International Financial Institutions (IFIs) affect the lives, livelihoods, and human rights of millions of people worldwide. Multilateral Development Banks (MDBs) - such as the World Bank and the Inter-American Development Bank - are a subset of IFIs that are comprised of State members. The multilateral development bank’s lending programs, development practices, and policy prescriptions have far-reaching economic, social, and environmental implications. 

Despite the adverse impacts that often result from MDB-financed activities, the multilateral development banks are not held accountable to any applicable law concerning the protection of human rights. At present the MDBs are only subject to the legal restraints of their own mandates – the charters or articles of agreement that created them and regulate their activities- which do not include specific human rights requirements. As a consequence, these powerful international financial institutions operate under a virtual situation of lawlessness. This situation of lawlessness has meant that many MDB activities have resulted in grave human rights violations, such as the forced resettlement of indigenous peoples and subsistence farmers. Many extractive industry, large-scale infrastructure, and agri-business projects have devastated local ecosystems and subsistence economies, and continue to pose great dangers to the well-being of indigenous peoples and other project-affected communities. Examples such as the Chixoy Dam in Guatemala and the Camisea project in Peru exemplify the dangers MDB projects can pose to communities when they are insufficiently regulated, either by internal or external mechanisms. 

The Need for Legal Standards

Civil society, local communities, and indigenous peoples have repeatedly called on MDBs to take human rights and environmental concerns into account. Many MDBs have responded by developing voluntary policy statements which articulate safeguards related to social and environmental considerations. Most MDBs have also established their own internal mechanisms tasked with reviewing allegations that certain project-related MDB policies have been violated. Nevertheless, these voluntary policy statements, and internal complaints mechanisms, are proving inadequate for systematically addressing human rights and environmental concerns. Voluntary safeguard policies instituted by the MDBs themselves are regularly disregarded by the MDBs since no external mechanisms exist to hold MDBs accountable. As a result, indigenous peoples and local communities continue to suffer the consequences of irresponsible development practices financed by the MDBs.

Developing new legal standards that apply directly and explicitly to MDBs, and to International Financial Institutions in general, are sorely needed to fill the serious gap in the existing legal framework. Creating binding legal standards to govern MDB activities would help further legal accountability and the rule of law, and would help protect communities from destructive development practices that threaten their cultures, livelihoods, and environments.

Moving from voluntary policies to development of new human rights standards.

For many years the Indian Law Resource Center has worked to ensure that the World Bank and the Inter-American Development Bank adopt voluntary operational policies regarding indigenous peoples that safeguard the rights and interests of indigenous peoples, particularly their right to self-determination and their right to collective ownership of their lands, territories and natural resources. 

Within the last year the World Bank revised its Operational Policy on Indigenous Peoples (OP 4.10) , the International Financial Corporation developed a new Performance Standard on Indigenous Peoples , and the Inter-American Development Bank developed its first ever Operational Policy on Indigenous Peoples. During the revision and development of these respective policies, the Indian Law Resource Center worked with indigenous peoples and other NGO partners to educate these institutions about the need for their policies to reflect the rights of indigenous peoples guaranteed under international human rights law.

Our advocacy for stronger internal operational policies at the Banks for projects that impact indigenous peoples has been extremely important. We have made some notable progress. Nevertheless, the operational policies alone will not be sufficient for protecting the rights of indigenous peoples. As a result, the ILRC is working with organizations and communities toward the creation of new human rights standards that would hold the banks accountable to external accountability mechanisms.

For further information about the respective operational policies on indigenous peoples and to learn more about the process for creating new human rights standards applicable development banks, please click on the appropriate links below. 

Operational Policies on Indigenous Peoples

• World Bank
• International Finance Corporation
• Inter-American Development Bank

Other Documents Pertinent to IFI Projects that Impact Indigenous Peoples

• Akwé: Kon Voluntary Guidelines (Convention on Biological Diversity Guidelines)

Relevant Articles and Documents Regarding the Rights of Indigenous Peoples

• Indigenous Peoples Right of Free Prior Informed Consent with Respect to Indigenous Land, Territories, and Natural Resources (Indian Law Resource Center Position Paper)

Links
Bank Information Center (www.bic.org)
IFIwatchnet (www.ifiwatchnet.org)
Global Rights Rules Responsibilities (www.grrr-now.org)