Forest Peoples Programme
Bank Information Center

REPORT ON A WORKSHOP ON ‘INDIGENOUS PEOPLES, FORESTS AND THE WORLD BANK: POLICIES AND PRACTICE’
Washington D.C., 9-10 May 2000

Sponsored by:

Forest Peoples Programme
Bank Information Center
Charles Stewart Mott Foundation
Moriah Fund
International Work Group for Indigenous Affairs
Environmental Defense
Rainforest Foundation UK and USA
Swedish Society for Nature Conservation

Table 1 Case studies undertaken as part of the review
Table 2 Official response to Inspection Panel claims

BOX 1 OD4.20 and the World Bank’s View on Indigenous Land and Resource Rights
BOX 2 The Challenge of Compliance: A Bank-wide problem
BOX 3 Ecuador Indigenous Peoples And Afro-Ecuadorian Development Project (Prodepine)
BOX 4 Bolivia-Brazil Gas Pipeline
BOX 5 Guyana: National Protected Area System Project
BOX 6 Eastern Lowlands Project (PTBE), Santa Cruz, Bolivia
BOX 7 Madhya Pradesh Forestry Project, India
BOX 8 Ecodevelopment Project: Nagarhole National Park, India
BOX 9 Conservation of Priority Protected Areas System Project (CPPAP), Bataan, Philippines
BOX 10 First and Second Integrated Forestry Projects, Rwanda
BOX 11 Chad-Cameroon Petroleum Development and Pipeline Project
BOX 12 Conservation of Bwindi and Mgahinga National Parks, Uganda
BOX 13 Forfeiting accountability or creating flexibility?

Executive Summary

Concern about the impacts of World Bank projects on indigenous peoples has been widespread for many years. Forced removals of tribal peoples to make way for large dams and mines, the invasion of indigenous reserves by landless colonists and loggers, the denial of land rights in the extension of large-scale plantations and agricultural schemes, pollution and the desecration of lands by oil exploration, all have been widely reported and decried. In response to criticisms and expressions of concern, the World Bank has adopted special policies designed to mitigate these impacts and ensure indigenous participation in development.

Acronyms:

ANR - Assisted Natural Regeneration
ARDE - Annual Review of Development Effectiveness
ARPP - Annual Review of Portfolio Performance
BIC - Bank Information Center
CAS - Country Assistance Strategy
CIDOB - Confederacion Indígena del Oriente de Bolivia
CODE - Committee on Development Effectiveness
COICA - Coordinadora de Organizaciones Indígenas de la Cuenca Amazónica
CPPAP - Conservation of Priority Protected Areas Project
CSO        Civil Society Organisation
DENR Department of Energy and Natural Resources
EA        Environmental Assessment
EAP        Environmental Action Plan
ESSD Environmentally and Socially Sustainable Development Department
ESW        Economic and Sector Work
FPP        Forest Peoples Programme
GBP        Guidelines for Bank Practice
GEF        Global Environment Fund
GOB        Government of Bolivia
IBRD International Bank for Reconstruction and Development
IDA        International Development Association
IDB        Inter-American Development Bank
IDF  International Development Fund
IFAD International Fund for Agricultural Development
IFC  International Finance Corporation
ILO   International Labour Organisation
INRA Instituto Nacional de Reforma Agraria (Bolivia)
IPDP Indigenous Peoples Development Plan
IPO  Indigenous Peoples Organisation
KfW  Kreditanstalt fur Wiederaufbau (Bank for Reconstruction)
MIGA Multilateral Investment Guarantee Agency
MPFD Madhya Pradesh Forestry Department
NEAP National Environmental Action Plan
NGO Non-Governmental Organisation
NIPAS National Integrated Protected Area System
NPAS National Protected Area System
NRM Natural Resource Management
OD   Operational Directive
OED Operations Evaluation Department
OEG Operations Evaluation Group (of the IFC)
OMS Operational Manual Statement
OP   Operational Policy
OPN Operational Policy Note
PA    Protected Area
PAMB Protected Area Management Board
PRSP Poverty Reduction Strategy Paper
QAG Quality Assurance Group
QACT Quality Assurance Compliance Team
SAL  Structural Adjustment Loan
SAP Structural Adjustment Program
UNEP United Nations Environment Program
UNDP United Nations Development Program
USA United States of America
USAID United States Agency for International Development
VFC Village-level Forestry Committee
VPC Village-level Forest Protection Committee
WCS Wildlife Conservation Society
WRM World Rainforest Movement
WWF World Wildlife Fund

