The Inga III dam would be the first in a series of hydroelectric installations along the Congo River, collectively referred to as the Grand Inga project. Credit: alaindg/GNU license

By Carey L. Biron
WASHINGTON, Feb 11 2014 (IPS)

Watchdog groups here are warning that a deal has been struck that would see Chinese investors fund a massive, contentious dam on the Congo River, the first phase of a project that could eventually be the largest hydroelectric project in the world.

Discussions around the Inga III dam proposal, in the Democratic Republic of Congo (DRC), have been taking place in some form for decades. They have picked up speed over the past year, however, under the auspices of the World Bank, the Washington-based development funder.“Handing the project over to a private investor will make it even less likely the country’s poor people would benefit from the project.” -- Peter Bosshard

On Tuesday, the bank’s board of directors were to have voted on an initial 73-million-dollar loan for the project, to be offered through the International Development Association (IDA), the institution’s programme for the world’s poorest countries. Last week, however, that vote was abruptly postponed.

Now, civil society groups are reporting that the project may be going forward instead under the World Bank’s private-sector arm, the International Finance Corporation (IFC), with the backing of Chinese investors. Yet critics, who have long worried about the local social and environmental impact of the Inga project, worry that greater involvement by the private sector will result in skewed prioritisation of beneficiaries.

“Handing the project over to a private investor will make it even less likely the country’s poor people would benefit from the project,” Peter Bosshard, policy director for International Rivers, an advocacy group, said Monday.

“The IFC deal was arranged behind closed doors without any accountability to the DRC parliament, the World Bank’s board of directors, or civil society … Non-transparent deals such as the Inga 3 Dam are the best recipe for deepening corruption in the DRC. They will not strengthen the public accountability that is necessary for social and economic development.”

Citing multiple sources within the bank, Bosshard says the decision to change the Inga III funding modality appears to have been made between high-level officials from the World Bank, the IFC and USAID, the U.S. government’s main foreign-aid arm, reportedly bypassing the bank’s board of directors. Thus far, none of these institutions have publicly confirmed any deal.

“The World Bank Group is fully committed to supporting the Inga III hydropower project, which has the potential to improve the lives of millions of Africans,” a bank spokesperson told IPS in a statement. “We postponed presenting to our Board a Technical Assistance package related to the design of the project’s operation, but the project has not been cancelled, and our commitment to Inga III is unchanged.”

Primary beneficiaries

As currently envisioned, the Inga III dam would be the first in a series of hydroelectric installations along the Congo River, collectively referred to as the Grand Inga project. This would include a single 145 metre dam, which would flood an area known as the Bundi Valley, home to around 30,000 people.

The full project could provide up to 40,000 megawatts of electricity, a power potential that has been eyed hungrily by the rest of the continent for decades. While DRC’s chaotic governance has stymied forward progress on the project for years, the Grand Inga vision received an important boost last year when the South African government agreed to purchase a substantial amount of power produced by Inga III.

The 12-billion-dollar dam is now supposed to be built by 2020 and, according to Congolese government estimates from November, would produce around 4,800 MW of electricity. Of this, 2,500 MW would go to South Africa while another 1,300 MW would be earmarked for use by mines and related industry in the province of Katanga.

“There is little indication that the dam development schemes underway would address the issue of access to electricity for the population at-large; industrial users stand to be the primary beneficiaries,” Maurice Carney, executive director of Friends of the Congo, an advocacy group here, told IPS.

“Only 10 percent of Congo’s population has access to electricity and the situation is even worse for rural population, where only 1 percent has access to electricity. For a country like the DRC that is endowed with a plethora of alternative energy options, smaller-scale renewable energy technologies would be the best way forward.”

Carney and others are calling for a cumulative assessment of the Grand Inga scheme, to include study of all social and environmental impacts. Indeed, these have been longstanding concerns, but now some development advocates worry that greater private sector involvement in the Inga III project will further exacerbate such issues.

“We have questions about whether the scheme can deliver any development at all in the hands of the private sector,” Joshua Klemm, manager of the Africa programme at the Bank Information Center, a watchdog group here that focuses on the World Bank, told IPS.

