The World Bank and How It Shaped Public Policy In the Developing World - Essay Example

?The World Bank and How it Shapes Public Policy in the Developing World I. Introduction This paper intends to look at the World Bank as an organisation and how it impacted public policy in developing countries, particularly with respect to the context of large scale investment in farmland. It begins by providing an overview of the organization chosen, in this case the World Bank, a background of the policy issue involved, the desired outcome and goal, the action undertaken for that outcome, which is the enactment of the Principles for Responsible Agro-investment (hereinafter, RAI Principles). It will then look at the variables that came into play, specifically the role of the legal system, the actors involved such as the local elite, the challenges to local governance. Then, it will analyze the relationships between the variables – how the World Bank impacts on public policy by setting the frame and policy framework upon which all actors revolve and rotate. By way of clarification, it is imperative to first define what we mean by “public policy”. It is crucial to view public policy not simply as that which is reposed in written statute, but as Gerston put it, the “combination of basic definitions, commitments and actions made by those who hold or influence government positions of authority” (2010: 1) as well as an ongoing process of decision making by a variety of actors, the ultimate outcome of which is the determined by the content of the program being pursued and by the interaction of the decision makers within a given political administrative context.” (Grindle, 1980: 5.) 1.1 Background The World Bank is an international financial institution whose avowed mandate is to support capitalist development in the third world by consciously steering developing countries towards international trade, liberalization and capital investment. Its World Development Report 2008: Agriculture for Development (WB, 2008), signposts its shift to agriculture and rural development, primarily owing to “a greater recognition that improving agriculture performance is the most powerful tool we have available to reduce global poverty and hunger, both directly and indirectly” (FAQ, Agriculture and Rural Development, WB: 2010). By its own admission, its primary focus is market and investment oriented – “raising smallholder productivity, strengthening smallholder linkages with the markets, and helping better manage risks.” (ibid). Most relevant to this paper is its commitment to “develop a code of conduct for large scale foreign investment in agriculture to ensure equitable sharing of benefits.” (ibid). The balance of power within the World Bank is historically overwhelmingly tilted in favor of the North. It was created during the Bretton Woods Conference in 1944, where negotiations were dominated by the United States and the United Kingdom. Critics have constantly railed against the World Bank’s so-called poverty alleviating measures that have only resulted in driving third world economies deeper and deeper into debt. Its interventions in agriculture and rural development have been said to be no different. In truth, however, the prescription package that is contained in these structural adjustment programs, particularly its explicit support for laissez-faire agrarian reform, have led to even deeper poverty and rural inequality. This is because land redistribution strategies that are not backed by coercive State power and only rely on the “efficiency of the market” are often hijacked by the elite and the dominant classes in the countryside. By its inordinate emphasis on land titling as the primary solution out of rural poverty, the World Bank has managed to reframe the land reform imperative in the developing world by obscuring core issues of systemic exploitation and social relations of production under the jargon of efficiency and equitable land markets. 1.2 Contextual Backdrop The global food crisis of 2007-2008, attended by a sudden and alarming spike in food prices and the skyrocketing costs of gasoline, have compelled import-dependent governments to revisit their agricultural policies and assess whether or not the agricultural lands at their disposal would be enough to feed their burgeoning populations. The realization that there was not enough lands to be had was what granted traction to the idea of engaging in off-shore farming in the global south. Instead of importing food, feedstock or fuel and be at the mercy of the vagaries of the market, they would grow it on their own by leasing vast tracts of agricultural lands in another country. Borras and Franco described it as: “A convergence of global crises (financial, environmental, energy, food) in recent years (that) has been contributing to a dramatic revaluation of and rush to control land, especially land located in the Global South. (2010: 508)” It has been reported that between 2006-2009, 37 million to 49 million hectares of land in poor countries, valued at $20 to $30 billion, were sold or under negotiation for sale to foreign buyers (The Economist: 2010). The social costs, however, were not minimal. Determining the extent of the damage to the developing world (the host countries) means going beyond a country-specific assessment and looking not only at how many farmers were dispossessed or were incorporated under terms adverse to them, but also how it enervates global class fault lines and the North-South unevenness. Critics of global land grabbing believe that with the North already controlling resources and driving unfair competition via farm subsidies, granting more access to land means more access to the means of production, larger gate-keeping functions in the realm of prices of food and energy, and therefore more entrenched corporate interests. On the other hand, the proponents of these large-scale investments feel that farmland investment means more integration into the global value chain of the farmers, and this will benefit them in the final analysis. All that needs to be done, according to them, is to mitigate the risks to the socially vulnerable so that the gains may be maximized and farmers’ livelihoods can improve as a result of increased earnings. The neo-classical formulation, the ideological fulcrum for the World Bank and this report, clearly finds itself in the first pole – explicitly stating that rural peoples can benefit from large-scale farmland investment through integration into the market. 