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Landmark events such as the end of the Cold War, the renaissance of market policies, and the
worldwide expansion of liberal political systems have contributed to civil society being gradually
have implemented microlending and resettlement projects since the 1980s, the setting is different
today. So is the responsibility of the players. For one thing, NGOs are now given the
responsibility of identifying vulnerable groups and social needs in order to design effective
assistance programs; NGOs are also seen as vehicles for maximizing the effectiveness of
international funds. Most important, they have become the main challenge to the agendas of
It is in this context that the World Bank and the Inter-American Development Bank
(IDB) initiated step-by-step adjustments in their mission and mandate on the one hand, and
operational changes on the other. Both enlarged their agendas to incorporate interventions in
areas closely associated with public administration (that is, modernization of the state,
human rights and the environment, and reform of social policies). Conditions applied to the loans
and their implementation in specific projects also became subject to public monitoring. The
cultural change within the institutions themselves demanded new skills to initiate consultations
with local civil society. These advances have not followed a linear progression. The new
approach still coexists with the persistence of traditional top-down practices. Furthermore,
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country case studies show that there is a major gap between the incorporation of new modalities
by the multilateral development banks (MDBs) and their implementation in programs and
In this concluding essay, we bring together the various components of our project
together, in two main parts. In the first, we deal with the governance agenda as it is applied by
the multilateral development banks at the global and local levels and in relation to their own
institutional governance. In the second, we draw together the main conclusions and the major
Until the 1970s, the operations of the MDBs were strictly related to the narrow mandates
stipulated in their charters: the provision of long-term financing for infrastructure projects such
as roads, bridges, power plants, and sewerage. The MDBs were meant to take the place of
undeveloped domestic capital markets and eventually close the gap with the more advanced
industrial nations. By the late 1970s, but most notably in the 1980s, this strategy yielded far
lower results than expected. Questions emerged about the value of such efforts, in a context in
prevailed on the failure of key economic policies in many developing countries and on what
should be done. A new confidence in orthodox economics set the frame for the structural reform
agenda that called for a stronger role of market mechanisms to allocate resources. Trade
then considered essential to restore, first, financial solvency and, then, the conditions for
sustainable long-term economic growth in developing countries. The MDBs continued their
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traditional infrastructure-related loans but wrapped up with policy-based loans. Conditionality
funds were contingent on the commitment to market liberalization.1 In the context of the debt
crisis and the shallow international financial markets of the late 1980s, the leverage of the MDBs
to put forward their reform agenda was significant. These external pressures, coupled with
domestic factors, succeeded in making governments in Latin America embrace the reform
Sweeping reforms were slow to show the expected positive effects on growth, stability,
and employment in most reforming countries. Moreover, the social costs related to the structural
adjustment of the 1980s became more and more evident; social and political consensus to
support the reforms became harder to obtain. A double pressure mounted against the MDBs. On
one hand, domestic social and political actors in countries undertaking the reforms resented the
external pressure to push them through. On the other hand, the international communitymostly
through NGOs in Washingtonbegan to lobby strongly to revise the structural reform creed and
bring more issues to the consideration of the MDBs strategies, including the environment, the
social impact of reforms, and the political legitimacy of the governments embracing reform
agendas.2
The MDBs have responded to these twin challenges in a way that creatively opened new
spheres of action to them. A new consensus emerged alleging that these reforms could be
politically feasible and sustainable in the long term only if specific conditions were met. Among
participation by those most directly affected, a capable and transparent civil service, and a
Together, these new conditions became increasingly packaged under the catch-all term
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governance. Increasingly, lending operations and overall financial support have expanded to take
into account how societies operate. New policy-based loansand, what is more important, the
new conditionality attached to themare meant to help improve the governance of borrowing
countries.
The concept of governance has become pervasive in social sciences over the past yearsso
much so, that a literature review would be an endeavor in and of itself and would go well beyond
the scope of this article. However, meanings adapt to context and purposes, just as chameleons
change according to their surroundings. Flexibility and ambiguity are part of its virtues and have
proved useful to deal with the complexities of the exercise of authority in fin de sicle societies.4
circumscribe the uses of the term and define more precisely its meaning, hence articles such as
Uses and Abuses of the Concept of Governance5 or The Proper Use of Governance in
International Relations.6 From this literature, we are able to identify a common ground among
the different uses of the term. It refers to situations in which several actors play different roles to
achieve a given goal in a context where power is exercised with or without the endowment of a
formal authority. The idea conceived in the context of domestic politics suited the realm of
The more recent questioning of the effective capacities of traditional state structures to
fulfill their obligations and achieve their goals enabled a smooth transition of the use of the term
governance from the domestic to the global arena. The increasing recognition of the importance
with complex public policy issues made the term perfectly suited as an explanatory tool. In this
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more general use, governance involves building consensus, or obtaining the consent or
acquiescence necessary to carry out a program, in an arena where many different interests are in
play.7 Thus, governance can be applied to different units of analysis: an industry, an issue area,
refer to improving the governance in borrowers). This concept has an additional advantage: it
addresses issues of distribution of power and definitions of roles that allow the masking of
political conflicts and facilitates the presentation of ideas in a nonideological fashion.8 This
feature has contributed to its rapid acceptance. Curiously, the concept has no Spanish equivalent.
The Latin American political tradition tends to consider the state as the epicenter of all struggles.
The concept allows an analysis of MDBs as significant political actors invested with huge
influence, although not always with formal authority, local or global. The exercise of their
their lending operations or as strategic proposals on a broad array of public policies. MDBs
participate as key players in the governance structure of many different policy arenas, both in the
global economy and in borrowing countries. Moreover, as large bureaucratic organizations with
a loose definition as to whom they are accountable, their own institutional governance structure
has increasingly come under the scrutiny of scholars, public officials in donor and borrowing
countries, and, most insistently, international NGOs. A look into the inner dynamic of
international organizations and the anatomy of influence is hardly new.9 What is new is the
extent to which this inner dynamic is affected by international civil society organizations and the
way in which these organizations contribute to shaping agendas, projects, and processes.