This paper summarises the findings of a workshop held in Washington DC in May 2000 on the theme of ‘Indigenous Peoples, Forests and the World Bank: Policies and Practice’. The workshop focused on discussion of nine case studies, presented by indigenous representatives, of their communities' experiences with World Bank projects in forests. The workshop had five main aims:

• to provide community views on the effectiveness of the World Bank's policy on Indigenous Peoples (World Bank Operational Directive 4.20);
• to promote an informed dialogue between indigenous peoples and the World Bank both about the application of its policy and specific projects;
• to promote an exchange of experience both between indigenous peoples organisations and with supporting NGOs;
• to contribute to the World Bank's current processes of revising its policies on Indigenous Peoples and on Forests; and
• to strengthen indigenous peoples' capacity to assess the policies of international development institutions that relate to them.

The cases examined come from Central and South America, Central Africa, India and the Philippines. Some 15 indigenous people participated in the workshop, which was also attended by 1 government official, 15 NGO representatives and 17 members of staff and consultants of the World Bank. The cases examined come from a wide spectrum of World Bank projects affecting forests, including forestry, eco-development, protected areas, oil and gas pipelines and community development. The examples are also from nearly the full panoply of World Bank institutions including the ‘World Bank proper’- the International Bank for Reconstruction and Development (IBRD), the World Bank’s ‘soft loan window’ - the International Development Association (IDA), the World Bank’s private sector lending operation - the International Finance Corporation (IFC) and the current funding mechanism for the Convention on Biological Diversity which is administered by the World Bank - the Global Environment Facility (GEF). The cases also span over a decade of World Bank activity - some of the projects were initiated in the late 1980s, while others are still in preparation.

The cases were selected after the Forest Peoples Programme (FPP) sent out a call for case studies on the web to indigenous organisations, targeting those organisations with which the FPP has already worked. Although an effort was made to invite indigenous organisations to present case studies on a number of projects with indigenous peoples that the World Bank was especially proud of, in the event indigenous organisations who came forward to present their experiences to the conference were mainly those who had less happy stories to tell. In that sense the projects are not a random selection of World Bank projects that have affected indigenous peoples, however, they do include a good range, geographically, institutionally and sectorally. They are thus broadly illustrative of the kinds of engagement that the World Bank has had with indigenous peoples.

Table 1: Case studies undertaken as part of the review

This evaluation of World Bank performance comes at a time when the Bank is being pressured both externally and internally to reform the way it does business. Indeed, some social movements are calling for the World Bank to be shut down altogether. Ever since the mid-1970s, the World Bank has come under sustained criticism for the social and environmental impact of its projects. The World Bank has tried to respond: by increasing the number of staff with environmental and social expertise; by adopting operational guidelines on issues requiring special care; by establishing a whole new department on ‘Environmentally and Socially Sustainable Development’ (ESSD); and by opening itself up to more thorough review and scrutiny, both through its own Operations Evaluation Department (OED) and by establishing an independent Inspection Panel to review controversial projects. Notwithstanding these important advances, expressions of concern from affected groups have not lessened.

During 2000, the World Bank is itself undertaking two different policy reviews relevant to the theme of this paper. It aims to bring to a conclusion a process already long in gestation - its redrafting of its policy on Indigenous Peoples, with the objective of making its policy more realisable and flexible. It is also engaged in a detailed review of its Forest Policy, which it adopted in 1991, and which is now considered by World Bank staff to be outdated and in need of revision. The workshop was thus timed with the explicit intention of feeding into both these processes by drawing the World Bank’s attention to the people on the sharp end of both these policies, the forest-dwelling indigenous peoples themselves.