“For good or bad, if this project belongs to the Congolese government, there’s at least some hope to expand electricity access in the country. That would go out the window if we’re talking about a purely private sector project.”

Duelling U.S. stances

As the Inga III project picked up momentum in recent months, USAID too expressed its interest in the proposal. The agency’s administrator, Rajiv Shah, visited the Inga III dam site in mid-December, and stated that the proposal could be added to a new, large-scale initiative by the United States to significantly increase electrification across Africa.

Although USAID was unable to comment for this story by deadline, any involvement by the agency in brokering a deal with the IFC would be interesting. Just last month, the U.S. Congress passed a landmark new law requiring the U.S. Treasury to formally vote against multilateral funding for large-scale hydroelectric projects in developing countries.

The new provisions, contained in a huge appropriations bill funding the federal government, impact both on bilateral U.S. funding through agencies such as USAID, as well as on the significant contributions that the United States provides to multilateral development institutions, particularly the World Bank. (The U.S. Treasury was unable to comment by deadline.)

“Under the [appropriations] language, the United States will have to oppose the Inga III dam at the IFC as much as it would have had to do this if it were an IDA project,” International Rivers’ Bosshard told IPS. “There’s no difference there, but it is ironic that the USAID administrator would have pushed the deal.”

Washington will be barred from offering any bilateral assistance that could facilitate certain rights abuses, extractive industries or industrial logging in primary tropical forests. Credit: Bigstock

By Carey L. Biron
WASHINGTON, Jan 28 2014 (IPS)

Development activists and rights watchdogs are applauding a surprise strengthening of environmental and human rights policies governing U.S. development funding and overseas financial assistance.

Under the new provisions, the United States will be required to vote against multilateral funding for large-scale hydroelectric projects in developing countries, as well as push for redress of rights violations resulting from development initiatives by international financial institutions.“We’ve watched donor agencies such as USAID turning a blind eye to blatant human rights allegations in these areas." -- Anuradha Mittal

In addition, Washington will be barred from offering any bilateral assistance that could facilitate certain rights abuses, extractive industries or industrial logging in primary tropical forests.

The new mandates constitute just a tiny part of a massive bill, signed into law on Jan. 17, that funds the federal government through the end of this financial year. But supporters say the provisions could have both direct implications for specific situations and pending projects as well as longer-lasting impacts on development funding and approaches.

“The U.S. Congress has taken an important step toward bridging the gap between U.S. government policy on development finance and its human rights policy in requiring the U.S. government to press international financial institutions to provide compensation or otherwise remedy human right violations linked to their projects,” Jessica Evans, a Washington-based researcher on international financial institutions at Human Rights Watch, told IPS.

The new provisions, reportedly sponsored by Senator Patrick Leahy, will impact both on bilateral U.S. funding through agencies such as USAID, as well as on the significant contributions that the United States provides to multilateral development institutions, particularly the World Bank.

U.S. representatives will now be required to vote against multilateral funding for the construction of major hydroelectric projects, likely defined as anything over 15 metres high. Large dams have been criticised by development experts for decades, given their often inevitable impact on local communities and environmental systems.

However, the World Bank recently unveiled a new institutional strategy that may include a prominent focus on big dams. Thus, the Leahy provisions could prove to be an impediment to the Washington-based development funder’s vision.

“I applaud the U.S. Congress for directing the U.S. Treasury to oppose the financing of large dam projects through the World Bank and other financial institutions,” Deborah Moore, a former commissioner on the World Commission on Dams and current chair of the board of International Rivers, a global watchdog group, said in a statement.

“I think the message now is clear: there are better options for meeting communities’ needs for electricity that are cheaper and sustainable.”

International Rivers says the new law will require the United States to oppose current and pending hydro projects on the Indus and Congo rivers, as well as in Guyana, Laos and Togo.

The appropriations bill also requires that the U.S. push multilateral funders, particularly the World Bank, to incorporate new external oversight and evaluation mechanisms for each project they undertake, to ensure that stipulated safeguards are being followed.

