THE WORLD BANK’S EVOLVING CONCEPT OF GOOD GOVERNANCE AND

ITS IMPACT ON HUMAN RIGHTS

Doctoral workshop on development and international organizations

Stockholm, Sweden, May 29-30, 2010

Nicole MaldonadoPhD candidate

University of BonnLaw schoolGermany

TABLE OF CONTENTS

A. Introduction.............................................................................................................3

B. The Bank’s notion of good governance................................................................3

1. Origins of the concept...........................................................................................4

2. Contents of good governance................................................................................5

a) Public sector management.................................................................................5

b) Accountability...................................................................................................6

c) Legal framework for development....................................................................8

d) Transparency and information...........................................................................9

3. Corruption............................................................................................................10

4. Participation.........................................................................................................11

5. Résumé................................................................................................................12

C. Good governance and human rights....................................................................13

1. Human rights in the Bank’s concept of good governance...................................13

2. The World Bank as specialised agency of the United Nations...........................19

E. Conclusion..............................................................................................................22

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A. Introduction

This paper analyses the World Bank’s notion of good governance and how it has

changed over the past 20 years, focussing especially on the perception of human rights

by the Bank. It is based on a PhD thesis in Public International Law in progress.

The concept of good governance has been on the agenda of development

institutions now for more than 20 years and it has become indispensable in development

co-operation. The term was introduced in the development discussion by a World Bank

study, which focussed on the role of the state in the development process. With this new

view on the state and its overall performance, various new topics became important for

the work of development institutions as the World Bank, e.g. the negative effects of

corruption, the need for participation of the population and also the importance of

human rights.

The new focus on the performance of a state was combined under the term ‘good

governance’. The contents of this concept were adressing the way power is exercised in

the management of a country’s affairs.

This paper analyses the evolution of the World Bank’s concept of good

governance, with special regard to human rights within the good governance agenda.

The role the World Bank plays in the enforcement of human rights will be highlighted.

Finally, short reference will be made to the importance of international economic

agreements for human rights.

B. The Bank’s notion of good governance

This section of the paper describes the origins of the debate on good governance

and the evolution of the concept since its emergence more than 20 years ago. Special

attention is put on the contents of good governance and the expansion of the concept to

principles as the fight against corruption and participation. The role of human rights

within the good governance agenda will be discussed separately in the third section of

the paper.

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1. Origins of the concept

The concept of good governance emerged at the end of the 1980s, at a time of

unprecedented political changes. The collapse of the Berlin wall on 9 th November 1989

set off the desintegration of the Soviet Union which as a consequence thereof also led to

the decay of the political and economic alliances of the Eastern bloc. These political

changes created the breeding ground and gave way for a serious discussion on how a

state has to be designed in order to achieve (economic) development, i.e. a discussion

on good governance.

The 1989 World Bank Study “Sub-Saharan Africa – from Crisis to Sustainable

Growth” analysed the development problems in Sub-Saharan Africa. In the 1980s, the

economic performance of the countries in the region had worsened despite the

implementation of the Bank’s structural adjustment programs (SAP’s). The SAP’s

introduced conditionality on a marcoeconomic level into the Bank’s lending activities.

At the same time, the Bank changed its lending policy from project financing to

program financing.1

In the 1989 study the term “governance” was first used to describe the need for

institutional reform and a better and more efficient public sector in Sub-Saharan

countries. The former president of Senegal, Abdou Diouf summarised these findings:

“Africa requires not just less government but better government”.2

The Africa-study defined governance as “the exercise of political power to

manage a nation’s affairs”. The concept of governance was further developed in the

Bank’s 1992 publication “Governance and Development”. In this publication,

governance was defined as “the manner in which power is exercised in the management

of a country’s economic and social resources for development”.3 Two years later, the

Bank substantiated this definition:

„Governance is epitomized by predictable, open, and enlightened policymaking

(that is, transparent processes); a bureaucracy imbued with a professional ethos;

1 This change was critical because the World Bank’s articles of agreement only provide for project financing, see art. III sec. 4 (vii): Loans made or guaranteed by the Bank shall, except in special circumstances, be for the purpose of specific projects of reconstruction or development. The permissability of program financing is explained by Shihata 1991, pp. 25 et seq.2 World Bank 1989, p. 55.3 World Bank 1992, p. 1.

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an executive arm of government accountable for its actions; and a strong civil

society participating in public affairs; and all behaving under the rule of law”.4

More than 20 years later, these definitions still represent the basis of the Bank’s

perception of good governance.

The 1989 study on Sub-Saharan Africa introduced governance without explicitly

referring to the connotation “good”. It was only in the foreword, that former World

Bank president Conable used the term “good governance”, referring to it as a “public

service that is efficient, a judicial system that is reliable, and an administration that is

accountable to its public”.5 In following publications the Bank firstly avoided the

frequent use of the word “good” in connection with governance. According to

Frischtak6 a reason for this reluctance could have been that the use of the adjective

“good” referred to a subjective view on the performance of a state and that

interpretation of the meaning of “good governance” could vary.7 Nevertheless, the Bank

started using the term “good governance” more and more frequently.

