DGPO-INFIDRountable-Enhancing Democratic Accountability & Parliamentary Oversight of the IFIs

8/14/2019 DGPO-INFIDRountable-Enhancing Democratic Accountability & Parliamentary Oversight of the IFIs

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Enhancing Democratic Accountabilityand Parliamentary Oversight of theInternational Financial Institutions

James V. Riker, Ph.D.New Rules for Global Finance Coalition

Washington, DC, USA

Presentation to the Policy Round Table on

Financially Unaccountable International Financial Institutions,

INFID, Jakarta, Indonesia, 13 June 2006

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The IMF and World Bank:

What is there to smile about? Singapore Prepares Four Million Smiles

Welcome for IMF, The Strait Times, 12 June2006, page 1.

Singapores Prime Minister Lee Hsien Loongcalled on all four million citizens to greetdelegates of the upcoming IMF and World Bank

Annual Meeting in September 2006 with fourmillion smiles by submitting their photos at theFour Million Smiles campaign web site at:

www.smilesS2006.com2
http://www.smiless2006.com/http://www.smiless2006.com/


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The IMF and World Bank:What is there to smile about?

Major Accountability Issues Remain:

Presently, there is no democratically

accountable and open selection process forthe leadership of the World Bank or the IMF.Should future leaders be chosen in a openand transparent process based on merit

rather than on nationality? What progress has been made to increasethe base votes and voice of the leastdeveloped countries in the IMF?Will European countries continue to hold 8to 10 of the 24 IMF board chairs, or will newdemocratic principles for representationguide political formulas for reforming IMFgovernance?

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Overview

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1. Setting the Context: The Fundamental Issue for

Developing Countries Is IFI AccountabilityThis means going beyond financial accountabilityto understand the democratic, ecological, political,

and social accountability of the internationalfinancial institutions (IFIs) as well.

2. What Are the Possibilities for Enhancing the

Democratic Accountability of the IFIs? The International Parliamentary Petition (IPP)

initiative

The Democratic Governance and ParliamentaryOversight (DGPO) Project

3. A Shared Agenda for Advocacy focused on theSingapore 2006 Annual Meetings and beyond.


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Setting the Context: The Need for Enhancing theDemocratic Accountability of the IFIs (1)

A growing consensus is emerging that the internationalfinancial institutions (IFIs) face fundamental democraticlegitimacy crises due to the multi-dimensional issues of

accountability, transparency, representation, decision-making, and effectiveness.

The recent undemocratic leadership selection processes for the heads

of both the IMF and World Bank have put into question the democraticlegitimacy of these institutions (Kapur & Naim 2005). In terms of representation, the United Nations issued a report in early

2005 publicly criticizing the International Monetary Fund (IMF) andWorld Bank for failing to keep promises to increase the voice of

developing countries in those institutions, issuing an appeal forfundamental reform to address these governance issues.

In the aftermath of the Asian and Argentine financial crises, civil societyorganizations and parliaments in both the North and South have pressedfor more transparent and accountable processes and practices at theIMF and the World Bank.

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Over the past 60 years, the IMF and World Bank have exertedincreasing control over developing countries in their decision-making about national economic policies and the terms of

international development finance.

Shift in Decision-Making Away from Developing Countries: A keydemocratic deficit has emerged where the locus of decision-makingover national economic policy has been transferred from nationalrepresentatives into the hands of less representative internationalbureaucrats (Sikkink 2002: 310-311).

Parliament Bypassed: A countrys Executive Director is often required

to report only to the Ministry of Finance, thus circumventingdemocratic accountability to elected members of parliament.

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No Official Commitment to Parliamentary Processes: Despite theIMFs and World Banks professed adherence to the principles ofgood governance, decision-making over key economic policychoices and binding loan agreements is too often made without theformal participation, review, public debate, or ratification of nationalparliaments.

Local Ownership Requires Parliamentary Engagement: If borrowergovernments are expected to exhibit local ownership of thesepolicies and to embrace democratic processes in pursuit of theirnational economic development, parliamentarians need to be fullyengaged in these processes, if they are to be viewed as legitimate,

especially in terms of exercising their voice in the review, consent ordissent of the economic policy prescriptions and the binding loanagreements of the IMF and World Bank.

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What Are the Possibilities for Enhancing theDemocratic Accountability of the IFIs?

First, there is a critical need to understand

the possibilities for systemic reforms and todevelop effective strategies for enhancingthe democratic accountability of theinternational financial institutions.

Second, a collaborative approach involving

civil society organizations, members ofparliament, and parliamentary networks, anddeveloping country governments is required

to hold the IFIs accountable.8


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International Parliamentary Petition (IPP)

One positive step to address this situation is a petition initiativeto guarantee the right for effective parliamentary oversight ofnational economic policy-making by borrower countries in theirrelations with the international financial institutions.

To date, the International Parliamentary Petition (IPP) has receivedthe support of over 1,400 members of parliament worldwide, over400 members of whom are from the developing world and representover 50 countries. A group of parliamentarians formally presented

this petition to IMF and World Bank officials at the spring 2005meetings.

While the IPP initiative represents an important vehicle for facilitatingparliamentary attention on the IFIs, a longer-term multi-dimensionalstrategy is needed to enhance the accountability, transparency,representation and decision-making of these institutions, and tocoordinate efforts and support capacity-building for effectiveparliamentary oversight of the international financial institutions atthe national, regional, and global levels.

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International Parliamentary Petition (IPP)

Proposes specific democratic reforms:

that the democratically elected representativesof recipient nations are the final arbiters of alleconomic policies in their countries [and] thatnational parliaments in recipient nations have

the right and obligation to be fully involved in thedevelopment and scrutiny of all measuresassociated with BWI activities within theirborders, and hold the final power of ratification.