According to a statement released to the media and published over the weekend, the World Bank is currently analysing the scope of the new provisions. Yet future U.S. funding for the bank could now be contingent on this new requirement.

“The overall sentiment in provisions calling for stricter oversight and urging [World Bank President Jim Kim] to look outside the World Bank walls to better address the issues plaguing the institution is at the core of civil society advocacy,” Josh Lichtenstein, director of campaigns for the Bank Information Center (BIC), a watchdog group here, told IPS.

“We welcome the use of the legislative process to send strong messages to the [international financial institutions], particularly in pushing them to adopt policies and procedures that are better in line with highest international standards and in implementing stricter oversight to ensure those standards are upheld.”

Official acknowledgement

Other provisions within the new appropriations bill mandate actions regarding specific ongoing or pending projects that have garnered criticisms over rights abuses, particularly in Cambodia, Guatemala and Ethiopia.

In 2010 in Cambodia, families in northern Phnom Penh were illegally evicted from their lands for a major development project that included filling a large lake, Boeung Kak, with sand. Cambodia is a World Bank client, and the evictions directly contravened bank standards.

In Guatemala, the construction of a large hydroelectric dam on the ChixoyRiver during the early 1980s displaced 3,500 indigenous peoples, leading to tensions that resulted in the massacre or rights abuses of some 400 people. That project was partially funded by the World Bank.

Under the new legislation, the U.S. representative at the World Bank (and, in the case of the Chixoy dam, the Inter-American Development Bank) will now be required to offer regular updates on progress on reparations and redress surrounding both of these situations.

“We began to work for reparations in 1995 and today we heard the great news,” Carlos Chen Osorio, director for the Coordination of Affected Communities by the Chixoy Hydroelectric Plant, an advocacy group, said in a statement. “We feel that we are not alone and are very grateful to all those that have committed to work on this.”

In Ethiopia, meanwhile, the United States itself has come under criticism for helping to bankroll a major government development project that has included forcibly moving pastoralists from traditional lands in the Lower Omo and Gambella regions, to be settled in villages. The new law now disallows U.S. monies from either directly or indirectly funding forced displacement in these areas.

“We’ve watched donor agencies such as USAID turning a blind eye to blatant human rights allegations in these areas,” Anuradha Mittal, executive director of the Oakland Institute, a watchdog group that has carried out multiple investigations on forced displacements in Ethiopia, told IPS. (USAID did not respond to request for comment by deadline.)

“It’s a real relief now to see the U.S. Congress offering true acknowledgement that these reports of forced evictions are not mere allegations,” she continues. “Now that they’ve taken a stand, however, we need to ensure that this is not just language but rather is fully implemented.”

Indeed, civil society interest will now focus on how U.S. and international agencies implement these new provisions. While U.S. law offers a new opportunity to mitigate adverse impacts of development funding, it is unclear the extent to which that tool will be used.

“While we celebrate this achievement, we are cautious in our expectations,” BIC’s Lichtenstein says, “as unscripted and unfunded mandates, at their best, often indicate the start of serious discussion and better coordination, rather than systematic change.

World Bank President Jim Kim has formally put forward a major new proposal to refocus both the bank’s priorities and how it pursues those aims.

World Bank President Jim Kim. Credit: NBruschi/cc by 3.0

The new strategy, which would reorganise and harmonise the World Bank’s sprawling global operations, offers the first major realignment of the Washington-based development lender in nearly two decades. It also embodies the most significant move yet by Kim, who took over the top job in July 2012, to put his mark on the bank’s operations.

The strategy will be formally discussed by the bank’s Development Committee, made up of 25 foreign and development ministers, on Saturday. Joint annual meetings of the World Bank and International Monetary Fund (IMF) are taking place here in Washington this week.

“This strategy says a lot of the right things, particularly suggesting that the World Bank Group is going to operate as one to a greater extent than it does now,” Brett House, a senior fellow at the Centre for International Governance Innovation (CIGI), told IPS. “That makes a lot of sense, as the bank has increasingly become a Balkanised, siloed network of organisations.”