The Governance Agenda as Applied by the World Bank and the IDB
Despite the complexities, these multilateral institutions have wholeheartedly incorporated the
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concept of governance into their thinking and even into their lending programs. Good
governance has become desirable in and of itself, for the benefit of the subjects that are
governed. Even though both multilateral organizations have embraced many good governance
goals, their approaches have differed. The IDB does not use the term; instead it takes
governments as a starting point from which to build an agenda of modernization of the state that
encourages civil society participation to provide checks and balances, thus reinforcing the
process of providing checks and balances. The portfolio of MDB loans directed to the legislative
and judicial branches is on the increase. Together the package is intended to balance the
In the case of the World Bank, good governance does not seem to fit very well in the
apolitical body designed to contribute to the economic development of its members, not to
design or redesign their political and social systems. The World Bank seemed to have found a
way to get around this contradiction. It uses a definition of governance that turns it into a
problem-solving tool to make projects more effective or to help borrowing countries use scarce
resources better to move along the development path. Thus, according to the World Bank,
economic and social resources for development.10 In this way, governance becomes
consistent with the original mandates of the World Bank and, in principle, stripped of political
significance. It is about efficiency and effectiveness of public policies. This narrow definition,
however, opens a wide array of new areas in which the World Bank has become entitled to
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involvement. The goals of achieving better governance require action in the following
dimensions:
Political and bureaucratic accountability. The citizens of a country should have some
way of letting political leaders and policymakers in a country know how they evaluate
implement effective policies in the long run. Policies seen to contribute to this end, and
thus eligible for lending are decentralizing administration, creating ombudsman offices,
upgrading public sector information systems, and improving (or creating) the tasks of the
comptroller-general.
The rule of law. Investment prospects can be improved by virtue of a rational legal order
that is predictable and free of political interference. The system should provide the
framework to define property rights, contracts, and liabilities, based on written norms, not
the judiciary, and improvement of the information systems of the judicial system.
public project is enhanced when those who will be affected by it can participate in the
design and implementation of the process. The World Bank envisages participation of
grassroots community organizations as being closer to the affected social groups than
governmental bodies. A wider role for civil society organized by local organizations
should help programs overcome the lack of legitimacy and representation of many
governments in developing countries and should ease the pressures at the same time from
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international NGOs. Actions to be taken by the World Bank include the incorporation of
different voices from civil society during design stages and the implementation of
This agenda is reflected in lending programs that lean heavily toward reforming social
policies (including education) and decentralizing and devolving authority to provincial and local
government. Increasingly included is reform of the judiciary to facilitate access and increase
efficiency, including the creation of financial courts. All in all, the problems of governanceand
not only in developing countrieshave a technical side related to lack of knowledge, skills, and
material resources of different actors. However, key aspects related to bad governance cannot
be delinked from political implications. Technical assistance to a mediocre judiciary may bring
some help, but if it is not independent from political manipulation, it will deliver only minor
improvements. The political power that controls the judiciary will have little incentive to lose its
prerogatives. It can only be expected to change under political pressure, driving the government
to strike a negotiated bargain. The MDBs role in the first areatechnical assistanceis easy to
imagine, whereas its role in the second scenariopolitical bargaininglooks rather awkward.
As Susan Strange noted, Markets cannot play a dominant role in the way in which a political
economy functions unless allowed to do so by whoever wields power and possesses authority.12
In sum, the exercise of power and authority lies at the heart of governance, however narrowly
defined.
Although MDBs intend to play within the limits of the so-called technical understanding
of governance, they also expect to achieve results coherent with a wider definition of
governance: better governments that are more transparent, more honest, and more representative
of the popular will. In this wider sense, we can analyze the roles of the MDBs in the last decade
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at three different levels: global, local (borrowing countries), and their own institutional
governance. In the following sections, we discuss the complexities at each of these levels.
international economic affairs suffers from the same problems of all other global issues. With the
waning of the East-West confrontation, global economic issues came to the fore as part of the
challenges to be solved by the new world order. The global economy itself has been transformed
with the institutional and technological evolution that has given capital markets a renewed
predominance. Less developed countries as a group, and some countries in particular, have
become relevant actors. This arises not so much out of their political activism (as in the 1950s
and 1960s) but as a result of the fast growth of their relative economic weight, whether as global
traders or as borrowers in the world financial system. These changes require a redistribution of
decisionmaking power among a larger number of state actors. Furthermore, a new set of nonstate
players emerged demanding a place under the same sun. Multilateral economic organizations
have grown in number of members, coverage, and complexity; multinational corporations have
become key channels through which an increasingly large portion of the global exchange of
capital, technology, goods, and services is conducted; and international NGOs have raised their
voices as advocates of interest groups so far never represented at a global level by any of the
traditional actors.13 Together with rising aspirations of different actors, technology and financial
deregulation have turned the global economy more volatile and unruly. The governance of the
system has become more and more complex, and the whole formal and informal institutional
structure under which the world economy has been managed over past decades is under stress.
Although MDBs are still privileged actors in the politics of adjustment and global economic
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governance, their stronghold over capital markets has declined. At the same time, they are under
constant fire because of their increased visibility and the new demands from global civil
became increasingly irrelevant, as did developing country groupings, such as the Nonaligned
Movement or the Group of 77. The conflict has been replaced by a global consensus on a
policies than to biases in the international economic order against developing countries.
