The World Bank Inspection Panel: A Tool for Accountability?

Since the World Bank commenced operations on 25 June 1946, it has approved billions of dollars of loans, provided millions of hours of technical assistance, and published countless papers in respect of development economics.  Its first loan was for $250million to France for postwar reconstruction.[1]  Today the World Bank, through its two development institutions – the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA),[2] provides public sector loans and grants to developing countries for human development (education and health projects), infrastructure, communications and many other purposes.

Accountability is a broad concept with a multitude of meanings.  It generally refers to the responsibility, answerability or blameworthiness of a party who performs a duty or works in an official capacity. In the context of international intergovernmental organizations, such as the World Bank, under traditional notions of international law, there is only indirect accountability to individuals.  This  is justified on the presumption that these organizations merely monitor state behavior and facilitate international regulation – they do not exercise public power over individuals directly.  While it is true that in a public sector Bank financed project, it is the borrowing government who completes the project and not the Bank, the conditions under which these loans are made generally have significant bearing on the design and implementation of a specific project.  Accordingly, the Bank through imposing economic and political conditions to its loans, not only diminuates the economic and political independence of borrowing states, but can and does exercise public power over individuals directly.   Recognizing that the Bank’s conditionality arrangements co-ercively determines the fiscal and monetary policies and the contours of a borrowing nation’s development decisions, and thus the transfer of public decision making power from states to non-state actors such as the Bank, has lead various commentators to demand greater accountability from the Bank.[3]  The Bank’s response to date has been the creation of various policies seeking to address social and environmental concerns, and an institutional mechanism – the World Bank Inspection Panel.

This paper examines the general functioning of the World Bank Inspection Panel from its inception through to present day, and assesses whether it truly is a vehicle through which private citizens can hold the World Bank accountable In making this assessment, the paper considers (1) the history of the Panel’s creation, (2) the novelty of the Panel in respect of traditional notions in international law and the law of international organizations,  (3) the legal framework of the Panel, (4) how accessible the Panel is to the people it seeks to help, (5) how transparent, independent and publicly accountable the Panel is, and (6) the results and consequences, direct and indirect of those who have engaged the Panel process. Finally I conclude that the Inspection Panel, while not providing affected persons a legal avenue for redress, nevertheless, if used strategically as part of a bigger plan which involves media coverage of problematic projects, can serve as a useful tool in helping redress wrongs committed as a result of the Bank’s failure to comply with its own policies.

[2] Each institution plays a different but supportive role in the Bank’s mission of global poverty reduction and the improvement of living standards. The IBRD focuses on middle income and creditworthy poor countries, while the IDA focuses on the poorest countries in the world. IBRD loans are made with favorable interest rates and rather long repayment schedules, whereas IDA credits are extended to the poorest of the poor countries with no interest, and very relaxed loan repayment schedules.  The IBRD and IDA also provide loans and guarantees in support of private sector projects.  However, the majority of Bank financing for private sector operations is done through the International Finance Corporation (IFC) and the Multilateral International Guarantee Agency (MIGA).

[3] Namita Wahi, “Human Rights Accountability of the IMF and the World Bank: A Critique of Existing Mechanisms and Articulation of a Theory of Horizontal Accountability” (2006) 12 U.C. Davis J. Int’l L. & Pol’y 331 (hereafter Namita Wahi), p.333-334