Tag Archives: governance

Eurodad briefing paper: The UNCTAD principles on promoting responsible sovereign lending and borrowing

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Money matters for development. How to make financing more responsible and ultimately a more effective driver of development has been a key concern for the development community in recent years. In 2009, Eurodad released the first Responsible Finance Charter, outlining a comprehensive set of principles on how to regulate international finance better in order maximize its benefits while minimizing the harm it could do. This was comprehensively updated in 2011 to include private as well as public finance. Last year, the United Nations under the leadership of UNCTAD released the Principles on Promoting Sovereign Lending and Borrowing which are the first comprehensive set of principles on the subject from official side.

This briefing paper analyses the UNCTAD Principles and compares them with the Eurodad Responsible Finance Charter.  It finds that the UNCTAD Principles have started to fill the gaping hole in the international financial architecture caused by the lack of institutions to promote responsible financing. Among their many benefits is that the UNCTAD Principles make clear that state officers dealing with debt – borrowing or lending – are agents of citizens and obliged to act as such, in an accountable and transparent manner. They also promote the principle of co-responsibility of both parties – borrowers and lenders – for prevention and solution of debt crises that can result from irresponsible lending. As such, the UNCTAD principles stand out positively when compared to the debt management work done by creditor institutions such as the World Bank and the IMF, who tend to put the blame for wrongdoings on the borrower side, and make their populations pay the price for adjustments.

We also find, however, that limited political risk appetite has constrained the Principles and reduced their value. Compared to Eurodad’s Charter, the scope of the UNCTAD Principles is narrow as they cover just sovereign loans, neglecting private finance. Significant gaps remain, for instance in the area of effective debt work-out mechanisms. Implementation will be a challenge as so far neither hard nor soft accountability mechanism exist that would drive their implementation.  Just 13 of the 193 UN Member States have so far formally endorsed the Principles, and even their actual compliance reamins unclear because it is not yet monitored. While the UNCTAD Principles signify an important step forward on the path to responsible financing, much work remains to be done to reach the goal. 

Download the briefing paper here

PRESS RELEASE: Appointment of next World Bank head: Campaigners demand fair selection process

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Joint media statement

Reacting to the announcement that Robert Zoellick is stepping down as World Bank President, a global coalition of campaigners has called for an open and merit-based process to elect the next World Bank leader, and for developing countries to determine the selection. 

The campaigners, including Oxfam, Eurodad and the African Forum and Network on Debt and Development (Afrodad), have also asked the US to announce that it will no longer seek to monopolise the Presidential position. A “gentlemen’s agreement” between Europe and the US dating back to World War II ensures that the President of the World Bank is always an American, and a European IMF Managing Director.

Elizabeth Stuart of Oxfam said: “The way the World Bank picks its president needs to change. The Bank only operates in developing countries, so any candidate not supported by a majority of these countries would plainly lack legitimacy.”

In an open letter to World Bank governors, the campaigners demanded that:

  • The new President is selected by a majority of World Bank member countries, not just a majority of voting shares – the majority of these are from low and middle-income countries.
  • The selection process is open to anyone to apply, with interviews held in public and with open voting procedures.
  • A clear job description and required qualifications is set out, and that these include a strong understanding and experience of the particular problems facing developing countries. 

Jeroen Kwakkenbos of Eurodad said: “The next World Bank chief can’t be selected in a behind-the-scenes carve-up. The second wave of global economic crisis is almost certainly going to start hitting poor countries very hard, very soon. The World Bank needs to be geared to respond with credible, legitimate leadership in place. The US should no longer seek to monopolise this position.”

Collins Magalasi of Afrodad said: “It’s a World Bank, not a US Bank. It needs the best candidate to get the job with support of wide Bank membership, not just the US”.

***

For information:

In Washington, DC: Caroline Hooper-Box Caroline.hooper-box@oxfaminternational.org Mobile: +1 202 321 2967
In New York: Jesse Griffiths jgriffiths@brettonwoodsproject.org Mobile: +44 7968 041 747
In London: Peter Chowla pchowla@brettonwoodsproject.org Mobile: +44 7877 596 893

Notes to editors

  • The World Bank’ Ministerial level executive board, the Development Committee, has endorsed an “open, merit-based and transparent” selection process.

The following are quotes from World Bank Development Committee communiqués:

October 2010 – “We reiterate the importance of an open, merit based and transparent process for the selection of the President of the World Bank Group.”

April 2010 – “We reiterate the importance of an open, merit-based and transparent process for the selection of the President of the World Bank Group.”

October 2008 – “There is considerable agreement on the importance of a selection process for the President of the Bank that is merit-based and transparent, with nominations open to all Board members and transparent Board consideration of all candidates”

  • Having the new World Bank president be selected on the basis of the support of a majority of both voting shares and member countries could be agreed by the Board, without any formal changes to the Bank’s articles of agreement. To make this work, countries would need to vote independently, not through their constituencies, and declare their support publicly.