Simultaneously, the core issues of the liberal internationalist agenda15 are now more rooted
than ever before in Latin America. Indeed, even though in the late 1990s the World Bank seemed
ready to revise part of the Washington Consensus creed, and most of Europe has turned to social-
democratic governments, in Latin America promarket reforms continue apace. Even the center-
left governments elected in the Southern Cone are not expected to move away much from the
It is in this context that MDBs manage to capture a central role, almost monopolistic, in
the mainstream discourse on development issues and the ensuing policy recommendations. This
gives MDBs an unparalleled capacity to influence the main thrust of economic and social
policies in a myriad of developing nations that shapes the way these countries participate in the
consolidation of the new global economy.16 Moreover, it could be argued that the MDBs are
new environmental issues and seeking to become the voice of the worlds poor.
As the influence of MDBs in borrowing countries grew, so did their visibility; and as
their agenda extended, they have come under pressure to shed their traditional monastic secrecy
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in favor of a more open style. Most notably, international advocacy groups have mounted
pressure to adopt more transparent operating practices and lending modalities to make MDBs
more accountable. Some of these demands had usually been part of the traditional left-wing
criticism of the Bretton Woods order. In this postCold War era, they find a different echo within
both the MDBs and donor countries. With the fears of communism behind, the apprehensions
regarding popular participation, democratic representation, and minorities rights abated. MDBs
now seem more willing to listen to these demands, discuss them openly, and even implement
significant changes. The international scenario has contributed to changing the way MDBs
conduct their own internal affairs and lending operations in borrowing countries. Their role as
This transformation, however, was greeted differently at each bank. The IDB operates as
required reforms. In contrast, the World Bank is sheltered by an aura of apolitical interventions
that allows it to steer its doctrine. It applies loan conditions that would be unacceptable were they
Coupled with exogenous criticisms, other endogenous factors also pushed in the same direction;
internal evaluations showed rather starkly the unsatisfactory success of projects over past
decades. Widespread problems of governance were perceived to interfere with the success of
projects or to undermine the ultimate aims of economic policies. Thus, MDBs operational
mechanisms introduced in the 1990s have aimed at reshaping the interaction among stakeholders
in the decisionmaking process.17 A key aspect in these changes has been their willingness to
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lending projects. In their opening to new social actors, MDBs have focused primarily on
in and of themselves are slowly undergoing a transformation as new patterns of interaction are
emerging between new and old-time actors. The MDBs embedded tradition of restricted and
mobilized civil society that, fragile or strong, has made an appearance on the stage. In addition,
large-scale privatization and deregulation have also made room for an invigorated private sector
seen to participate actively in public policy issues that used to be the exclusive realm of central
government. Such proliferation of actors creates a scene where the resolution of problems and
the implementation of programs fit perfectly the complexities analyzed by the literature on local
governance. MDBs programs, by affecting more and more areas outside the traditional and
narrowly defined infrastructure-related loans and, in some cases, by inviting new stakeholders to
become involved in projects, have become increasingly entangled in the governance structures of
their clients. This scenario is a road riddled with obstacles where weak civil societies leave a
vacuum for the MDBs to step in with an agenda that tends to be biased or mistargeted. The risk
is that the MDB agenda may be seen to be a cultural implant, disconnected from country realities
and needs, scarcely contributing to the desired goal. In this respect, the World Bankbeing
more distant and autonomous from member governments is more susceptible to falling into
Perhaps the most important contribution of MDBs has been their operational practices
that have led to changes in governance practices at country level or at least at project level. By
increasing stakeholder participation in projects, MDBs have generated high expectations. And
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these actions hold the greatest potential for introducing meaningful changes in the role the
institutions play in borrowing countries. The point certainly deserves a separate analysis to
dissect the myths and realities of the new participatory paradigm that MDBs claim to pursue.
Although at the level of ideas the discourse relies on concepts of popular participation and
empowerment, practices seem more related to the drive of the private sector to obtain customer
A key point of the governance agenda addresses the issue of the participation of those who will
be affected by projects. Underlying this new concern of the MDBs are two issues: how much of
their loans actually reaches the supposed beneficiaries and, more important, to what extent the
supply of programs and projects meets the real demands of the different social groups affected
by them. The first concern involves issues related to the effectiveness of the loans, the so-called
delivery mechanisms. The second is much broader and more significant because it implicitly
questions the representativeness of the governments with which the MDBs have until now been
negotiating their lending operations. Whereas the first is basically a technical issue, the second is
The new strategyconsistent with these concernsis to design programs that are
demand driven. This means that beneficiariesin other words, demandshould drive the design
of programs and take part in implementation to make sure that they receive what they need,
much in the same line as the business tenet to make firms more client-oriented. In the context of
multilateral lending, however, this issue goes further and deeper than just improving customer
satisfaction; it entails redefining who the clients of the MDBs are. So far, the provision of
financial support had involved working almost always with central governments, which have a
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dual role as clients and shareholders. National governments have been the borrowers and the
civil society participation, the MDBs are opening new spaces for actors that may or may not be
to the liking of the incumbent government. Defining the clients, or even prioritizing them, may
become problematic when various constituencies exist who may not share the same goals and
interests. How would the MDBs handle an eventual conflict between two clients? As things
stand now, the MDBs may not bypass the governments in their relations with institutions of civil
society because the latter cannot assume liabilities, and the official borrowers continue to be the
national governments. This dilemma has already arisen in the discussion about the opening of the
