by Samir Desai
The World Bank Inspection Panel recently responded to its first complaint since the Panel’s inception in September 1993. (See related stories in The Human Rights Brief, Vol. 1, No. 1, at p.4, and Vol. 2, No. 2, at p.4.) Less than two months after the request for an investigation into the World Bank’s participation in a proposed dam project in Nepal was registered, the Inspection Panel unanimously recommended that the request be granted.
On October 24, 1994, the Arun Concerned Group (ACG), a Nepalese non-governmental organization representing local citizens, filed a Request for Inspection with the Panel. The ACG claimed that the World Bank did not comply with its own operational policies and procedures in designing and co-financing a hydroelectric dam in the Arun Valley east of Kathmandu. The Arun III Hydroelectric Project is expected to cost approximately $800 million and is to be financed by a number of international lenders, including the International Development Association of the World Bank Group.
The ACG alleged that the Bank failed to consider less costly alternatives to the dam project and that the cost of the dam, roughly equivalent to twice the annual budget of Nepal, was "completely out of proportion to the size of Nepal’s economy" and would exacerbate rather than alleviate the condition of the poor by reducing investment in health and education. The ACG also complained of the project’s potential impact on the environment and on resettled and indigenous groups in the area. It petitioned the Panel to recommend to the Bank’s Executive Directors to investigate the Bank’s design and approval of the project prior to implementation of the project.
The three-member Inspection Panel issued a Memorandum to the Executive Directors on December 16, 1994. The Panel concluded that the cost of the project "will have an extensive impact on living conditions throughout the country." In response to the complaint that the Bank did not consider alternatives to the size and scope of the Arun project, the Panel opined that "if a more exhaustive study of alternatives is made, it would enable Bank Management to deal with the numerous negative side effects encountered by this Panel, even if immediate construction of Arun II were the preferred option." The Panel unanimously recommended that "apparent violations of policy do exist that require further investigation."
On February 2, 1995, the Executive Board of the Bank agreed with the Panel and decided to pursue the investigation. Meanwhile, the controversy attached to the project has not subsided. The ACG and the International Rivers Network, an environmental group, have charged that the Bank has tried to misrepresent the Panel’s findings. A Bank memo, dated December 20, claims that "while the inspection panel had drawn attention in its initial report to the broad issue of alternative means of meeting Nepal’s energy needs, it does not recommend further work exploring these alternatives."
Professor Daniel Bradlow of the Washington College of Law (WCL), whose proposal for appointing an ombudsman at the Bank served as a model for the Panel, describes the Panel’s report as "diligent and thoughtful," and one that "makes a superb effort to respond to all the issues in the complaint in a very serious and determined way." He encourages affected people and groups representing them to take advantage of the opportunities provided by the Panel, and thereby to enhance the Panel’s ability to hold the Bank accountable for its development strategies. Professor Bradlow, WCL Professor David Hunter, Senior Attorney at the Center for International Environmental Law, and the Center for Human Rights and Humanitarian Law, have offered their services to assist potential complainants in filing requests before the Panel.
Professor Hunter applauds the Panel for "an independent and objective review of the claim" and for doing "an excellent job in identifying specific violations and calling into question the fundamental decision to pick [the Arun III] alternative." He believes that an investigation would reveal a "clear violation of Bank policies." While the Panel "has made a very strong case for inspection," it will not succeed in improving Bank operations unless "the Board and Bank Management take the Panel’s ultimate recommendations and findings seriously."
Samir Desai is a WCL LL.M. graduate and former Articles Editor for The Human Rights Brief.