For several years the Forest Peoples Programme has been calling on the World Bank to carry out a participatory implementation review of its Indigenous Peoples policy, in the belief that any revision of the policy should be informed above all by the actual experience of indigenous peoples themselves at whom the policy has been targeted. The workshop was not seen as substituting for such an implementation review but was aimed at demonstrating why one is necessary and what such a review should look at and how.

The workshop, and its preparations, were made possible through the support of many individuals and institutions. We would like to take this opportunity to thank in particular, Charles Stewart Mott Foundation, Moriah Fund, Novib, W Alton Jones Foundation, Bank Information Center, Environmental Defense, International Work Group for Indigenous Affairs, Swedish Society for Nature Conservation and Rainforest Foundation (UK and USA). We would like to thank all the workshop participants for their comments on this paper and the case studies given during the workshop and thereafter.

Background:

In 1982, the World Bank adopted its first policy guidelines on ‘Tribal Peoples in Bank-Financed Projects’ as an internal, and at that time confidential, document issued only to staff with the technical reference ‘Operational Manual Statement No. 2.34’ (OMS 2.34). The previous year, the World Bank had published a book titled ‘Tribal Peoples and Economic Development: Human Ecologic Considerations’, which ostensibly set out in more detail the World Bank’s policy towards ‘tribal peoples’. The publication was a progressive document, which committed the World Bank to respect the right of tribal peoples to their lands. It supported the principal of self-determination and affirmed that the World Bank would not support projects opposed by the peoples themselves. The internal OMS 2.34 issued to staff was, however, notably weaker being aimed at ‘mitigating’ the worst impacts of World Bank projects rather than affirming the principle of self-determination. It did not offer indigenous peoples a corresponding right of veto. It did however direct World Bank operational staff to incorporate into their projects measures designed to protect the affected peoples’ land rights, health, cultural integrity and ensure their participation in project design and execution. The discrepancy between the two policies was not clarified until 1986 when the World Bank felt obliged to disclose the existence of the OMS and admit that the published policy statement was not considered binding on staff.

Both the new internal policy and the publication were aimed at countering serious criticism of the World Bank for the severe impact of its projects on indigenous peoples. In the Philippines, the World Bank had offered to support the construction of the Chico Dams, which would have flooded some 80,000 Kalinga and Bontoc people off their lands. Tribal mobilisation against the dams triggered repression and insurgency. In Central India the World Bank had supported the establishment of huge timber plantations on tribal lands with shattering effects on the displaced Muria people. In Brazil, World Bank support for Amazonian development schemes also led to land invasions and high mortalities from introduced diseases.

Despite the adoption of the 1982 policy, the severe impact of World Bank projects on indigenous peoples continued, but the World Bank denied major problems until in 1987 the then World Bank President, Barber Conable, finally admitted that many of World Bank projects had failed to take into account social and environmental issues. New staff with social science expertise were recruited and a review was undertaken to establish the degree to which staff were adhering to the ‘tribal peoples’ policy (see below).

BOX 1: OD4.20 AND THE WORLD BANK’S VIEW ON INDIGENOUS LAND AND RESOURCE RIGHTS

During the late 1980s and early 1990s, there was a growing realisation inside the World Bank that borrower governments were failing to protect indigenous lands and therefore, where World Bank projects might impact such peoples, precautionary measures had to be taken to secure their rights and safeguard their future. The importance of such measures to secure the land rights of indigenous peoples was incorporated into the revised Indigenous Peoples policy in 1991. The fundamental role of land in indigenous welfare was further highlighted in a series of studies carried out by the World Bank in preparation for the 1992 World Development Report. The summary report of these studies noted:

‘…indigenous peoples – in contrast to Western economists and development planners – do not view land as a "commodity" which can be bought and sold in impersonal markets; nor, do they view the trees, plants, animals and fish which cohabit the land as "natural resources" which produce profits or rents. To the contrary, the indigenous view... is that land is a substance endowed with sacred meanings, embedded in social relations and fundamental to the definition of a people’s existence and identity. This close attachment to the land and the environment is the defining characteristic of indigenous peoples.... [Bank studies] emphasise the well-documented fact that indigenous peoples throughout the world face serious problems in gaining official recognition of their customary land and territorial rights. In most countries inhabited by indigenous peoples, there is either very limited or no legal recognition of their land and territorial rights; or, when national laws do recognize such rights, they are seldom defended in practice, especially when they conflict with wider regional and national development goals." pp.i-ii in Davis S (1991) "Indigenous Views of Land and the Environment" Background paper No. 10, World Development Report 1992, World Bank, Washington D.C. (emphasis added)