World Bank Country Assistance Strategy (CAS). Among our case studies, the issue emerged in
various ways in each country. In Mexico, the government opposed opening the CAS and, when
faced with an information leak, the government issued a complaint based on the principle of
certain NGOs and a few members of Congress that forced the government to make the CAS
public. In Argentina, the CAS was made public to discussion only once it was approved, and
then only to a small group of NGOs and academics. In sum, it is clear that there are also strong
political and strategic aspects hidden behind the apparently more narrow technical agenda of
increasing civil society participation to improve the effectiveness of loans and the efficiency of
In the business of multilateral lending, it used to be the case that projects had to be identified (by
experts), prepared, appraised, and selected through comprehensive and systematic analysis.19
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These methods included cost-benefit analysis, linear programming models, network scheduling,
and planning/programming budgeting systems. Underlying these methods was the assumption
that plans emanating from rational analysis had to be carried out through a hierarchical structure
of authority and a comprehensive system of rules and regulations. Exhaustive analysis would
lead to a concise definition of problems and generate alternatives from which optimal policy
choices could be made. Conflicts over goals and values were seen as adverse, unwanted
international lending institutions attempted through this strategy to promote social and economic
reforms in developing societies with relatively little knowledge of the conditions they were
seeking to transform and with little certainty that their theories, policies, and projects would
The new paradigm is straightforwardly value laden, and it has thus required changes not
only in the content of projects but also in the way projects are conceived. Design and
implementation of projects has become less hierarchical, and operations have moved from
overarching goals to targeted interventions. Since the mid-1990s, in both MDBs, loans and
projects have made efforts to include consultation with beneficiaries. New procedures are
gradually evolving to replace the traditional reliance on external experts, which assumed the
existence of authoritative and objective decisionmakers whose input could provide solutions to
economic and social problems. The character of consultation has evolved in the process and a
planning involves continuous dialogue with beneficiaries during the design and implementation
of a specific project or program. In the words of the World Bank, consultation is considered as
an iterative process that can and should be repeated at every stage of the Banks project
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cycle.21
allow beneficiaries to take an active and influential role in shaping decisions that will affect their
daily lives, safeguarding against policy reversals and offering loans and programs greater
legitimacy and, one hopes, sustainability. It is result oriented. Consultation is seen to facilitate
insofar as the scope of participation is restricted to projects, programs, and issues that both
MDBs and government agree are appropriate candidates for consultation. Not only are the
case-by-case basis.
Yet once the process is set in motion, expectations rise and differences about what
participation entails have begun to flourish among actors involved. Gradually, as the need to
connect projects at the microlevel with policies at the macrolevel has become increasingly
apparent, the expectations of civil society have gone beyond the MDBs piecemeal offer.
Participation by invitation to preselected instances is seen to be too narrow to channel the new
demands. NGOs and other civil society groups argue in favor of the need to coordinate projects
and programs with overall economic policies. For instance, sanitation programs in urban areas
cannot be isolated from housing projects, and both of them, at the same time, need to be linked
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with the general development strategy. The lack of coordination and the tension between these
two levels has led civil society to demand a bigger say in the design of policies and development
strategies as well. In general, NGOs no longer see their role as restricted to more efficient
executors of programs and projects. Their demands have flourished, especially vis--vis the
World Bank, which has provided them with an enabling environment. The NGOs have included
the IDB only at the edge of their radar screen, and they have focused mainly on the World Bank,
which has made greater efforts to include their demands, albeit after immense pressure.
Thus the process of participation creates a growing gap between the expectations of
NGOs and the MDBs with regard to the scope of the concept of participation and ultimately its
aim. While MDBs and governments tend to see participation as an instrument of ownership
a remedial way to improve project resultsNGOs and other civil society groups see it as a step
to empowerment, or a way to compensate for the exclusionary bias of the policy process. With
the growing ascendancy of autonomous civil societies in the region, the confines of requested
participation opened by MDBs have become all too obvious. For NGOs and grassroots
organizations, the meaning of participation is linked to the capacity of social actors to redirect
and shape broad policies that affect them. Participation should promote empowerment and is
considered as a propelling force toward good governance practices and decision by consensus.
Participation should also strengthen civil society by empowering groups, communities, and
organizations to negotiate with institutions and bureaucracies, thereby influencing public policy
and providing a check on the power of government. The novelty of this dynamic is that civil
society proposals are exogenous to the government and political parties and somehow question
Most projects and programs seem to face this tension between empowerment and
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ownership. Although consultation takes place, it is not enough to quench the new demands that
have gradually arisen. The asymmetry of expectations (with streaks of confrontation) increases
as we move from micro- to macroareas. For instance, it is increasingly possible to find civil
society involvement in project design, but involvement in the selection of issues to be included in
country programming is still uncommon. In sum, civil society demands more involvement in
project/program and policy design than what MDBs and governments are genuinely willing to
incorporate. NGOs, claiming that they better represent grassroots movements and organizations,
aspire to play an agenda-setting role, often bypassing governments, elected or not. However clear
the MDBs operational strategy for achieving the goals of governance and participation may be,
politicization, tension, and even conflict may ensue in the new three-way relationship. NGOs
aspire to increasing influence over the decisionmaking processes. Why settle for just a piece of
the sky?
Institutional Governance:
The process differs in rhythm and modalities when comparing international organizations.
