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Time to end World Bank immunity

  • Published at 12:02 am October 7th, 2016
  • Last updated at 06:09 pm October 7th, 2016
Time to end World Bank immunity

Fisher-folks, farmers, and marginal wage earners in Gujarat, India were shocked to hear about the US federal district court ruling in March this year that the International Finance Corporation (IFC), the private lending arm of the World Bank Group, enjoys absolute immunity and therefore cannot be sued in the US.

Earlier, Budha Ismail Jam and others filed a suit against the IFC. The plaintiffs accused the IFC-financed Tata Mundra Ultra Mega Power Project -- a 4,000MW giant coal-fired project -- of destroying their lives and livelihoods.

According to the plaintiffs, “who live, fish, and farm in the shadow of the plant, its main legacy has been environmental and social harm -- to the marine ecosystem, to the quality of the air, to plaintiffs’ health, and to their way of life.”

They complained that “the IFC, which provided $450 million for construction of the plant, is primarily responsible for their injuries,” and therefore sued IFC in the US federal district court “seeking several forms of equitable relief or, in the alternative, compensatory and punitive damages.”

To their dismay, they heard from John D Bates, the US district judge, that that IFC enjoys immunity from suits in the US courts and therefore the case was discharged. The judgment says: “It is well-established that statutes like the IOIA that grant immunity to foreign nations and international organisations limit the District Court’s jurisdiction over parties that are entitled to such protection.”

Background

In 2008, the IFC announced a $450m loan to a Tata Group subsidiary for building the power plant in Gujarat. The promoters claimed the project as essential to help fuel India’s ongoing “economic growth.”

However, the locals charged the project with severely damaging the local environment and lives of the local residents. The plant had damaged the local marine environment, causing fish to move further away from the coast, and damaged local water supplies used for drinking and irrigating farmers’ fields.

As Bharat Patel, head of the Association for the Struggle for Fishworkers’ Rights in the Kutch area of Gujarat, observed: “The Indian government’s motto is all about industrial development, but traditional communities -- like fishermen and farmers -- are going into poverty because of the IFC.” They accused the IFC of “irresponsible and negligent conduct in appraising, financing, advising, supervising, and monitoring its significant loan to enable the development of the Tata Mundra Project in Gujarat, India.”

The project is located on the Kutch coast, in the western part of India. This area around the Arabian Sea is replete with abundant natural resources. The construction phase already witnessed huge losses due to the displacement and devastation of mangrove forests. The dredging of streams and waste dumping destroyed precarious natural resources.

It is important to remember that mangrove forests play a central role in transferring organic matter and energy from the land to the marine ecosystems. It is apprehended that after the completion of the project, the region would be severely impacted by pollution from flying ash, coal dust, and hot water.

Tata Mundra uses open cycle cooling, which is less efficient than closed cycle cooling. The latter also has the capacity to reduce water usage by 85%. Secondly, coal for the project would be imported from Indonesia, which is supposed to be high in sulphur. Tata Mundra decided to forego installing flue gas de-sulfurisers in their chimneys. A decision which would result in higher sulphur emissions in the atmosphere.

A federal law enacted in 1945 provided IFC the same immunity from suit and every form of judicial process as is enjoyed by foreign governments

The pollution from the plant has already negatively impacted the fisheries and marine life that the fish workers rely on for their livelihoods, and the environmental impacts are very closely linked to the economic ones. Independent fact-finding missions reveal that severe respiratory diseases among children have increased by 20% in the villages around the power plant.

Coal dust and flying ash are endangering horticulture and the lives of people and animals. Water in the outlet channel is at a whopping 35.6-35.8 degree centigrade, which no marine life accustomed to a Gulf of Kutch’s “normal” of 30-31.8C would be able to bear.

Releasing the report, senior activist Soumya Dutta said: “The impacts which were noted by the fact finding team was at a time when only one unit of the 4,000MW plant was operational. Today, since all units of the project are on steam, the impacts are manifold and no agency, either of the governments or of the financial institutions, are monitoring it and people and the environment are at high risk.”

Faced with such charges, the IFC could not, in any reasonable or sustainable manner, refute the merit of the argument.

In order to dodge genuine concerns, IFC resorted to a deviant route. It claimed immunity under International Organisations Immunities Act (IOIA). A federal law enacted in 1945 provided IFC the same immunity from suit and every form of judicial process as is enjoyed by foreign governments.

The IFC also claimed that waiving this immunity could “produce a considerable chilling effect on IFC’s capacity and willingness to lend money in developing countries” by opening “a floodgate of lawsuits by allegedly aggrieved complainants from all over the world.”

