In 1993 the World Bank allowed people to seek recourse for harm resulting from the projects it finances in developing countries. Within a decade of the World Bank Inspection Panel, the other Multilateral Development Banks, including the World Bank Group, the Asian, African and Inter-American Development Banks and the European Bank for Reconstruction and Development would create similar accountability mechanisms. These accountability mechanisms embody a norm of ‘accountability as justice’ that seeks to provide recourse for environmentally and socially damaging behaviour through a formal sanctioning process. The norm has now spread to other development financiers. Until now, no explanation has been provided for their creation, how they function, and whether they hold the Banks to account. My book The Good Hegemon: US Power, Accountability as Justice, and the Multilateral Development Banks answers these questions with three central arguments: the US pushed for the norm, the Banks tried to resist, but the norm has become entrenched as a corrective to Bank actions rather than pre-emptive justice norm.
Using tools of accountability for justice
Ruth Grant and Robert Keohane define accountability as when “some actors have the right to hold other actors to a set of standards, to judge whether they have filled their responsibilities in light of those standards, and to impose sanctions if they determine that those responsibilities have not been met”. The US invokes two accountability narratives in relation to the MDBs: the first narrative views accountability to facilitate control. Chapter three argues that this is traditionally how the US engages with the Banks. In the 1990s it created more monitoring and evaluation tools to better ensure the Banks efficiency and effectiveness.
Second, accountability may be understood within a justice narrative to provide defensible treatment for those harmed by damaging behaviour considering the Banks own environmental and social standards. In the 1990s activists galvanised demanding formal sanctioning mechanisms to help people hold the Banks to account, which shaped US interactions with the Banks. As chapter three shows, efforts to hold the MDBs to account through formal sanctioning procedures included demanding transparency; answers from the Banks as to whether they did or did not comply with their policies and if that led to harm; and MDB compliance and monitoring if they had not. The result was that typical accountability tools (evaluation, audits, and monitoring) were reshaped for another normative priority (justice). As demonstrated throughout, US concern for controlling the MDBs became overlaid with an additional narrative of justice with its aim to provide recourse to people adversely affected by MDB-financed projects.
The norm is striking considering how radical a change it was for the MDBs. Constitutively it has created new ways of thinking: acknowledging that MDB-financed development projects can lead to harm and that this should be addressed by the Banks. It has created new actors in the form of accountability mechanism officers. It has also created new categories of action: ‘problem solving’ to address community grievances, and ‘compliance audits’ to assess whether Bank policy non-compliance led to harm. The norm is also regulative: Bank Management or member states on the Board of Executive Directors must now respond to findings of Bank non-compliance leading to harm.
1) The US advocated for the norm
The United States acted as a norm entrepreneur during debates over how to maintain MDB efficiency and effectiveness in the 1990s. Building on its history of using ‘accountability as control’ the US sought to establish a norm of ‘accountability as justice’ for all the MDBs. As the preeminent shareholder the US used three strategies to garner support for the norm. The ‘power of the purse’ is where the US links new ideas to commitments to replenish the Banks’ capital; its ‘vote’ is where the US has a greater number of votes on the Banks’ Boards to support new ideas; and its ‘voice’ is where the US seeks to persuade other member states and the Banks to agree with the norm. The Banks are similarly governed with similar development financing functions operating in the same policy space. Unequal voting systems linked to capital subscribed in the MDBs means that member states with large shares like the US tend to shape the policy direction of the Banks.
The US proposed the accountability as justice norm in response to increasing evidence from transnational activist campaigns, that the MDBs were harming the ostensible beneficiaries of international development. While most explanations of the creation of the Inspection Panel correctly identify the role of transnational advocacy networks in demanding accountability, my book shows that this would not have been possible without the US taking it up and advocating for it. The activist explanation also fails to explain how and why the US continued to pursue the norm for all the Banks even when activist and other member states interest in doing so was absent or muted.
The norm emerged because other options for providing recourse and redress for project-affected people were delimited by two factors: the priority of debating Bank inefficiency and ineffectiveness, and the nature of US engagement with the Banks. The US employed tools already at its disposal to add concerns of Bank harm to the discussion over the Banks’ economic performance: accountability processes such as auditing, monitoring and evaluation, and oversight procedures. The US can then use its financial position in the Banks to allocate resources and to promote certain ideas and practices, which influence other shareholders and the Banks. From collective agreement among member states of the MDBs, the norm of accountability as justice was created.
2) The Banks resist the norm
All the Banks resisted a norm that challenges their autonomy and banking culture by engaging in compromise, acquiescence, avoidance, defiance, and manipulation, with avoidance the most frequently invoked. Once the Banks realised the norm was emerging, they engaged in compromise by bargaining with member states over what the mechanisms would look like. When the US demanded the World Bank create its Inspection Panel it gave Management little room to design a mechanism that better fit its organisational culture and mandate. The other MDBs were able to bargain for a greater role for Management in the investigation process (excluding the World Bank Group) to underscore the importance of (and stymie) accountability.
The second resistance strategy was to passively acquiesce to US demands for the accountability mechanisms be reviewed every two to three years. All the accountability mechanisms improved over time because of periodic reviews into their practices, including acquiring greater independence from Management, which has enhanced their credibility. Beyond this, the US would use the same power of the purse, vote, and voice mechanisms to overhaul the accountability mechanisms in egregious cases.
The third and most used strategy, is the use of avoidance. The Banks’ Management engaged in this strategy in three ways: first, by establishing accountability mechanisms that were hard to access. Second, Management often provided ceremonial information during accountability mechanism investigations. Finally, avoidance is evident in failures to respond to findings of MDB non-compliance with remedies to improve the plight of people negatively affected.
All the Banks would also engage in defiance by denying that claims from affected people were legitimate and refuted any wrongdoing, with some seeking to undermine the investigation process.
Finally, Bank resistance was evident with efforts to influence the standards by which they would be evaluated. For example, the World Bank Management sought to influence the definition of what constitutes a “project” that could be investigated. A more extreme form of manipulation is when Management supported staff withholding evidence of wrong-doing, and staff that sought to persuade affected people not to make claims.
3) The MDBs have institutionalised the norm, but as a corrective not pre-emptive norm
Despite entrenched Bank Management resistance, the accountability as justice norm is now taken for granted in terms of the practices of the accountability mechanisms and their growing caseloads. It became accepted that if one had to have an accountability mechanism, then it should be able to operate according to its mandate. While they do not challenge the Banks’ lending imperative culture, the accountability mechanisms have changed the governance of the Banks, with a limited contribution towards changing the Banks’ policies. Moreover, ongoing improvements in the operations of the accountability mechanisms generated by US efforts, the periodic reviews, and actions by the accountability mechanism officers, all contribute to improving the accountability mechanisms’ accessibility, transparency, independence, responsiveness to affected people, and the effectiveness of compliance investigations and MDB monitoring. Despite these gains, the accountability as justice norm is a corrective rather than pre-emptive justice norm adhered to by the MDBs.
The set image is By Shiny Things – Flickr, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=2390362