Evidence shows that the incorporation of new mechanisms and strategies for civil society
involvement stems from the institutional culture and political practices of the organizations. In
turn, the different governance structures and institutional cultures of each MDB influence the
pursuit of their governance agenda and their participatory paradigm, and the intensity and even
the commitment with which they are pursued. Although both the World Bank and the IDB now
share a concern for the design of projects in a new bottom-up fashion, there are differences in the
way objectives and strategies are framed. The World Bank, still marked by the long-time effort
of structural adjustment, has placed overall greater emphasis on the consolidation of the gains of
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stabilization. In contrast, the IDBs greater attention to regional peculiarities, coupled with its
different skills base, is reflected in an agenda that makes much more of the great income
inequalities in the region. The IDBs main thrust is on the goal of equity-oriented growth. At the
IDB, the goals pursued do not come under the umbrella of governance; they come under the
umbrella of second generation of reforms and modernization of the state. Its focus is mainly on
institutional strengthening, including the ability of civil society to take up some of the tasks
The aspect of governance that matters first is the composition and functioning of the
board. The executive directors represent the member countries, and their individual voting power
is weighted by the size of their capital contribution. In this respect, the IDB stands apart because
the distribution is highly concentrated.23 The IDB is at once closer both to borrower governments
who hold a little over 50 percent of its capital and votes and to the United States, which enjoys
enormous dominance with a third of the total voting power. The governors of the IDB from both
the United States and the region display an intense sense of ownership and a distinct feeling of
entitlement over the lending program. The IDB, as put by Sidney Dell, is the servant of the
member governments, not their master.24 Although this relationship may be changing, the
essence remains untouched, change being slow and still quite marginal. Governments are an
In contrast, the World Banks voting and capital shares are relatively more atomized. The
United States remains the single largest shareholder at the World Bank, but with 17.43 percent of
the voting power, it holds a significantly smaller portion than at the IDB. Even though the World
Bank president is always a U.S. national nominated by the Treasury, the atomized distribution of
shareholding and voting power allows the Bank president and management to hold an arms
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length relationship with all governments, including the United States. After taking office, the
World Banks president and, by extension, its management are independent from all
shareholdersmuch more so than are the president and management of the IDB.
Shareholding power also influences the agenda-setting process. In the case of the IDB,
the agenda is an item for negotiation with each periodical capital increase. Thus, regional
governments are allowed a greater role in setting the agenda that then unleashes lending
programs. For instance, the eighth replenishment, in 1994, provided a forum where members,
through a consensus-building process, discussed and agreed on the new investment priorities. In
contrast, the atomized shareholding of the World Bank, gives management greater leverage in
the shaping of the agenda. In this case, the agenda is less negotiated and more prone to include
global issues.
Different patterns of recruitment also influence the relationship style with borrowing
member governments. The IDBs president is always drawn from the Latin American ranks, and
he is seen as a collective ambassador of the governors of the Bank, of borrowing countries, and
of the major donor, the United States. He remains much more closely scrutinized by the board
than the president of the World Bank and must be careful not to upset political sensitivities.
Moreover, top management at the IDB is more frequently drawn from the regions former high-
level public officials than at the World Bank, where other kinds of channels based on merit,
education, and formal and informal old boys networks prevail. This allows the World Bank to
play an evangelizing role.25 Although these are, all in all, differences of degree rather than of
kind, the result is a different relationship vis--vis all governments, both borrowers and donors.
best imperfect restricts the IDBs room to maneuver when forced to define who it is responsible
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to. First and foremost the IDB responds to governments and to government-set priorities.26 Thus,
its relative inclination to increase its openness to civil society is marked by this very clear line of
command. This is especially evident at the level of country programming, which is considered to
be solely a government-to-bank negotiation. Moreover, the result of the process still remains an
internal bank document: the so-called Country Programming Paper does not become derestricted
even after approval. By contrast, in most countries, the equivalent document from the World
Bank, the so-called Country Assistance Strategy, tends to be more readily accessible to the
public. Moreover, the World Bank is experimenting in a number of countries with the idea of
opening the exercise to participation at the same time as it conducts negotiations with the
government. The countries first selected in the region are Colombia, El Salvador, and Peru, all
three of them, it should be noted, characterized by the extreme fragility of state institutions.
As another indication of this trend, the World Banks president, James Wolfensohn, has
also launched a research process to assess the lessons of past structural adjustment, known as
Structural Adjustment Participatory Review Initiative (SAPRI). Each country study requires
governmental approval and participation; still, the initiative in itself indicates the greater
autonomy of the World Banks president. It would be difficult to imagine IDBs President
Iglesias launching an independent general initiative of this sort requiring only case-by-case
These character traits are also reflected in the constitution and shape of the inspection
panel at each MDB. The Inspection Panel at the World Bank is a three-member independent
bank policies and procedures. Once a claim is submitted, the panel weighs evidence from
claimants and management and sends a recommendation to the board. If the board authorizes an
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investigation, prior consent from the government involved is requested for the inspection to
proceed. In contrast, the inspection function is not permanent at the IDB, and much more power
is vested with the president. The office of the president receives claims, weighs evidence, and
However, the tighter mechanisms at the World Bank are no guarantee of tighter control
over projects when alternative mechanisms of finance are available. An illustrative case in point
was the much publicized attempt of President Wolfensohn in early 1997 to make the company
Endesa take measures to mitigate the effects of the Pangue Dam on the Bo Bo River in southern
Chile. When Wolfensohn threatened to declare the company in default, the company paid off its
debt obligations, seeking and obtaining alternative finance. The influence of the World Bank on
One could speculate that the World Banks inclination to incorporate civil society both
before and after country programming is an exercise that increases its already relatively high
autonomy from borrowing governments. The more demands are placed on its agenda, the more it
can play one against the other and the smaller will be the risk it runs of being tied to a single
stakeholder. The autonomy of the World Bank from borrower governments is indeed reflected in
greater opportunities for participation of civil society at the time of planning general strategies.
The real world reluctance remains to be tested, considering that the World Bank is only half of
the picture. In effect, in many if not most countries in the region, the IDB has become since 1995
the most important official provider of external support. If the World Banks strategy is open but
the IDBs remains a closed exercise, how relevant to the course of general economic and social
policy does the World Banks openness really become? Is it a half-empty exercise? Can the
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To take this point from a different angle, the World Bank has evidently been making
efforts to change its mode of conceiving country strategy before and is also predisposed to study
effects after. Today, at both the beginning and end of the process, procedures are clearly different
from those prevailing in the recent past and from what goes on at the IDB. At the IDB, these two
bounds of the public domain and even out of the bounds of NGO concerns, which seem to be
A clearly different approach to civil society strategies can be observed in the two MDBs.