2. Contents of good governance

Public sector management, accountability, a legal framework for development

and transparency and information have been initially identified as core elements of

governance. While the topic of public sector management (PSM) had already been on

the agenda of the World Bank before, the other elements of governance had to be filled

with content. Furthermore they had to be reconciled with the prohibition of political

activities laid down in the Bank’s Articles of Agreement (see below).

a) Public sector management The issue of public sector management referred to the classical field of work of

the Bank, i.e. public expenditure management, civil service reform and public

enterprises, to sum things up: improvement in efficiency of public institutions. Special

attention within the topic of public expenditure management was put on public

investments, budget planning concerning operation and maintenance, and on

strengthening the budgeting process. Civil service reform in context of the good

governance agenda meant in principle assistance to borrower countries in their efforts to 4 World Bank 1994, p. vii.5 World Bank 1989, p. xii.6 Frischtak, p. 11 ref. 11.7 See also van Dok who discusses the „moral in the title“ in good governance.

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“redimension” the state and “help the affected borrower countries manage less but

manage better”.8 Reform of public enterprises included privatisation of those public

enterprises that were not commercially viable, improving the market and competitive

conditions, and the reform of co-operation mechanisms between public enterprises and

the governments in order to strengthen the management of public enterprises and so

give less opportunity for politically motivated influence.

This concept of public sector management reform are still relevant today. The

Governance Indicators of the World Bank Institute define “government effectiveness”

as: “measuring the quality of public services, the quality of the civil service and the

degree of independence from political pressures, the quality of policy formulation and

implementation and the credibility of the government’s commitment to such policies”.9

b) Accountability Accountability, by contrast, constituted an innovation in the Bank’s sphere of

action and has been described as being “at the heart of governance”.10 In the beginning

of the governance debate, accountability was described as “holding public officials

responsible for their actions”.11 Another description of the contents of Accountability

was: “Accountability (...) has to do with holding governments responsible for their

actions. At the political level it means making rulers accountable to the ruled, typically

through the contestability of political power”.12

According to these definitions, accountability works in two directions: On one

hand there is an internal effect within public institutions regarding financial

accountability and the creation of internal control mechanisms. This is very much

related to the topic of PSM as explained above. On the other hand, there is also an

external effect of accountability which relates to involvement of the population. The

internal effect of accountability is referred to as “horizontal accountability”, the external

effect as “vertical accountability”.

In principle, the Bank followed Hirschmann’s concept of “exit and voice”,

which had been further developed by Paul who applied the concept on accountability.

8 World Bank 1991, p. 14.9 Kaufmann et al. 2008, p.7.10 World Bank 1994, p. 12.11 World Bank 1992, p. 13.12 World Bank 1994, p. 12.

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In this context, “exit” means the possibility of the public to gain access to other service-

suppliers in case the state does not provide for the services in a satisfactory way.

“Voice” refers to the possibility of the public to influence the quality and quantity of

public services by e.g. improving access to information and involving non-

governmental organisations (NGOs). This meant that in contrast to the Bank’s policies

in the era before good governance, the quality of a government with regard to the

performance in satisfying the needs of the population was put up for discussion, not

only its economic performance. Especially the “voice”-mechanisms gave way for a

more participatory approach to development by focussing on access to information and

including NGOs as partners in the development process. This more participatory

approach was pursued from the very beginning of the governance debate and can be

seen as the underlying principle of the Bank’s governance agenda: „The global trend is

toward less authoritarian modes of exercising power“.13

In the past 10 years, the debate on accountability concentrated very much on

efforts to describe and concretise the content of “vertical accountability”, i.e. the way

how the population can be involved in decision-making processes. While in the

beginning of the 1990s the main focus of the Bank’s work on accountability was on

providing access to information, in recent years the importance of parliament as a major

tool to enable citizens to participate in the political processes was stressed. Also, the

double function of parliament in the so called “chain of accountability”14 was

highlighted: On one hand, parliaments strengthen horizontal accountability within

public institutions, especially by controlling the government; on the other hand, they

also provide platforms for citizens to address their representatives in a vertical way to

denounce deficits.15

A very import topic related to accountability is the fight against corruption.

