[afro-nets] Bringing the Bank to trial?

[Claudio Schuftan <claudio@hcmc.netnam.vn>]

Bringing the Bank to trial?
---------------------------

By Eric Toussaint <cadtm@skynet.be>
http://www.cadtm.org/

The World Bank Held to Account
Using the Law to Bring about Justice

By Eric Toussaint[1] (CADTM)


Question 1: Is it possible to sue the World Bank?

Answer: Contrary to popular opinion, the World Bank (WB) is not
entitled to immunity either as an institution or as a legal en-
tity. Section 3 of Article VII of the Charter (articles of
agreement) explicitly states that the WB may be taken to court
under certain conditions. For example, the WB may be tried by a
national court of justice in countries where it is represented
and/or has issued bonds[2]. The possibility of bringing an ac-
tion against the WB has existed since its foundation in 1944 and
has never been modified until now for the simple reason that the
WB finances the loans it grants to member-countries by borrowing
(by issuing bonds) on the finance markets. Originally, these
bonds were bought by the big, mainly North-American, private
banks. Now, other institutions, including pension funds and
trade unions, buy them. The WB's founder countries estimated
that they would not be able to sell the Bank's bonds unless they
guaranteed buyers the right to sue the Bank in case of default.
This is why there is a fundamental difference between the immu-
nity status of the WB and the IMF. The WB has no immunity since
it makes use of banking services and finance markets in general.
No bank would give the WB credit if it had immunity. On the
other hand, the IMF can have immunity since it finances its
loans itself using the money paid in by its members in the form
of pro rata shares. If the WB does not enjoy immunity, it is not
for humanitarian reasons, but to provide creditors with the req-
uisite guarantees.

It is therefore perfectly possible to sue the WB in the numerous
countries where it has offices. It is possible in Djakarta or in
Dili, the capital of East Timor, in Kinshasa, Brussels, Moscow
or Washington, since the WB is represented in all those coun-
tries.

Question 2: Why sue?

Since the WB has been making loans[3], a good portion of them
has been used to carry out policies detrimental to the welfare
of hundreds of millions of citizens. How so? The WB has system-
atically given priority to loans for big infrastructures such as
huge dams[4], investment in industries that extract raw materi-
als (for example, open-cast mines, numerous pipe-lines ­ of
which the most recent are the Chad-Cameroon and the Baku-
Tbilisi-Ceyhan[5] pipelines), agricultural policies in favour of
?all-export? at the expense of food security and food sover-
eignty, and power stations which devour tropical forests.

Moreover, the WB has frequently come to the aid of dictatorships
known to be guilty of crimes against humanity: there were the
dictatorships of the Southern Cone of Latin America from the 60s
to the 80s; numerous African dictatorships (Mobutu from 1965 un-
til his fall in 1997, the Apartheid regime of South Africa); re-
gimes of the former Soviet Bloc such as the Ceaucescu dictator-
ship in Romania; those of Southeast Asia and the Far East, such
as that of Marcos from 1972 to 1986 in the Philippines, Suharto
from 1965 to 1998 in Indonesia, South Korea (1961-1981), Thai-
land (1966-1988), up to and including today's dictatorship in
China.

At the same time the WB, along with other actors, has contrib-
uted to the systematic destabilization of progressive and democ-
ratic governments by withdrawing all aid: this was the case for
the Sukarno government in Indonesia until he was overthrown in
1965; the governments of Juscelino Kubitschek (1956-1960) fol-
lowed by Joao Goulart (1961-1964) in Brazil, finally overthrown
by a military coup d'état; Salvador Allende's government in
Chile (1970-1973), and so on.

Next there are all the loans made by the WB to the colonial pow-
ers (Belgium, Great Britain, France, Italy, the Netherlands?) to
enable them to exploit the natural resources of the countries
they ruled until the 60s. All those loans were later included in
the external debt of the States when they became independent.
For example, the independent State of Congo had to finish paying
off the debt incurred by Belgium in its name. The same thing
happened for Kenya, Uganda, Nigeria, Gabon, Mauritania, Algeria
and Somalia for the debts contracted in their names by the colo-
nial governments.