With six institutions under the umbrella of the World Bank Group, each with largely autonomous country operations, aligning strategies has always been extremely difficult. Further, recent years have seen a strengthening impression that the institution, which lends around 30 billion dollars every year, is spreading itself too thin.

“The strategy talks a lot about being country-led, more carefully curated, and more strategic. That’s important because what you’ve seen in past country engagements is incredible sprawl in terms of the number of objectives and issues that individual World Bank country teams have taken on,” House notes.

“So we can welcome the strategy’s expressed desire to become more parsimonious, engaging in a smaller number of strategic projects in each country.”

On Monday, the bank’s lead finance official announced a proposed budget trim of four hundred million dollars, to take place over the next three years. If approved later this week, that would constitute an eight percent cut in the institution’s five-billion-dollar annual operating budget, and World Bank employees are reportedly bracing for layoffs.

Nine percent by 2020

The strategy finalises two central aims for a redefined World Bank, first introduced by Jim Kim earlier this year: reducing extreme poverty (those living on less than 1.25 dollars a day) to less than three percent by 2030, and nurturing income growth among the poorest 40 percent in each country.

On Wednesday, Kim announced an additional interim goal, reducing global poverty levels to nine percent by 2020. That would mean lifting an additional 510 million people out of poverty by the end of the decade, something the bank says is possible only if developing countries maintain strong growth rates in coming years.

“Ending extreme poverty is achievable in less than a generation’s time,” Kim said Wednesday. “But we need strong growth, committed political leaders, and a growing social movement that keeps pushing all of us to focus like a laser beam on the result all of us want.”

In order to achieve such a goal, the bank will be retooling the model by which it engages with countries as well as focusing less on lending and more on technical expertise and “knowledge services”. It will also be directing its energies and tightened budgets toward “transformational” projects, a reference that has some critics worried about a renewed focus on large-scale infrastructure.

This new set of goals will also lead to a targeting of remaining pockets of poverty in middle-income countries, though some sees this as a misplaced priority.

“The strategy raises the need to clarify the bank’s role in emerging middle-income countries that have access to international capital markets, but it doesn’t follow through,” CIGI’s House says. “It misses the opportunity to focus the bank’s financial resources on the world’s lowest-income countries, and restrict its engagement in middle-income countries to technical assistance and advice.”

Details to follow

While the scope and potential of the new strategy proposal has received generally positive initial responses from development scholars and civil society practitioners, much depends on the technical details of how these reforms would be implemented.

First off, the changes are widely expected to be met with some level of resistance within the institution (Kim told the media earlier this week he has received “mixed” reactions). More to the point, the 40-page strategy as it currently stands offers a soaring outline and rationale for broad reforms but little in the way of detail on operationalisation.

“Many of the change elements underpinning the Strategy will be rolled out in the coming months, but some may not be fully implemented for 1-2 years,” the paper states, noting that a “forthcoming Implementation Paper will describe the needed changes in structures, systems, and business processes, as well as the timetable and actions for carrying them out.”

For the moment, that lack of detail has led some civil society voices to offer only cautious support.

“We’ll be looking for what this reorganisation does to staffing and budgeting for social and environmental sustainability,” Mark Rentschler, director of campaigns at the Bank Information Center (BIC), a watchdog group, told IPS.

“There are conflicting signals in what you read in strategy. On the one hand, it says that [social and environmental] safeguards are valuable, including for clients, but at the same time it says the bank needs to get projects out more quickly and not be too bureaucratic.”

Those two aims don’t necessarily go together, Rentschler warns. He expresses concern that the strategy offers few details yet on how exactly this new efficiency will be attained.

“At the heart of the safeguards is this idea of public consultation. But ensuring, say, that documents are made available and that the public is given adequate opportunity to understand them – that builds in time,” he says.

“It bears noting that this strategy was developed without much consultation with civil society. So on the one hand we’ll be looking to make sure the safeguards aren’t mere afterthoughts. On the other, we certainly hope that whatever gets approved will lead to more consultation on how this strategy and reorganisation gets implemented.”