World Bank President appointment: Choose the best candidate

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As Robert Zoellick announced that he is stepping down as World Bank President on 30 June, a global coalition of campaigners issued an open letter to World Bank governors calling for an open and merit-based process to elect the next World Bank leader, and for developing countries to determine the selection.

Open letter to all governors of the World Bank

15 February 2012

Dear Governors

Appointment of World Bank President

As you will soon have to make a decision about a successor to Robert Zoellick as World Bank President, we are writing to urge you to push for the selection of the best candidate through an open, merit-based, transparent process, and to ensure that developing countries play a central role in the selection process.

As you know, the Development Committee has endorsed an “open, merit-based and transparent selection process”, most recently in April 2011. This underscored previous commitments by the G20, and if implemented would mark a vitally important break with past practice. To ensure the selection of the best candidate, with the legitimacy gained from the support of the wider World Bank membership, not just a powerful minority of countries, we believe three things are essential.

First, the candidate must gain the open support from at least the majority of World Bank member countries, and from the majority of low and middle-income countries. As the Bank only operates in developing countries, and has most impact in low-income countries, any candidate that was not supported by these countries would seriously lack legitimacy. In addition to encouraging developing countries to nominate their own candidates, the best way to ensure that developing countries play a central role throughout the selection process is for the successful candidate to be required to gain the support of a majority of both voting shares and member countries. This need not require any formal changes to the Bank’s articles of agreement, but could simply be agreed by the Board, to build on the limited proposals agreed in April 2011. To make this work, countries would need to vote independently, not through their constituencies, and declare their support publicly. It is time for the US to publicly announce that it will no longer seek to monopolise the Presidential position.

Second, the selection process needs to be significantly strengthened. This should include: having a public application procedure open to anyone to apply; sufficient time to allow proper deliberation; interviews held in public; and open voting procedures.

Third, a clear job description and required qualifications should be set out, building on the short version outlined in 2011. Given that the World Bank has a mandate to focus on eradicating poverty and only works in developing countries, the new President should have strong understanding and experience of the particular problems facing those countries. The right candidate needs to be – and be seen to be – independent, and able to work with a variety of stakeholders, including civil society groups.

The World Bank needs serious and genuine reform. The selection of the new President is an essential place to start. We trust that you will take a leading role to ensure that promises for reform are honoured.

Yours sincerely

Endorsed by the following organisations

  1. AFRODAD (African Forum and Network on Debt and Development), Africa region
  2. Idasa – Economic Governance Programme, Africa region
  3. Jubilee Australia, Australia
  4. RESULTS International – Australia, Australia
  5. KOO, Austria
  6. Equity and Justice Working Group, Bangladesh
  7. VOICE, Bangladesh
  8. 11.11.11, Belgium
  9. CNCD – 11.11.11, Belgium
  10. Halifax Initiative, Canada
  11. IBIS, Denmark
  12. CEE Bankwatch, Europe Region
  13. Eurodad, Europe Region
  14. INKOTA-netzwerk, Germany
  15. WEED, Germany
  16. National Insurance Academy, India
  17. Public interest research centre, India
  18. INFID, Indonesia
  19. ActionAid International, international
  20. Americans for Informed Democracy, International
  21. CIDSE, International
  22. Civicius, International
  23. Gender Action, International
  24. ITUC, International
  25. New Rules for Global Finance Coalition, International
  26. Oxfam International, International
  27. Tax Justice Network, International
  28. WFM – Institute for Global Policy, International
  29. Debt and Development Coalition, Ireland
  30. CRBM, Italy
  31. JACSES, Japan
  32. Fundar, Centro de Análisis e Investigación, México
  33. Both Ends, Netherlands
  34. Norwegian Forum for Environment and Development, Norway
  35. The Norwegian Coalition for Debt Cancellation (SLUG)
  36. Changemaker
  37. Diakonia, Sweden
  38. Action For Global Health, UK
  39. Bond, UK
  40. Bretton Woods Project, UK
  41. CAFOD, UK
  42. Christian Aid, UK
  43. Compass, UK
  44. Fairtade Foundation, UK
  45. Health Poverty Action, UK
  46. HelpAge International, UK
  47. Jubilee Debt Campaign, UK
  48. new economics foundation, UK
  49. RESULTS UK, UK
  50. Stop AIDS Campaign, UK
  51. Center of Concern, USA
  52. Friends of the Earth US, USA
  53. Maryknoll Fathers and Brothers, USA
  54. RESULTS Educational Fund
  55. Sisters of St Joseph of Springfield, USA
  56. Ethical Markets Media, USA & Brazil

Endorsed by the following individuals:

  1. Donald Sherk
  2. Dr Robin Broad, International Development Program, American University
  3. Hazel Henderson
  4. David Shaman, B-SPAN Coalition