Source: International Parliamentarians Petition for Democratic Oversight ofIMF and World Bank Policies, web site at: www.ipp-info.net.

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http://www.ipp-info.net/http://www.ipp-info.net/http://www.ipp-info.net/


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Democratic Governance & ParliamentaryOversight (DGPO) Project

Overall Project Research Agenda:

What are the guiding principles for effectivedemocratic governance of the IFIs?(i.e., standards for transparency, accountability

mechanisms, basis for representation, legitimatedecision-making processes).

What role can civil society play in developingand/or strengthening appropriate accountabilitymechanismsat the national, regional, and globallevels for enhancing democratic governance and

parliamentary oversight of the IFIs?11


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ENHANCING DEMOCRATIC ACCOUNTABILITY &PARLIAMENTARY OVERSIGHT OF THE IFIs

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LEVEL OFACTION

ENHANCE ACCOUNTABILITYOF THE IFIs

TARGETS OFADVOCACY

NATIONAL Strengthen Civil Society Capacity on IFIAccountability Issues

Provide Outreach to Parliament to StrengthenOversight of the IFIs

Strengthen Government Position in its Relationswith the IFIs

National Parliaments(Brazil, Ghana, India)

Sub-nationalParliaments (India)

REGIONAL Strengthen Regional Civil Society Network on IFIAccountability IssuesProvide Outreach to Regional ParliamentaryNetwork

Target Governments Advocacy toward RegionalDevelopment Banks

Asian DevelopmentBank (ADB)

Inter-AmericanDevelopment Bank (IDB)

Committee ofParliaments of theAmericas (COPA)

GLOBAL Strengthen Global Civil Society Network on IFIAccountability

Provide Outreach to Global ParliamentaryNetworks

Target Governments Advocacy toward the IFIs

IMF

World Bank

Parliamentary Networkon the World Bank(PNoWB)


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The Role of Parliamentary Oversight

What oversight roleshould parliamentarians play inensuring effective democratic governance of the IFIs?

The Basis for Representation: What role should members ofparliament play in enhancing the voice and vote of developingcountries in the governance of IFIs?

Legitimate Decision-Making Processes: How should membersof parliament be engaged in the process for review and finalapproval of IFI loans and projects, both those directly affectingtheir respective countries and those that impinge on globalstandards or public goods?

Accountability Mechanisms: What forms of accountability are

appropriate for parliamentarians to hold Executive Directors(EDs) for decisions taken at Board meetings?

Standards for Transparency: How can parliamentarians andthe public acquire relevant information regarding Boarddiscussions and decisions?

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DGPO Project: Main Research Activities (1)

1. Case Studies of 3-4 Key Countries:Each civil society country partner will share what theyhave learned about what works, what does not, and

what is still needed to expand civil society collaborationwith national parliaments.

The initial civil society country partners include: Rede Brasil in Brazil; ISODEC in Ghana; Intercultural Resources in India; and

INFID in Indonesia (pending approval).

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Country partners will explore:

(a) How to expand and to enhance outreach totheir own national parliaments?(e.g., literacytraining and materials; budget monitoring); and

(b) How to reinvigorate national civic processesthat enhance parliamentary oversight of theIFIs?This means identifying a range of relevantactivities, such as strategic planning, capacity-

building, public education and training, outreachto parliaments and other key actors (e.g., media,political parties, trade unions, etc.).

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2. Conduct a Global Inventory of Relevant Initiatives:

Develop a broad catalogue of civil society initiatives to

hold the IFIs accountable and engage with their nationalparliaments on a range of policy issues.

The project will catalogue the civil society groups that

are engaged in some aspect of IFI democracy, includingdeveloping a matrix of key governance objectives andspecific actions planned. This also means conductingan inventory (i.e., both of initiatives and groups) of what

is currently happening to enhance parliamentaryoversight of the IFIs.

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3. Develop a Data Base of Members of Parliament

and Groups of Parliamentarians: The project iscoordinating the development of a database andforming a network of elected officials and groups ofparliamentarians interested in two levels of action:

National: Increasing oversight and accountabilityfor IFI projects within their respective countries; &

Global: Increasing oversight and accountability forthe actions and decisions of Executive Directors(EDs) representing their countries.

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4. Design and Disseminate Educational andPolicy Tools to Elected Officials:

A range of materials (e.g., primer/handbook,policy briefs, etc.) will be developed for membersof parliament (MPs) to:

a) Enhance economic and political literacy of IFIissues; and

b) Share effective policy strategies, processesand practices for enhancing the democraticaccountability of IFIs and their operations at the

national, regional, and global levels.


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A Shared Agenda for Advocacy

1. Enact and implement legislation requiring

that the national parliaments of developingcountries are engaged in the formalparticipation, review, public debate and

ratification process over the economic policyprescriptions and loan agreements of theinternational financial institutions (IFIs) and

regional development banks.(i.e., International Parliamentary Petition)

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A Shared Agenda for Advocacy

2. Enhance national parliamentariansoversight of the economic priorities,policies and lending practices of theinternational financial institutions (i.e.,

IMF, World Bank) and regionaldevelopment banks.

(e.g., Parliamentary Network on the World Bank

PNoWB; Committee of Parliaments of theAmericas COPA; Inter-American Federation ofParliamentarians - FIPA)

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A Shared Agenda for Advocacy3. Reform the IFIs by making them more

accountable to broader publics.

Some strategies include: Opening these institutions to civil societyrepresentatives and parliamentarians;

Ensuring access to essential information; Fostering broader representation of developing

countries and non-state actors; and

Altering the power distribution of these institutionsby strengthening the voting rights of developingcountries.

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Documents

DGPO-INFIDRountable-Enhancing Democratic Accountability & Parliamentary Oversight of the IFIs