As a result of this internal review and extensive consultations inside the World Bank, a new policy was adopted in 1991. Titled ‘Indigenous Peoples’ and referred to as ‘Operational Directive 4.20’, the new six-page policy is a real improvement on OMS 2.34. The new policy adopts a broad approach about which categories of people should be considered as ‘indigenous’ for the purpose of the World Bank’s operations and thus treats as indigenous peoples those "social groups with a social and cultural identity distinct from the dominant society, which makes them vulnerable to being disadvantaged in the development process". Key characteristics highlighted in OD 4.20 to help staff identify such peoples include:

• close attachment to ancestral territories and to natural resources in these areas
• self-identification and identification by others as members of a distinct group
• an indigenous language, often different from the national language
• presence of customary social and political institutions
• primarily subsistence-oriented production.

The new policy makes much clearer the steps that World Bank project staff should go through to safeguard indigenous peoples in project areas. It emphasises the participation of affected peoples in project design, implementation and monitoring. Key elements that staff are expected to observe in applying the policy include the following:

• there is a clear borrower government commitment to adhere to the World Bank’s policy
• acceptable mechanisms are in place to ensure indigenous participation in the full project cycle
• an Indigenous Peoples’ Component is developed which
  • makes an assessment of the national legal framework regarding indigenous peoples
  • provides baseline data about the indigenous peoples to be affected
  • establishes a mechanism for the legal recognition of indigenous peoples’ rights, especially tenure rights
  • includes sub-components in health care, education, legal assistance and institution building
  • provides for capacity-building of the government agency dealing with indigenous peoples
  • establishes a clear schedule for fitting actions related to indigenous peoples into the overall project, with a clear and adequate budget
• final contracts and disbursements are conditional on government compliance with these measures.

The central and overriding objectives of the current safeguard policy are to: "ensure that the development process fosters full respect for [indigenous peoples’] dignity, human rights and cultural uniqueness" (para. 6) and to "ensure that indigenous peoples do not suffer adverse effects during the development process...and that they receive culturally compatible social and economic benefits" (para 6). The policy therefore remains dominated by the concept of large projects requiring mitigation measures, but adds requirements for benefit sharing and indigenous participation. In sum, OD4.20 seeks to guarantee and promote:

• land tenure and resource security
• protection from adverse affects during the development process
• indigenous participation in project design, implementation and monitoring
• positive action on the part of the borrower to ensure that indigenous peoples receive culturally appropriate development and economic benefits
• rejection of projects where negative impacts cannot be adequately ameliorated

More than its definitions, guidelines and objectives the policy is important because it makes requirements of borrowers and Bank staff in loan operations affecting indigenous peoples most of which are tied to specific stages of the project cycle (see Annex I).

The Forest Peoples Programme criticised the World Bank at the time that the new policy was released for not having elaborated it through a participatory process in consultation with indigenous peoples. We also noted that the policy did not respect the right of indigenous peoples to self-determination or to veto projects, and did not make clear exactly when in the project cycle the critical elements of participation and land regularisation should take place. Indeed, indigenous organisations such as COICA had made clear recommendations to the World Bank in 1990 demanding a policy which included:

• Recognition of indigenous rights as set out in international law
• Direct consultations with indigenous peoples in the elaboration of the policy
• No development projects in indigenous areas without the informed consent of the peoples affected
• Participation of the indigenous organisations, which represent the affected peoples, throughout the full project cycle
• Establishment of tripartite commissions, including governments, funders and the affected peoples, to oversee project implementation
• Prioritisation of indigenous development alternatives.