Since corruption has become an independent issue within the debate on good

governance it will be discussed separately below.

c) Legal framework for development The legal framework for development represents the Bank’s rule of law

approach in governance. Schlemmer-Schulte described the relation between the rule of

13 World Bank 1994, p. 13.14 Stapenhurst/ O‘Brien, p. 1.15 Stapenhurst/ O‘Brien, p. 2.

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law and good governance as follows: “The rule of law represents the legal dimension of

good governance by a country”.16 For the Bank an economic environment where

business risks may be rationally assessed and the cost of transactions are lowered

requires stability and predictability.17 Both aims will only be achieved in an appropriate

legal system. Also, the Bank stressed that the law could make “an important

contribution to an equitable and just society and thus to prospects for social

development and poverty alleviation”.18

Within governance, the Bank distinguished between two dimensions of the rule

of law: an instrumental one referring to the formal basis of the system of law, and a

substantive dimension which included the contents of laws and legal concepts such as

justice, fairness and liberty.19

In the first years after the introduction of good governance, the Bank focussed

very much on the creation of laws, their implementation and application – especially

with regard to their impact on private sector development -, and the communication of

rules to the public. This focus changed in the following years as the World Bank began

to work more in the field of dispute settlement mechanisms.20 The Bank also started to

concentrate more on the individual rights of the citizens.

Summing up, judicial reform within good governance is now being understood

as a comprehensive approach that encompasses the improvement of the judicial system

– including dispute settlement mechanisms -, legislative reforms, and the improvement

of legal education and training. It is noteworthy that the Bank’s engagement in judicial

reform - as far as substantive law is concerned - for a long time ignored the whole sector

of criminal law. Even after former World Bank president Wolfowitz -together with the

United Nations- initiated the Stolen Asset Recovery (StAR) Initiative in 2007, criminal

law reform has not been put high on the agenda, but it is mentioned as only one means

along many others to fight corruption.21

16 Schlemmer-Schulte, p. 697.17 World Bank 1994, p. 23.18 World Bank 1994, p. 23.19 World Bank 1992, p. 30.20 See World Bank 2004, p. 3.21 Cf. World Bank 2004, p. 9, listing 60 areas of law for Bank engagement without mentioning any section of criminal law.

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The judicial reform approach of the World Bank was not only further expanded

as regards content; the use of terminology also started to change around 2004. Since

then, instead of “judicial reform” the Bank is using more and more the term “rule of

law”.

d) Transparency and information The issue of transparency and information within good governance took account

of the fact, that “a competitive market economy requires that economic actors have

access to relevant, timely, and reliable information”.22 According to the World Bank,

transparency and information would be beneficial especially regarding three areas:

economic efficiency, prevention of corruption, and in the analysis, articulation and

acceptance of governmental policy choices.

Economic efficiency was particularly understood as the access to information on

governmental economic policies and as transparency of the decision processes in this

regard. It was foremost the private sector who would benefit from this understanding of

economic efficiency. But the Bank also stressed that the population should be given the

possibility to influence the decision-making processes. Looking at the financial crisis

we have to face actually, it is noteworthy that the Bank already at that time highlighted

the need for improved transparency and information of the financial markets at the very

beginning of the debate on governance.23

With regard to corruption the Bank pointed out that the main weapon against

corruption was to reduce the opportunities for it to a minimum. Although the Bank

referred to the issue of corruption in this context without mentioning possible problems

arising from addressing this issues with regard to its mandate, it can not be ignored that

corruption has been a very delicate issue for the Bank until the late 1990s. Corruption

until then was perceived as a highly political issue that could not be tackled because of

the Bank’s articles of agreement. According to the Bank, the challenge to improve the

interaction between government and the public in terms of rendering more transparency

in the decision-making processes had to be addressed not only by the state concerned; a

very important role in this process was rather given to civil society institutions as e.g.

22 World Bank 1992, p. 39.23 World Bank 1992, p. 40.

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labour unions, universities and, with a special focus, the media. For the Bank the

freedom of the press was an essential condition for enabling the public debate.

Thus, in principle, the Bank’s approach to transparency and information was

highly oriented towards the development of the private sector, i.e. it was in particular

economically oriented. But the Bank’s approach in this regard also encompassed from

the very beginning the issues of corruption and freedom of the press, which broke new

grounds in the Bank’s work. The approach also paved the way for the introduction of

these issues - which where until then perceived as too political for the Bank - into the

Bank’s agenda.

3. Corruption

As already mentioned above, the issue of corruption has been conceived as a

very delicate topic to deal with for the World Bank, it was nearly considered a “taboo

subject”.24 Until the 1980s, corruption was not mentioned in the Bank’s development

strategies as it was perceived as too political, even though it soon became very clear that

corruption had a negative effect on an country’s economic development and therefore

would fall inside the Bank’s mandate.25 With the introduction of the Bank’s structural

adjustment programs, the fight against corruption became an increasingly important

topic for the Bank.26

Within the Bank’s good governance agenda, the fight against corruption was

mainly discussed as a matter of transparency and information. But it was always also a

cross-cutting theme, touching the subjects of accountability, the rule of law and PSM.

The Bank defined corruption as “the abuse of public power for private gain”.27 Thus,

corruption encompasses two elements: first, a moral abjection in terms of misuse of

power, and second, as a result, the substantive or incorporeal gain.