Whereas the World Bank displays a market-centrist approach, the IDB focuses in a more state-
centric relationship. The World Bank assumes that increasing involvement of civil society and its
demands will, in time, improve the quality of governments. In contrast, at the IDB the
participation agenda is conceptually more closely linked to the state, placing the focus on the
linkages and interaction with governments. As a regional institution, the IDB is at pains to knit a
web of commitments with regional governments to allow and gradually strengthen the
participation of civil society. A priori, however, one would expect that these differences are
reduced, if not negligible, at a microlevel, where both institutions work within the same new
consensus on implementing development projects and sharing expertise, skills, and best
practices. Remaining differences at project level seem to stem from factors that are less
institutionalized and more haphazard, such as personalities, languages, and even national
idiosyncrasies.
Field research in different Latin American countries focused on the patterns of relationship in the
triangle formed by MDBs, governments, and civil society. In the following section, we flesh out
23
some major trends stemming from the case studies, resisting the temptation to believe that the
eight points made below can cover the full complexity of the issues at stake.
1. The Inter-American Development Bank and the World Bank exhibit different approaches to
promoting participation. Their differences have to do with the particular institutional culture
The approach to civil society participation in the IDB and the World Bank reflects the specific
corporate culture and institutional features of each organization. The IDB has adopted a state-
centric approach to governments agreement. At the risk of severe oversimplification, the IDB is
less interested in leaning on a strong civil society to act as an effective check on government than
in channeling participation to predetermined and focalized instances. In contrast, the World Bank
takes a market-centric approach and aims at strengthening civil society to reduce the boundaries
of the state and to control the power of those who govern. This approach views the public sphere
in term of market mechanisms, where a strong civil society with heightened demands on
government will improve the quality of public administration. The IDBs agenda is molded by its
own governance whereby Latin American countries hold 50 percent of the voting power on the
executive board. This has allowed the IDB to generate less of an arms length relationship with
the borrowing governments of the region. Thus, the IDBs civil society approach works in
2. In spite of their different approaches, the World Bank and the IDB exhibit strong similarities
when implementing projects. Civil society participation is promoted only in certain types of
projects.
Participation is almost exclusively limited to social assistance projects although there remains a
hard core of loans related to adjustment and specific sector reforms with little or no involvement
24
of civil society. Participation mechanisms are applied selectively. This means that, at best, it is
The World Bank and the IDB each have a normative framework promoting civil society
participatory practices is not binding. In fact, in the majority of the cases, the decision whether or
how to promote civil society participation remains at the discretion of loan officers. Ultimately,
lending only in three specific instances: high-risk environmental projects, projects affecting
indigenous peoples, and projects that lead to population resettlement. In such cases, the people
affected by the projects are entitled to raise complaints to the Inspection Panel in the event that
policies are not appropriately implemented. In all other programs, the inclusion of civil society is
Participation, even with only these limitations, has led to tensions with the borrowing
governments. The lack of binding guidelines allows both MDBs to maintain an ambiguous and
selective stance avoiding confrontation with governments. In practice, the World Bank
introduces some ambiguity into its agitational rhetoric, whereas the IDB is operationally not as
weak toward civil society participation as it seems conceptually. This brings both MDBs closer
to the grassroots than is readily apparent, with different forms of participation taking place on
two tracks.
loans. Here, field offices in borrowing countries are key players. The World Bank relies on high-
profile liaison officers who maintain an active dialogue with the NGO community. The IDB has
25
convened an Advisory Council of the Civil Society in each field office to draw a map of civil
and sector adjustment reforms. Here, civil participation is shunned. Only some executive
agencies and loan officers take part in the negotiation of the terms and conditions of loans.
Paradigmatic examples of this track are the second-generation reforms that entail a redistribution
of power among players in the process. Herein lies the hard core of MDBs lending, where no
3. Field research shows a much larger group of relevant social actors in the field than appears
on the MDBs radar screens. More specifically, in their construction of civil society, the MDBs
seem biased toward NGOs, without considering other, albeit weaker but still relevant, civil
individualism, and voluntarism to the detriment of other forms of social organizations seldom
invited to participate. At the same time, invited NGOs seem increasingly attracted to the MDBs.
Because of this mutual attraction, there is an increasing trend to institutionalize these relations
via the creation of new government agencies in charge of implementing social assistance loans.
In Argentina, the Secretariat for Social Development has created a National Center of
Community Organizations to foster active links with NGOs. In Colombia, the 1991 constitution
established a framework for the participation of NGOs. In this context, the Colombian
in the case of Argentina, trade unions and some civic organizations actively resisted the
26
structural adjustment measures. In Mexico, the government has generated strong links with
organizations closely linked to the state or the party apparatus. Rural organizations and
campesino movements from marginalized areas actively resist the adjustment policies of the
central administration.
In sum, the group of civil society organizations in Latin America able to raise demands is
considerably larger than the group of NGOs that either maintain an ongoing dialogue with or
receive funds from MDBs. This selective strategy was able to deflate the power of trade unions
transferred with equal cogency to general lending strategies. The World Banks Country
Assistance Strategy and the IDBs Country Paper remain confidential documents discussed only
with the borrowing governments. Although the World Bank recently allowed participation in
selected countries, the experience was carried out half-heartedly and yielded rather limited
results.
Neither the IDB nor the World Bank disclose the hard numbers of adjustment contained in their
general lending strategies, although the World Bank has recently tested some innovations. In
Argentina, a debate was conducted after the fact on the CAS approved for the 19971999 period.
