PHA-Exchange> bringing the Bank to trial?

[Nance (PHM)]

An article published by our friend in struggle, Eric and translated by my very dear friend and member of PHM here, Vicki Briault.
Who wants to be the first?
Nance

Eric Toussaint
cadtm at skynet.be
 <http://www.cadtm.org/> www.cadtm.org
 
The World Bank Held to Account
 
Using the Law to Bring about Justice
 
Eric Toussaint[1] (CADTM)
 
 
Question 1: Is it possible to sue the World Bank?
 
Answer: Contrary to popular opinion, the World Bank (WB) is not entitled
to immunity either as an institution or as a legal entity. Section 3 of
Article VII of the Charter (articles of agreement) explicitly states
that the WB may be taken to court under certain conditions. For example,
the WB may be tried by a national court of justice in countries where it
is represented and/or has issued bonds[2]. 
The possibility of bringing an action against the WB has existed since
its foundation in 1944 and has never been modified until now for the
simple reason that the WB finances the loans it grants to
member-countries by borrowing (by issuing bonds) on the finance markets.
Originally, these bonds were bought by the big, mainly North-American,
private banks.  Now, other institutions, including pension funds and
trade unions, buy them. 
The WB's founder countries estimated that they would not be able to sell
the Bank's bonds unless they guaranteed buyers the right to sue the Bank
in case of default.  This is why there is a fundamental difference
between the immunity status of the WB and the IMF.   The WB has no
immunity since it makes use of banking services and finance markets in
general.  No bank would give the WB credit if it had immunity.   On the
other hand, the IMF can have immunity since it finances its loans itself
using the money paid in by its members in the form of pro rata shares.
If the WB does not enjoy immunity, it is not for humanitarian reasons,
but to provide creditors with the requisite guarantees. 
 
It is therefore perfectly possible to sue the WB in the numerous
countries where it has offices.  It is possible in Djakarta or in Dili,
the capital of East Timor, in Kinshasa, Brussels, Moscow or Washington,
since the WB is represented in all those countries.
 
Question 2: Why sue?
 
Since the WB has been making loans[3], a good portion of them has been
used to carry out policies detrimental to the welfare of hundreds of
millions of citizens.   How so? The WB has systematically given priority
to loans for big infrastructures such as huge dams[4], investment in
industries that extract raw materials (for example, open-cast mines,
numerous pipe-lines – of which the most recent are the Chad-Cameroon and
the Baku-Tbilisi-Ceyhan[5] pipelines), agricultural policies in favour
of “all-export” at the expense of food security and food sovereignty,
and power stations which devour tropical forests.
 
Moreover, the WB has frequently come to the aid of dictatorships known
to be guilty of crimes against humanity: there were the dictatorships of
the Southern Cone of Latin America from the 60s to the 80s; numerous
African dictatorships (Mobutu from 1965 until his fall in 1997, the
Apartheid regime of South Africa); regimes of the former Soviet Bloc
such as the Ceaucescu dictatorship in Romania; those of Southeast Asia
and the Far East, such as that of Marcos from 1972 to 1986 in the
Philippines, Suharto from 1965 to 1998 in Indonesia, South Korea
(1961-1981), Thailand (1966-1988), up to and including today's
dictatorship in China. 
 
At the same time the WB, along with other actors, has contributed to the
systematic destabilization  of progressive and democratic governments by
withdrawing all aid: this was the case for the Sukarno government in
Indonesia until he was overthrown in 1965; the governments of Juscelino
Kubitschek (1956-1960) followed by Joao Goulart (1961-1964) in Brazil,
finally overthrown by a military coup d'état; Salvador Allende's
government in Chile (1970-1973), and so on.
 
Next there are all the loans made by the WB to the colonial powers
(Belgium, Great Britain, France, Italy, the Netherlands…) to enable them
to exploit the natural resources of the countries they ruled until the
60s.  All those loans were later included in the external debt of the
States when they became independent.  For example, the independent State
of Congo had to finish paying off the debt incurred by Belgium in its
name.  The same thing happened for Kenya, Uganda, Nigeria, Gabon,
Mauritania, Algeria and Somalia for the debts contracted in their names
by the colonial governments.  
 