During the first half of the 1990s, the Bank realised that corruption was a much

bigger obstacle to development than initially anticipated. In 1996, former World Bank

president Wolfensohn announced that the Bank would focus more on the fight against

corruption by assisting countries to combat the “cancer of corruption”. In 1997, the

24 World Bank 2007, p. 38.25 Forsythe, p. 340.26 The first studies of the World Bank on corruption related to the transition countries in Europe and Central Asia, particularly analysing the phenomenon of “state capture“.27 World Bank, WDR 1997, p.102.

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Bank launched its “comprehensive anti-corruption policy framework”; in the same year

the World Development Report focussed mainly on the issue of corruption and nearly

all loans granted by the Bank in that year for PSM contained specific targets with regard

to the fight against corruption.28 Therefore, the year 1997 marked a starting point for the

Bank’s enhanced engagement in the fight against corruption. From the end of the 1990s

on, the fight against corruption became more and more an independent topic on the

Bank’s agenda. As already mentioned, in 2007 former Bank president Wolfowitz and the

United Nations initiated the Stolen Asset Recovery (StAR) Initiative, which aims to

return those state assets stolen through corruption. Also in 2007 “Governance and Anti-

Corruption Strategy” made clear that governance and anti-corruption are not

synonymous because corruption would also occur in the private sector while

governance was looking at the performance of the state and public institutions. Former

World Bank president Wolfowitz stressed: “Improving governance is certainly about

fighting corruption, although it is also about much more than fighting corruption”.29

4. Participation

Another issue that is related to the World Bank’s notion of good governance is

principle of participation. Although the Bank did not see this principle as an

independent element of its governance definition, it became clear at a very early stage

that good governance would require a more participatory approach to development. This

more participatory approach had been already highlighted in the Bank’s 1989 Africa

study. Now participation was perceived as being intrinsic to good governance.30

For the Bank, participation is the process through which stakeholders influence

and share control over priority setting, policy-making, resource allocations and access to

public goods and services. That means that all civil groups involved in the development

process have to be included. The importance of participation was highlighted with the

Bank’s “Comprehensive Development Framework” in 1999, in which the aim of

“country ownership” called for participation of all relevant groups in the elaboration of

a national development strategy.

Participation is also a cross-cutting theme throughout good governance.

Especially accountability and transparency and information focus on the participation of

28 World Bank, annual report 1997, p. 79.29 Wolfowitz, Paul, speech at the International Conference on Governance and Fighting Corruption, Brussels, 15 March 2007, available at: http://go.worldbank.org/FRQQCB8740.30 World Bank 1994, p. 42.

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the population. As already discussed above, accountability stresses the importance of

parliament in the participatory process. This reference to democratic forms of

governments has been repeated by the Bank, without, however, directly linking its

perception of participation to a specific form of government. For the Bank, participation

is an overall principle, and democratic forms of governments are one possible way to

get to more participation.31 Though the Bank’s participatory approach does not directly

call for a democratic form of government, it is hard to imagine which form of

government could meet with the requirements of the governance agenda, but a

democratic one.

5. Résumé

The emergence of the good governance agenda constituted a remarkable change

in the Bank’s view on the state. In the 1980s the Bank’s structural adjustment programs

were directed towards macro-economic reforms in borrower countries. However, with

the beginning of the governance debate, the World Bank looked at the state not only in

terms of its macro-economic policies anymore but also in terms of its institutional

performance. In the course of the ongoing debate, participation and the fight against

corruption were added to the good governance agenda while transparency and

information became a cross-cutting theme throughout governance.

Especially with accountability and transparency and information, the Bank

addressed issues that were until then perceived as too political to discuss, e.g.

corruption, participation of the population in the development process, certain political

human rights (freedom of the press, freedom of assembly). In this regard good

governance represents the change of the Bank’s approach to development to a more

participatory one. This section of the paper also showed, that there is a link between

good governance and human rights issues. Questions arising from this connection of the

two concepts will be discussed in the following section.

C. Good governance and human rights

When the concept of good governance first emerged, it was clearly linked to

human rights issues. The 1989 Africa study highlighted the need for the rule of law and

called for “scrupulous respect for the law and human rights at every level of 31 See World Bank 1994, p. 13.

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government”.32 This demand was based on the idea that the very core elements of

governance emanated from the Universal Declaration of Human Rights, especially from

some of the political and civil rights contained therein. However, the World Bank,

through its General Counsel Ibrahim F. Shihata, did not endorse this opinion in the

beginning of the governance debate by stressing the World Bank’s non-political

mandate, which would not allow the Bank to deal with political and civil human rights.

In this section of the paper the development of the World Bank’s approach to

human rights with regard to good governance will be described by taking into account

the articles of agreement of the World Bank. Subsequently, the position of the World

Bank as a specialised agency of the United Nations will be discussed, taking especially

into account the possible human rights obligations arising from this status.