Amendments were thus foreclosed. Moreover, only the parts of the document that contained
reference to social assistance funding were up for debate. The macrosection was not made
available, and NGOs might have been led to believe the World Bank was a benefactor handing
out grants at no cost. In Colombia, Peru, and El Salvador, some civil society organizations were
invited to give inputs to the CAS process before approval by the board. Such openness must,
however, be put into context. Colombia and Peru are currently suffering severe internal conflicts;
27
civil society is politically disorganized, and a torn state is at odds responding to social demands.
In the case of Peru, the government gave its consent to consultation process, but it did not take
part in the experiment. In Colombia, several government agencies joined in the experience, but
invitations were significantly biased in favor of NGOs, with labor union movements and other
organizations altogether excluded. Whereas in Colombia the CAS was approved by the executive
directory and later published in Spanish, the contents of the final document in Peru were never
released. Thus, the possibility of comparing the draft and the end document never materialized.
At the other end is Mexico, where the government has severely limited possibilities for
participation. However, during the drafting of the CAS, civil society organizations managed to
get hold of some important information contained in the document and handed it over to the
press. As a consequence, many NGOs had the chance to air their views on specific points. The
incident led the government to raise an official complaint to the World Bank, thus demonstrating
the serious limitations that governments pose to the participation and disclosure policies.
In Brazil, a constitutional reform introduced in 1988 gave Congress the right to approve
international loans. The strengthening of Congress allowed civil society to switch their old
tactics of indirect action using the lever provided by North American NGOs. Such a form of
indirect participation was the expedient of human rights campaigns against the military
governments of the 1960s and 1970s. In the 1990s, however, the strengthening of civil society
organizations and the processes of democratic consolidation have opened new options in national
politics and rendered obsolete the sidestepping of government. The abandonment of indirect
tactics also coincided with the rise of networks dedicated to strengthening ties with political
parties and Congress. Political citizenship campaigns had as their focal points the institutions of
Congress and local government. In Brazil, for the first time ever, the strategies of legislators and
28
some NGOs converged to limit the collaboration between the executive and the MDBs. In
addition, the Brazilian case posed a new challenge insofar as civil society prioritized public
dissemination of the documents over participation. In fact, civil society and members of
Experiences with Country Assistance Strategies reveal that the intention of the World
limited. The opening to participation seems to have been aimed at addressing the expectations of
relevant actors in Washington rather than of those who are actually affected by the
implementation of the reforms. The IDB has not fallen for such exercises. The Country Paper is
negotiated with the government and is not made available for public dissemination.
Paradoxically, the brunt of demands for greater participation is generally borne by the World
Bank. To sum up, case studies show that the actual relevance of the whole exercisethough
minimalhas more to do with the setting of precedents and the raising of expectations than with
the degree of participation achieved in a single event. It raises the floor level and has the
5. Governments in the region have left behind the confrontations with MDBs that marked the
Since the early 1990s, MDBs have acquired the role of mere servants providing guidelines and
Conditionality applied to the loans acts as a trigger for reform processes already in place.
the process and overcome internal opposition. The cases of reforms introduced in the health and
labor market sectors in Argentina, Brazil, Colombia, and Mexico illustrate this trend. Such work
29
in tandem can be observed even in highly sensitive areas the MDBs had never been involved
with. This has been the case in Colombia and Mexico, where widespread violence has justified
the financing of specific programs to promote peace and to prevent greater marginalization of
rural areas. In sum, lending programs during the 1990s have mostly coincided with the agendas
6. Case studies show that the main roadblocks to achieving greater levels of open participation
lie in governments. In fact, access to the extrabudgetary resources provided by MDBs may feed
Governments have responded to the new participatory mechanisms of the MDBs on two tracks.
On the one hand, they are reluctant to allow access to information and participation in programs
implementation of sector reforms (health care, education, labor) is usually politically sensitive.
On the other hand, governments are prone to adopt the participatory initiatives of the MDBs in
social assistance projects. In many cases, these funds are used as clientelistic handouts to obtain
favors from the electorate. All in all, cases show excessive discretion in the extent to which
governments make use of funding and political calculation in the use of the mechanisms of
participation promoted by the IDB and the World Bank. The message, therefore, is that in the
demonizing of the MDBs a lot of displacement politics is taking place, and more care in the top-
down monitoring of the governments actions is necessary for global governance goals.
7. In spite of the MDBs declared reluctance to apply general prescriptions for health care
reforms, the experiences in Latin America have been exceptionally similar. Two features of such
reforms stand out: decentralization and the transfer of state-provided care to the private sector.
Decentralization can lead to a significant improvement in the quality of services and in the
30
management of public resources but requires competent local management skills, availability of
sufficient resources, and technical expertise. Few subnational administrations are qualified to
take over responsibilities from the federal government. In many instances, the fiscal funds
directed to the local administration rarely reach their destination. When received, these funds are
usually managed inefficiently or are insufficient to meet the obligations. As access to health care
cannot be ensured, inequality is at best perpetuated. Although many of these reforms are not
complete, the introduction of competition among providers and the increase in the role of private
health services providers so far have not been effective to make health care provision more
equitable.
8. The analysis of the loans supporting health care reform revealed the coexistence of two types
of practices: traditional practices that respond to a vertical hierarchy; and practices based on a
new consensus with respect to the principles of transparency, participation, and financial
accountability. Such coexistence leads to a growing gap between the rhetoric and the practice of
the MDBs and highlights the need to study the reasons why traditional practices are so difficult
to eradicate.
Negotiations between MDBs and governments have been highly ambivalent with regard to the
participation of civil society. In cases where municipalities and NGOs have taken an active role
in the negotiation processes (as in Brazil), this was because of congressional requirements rather
than because of the mechanisms promoted by MDBs in and of themselves. In all of the cases
studied, groups affected by the reforms were absent and even actively excluded from the
negotiation table. In Argentina and Mexico, resistance and collective action forced renegotiation.
