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February 16, 1999


World Bank puts off recast of watchdog panel as Narmada body, other NGOs protest

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Desikan Thirunarayanapuram in Washington

The World Bank board of directors has put off consideration of proposed changes in the operations of a controversial watchdog panel following appeals from 20 non-governmental organisations, including Narmada Bachao Andolan from India.

The board, which was scheduled to decide on the inspection panel on February 9, will now meet, tentatively, on March 16.

The inspection panel considers complaints from citizen groups on harm caused by projects financed by the World Bank. It was set up in 1994 following a resolution approved in September 1993.

While NGOs from developing countries and World Bank representatives from donor nations are happy with the work done by the panel, several developing countries see its work as meddling in the internal affairs of the borrowing countries.

Following such objections from India, Brazil and other borrowing countries, the World Bank board set up a working group in March 1998 to examine the panel's operations and suggest ways for compromise.

The six-member working group of board members includes Surendra Singh of India, Murilo Portugal of Brazil and the Saudi Arabian representative from the borrowers' side; the donor side is represented by directors from Canada, Switzerland and the Netherlands.

The working group submitted its report on December 9 last, according to panel secretary Eduardo Abbott. Following appeals from the NGOs, the bank board has put out the report on the inspection panel's Website ( and called for comments from citizens' groups, which have time until March 5 to respond.

The compromise arrived at by the working group is expected to be approved by the board in mid-March.

In its report, the working group says that it "takes note of a tendency in the Board to split mainly between borrowing and non-borrowing members in cases in which the panel has recommended an investigation," and on other issues relating to requests to the panel for investigations of complaints.

The report says "this tendency is harmful to the effectiveness of the panel and the credibility of the bank," and "aims to remedy this..."

Among the working group's recommendations, which will have to be approved by the full board of directors are the following: during the panel's field visits, it will not report on the bank's failure to comply with its policies and procedures or its resulting material adverse effect; any definitive assessment of these effects and failures will be done after the panel has completed its investigation; during in-country field investigations, the panel must maintain a low-profile and its "methods of investigation should not create the impression that it is investigating the borrower's performance.

Further, it states that the panel and the bank management "should decline media contacts while an investigation is pending or under way"; if a project-affected person alleges an adverse effect and the panel finds that it is not totally or partially caused by the bank's failure, the panel's report will so state without entering into analysis of the material adverse effect itself or its causes."

While assessing material adverse effect, "non-accomplishments and unfulfilled expectations that do not generate a material deterioration" compared to the situation in the absence of the project should not be considered as a material adverse effect.

On remedial actions following complaints to the inspection panel, the working group makes a distinction between "compliance plans" which address the bank's failures in response to the panel, and "action plans" which constitute an agreement between the borrower and the bank. The working group states that the action plans shall be outside the purview of the inspection panel. The bank management shall communicate to the panel changes in action plans agreed upon with the borrower in respect of complaints to the panel.

The panel, in turn, shall hold consultations with complainants on the proposed changes without making a field visit. The panel shall not examine other aspects of the action plans. And the Bank management shall not ask the inspection panel to monitor the implementation of the action plans.

Storm brewing in World Bank over inspection panel's role

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