The International Alliance of Indigenous and Tribal Peoples of the Tropical Forests, which held meetings with the World Bank to discuss the new policy in 1992, also called for a much stronger recognition of indigenous peoples’ rights. They again demanded that:

National or international agencies considering funding development projects which affect us, must set up tripartite commissions – including the funding agency, government representatives and our own communities as represented through our representative organisations – to carry through the planning, implementation, monitoring and evaluation of the projects.

Both the forest policy and the indigenous peoples policy are examples of what the World Bank calls its ‘safeguard policies’: policies that have been adopted by the World Bank to make sure that social groups and issues that are frequently marginalised or over-looked in economic planning are taken care of in its actual projects. 

World Bank staff are obliged to comply with these policies in all projects which may have an impact on these peoples or environments, including sectoral adjustment loans (SECALs), and they are also encouraged to address these issues in developing Country Assistance Strategies (CAS). Compliance with safeguard policies is, however, not currently mandatory for full structural adjustment loans though many indigenous peoples and civil society groups believe this is necessary.

Current Revision Process:

Since 1996, the World Bank has once again been revising its indigenous peoples policy. This is being undertaken by an ad hoc Working Group within the Bank and moved into the public domain in 1998 with the circulation of an "Approach Paper" to indigenous peoples’ organisations, governments and NGOs. The approach paper retains many of the objectives of OD4.20 but places more emphasis on culturally appropriate indigenous "self-development" and poverty alleviation. Much of the focus of the paper is centred on redefining categories and clarifying definitions and requirements. The underlying assumption is that development of a clearer policy will improve implementation. The proposed revision, as set out in the ‘Approach Paper’, intends to ensure that "minimum standards" are maintained by:

• clarifying what is meant by "meaningful participation" and setting out clear requirements for indigenous involvement with clear criteria and benchmarks for participation
• improving training for staff on social and cultural aspects of project design
• clarifying legal safeguards and measures needed to secure indigenous rights
• requiring a comprehensive "Indigenous Peoples Action Plan" where negative impacts are anticipated
• promoting ‘ethno-development’ and poverty reduction
• increasing private sector investments to assist indigenous communities
• clarifying the roles and responsibilities of the private sector when their activities affect indigenous peoples and their territories
• affirming the borrower’s obligations to adhere to the policy as set out in loan covenants and conditions.

In late 1998, the World Bank held a series of consultations with indigenous peoples’ organisations and others in Brazil, Costa Rica, Ecuador, Vietnam, the Philippines, India and Russia. Each meeting produced a brief report of civil society recommendations. Since then, the World Bank has been reviewing its policy without direct consultation with indigenous peoples and advocacy groups. The World Bank was expected to make public a ‘zero draft’ of its new policy on Indigenous Peoples (to be renamed Operational Policy 4.10) in July 2000, with the expressed intention of getting reactions to the draft from indigenous people and other interested parties. 

However, in line with current World Bank procedures, the draft first needs to be assessed and approved by the World Bank’s legal department and then passed to and ‘cleared’ by the World Bank’s Operational Policy Committee before it can be released to the general public for further discussion. Owing to controversy now raging within the Bank about the status of all its ‘safeguard policies’ and owing to a series of very critical findings by the World Bank’s Inspection Panel, which has documented persistent failures by World Bank staff to adhere to these policies, the process of revising these policies has been, at least temporarily, stalled. At the time of going to press, it is still not clear when or whether the ‘zero draft’ OP 4.10 on Indigenous Peoples will be released for consultation.

Non-Governmental Organisations like FPP have argued that while modifying the policies may be useful this will not necessarily improve implementation without more fundamental changes in World Bank procedures and practice. Crucially, there is a need to insitutionalise real incentives for staff to apply the policy and address the cross-sectoral impacts of World Bank lending. Indigenous and NGO recommendations for the revision of OD4.20 centred on six central themes: identification, land and natural resource management, participation and consultation, compensation, self-determination and indigenous development, and compliance. Some of the more important recommendations and observations included:

• the policy should adopt the indigenous right to "self-identification" in accordance with the principles set out in the UN Draft Declaration on the Rights of Indigenous Peoples.
• indigenous land and resource security should be further specified as an essential precondition for project appraisal and approval with concrete benchmarks to ensure compliance.
• there should be no involuntary resettlement of indigenous peoples. Resettlement may only take place with the full, prior, free and informed consent of affected indigenous communities. Indigenous participants rejected language suggesting this could be permitted in cases where it 'was demonstrated to be unavoidable'.
• Indigenous peoples reject the notion in the Approach Paper of "converting" customary rights into legal rights. What they seek is legal recognition of their customary land and resource rights, in line with ILO Convention 169.
• the definition of indigenous lands and territories must be extended to include lands that are of spiritual and cultural significance to indigenous peoples. Such lands include sacred sites.
• baseline studies should include an environmental audit that properly values indigenous peoples’ resources and territories.
• baseline studies and natural resource and land management project components that utilise indigenous knowledge must incorporate adequate intellectual property rights safeguards and benefit sharing mechanisms.
• the policy should recognise the indigenous right to "prior, free and informed consent" as specified under Article 30 of the UN Draft Declaration on the Rights of Indigenous Peoples.
• the policy must require "effective" participation by indigenous peoples affected by Bank loan operations throughout the project cycle.
• consultations must include traditional leaders as well as local indigenous organisations.
• affected indigenous peoples must be involved in negotiations between the World Bank and the client government, as this is a crucial stage for ensuring effective participation.
• indigenous networks should be activated at national and regional levels to track World Bank operations through the whole project cycle.
• the policy must require the proactive circulation of information in local languages to indigenous organisations and communities affected by Bank loan operations.
• the role of NGOs must be clarified in the new policy.
• the indigenous peoples who are affected by Bank project must be consulted fully regarding their views on "appropriate" compensation and mitigation measures.
• there should be more concern with gender, as indigenous women are frequently disproportionately impacted by projects.
• there should be a specific requirement that indigenous peoples be involved in monitoring and evaluation
• provisions should be made for direct funding to ensure that benefits reach the indigenous peoples on the ground.
• development initiatives should accommodate the cultural priorities and "cosmovision" of indigenous peoples.
• World Bank staff must find ways of enforcing compliance with legal covenants and policy requirements by borrower governments and implementing agencies.
• The World Bank must guarantee that indigenous recommendations are acted upon and incorporated into the Bank's revised policy on indigenous peoples.

Previous Implementation Reviews:

In 1987, the World Bank carried out a very partial internal review of the implementation of its 1982 policy. It found that, out of a small sample of 33 World Bank projects thought to be affecting indigenous peoples since the policy was adopted, only 15 had observed the policy at all - less than half. Moreover, of those 15 only 2 projects had observed all four key elements of the World Bank's policy. Only 6 out of the 33 projects included measures to protect the land rights of the affected peoples; only 2 included the required health measures; only 2 included measures for protecting the cultural integrity of the affected peoples and only 3 included measures for increasing the peoples’ participation in project design and execution. The review also found that land demarcation elements in indigenous project components were "severely delayed or out of pace with the progress of the overall project". These findings encouraged the World Bank to redraft the policy with the aim of giving clearer guidance to operational staff on how and at what stage in the project cycle, they should undertake specified actions.

Since the 1988 study and since the World Bank adopted a new policy on Indigenous Peoples in 1991, no overall implementation review has been carried out. However, partial reviews have been undertaken of the application of the policy in Latin America. One early internal review suggested that in lowland South America, the new policy was promoting land regularization but noted the need for greater institution- building in borrower country governments so that national policy reforms could be put into practice. The review also advocated an alternative approach that built on the cultural and social strengths of indigenous peoples.

The Indigenous Peoples policy is not the only one of the ‘safeguard policies’ which the World Bank has problems complying with. The same is true of other policies such as those on Environment Assessment, Involuntary Resettlement and Forests. The main reason is that operational staff are under heavy pressure to move money fast with the minimum amount of hassle. Country Directors, who tend to be professional economists, have the job of overseeing World Bank lending to client countries in line with ‘Country Assistance Strategies’, which define borrower requirements principally in macro-economic terms. Annual lending targets to cushion countries’ balance of payment difficulties are also set by Consultative Groups comprising all the main donor agencies. Meeting these targets is a Country Director’s first priority and operational staff are thus discouraged from investing too much time in socially and environmentally complicated projects. As a result, ‘safeguard policies’ are seen as ‘all pain and no gain’. Staff are thus likely to invest the minimum of time in compliance with these policies, or they just avoid controversial projects altogether.

