing countries to meet ‘agreed incremental costs’ of measures taken pursuant to UNCED Agenda 21 and intended to achieve ‘agreed global environmental benefi ts’ with regard to cli-mate change, biological diversity, international waters, ozone-layer depletion, defor-estation, desertifi cation, and persistent organic pollutants. It has also been designated to act as the fi nancial mechanism established by the Climate Change Convention, the Biological Diversity Convention, and the Persistent Organic Pollutants (POPS) Convention. It works closely with other international bodies and regional develop-ment banks and also funds related NGO activities, including those of IUCN.

Although formally an inter-agency body, the GEF is a separate and distinct entity from the World Bank and its partners,²⁰⁴ with a voting structure that was redesigned in 1994 to avoid the World Bank’s pattern of dominance by major Western donors.

It has its own Council, responsible for developing, adopting, and evaluating oper-ational policies and programmes for GEF-fi nanced activities. Composed of thirty-two members with an equal balance of developed and developing states (or ‘recipient’

and ‘non-recipient’ states), decisions require a double majority of 60 per cent of all members plus a majority of 60 per cent (by contribution) of donors. An Assembly, in which all member states have one vote, reviews the general policies of the Facility and reports received from the Council. Although the GEF Instrument specifi es that ‘use of the GEF resources for purposes of [the relevant MEAs] shall be in conformity with the policies, program priorities and eligibility criteria decided by the Conference of

200 Handl, Multilateral Development Banking, 26–31. ²⁰¹ See infra, Ch 3, section 4(4).

202 Fox and Brown (eds), Th e Struggle for Accountability: the World Bank, NGOs and Grassroots Movements, 9, citing a WWF assessment.

203 1994 Instrument for the Establishment of the Restructured Global Environment Facility, revised 2002.

See generally Freestone, in Ndiaye and Wolfrum (eds), Law of the Sea, Environmental Law and Settlement of Disputes (Leiden, 2007) 1077–107.

204 Werksman, 6 YbIEL (1995) 55–8 reviews the legal status of the GEF.

the Parties of each of those conventions’,²⁰⁵ as one commentator has noted, the GEF’s voting structure ‘does not preclude the possibility of confl ict between the objectives of the Conventions, the implementing agencies, and the GEF in the context of particular decisions’.²⁰⁶

Th e GEF is thus an important instrument for promoting participation by devel-oping countries in policies and conventions intended to protect the global environ-ment, and for assisting their implementation through capacity-building, as envisaged in Agenda 21. As such, it funds measures that do not necessarily benefi t the country concerned, but which do benefi t the international community as a whole. Its creation and remit refl ect notions of ‘common but diff erentiated responsibility’ and ‘addi-tionality’ in funding allocations which are core elements of the equitable treatment of developing countries in the Rio Declaration and the two Rio Conventions.²⁰⁷ Th e scale and impact of GEF funding have been substantial. Inter alia, it has become the principal instrument for funding biodiversity conservation in developing countries;

it has supported negotiation and implementation of MEAs, including the elimination of ozone depleting substances; and it has helped to promote the objectives of the 1982 UNCLOS, Agenda 21 and the Rio Conventions.²⁰⁸

() the organization for economic