1. Human rights in the Bank’s concept of good governance

The articles of agreement command the Bank to refrain from taking account of

political considerations in its work, especially in Art. IV, section 10:33

“POLITICAL ACTIVITY PROHIBITED

The Bank and its officers shall not interfere in the political affairs of any

member; nor shall they be influenced in their decisions by the political character

of the member or members concerned. Only economic considerations shall be

relevant to their decisions, and these considerations shall be weighed impartially

in order to achieve the purposes stated in Article I.” 34

The articles of agreement do not contain explicit provisions on human rights or

on a possible inclusion of human rights in the Bank’s work. Art. I (iii) mentions the

improvement of the “ conditions of labour” as a purpose of the Bank. But, even though

the conditions of labour are covered by various international human rights treaties – e.g.

32 World Bank 1989, p. 192.33 The prohibition of political activities is also relates to two other articles of the Bank’s articles of agreement:Art. III, section 5 (b): The Bank shall make arrangements to ensure that the proceeds of any loan are used only for the purposes for which the loan was granted, with due attention to considerations of economy and efficiency and without regard to political or other non-economic influences or considerations.Art. V, section 5 (c): The President, officers and staff of the Bank, in the discharge of their offices, owe their duty entirely to the Bank and to no other authority. Each member of the Bank shall respect the international character of this duty and shall refrain from all attempts to influence any of them in the discharge of their duties.34 The reason for this limitation of the Bank’s work can be found in its genesis. The history of origin of the Articles of Agreement is described in detail by Yokota, pp. 39 et seq.

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Art. 6-8 of the International Covenant on economic, social and cultural rights, Art. 6 of

the additional protocol on economic, social and cultural rights of the American

Convention on Human Rights, and the ILO Conventions – this allusion to a single

human rights aspect can hardly be interpreted as extending the Bank’s mandate to cover

human rights issues generally.

Having this in mind, it is understandable that in the early 1990s, the Bank’s

internal debate on good overnance focussed very much on the compatibility with the

articles of agreement and the interpretation of the prohibition of political activities as

laid down in the articles of agreement. In this discussion, the Bank followed a narrow

approach, stressing the wording of the prohibition of political activities and rejecting

political considerations in principle. For the Bank, governance encompassed three

different aspects: first, the form of political regime; second, the process by which

authority is exercised in the management of a country’s economic and social resources

for development; and third, the capacity of governments to design, formulate, and

implement policies and discharge functions.35 The first aspect was deemed outside the

World Bank’s mandate as being political in nature.

By interpreting the articles of agreement, Shihata consistently held the view that

with regard to human rights the Bank could only consider social and economic rights.36

In this context it is worth mentioning that despite this interpretation of the articles of

agreement, the Bank started to work on the topics of involuntary resettlement of

indigenous peoples and the rights of indigenous peoples from the beginning of the

1990s on.37 Both fields of roghts also touch political issues.

With view to good governance, especially the call for accountability turned out

to be difficult to handle with regard to the articles of agreement. Accountability is also

linked to the political structures in a country by alluding to the issue of responsibility of

the governing to the governed. Similarly, the legal framework for development – today

referred to as the rule of law - contains critical issues in this regard, like e.g. questions

relating a country’s criminal law.

35 World Bank 1994, p. xiv.36 Shihata 1991, pp. 97, 99 et seq., 109 et seq.37 See World Bank operational directive 4.30 –Involuntary Resettlement- 1990, and World Bank operational directive 4.20 –Indigenous Peoples- 1991.

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However, the ongoing international debate in the 1990s showed that good

governance was strongly related to issues as participation, freedom of expression,

freedom of association, a free press etc. These insights were included in the World

Bank’s work and the Bank’s view on the topic gradually changed. In 1995, Shihata

again tackled the issue of human rights in the Bank’s work with regard to the articles of

agreement. In a legal opinion he renewed his view that the Bank could not engage in the

enforcement of (civil and political) human rights.38 But he also described two situations

in which the Bank could take violations of individual political rights into account: On

the one hand if those violations had a direct economic effect. On the other hand, the

Bank could consider human rights violations according to Shihata if they affected the

Bank’s aim to promote participation of the population and civil society (e.g. freedom of

association, freedom of opinion).

This legal opinion constituted a first step on the way to a less strict interpretation

of the prohibition of political activities, as it allowed the Bank to consider political

rights in some cases. However, Shihata still rejected claims that called for not lending to

countries with a record of human rights violations.39

Anyway, the issue of human rights could not be ignored by the Bank anymore.