Then there are the structural adjustment loans that the WB has granted
since the 70s.  These loans are not destined for any particular economic
project - but are intended to help implement global policies with the
ultimate aim of completely opening up the economies of the "beneficiary"
countries to investments and imports, mainly from the principal
shareholders of the WB. This means that the WB supports policies
denationalising the assisted countries to the advantage of a few of its
members. Thus a handful of industrial powers impose their wishes on the
majority of the inhabitants and the countries of the planet.  The fact
that all their remedies - whether long-term structural remedies or the
short sharp shock type - do more harm than good has been demonstrated
repeatedly in the string of crises that began with the Tequila crisis
that hit Mexico in 1994. The Bank's new priorities, such as the
privatization of water and land, along with its recent refusal to apply
the recommendations of the independent Commission on Extractive
Industries, clearly indicate that the Bank has no intention of changing
course and that new social catastrophes are on the horizon - powerful
tsunamis caused by the cataclysmic interventions of the WB!
 
Question 3. Who might bring an action?
 
One might imagine that associations representing the interests of people
adversely affected by WB loans and/or by its support for dictatorships
could bring an independent action and sue the WB for damages in national
courts. One might also imagine that holders of WB bonds - not only
bankers, but also trade unions - could sue the Bank over the use it
makes of the money it borrows from them.  There is no guarantee that
such lawsuits would be successful, but it is hard to see why citizens'
movements should not use their right to hold the WB accountable for its
acts.  It is inconceivable that the nefarious practices of an
institution like the WB should not one day be sanctioned by a decision
of justice. 
 
Question 4. Why have no such procedures ever been initiated?
 
The clause of the WB Charter (Article VII, Section 8) which grants
immunity to the decision-makers and to officials in the exercise of
their duties has tended to obscure the possibility of suing the WB as a
legal entity (Article VII, Section 3, see note 1 of this article). Yet
it is more important to be able to demand that the WB answer for its
actions as an institution than to simply hold its executives to account.
Indeed, the same clause of its Charter (Article VII, Section 8) provides
for the WB to decide to remove the immunity protecting its directors and
officials.  Actions could also be envisaged against high-ranking
officials after they have left office. 
Another reason why so far there have been no actions brought against the
WB is that it has taken a very long time for the truth to emerge, and
for people to realise just how systematic and generalized the
reprehensible practices of the WB are.  In the eyes of the citizens, it
is often their national governments that are seen to be responsible for
the policies demanded by the WB, so its true role passes unnoticed. 
 
 
[1] Eric Toussaint is the President of the CADTM (Committee for the
Abolition of the Third World Debt) Belgium, and author of Your Money or
Your Life: the Tyranny of Global Finance Pluto, London 1998, 340 p.
Third edition to be published in May 2005 by Haymarket in Chicago;
co-author with Damien Millet of  The Debt Scam, VAK Publication, Mumbai,
2003 and  Who Owes Who? 50 Questions about World Debt, Zedbooks, London,
2004. For more information:  <http://www.cadtm.org/> www.cadtm.org
2 Section 3 of Article VII:  "Actions may be brought against the Bank
only in a court of competent jurisdiction in the territories of a member
state in which the Bank has an office, has appointed an agent for the
purpose of accepting service or notice of process, or has issued or
guaranteed securities."
3 The first loan dates back to 1947.
4.  According to the report of the Commission on Large Dams, 60 to 80
million people have been displaced as a result of the construction of
large dams.  In a great  many cases, the rights of these people in terms
of compensation and resettlement have not been respected.  
5 According to the report of the Commission on Extractive Industries
published in December 2003,  a large portion of the projects financed by
the WB have had negative effects on the populations of the countries
concerned.
 
Translated by Vicki Briault
 
 
 
 
  _____  

[1] Eric Toussaint is the President of the CADTM (Committee for the
Abolition of the Third World Debt) Belgium, and author of Your Money or
Your Life: the Tyranny of Global Finance Pluto, London 1998, 340 p.
Third edition to be published in May 2005 by Haymarket in Chicago;
co-author with Damien Millet of  The Debt Scam, VAK Publication, Mumbai,
2003 and  Who Owes Who? 50 Questions about World Debt, Zedbooks, London,
2004. For more information: www.cadtm.org <http://www.cadtm.org/> 
[2] Section 3 of Article VII:  "Actions may be brought against the Bank
only in a court of competent jurisdiction in the territories of a member
state in which the Bank has an office, has appointed an agent for the
purpose of accepting service or notice of process, or has issued or
guaranteed securities."
[3] The first loan dates back to 1947.
[4] According to the report of the Commission on Large Dams, 60 to 80
million people have been displaced as a result of the construction of
large dams.  In a great  many cases, the rights of these people in terms
of compensation and resettlement have not been respected.  
[5] According to the report of the Commission on Extractive Industries
published in December 2003,  a large portion of the projects financed by
the WB have had negative effects on the populations of the countries
concerned.