Then there are the structural adjustment loans that the WB has
granted since the 70s. These loans are not destined for any par-
ticular economic project - but are intended to help implement
global policies with the ultimate aim of completely opening up
the economies of the "beneficiary" countries to investments and
imports, mainly from the principal shareholders of the WB. This
means that the WB supports policies denationalising the assisted
countries to the advantage of a few of its members. Thus a hand-
ful of industrial powers impose their wishes on the majority of
the inhabitants and the countries of the planet. The fact that
all their remedies - whether long-term structural remedies or
the short sharp shock type - do more harm than good has been
demonstrated repeatedly in the string of crises that began with
the Tequila crisis that hit Mexico in 1994. The Bank's new pri-
orities, such as the privatization of water and land, along with
its recent refusal to apply the recommendations of the independ-
ent Commission on Extractive Industries, clearly indicate that
the Bank has no intention of changing course and that new social
catastrophes are on the horizon - powerful tsunamis caused by
the cataclysmic interventions of the WB!

Question 3: Who might bring an action?

One might imagine that associations representing the interests
of people adversely affected by WB loans and/or by its support
for dictatorships could bring an independent action and sue the
WB for damages in national courts. One might also imagine that
holders of WB bonds - not only bankers, but also trade unions -
could sue the Bank over the use it makes of the money it borrows
from them. There is no guarantee that such lawsuits would be
successful, but it is hard to see why citizens' movements should
not use their right to hold the WB accountable for its acts. It
is inconceivable that the nefarious practices of an institution
like the WB should not one day be sanctioned by a decision of
justice.

Question 4: Why have no such procedures ever been initiated?

The clause of the WB Charter (Article VII, Section 8) which
grants immunity to the decision-makers and to officials in the
exercise of their duties has tended to obscure the possibility
of suing the WB as a legal entity (Article VII, Section 3, see
note 1 of this article). Yet it is more important to be able to
demand that the WB answer for its actions as an institution than
to simply hold its executives to account. Indeed, the same
clause of its Charter (Article VII, Section 8) provides for the
WB to decide to remove the immunity protecting its directors and
officials. Actions could also be envisaged against high-ranking
officials after they have left office. Another reason why so far
there have been no actions brought against the WB is that it has
taken a very long time for the truth to emerge, and for people
to realise just how systematic and generalized the reprehensible
practices of the WB are. In the eyes of the citizens, it is of-
ten their national governments that are seen to be responsible
for the policies demanded by the WB, so its true role passes un-
noticed.

--
[1] Eric Toussaint is the President of the CADTM (Committee for
the Abolition of the Third World Debt) Belgium, and author of
Your Money or Your Life: the Tyranny of Global Finance Pluto,
London 1998, 340 p. Third edition to be published in May 2005 by
Haymarket in Chicago; co-author with Damien Millet of The Debt
Scam, VAK Publication, Mumbai, 2003 and Who Owes Who? 50 Ques-
tions about World Debt, Zedbooks, London, 2004. For more infor-
mation: http://www.cadtm.org/

[2] Section 3 of Article VII: "Actions may be brought against
the Bank only in a court of competent jurisdiction in the terri-
tories of a member state in which the Bank has an office, has
appointed an agent for the purpose of accepting service or no-
tice of process, or has issued or guaranteed securities."

[3] The first loan dates back to 1947.

[4] According to the report of the Commission on Large Dams, 60
to 80 million people have been displaced as a result of the con-
struction of large dams. In a great many cases, the rights of
these people in terms of compensation and resettlement have not
been respected.

[5] According to the report of the Commission on Extractive In-
dustries published in December 2003, a large portion of the pro-
jects financed by the WB have had negative effects on the popu-
lations of the countries concerned.

Translated by Vicki Briault