The Bank’s changing approach to human rights can be illustrated by the controversies

regarding loans to Indonesia in 1999. In the course of the referendum on the

independence of East Timor, especially those groups and individuals who endorsed

independence experienced outbreaks of violence. In a letter to Indonesia’s president

Habibie, former World Bank president Wolfensohn addressed the human rights

violations happening in East Timor. He also called for the cessation of those violations

and for the restoration of peace as a condition for further aid from the World Bank.40

In 2006, General Counsel Roberto Dañino clarified the Bank’s view on human

rights by stating that human rights were “at the very core of the World Bank’s

mandate”.41 In his “Legal opinion on Human Rights and the Work of the World Bank”42

he pointed out that the question if the Bank was allowed to include human rights

considerations in its work must not be answered by taking the prohibition of political 38 Shihata 1995, pp. 219 et seq.39 Shihata 2000, pp. 245 et seq.40 Letter from World Bank president Wolfensohn to the president of Indonesia, 8 September 1999, reproduced in Steiner/Alston, 2nd ed., p. 1340.41 Dañino 2006, Development Outreach, p.30.42 Dañino 2006, Legal opinion.

15

activities as a starting point but rather by defining the Bank’s mandate. The prohibition

of political activities itself has to be interpreted in the light of this mandate, i.e. the

purpose to assist member countries in their development processes. That’s why,

according to Dañino, the distinction between civil and political human rights on one

hand, and economic, social and cultural rights on the other hand could not be the crucial

point. The decisive question must rather be if the consideration of human rights issues

has economic effects or economic relevance: “(...) the decision-making processes of the

Bank incorporate human rights and any other relevant input which may have an impact

on its economic decisions”.43 According to Dañino, the Bank could take human rights

considerations into account in three situations: First, if the borrowing country asked the

Bank to do so; second, if human rights violations had an economic effect; and third, if a

human rights violation would lead to a breach of international obligations relevant to the

Bank, such as those created under binding decisions of the UN Security Council.44

With regard to the distinction between civil and political rights on one hand, and

social, economic and cultural rights on the other hand, Dañino took the view that „(...)

there is no stark distinction between economic and political considerations: there is

similarly an interconnection among economic, social and cultural rights on the one

hand, and civil and political rights on the other. Indeed, it is generally accepted at the

political level that ‘all human rights are universal, indivisible, interdependent and

interrelated’“.45

This broader approach to the consideration of human rights in the World Bank’s

work was also reflected in World Development Report 2006, which focussed on the

issue of “equity” and stressed that the principle of “equity” is very much related to

international human rights.

Although the Bank’s general view on human rights changed as described above,

the question of human rights within the good governance agenda was not influenced by

the new human rights approach straight away. In 2006, former World Bank president

Wolfowitz in the end still followed the same approach that had been described by

43 Dañino 2006, Legal opinion, p. 5.44 Dañino 2006, Legal opinion, p. 7.45 Dañino 2006, Development Outreach, p 31.

16

Shihata in his legal opinion of 1995: “An independent judiciary, a free press, and a

vibrant civil society are important components of good governance”.46

It was Dañino’s successor as General Counsel of the World Bank, Ana Palacio,

who applied the broader human rights approach elaborated by Dañino on good

governance:

“The concept of governance is widely acknowledged to be indispensable to

sustainable development. That focus would be significantly strengthened by

anchoring it in the international human rights framework. Human rights offer a

clear conceptual and legal framework for connecting the supply and demand

sides of governance in terms of its basic correlative notions of rights and duties.

Acknowledging the relevance of human rights to the Bank and integrating

human rights into its work is an important element in our efforts to step up the

Bank’s promotion of good governance and its global fight against corruption.

Indeed, in substantive terms, these areas share common legal principles“.47

Although according to this view the consideration of human rights issues in the

Bank’s work on good governance doesn’t seem to face any legal hurdles anymore,

human rights are not part of the operative policies of the World Bank. This has been

explained by the fact, that integrating human rights in these policies would have to face

opposition from the Bank’s executive directors.48

A slightly different approach to describe the relation between good governance

and human rights takes Daniel Kaufmann from the World Bank Institute.49 He comes to

the conclusion that the concept of good governance constitutes a link between political

and civil rights on one hand and economic, social and cultural human rights on the

other.50 According to Kaufmann, on one hand, empirical studies have shown that

governance, the fight against corruption and the rule of law can only prosper in an

environment in which basic civil and political human rights are respected. On the other

hand, governance also constitutes a precondition for certain economic, social and

cultural human rights. Therefore, within the good governance agenda, certain civil and 46 Wolfowitz, Paul, Good Governance and Development – A time for Action, Jakarta, Indonesia 2006, available at < http://go.worldbank.org/OAIRTYW9X0>. (last accessed: 2 May 2010).47 Palacio, p. 248 Sarfaty, p. 74.49 Kaufmann 2004.50 Kaufmann 2004, p. 18.

17

political rights have to be considered in order to realise social, economic and cultural

rights. In this sense, the World Bank’s good governance agenda in the past had

consistently included certain civil and political rights as the freedom of press, freedom

of expression, freedom of information and freedom of assembly as well as the right to

participate in the decision-making processes, as a part of and also a precondition for

good governance. This view of Kaufmann makes also sense looking at the World

Bank’s perception of accountability as a means to restrict the abuse of public power.