An Open-Ended Walk
The new pledges of the MDBs may have a soft backbone. But they nonetheless have sown the
31
seeds of a transformation in the triangular relationship with government and civil society. The
process is fragmentary and ambivalent, but it has opened up new opportunities for civil society in
borrowing countries. The question of who ought to participate and when raises two important
issues.
First, the question of who is entitled to participate in the design of public policy points to
the central issue of interest representation. The new practices of the IDB and the World Bank
Once the secure terrain of electoral representation is abandoned, one is confronted with a
slippery slope where the rights and responsibilities of various social groups have to be redefined.
Who is more representative: an NGO with global reach opposed to the construction of a bridge
because of its environmental impact, or the inhabitants of an isolated town whose livelihood
might benefit from the construction of the bridge? Traditional democratic practices would give
priority to the majority and would formulate a range of approaches to addressing the interests of
minorities. The dilemma poses a challenge to the political systems of borrowing countries insofar
as it exposes their own democratic deficit. Although useful in crisis situations, the mechanisms
Second, the question of when those entitled can participate further complicates the
picture. So far, participation has been restricted to the project implementation phases, with
precious few examples of civil society participation at higher levels of the decisionmaking
process. The risk posed by having participatory mechanisms that are embryonic without
adequate institutionalization is that such mechanisms may serve only to increase the legitimacy
32
All told, civil society participation in lending programs is here to stay. It will continue to
transform traditional power relations at the global and national levels. At the same time, the
MDBs have become key players in domestic politics beyond the field of macromanagement. The
nature of these changes goes beyond simple dilemmas of words versus deeds. Viewed with more
or less enthusiasm, they will adopt a different complexion in each country, but domestic and
international democratization will continue to fuel each other. As Alice quizzed the Cheshire cat
Would you tell me, please, which way I ought to go from here?
That depends a good deal on where you want to get to, said the Cat.
Then it doesnt matter which way you go, said the Cat.
Oh, youre sure to do that, said the Cat, if you only walk long enough.29
Notes
Argentina and Latinoamericana (IERAL) in Buenos Aires. He has been a consultant for the
at the University of Miami, Florida. Mara Fernanda Tuozzo is a research officer in the Program
33
University of Warwick, England. Diana Tussie directs the Program on International Economic
Institutions at FLACSO in Buenos Aires. In 1996, she was selected as Distinguished Fulbright
Scholar in International Relations for the fiftieth anniversary of the creation of the Fulbright
Commission. The authors acknowledge financial support received from the Ford Foundation.
1. Diana Tussie and Mara Fernanda Tuozzo, Argentinas Big Bang Reform: The
Interplay of MDBs and Domestic Actors, Working Paper No. 2 (Buenos Aires:
FLACSO/Argentina, 1997).
los bancos multilaterales de desarrollo, in Diana Tussie, ed., El BID, el Banco Mundial y la
FLACSO/Argentina, 1997).
3. Sahid Burki and William Perry, Beyond the Washington Consensus: Institutions
5. UNESCO, Governance, International Social Science Journal, no. 155 (March 1998):
105.
6. Ibid., p. 81.
34
International Social Science Journal, no.155 (March 1998): 105114.
8. Ibid.
9. Robert Cox and Harold Jacobson, The Anatomy of Influence: Decision Making in
13. Leon Gordenker and Thomas G. Weiss, NGO Participation in the Global Policy
14. Richard Higgott and Simon Reich, From Globalisation to Glamourisation: The Rise
of the NGO in International Relations, paper presented at the annual meeting of the
International Studies Association, Washington, D.C., 1620 February 1999; Jan Aart Scholte,
The International Monetary Fund and Civil Society and Underdeveloped Dialogue, Report of
Research Findings, The Hague, Netherlands: Insitute of Social Studies, August 1998; Michael
35
16. Ngaire Woods, Governance in International Organizations: The Case for the Reform
in the Bretton Woods Institutions, UNCTAD Paper for the Group of 24 (Geneva: UNCTAD,
1997).
17. The term stakeholders involves not only beneficiaries but also representatives of
borrowing governments (elected officials and local government officials), indirectly affected
groups such as NGOs and private sector organizations, and bank management staff.
19. Robert Picciotto and Rachel Weaving, The New Project Cycle, Finance and
Routledge,1993).
21. World Bank, Participation Sourcebook (Washington, D.C.: World Bank, 1996), p.
10.
22. Norman Schwartz and Anne Deruyttere, Consulta comunitaria, desarrollo sostenible
Bank, 1996).
23. Diana Tussie, The Inter-American Development Bank (Boulder: Lynne Rienner,
25. Moises Naim, From Supplicants to Shareholders: Developing Countries and the
36
World Bank, paper presented at the conference sponsored by the Group of 24 on the occasion of
the fiftieth anniversary of the Bretton Woods conference, The International Monetary and
Financial System: Developing Country Perspectives, Cartagena, 1820 April 1994 (Geneva:
UNCTAD, 1995).
26. Political consensus among governments, for example, led the IDB to suspend
consideration of loans to Allendes Chile in the early 1970s and the Sandinista government in
Nicaragua in the 1980s. In the 1990s, with a new consensus on democratic rule after the fall of
President Aristide in Haiti, the IDB suspended all further country planning. When President
Fujimori suspended constitutional rule in Peru in April 1992, the board blocked all new loans to
the country, and management froze the signature of loans already approved by the board. The
block was lifted when elections were announced in September, and the Bank subsequently led an
international rescue package for Peru. See Tussie, The Inter-American Development Bank.
represa pangue en el Bio-Bio: La excepcin a la regla? Working Paper No. 4 (Buenos Aires:
FLACSO, 1999).
37