This carapace of protecting capital from any sort of environmental, socio-political, economic, or moral safeguard relieved IFC of any commitment towards popular democratic opinions. It acts to justify false intentions and flawed processes.

By fooling people through shams and dubious acts, the attempt is to push private investments in all possible sectors, with scant regard for social and environmental impacts without any democratic and participatory processes.

“The IFC’s defense boils down to this: ‘We are above the law,’” Rick Herz, the litigation coordinator for the human rights and environmental advocacy group EarthRights International, which represents the Gujarat farmers, said in a statement on July 13.

He added: “It argues that it is entitled to act with impunity, contrary to its own mission and accountable to no one, even though the risks were so obvious from the start and the IFC’s failure to act [has been] so devastating for precisely the people the IFC is supposed to help and protect.”

In June, 2015 Human Rights Watch came out with a document “At Your Own Risk: Reprisals against Critics of World Bank Group Projects” that highlighted repression against the critics of the bank-funded projects in a number of countries.

Reporting cases from India, Cambodia, Uganda, Uzbekistan, and elsewhere, the document charges that the “World Bank and IFC officials failed to respond meaningfully to abuses that make a mockery out of their own stated commitments to participation and accountability.”

It also points out the World Bank’s collusion with authoritarian governments, violating the right to free speech and opinion and also minimum human rights for people affected by the World Bank’s projects.

Instead, the World Bank has continued providing loans to governments that have carried on violating the minimum human rights standard set by itself.

The report highlights terrible gender violence “where project critics and concerned community members have been the target of threats, intimidation tactics, and baseless criminal charges.

“Some women have faced sexual harassment or gender-based threats, attacks, or insults when they speak out” and are even branded as prostitutes.

In another investigation conducted by the International Consortium of Investigative Journalists (ICIJ), The Huffington Post and other media partners found out that “the bank has regularly failed to enforce its rules, with devastating consequences for some of the poorest and most vulnerable people on the planet.”

Utilising a number of privileges and immunities, World Bank acts like a supra-sovereign body -- relieved of any obligation or willingness to accept responsibility or to account for its actions

The key findings of the report are:

• Over the last decade, projects funded by the World Bank have physically or economically displaced an estimated 3.4 million people, ousting them from their homes, taking their land, or damaging their livelihoods.

• The World Bank has regularly failed to live up to its own policies for protecting people harmed by projects it finances.

• The World Bank and its private-sector lending arm, the IFC, have financed governments and companies accused of human rights violations such as rape, murder, and torture. In some cases, the lenders have continued to bankroll these borrowers after evidence of abuses emerged.

• Ethiopian authorities diverted millions of dollars from a World Bank-supported project to fund a violent campaign of mass evictions, according to former officials who carried out the forced resettlement program.

• From 2009 to 2013, World Bank Group lenders pumped $50 billion into projects graded the highest risk for “irreversible or unprecedented” social or environmental impacts -- more than twice as much as the previous five-year span.

A supra-sovereign body

While we can sue individuals, private corporations, or even the highest orders of our respective governments, inter-governmental organisations like WB enjoy absolute immunity from any judicial procedure.

Utilising a number of privileges and immunities, WB acts like a supra-sovereign body -- relieved of any obligation or willingness to accept responsibility or to account for its actions. It is therefore exempted from any jurisdiction, taxes, or executions.

We must remember that the World Bank operates like any other bank ie it makes money by charging interests on its loans.

However, the tag of “development” and its absolute immunities excuse the bank from any accountability under any legal or democratic procedure.

In a number of cases, this immunity violates the citizens’ rights to seek protection under law and the right to seek justice.

These immunities are at the roots of the bank’s belligerent attitude towards anything that acts as an infringement on its profits. It is nowhere accountable, liable, and chargeable for the terrible consequences that its projects, policies, and actions inflict on human lives or the environment.

It is also not interested in scrutinising its policies against the international legal covenants, many of which are a result of immense socio-political struggles worldwide.

It is only accountable to its shareholders.

This indiscriminate mockery of immunities to IFIs, including the World Bank, must immediately end since lives matter more than profits.

Noreena Hertz, in her book The Debt Threat: The Story of Third World Debt commented on the problems of the third world debt and why it must be resolved soon if we are ever to see global stability.

She also demanded an end to the immunity provided to the IFIs like the WB and the IMF: “Where professional negligence or lack of due diligence in lending can be proven, a claimant, whether a village, an individual, or a nation, must be able to hold the institutions liable in the same way that a bank can be held liable by law.”

Sushovan Dhar is an activist. He is based in Kolkata.