The above mentioned individual freedoms that are part of the good governance

definition constitute tools in order to achieve accountability.

Kaufmann describes the relation between human rights and good governance by

using empirical evidence. This is indicative of a trend to perceive human rights merely

as an instrument to achieve the goal of economic development, not as a basic obligation

under international law.51 In the same way the Lawyer’s Committee for Human Rights

already in 1995 summarised the relation between governance and human rights as

follows: “The governance debate looks to human rights not for their intrinsic value but

for their instrumental role in creating an environment in which effective and sustainable

economic development can occur“.52

2. The World Bank as specialised agency of the United Nations

As mentioned above, former General Counsel Dañino hold the view that human

rights violations, which lead to a breach of international obligations relevant to the

Bank, should be taken into account by it. This begs the question: what kind of

international human rights obligations have to be taken into account by the Bank

besides the binding decisions of the UN Security Council? In the following, this

question is addressed with regard to the general obligations arising from the Bank’s

status as specialised agency of the United Nations.

The specialised agencies of the United Nations enjoy a certain autonomy from

the UN. They are brought into relationship with the United Nations by a relationship

agreement with the Economic and Social Council. These agreements differ depending

on the various agencies. The World Bank’s agreement with the UN stresses the

51 See Sarfaty, p. 73, who holds the view that this perception of human rights is due to the dominance of economists within the World Bank.52 Lawyer’s Committee for Human Rights, p. 61.

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independence of the Bank from the United Nations by requesting the UN „to refrain

from making recommendations to the Bank with respect to particular loans or with

respect to terms or conditions of financing the Bank”.53 Also, the Bank only has to pay

“due regard” to the decisions of the Security Council, i.e. the final decision on the

application of the Security Council’s decision rests with the Bank.

Despite this independence, the Bank remains part of the UN-System.54 It has also

to be taken into account that the Bank’s members have obligations according to the UN

Charter. Art. 103 UN Charter states, that “in the event of a conflict between the

obligations of the Members of the United Nations under the present Charter and their

obligations under any other international agreement, their obligations under the present

Charter shall prevail”. That means, that the Bank is indirectly bound to the United

Nations through the obligations of its member states.55 A direct obligation of the Bank

to respect the UN-Charter beyond the scope of Art. 103 has been rejected.

Nevertheless, some authors, namely Skogly, argue that the independence of the

World Bank laid down in the agreement with the United Nations does not discharge the

Bank from its obligations under international law as contained in the United Nations

Charter.56 This leads to the question, if the UN Charter contains human rights

obligations which would have to be respected by the Bank.

It has been discussed if such an obligation for all specialised agencies arises

from art. 57, 55 UN Charter. This must be rejected, as art. 57 UN Charter does not

contain any reference to the purposes of art. 55, not to mention that there are no

obligations concerning the specialised agencies contained in art. 55 either.

The UN Charter mentions human rights in various articles,57 calling for the

“promotion”, “respect” and “observance” of human rights. Regarding all these

references to human rights, especially Art. 1 para. 3, the respect for human rights has to

be interpreted as a main objective of the United Nations.58 The question if this objective

53 Agreement between the United Nations and the International Bank for Reconstruction and Development, 16 U.N.T.S., 1947, pp. 346 et seq, at art. IV, § 3.54 Tomasevski 1989, p. 82.55 Shihata 1991, p. 76 et seq.56 Skogly, p. 105; Darrow, p. 125.57 See preamble, art. 1 para. 3; 13 para. 1 b); 55 c); 56; 62 para. 2; 68 and 76 c) UN Charter. 58 Simma 2002, art. 55 (c) ref. 15.

19

establishes human rights obligations for the member states has been discussed for a long

time;59 today it is generally assumed that the UN Charter contains human rights

obligations for its member states.60

Besides these obligations for the member states, the UN Charter also contains

human rights obligations for the organisation itself, e.g. art. 55 (c):

“With a view to the creation of conditions of stability and well-being which are

necessary for peaceful and friendly relations among nations based on respect for

the principle of equal rights and self-determination of peoples, the United

Nations shall promote: (...)

(c) universal respect for, and observance of, human rights and fundamental

freedoms for all without distinction as to race, sex, language, or religion”.

With regard to the specific human rights commitments - i.e. which rights are

meant by this obligation? - the Charter does not give a clear answer. In describing the

content of the human rights obligations of the United Nations, allusions are made to the

International Bill of Human Rights, including the Universal Declaration on Human

Rights and the two Covenants on Political and Civil Rights and on Economic, Social

and Cultural Rights.61 These allusions are very consistent in two ways: firstly, the

reference to human rights made in art. 55 UN Charter does not conatin any restriction

with regard to the nature of the rights included into the mandate of the UN. Secondly,

the described contents of the International Bill of Human Rights are based on United

Nations documents.