The problem of abbreviated participatory procedures is widespread as a direct result. As a 1992 report by the World Bank’s Portfolio Management Task Force made clear, the Bank’s "pervasive preoccupation with new lending" takes precedence over all other considerations. According to the Task Force, "a number of current practices – with respect to career development, feedback to staff and signals from managers – militate against increased attention to project performance management." In the subculture which prevailed at the Bank, staff appraisals of projects tended to be perceived "as marketing devices for securing loan approval (and achieving personal recognition)", with the result that "little is done to ascertain the actual flow of benefits or to evaluate the sustainability of projects during their operational phrase." The Bank’s institutional priorities and management structures thus encouraged staff to flout internal policy directives and borrower governments to ignore loan conditions. Unsurprisingly, the "credibility [of loan agreements] as binding documents has suffered" and "evidence of gross non-compliance [with Bank legal covenants] is overwhelming." When borrowers disregard loan conditions, the typical response of Bank management has been to look the other way or waive the relevant requirement, unless public pressure forces them to do otherwise.

Since this report came out, the World Bank has made efforts to change staff culture. Attempts are now being made to assess projects based on actual performance rather than merely on whether staff notionally comply with policies during project preparation and appraisal. New institutions have been set up within the Bank to encourage this change (QAG and CODE). To try to encourage participation and closer engagement with client governments, the World Bank has been decentralized with greater autonomy being given to Regional Vice-Presidents and Country Directors. However, this has not led to noticeably greater engagement with civil society or indigenous peoples within borrower countries and it has lessened the influence of the Environmentally and Socially Sustainable Development department.

Failures in the World Bank’s compliance with its policy on Involuntary Resettlement have become notorious. Successive reviews have catalogued the very severe problems of people, disproportionately indigenous, forced off their lands by large dams. World Bank review teams have been hard-pressed to find any projects at all which comply with the minimal requirement that oustees should be at least as well off after removal, as they were prior to it. Nearly all have been worse off, many disgracefully so. A recent Forest Policy Implementation Review by the Operations Evaluation Department, which reviewed over 600 projects undertaken between 1991 and 1999, has documented a similar failure in compliance. Contrary to requirements, the policy was not incorporated into macro-economic planning or lending. There was poor linkage to poverty alleviation, weak participation, land tenure issues were often neglected and gender considerations almost wholly ignored.

A major problem is that the World Bank allocates inadequate funds for what it calls the ‘transaction costs’ of preparing and overseeing projects. Special funds for the higher costs of spending time in careful project planning and participation are limited and hard to access. The fact remains that operational staff are given very few real incentives to pro-actively engage in controversial sectors in the way that the ‘safeguard policies’ demand. Real participation is a long way off and to date the World Bank has resisted suggestions that affected peoples or independent NGOs should carry out monitoring.

A more recent internal review of 72 projects affecting indigenous communities in Latin America found that the policy was slow to take effect in the period 1992-1997 but had improved thereafter. Of 48 projects already underway by 1997, only 19 had attempted to address indigenous needs with an Indigenous Peoples Development Plan (IPDP) while another 12 featured an indigenous "component". In other words, over one third of the projects had failed to include the required indigenous peoples component. Only half of the projects involved active consultation with traditional indigenous authorities regarding project design and implementation. The best examples of compliance with OD4.20 were identified in pilot projects specifically targeting indigenous beneficiaries. The apparent degree of compliance with OD4.20 was much higher in the 24 projects still in the preparation phase in 1997 where, according to the Bank, "a good number" planned to incorporate an IPDP.

The improvement in the World Bank’s performance of adhering to its own policy in Latin America is largely due to an increase in the number of staff with social science expertise in the ESSD. The overall performance, however, is still unacceptable. Moreover, as far as we are aware, no reviews have been done of the degree of compliance with the policy in World Bank projects in Africa or Asia, where the evidence is that the policy is applied even more patchily.

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