Therefore it can be said that there are basic human rights obligations for the

United Nations itself as an organisation. The author of this paper agrees with Skogly

that, as a consequence, these human rights obligations also must bind the UN

specialised agencies and hence, the World Bank.62 But, taking into account that these

obligations do not emanate from a direct contractual obligation and also regarding the

specific tasks of the World Bank laid down in its own articles of agreement, it seems

hard to establish an obligation for the Bank to actively promote human rights. However,

in the opinion of the author of this paper, the Bank has to respect its human rights

59 Against such obligations, for example, Kelsen 1951, p. 29; Hudson 1948, pp. 105 et seq.60 Brownlie, p. 556; Shaw, p. 278; Skogly, p. 117; Schwelb, p. 337, 34861 Tomuschat 2003, p. 32; Steiner/Alston/Goodmann 2007, pp. 133 et seq.62 Skogly, p. 120.

20

obligations under the Charter by ensuring that its activities do not constitute human

rights violations.

In this spirit, the UN Committee on Economic, Social and Cultural Rights stated with

regard to art. 22 International Covenant on Economic, Social and Cultural Rights:

„United Nations agencies involved in the promotion of economic, social and

cultural rights should do their utmost to ensure that their activities are fully

consistent with the enjoyment of civil and political rights. In negative terms this

means that the international agencies should scrupulously avoid involvement in

projects which, for example, involve the use of forced labour in contravention of

international standards, or promote or reinforce discrimination against

individuals or groups contrary to the provisions of the Covenant, or involve

large-scale evictions or displacement of persons without the provision of all

appropriate protection an compensation. In positive terms, it means that,

wherever possible, the agencies should act as advocates of projects and

approaches which contribute not only to economic growth or other broadly

defined objectives, but also to enhanced enjoyment of the full range of human

rights”.63

E. Conclusion

The developments in the perception of the role of human rights in the Bank’s

concept of good governance as outlined above show, that the narrow approach towards

human rights has changed notably in the past 20 years. At the beginning of the

governance debate, the Bank limited itself to “purely” economic aspects of its work,

thereby following a strict interpretation of the Bank’s articles of agreement. Now it is

accepted that the Bank’s mandate as a development agency is also related to (political)

human rights issues and that human rights have to be considered in the Bank’s work.

The fact that the fight against corruption has been very high on the agenda of the World

Bank for more than ten years now confirms this assessment.

63 UN Committee on Economic, Social and Cultural Rights, General Comment No. 2 (1990), UN-doc. E/1990/23, para. 6.

21

Good governance in the World Bank’s perception comprises certain political and

civil human rights, as freedom of expression, freedom of the press, freedom of

assembly, freedom of information, and participation in political decision-making

processes. However, for the World Bank human rights are not an independent

component of good governance. Human rights issues arise throughout the whole good

governance agenda. In that sense, human rights constitute a cross-cutting topic, like the

issues of corruption and participation.

Furthermore, according to Palacio and Kaufmann, human rights also form the

basis on which good governance can be realised. This leads to the conclusion that good

governance constitutes an “institution” for the enforcement of those human rights that

are directly linked to good governance. In the same way, Tomuschat says: “It is clear,

that a framework of good governance, if actually established, leads to a significantly

increased effectiveness of human rights”.64

Additionally, according to the author of this paper, the Bank has human rights

obligations arising from the UN Charter. These obligations have to be taken into

account when interpreting the prohibition of political activities in a way that the Bank’s

activities must not result in human rights violations.

However, the Bank’s role according to its mandate is not to promote human

rights in the first place, but to foster economic development in its member countries.

But, by demanding good governance in the borrower countries and predicating its loans

on the commitment to good governance, the Bank plays an important role in the

promotion of human rights, including political ones. The Bank has to accept this

challenge and consider it in its work in a responsible way.

In this regard it is worth mentioning, that the promotion of human rights through

genuinely economic agreements has become an increasingly important issue in recent

years. For example, the Charter of the Association of Southeast Asian Nations

(ASEAN) contains a commitment to “the principles of democracy, the rule of law and

good governance, respect of human rights and fundamental freedoms”.65 Also, the

Southern African Development Community (SADC) treaty contains a clause calling for

64 Tomuschat, Human Rights, p. 55. 65 In 2009 ASEAN adopted terms of reference for the establishment of a regional human rights mechanism, for an introduction to these terms see 48 ILM 1161 (2009).

22

its members to act in accordance with human rights, democracy and the rule of law.66

Last but not least the fair and equitable treatment clauses in international investment

agreements give way for the consideration of certain human rights aspects as e.g. the

prohibition of discrimination or the right to access to courts. This non-exhaustive list of

examples show that human rights play an ever increasing role in the international

economic relations.

66 In a SADC tribunal on the expropriation of white farmers‘ agricultural lands the questions of access to courts and the prohibition of racial discrimination have been intensively discussed and led to the success of the complaints, SADC (T) Case No. 2/2007.

23

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