1.3 Specific action We come now to the World Bank’s main contribution to the land grabbing discourse, the crafting of the principles of responsible agro-investment. The text enumerated the principles as follows: 1. Respecting land and resource rights. Existing rights to land and associated natural resources are recognized and respected. 2. Ensuring food security. Investments do not jeopardize food security but strengthen it. 3. Ensuring transparency, good governance and a proper enabling environment. Processes for acquiring land and other resources and then making associated investments are transparent and monitored, ensuring the accountability of all stakeholders within a proper, legal, regulatory, and business environment. 4. Consultation and participation. All those materially affected are consulted, and the agreements from consultations are recorded and enforced. 5. Responsible agro-investing. Investors ensure that projects respect the rule of law, reflect industry best practice, are economically viable, and result in durable shared value. 6. Social sustainability. Investments generate desirable social and distributional impacts and do not increase vulnerability. 7. Environmental sustainability. Environmental impacts of a project are quantified and measures are taken to encourage sustainable resource use while minimizing and mitigating the risk and magnitude of negative impacts. A perusal of the seven principles shows a generous use of praise words and praise adjectives – “proper legal, regulatory, and business environment”, “industry best practice”, “durable shared value”, “desirable social and distributional impacts”, “sustainable resource use”. What is interesting to note is that semantic choices are made to appeal both to corporate interests (the lexicon of big business, e.g., “industry best practice”) and to social movements/civil society/ NGO groups (the progressive lexicon, e.g.,, “sustainable resource use”, “land and resource rights”). This tells us a lot about the intended audience of the document: the corporate investors, but also civil society interest groups. By mixing the two together and trying to appeal to both, the World Bank is telling us even more: it is telling us that it believes it possible to merge corporate interests with the interests of those advocating for the interests of the marginalized. II. Variables An important variable to consider is the legal framework of the host countries (the countries that are the recipient of the investments and whose lands are being used), which are influenced by the World Bank’s neoliberal policies. The flurry of bilateral and multilateral trade agreements entered into and the lifting of protectionist domestic policies required some reconfigurations in the legal framework. When the food crisis hit in 2008, the scramble for agriculture lands and resources reached crescendo pitch. Vast tracts of land became fair game -- for cash-rich but resource-poor countries needing to outsource agricultural production in order to maintain present consumption patterns, transnational companies looking to cash in on the bio-fuels phenomenon created by mandatory blending legislation, and even developing economies with populations bursting at the seams that need to be fed. On the other side, overseas investment in farmland was a bonanza for the host country and it became clear that even starker reconfigurations in the policy framework had to be quickly made: new laws had to be created, old ones amended, and legal fictions invented. We look at some of the legal frameworks in countries that are host to these farmland investments and explore in broad strokes the common themes that underlie these frameworks. Special interest is given to Southeast Asia, which saw in the last half decade, a frenzy of trade-friendly legislation designed with the express intent to increase the influx of foreign investment. In December 2005, Cambodia passed a sub-decree to its Land Law of 2001, which would allow the state to issue Economic Land Concessions – defined as a “mechanism to grant private state land through a specific economic land concession contract to a concessionaire to use for agricultural and industrial-agricultural exploitation” (Sub-Decree No. 46. Chapter 1, Article 1.) Land to be granted under the ELC should not exceed 10,000 has., and shall is supposedly subject to the following criteria: (1) registered and classified as state private land; (2) land use plan for the land has been adopted by the Provincial Municipal State Land Management Committee and the land use is consistent with the plan; (3) environmental and social impact assessments have been completed; (4) no involuntary resettlement by lawful land holders; and (5) public consultations have been conducted. (Article 4, Chapter 2.) The limit on the land size was supposedly to ensure that big corporations will not be able to gain concessions over limitless tracts of land. But then we see how another variable comes into play: corporations. Corporations have developed an ingenious method of flouting this simply by applying for two or more separate concessions over parcels of land that are contiguous to each other. The NGO Licadho reports of a case wherein “on the same day in 2006 two companies sharing the same registered office in Phnom Penh were awarded adjacent concessions in Koh Kong for sugar cane plantations. Each concession is under 10,000 hectares, but together they total 19,100 hectares.” (Licadho: 2009). Also, despite the clear transparency requirements, village people could not make much use of the public records in the logbook, because while the law imposes the requirement that all ELC’s be documented in a logbook and made available to the public, it is written in English and not in Khmer. Another variable is international financial organizations, such as the Asian Development Bank, which derives its policy framework from the World Bank. Lao PDR law explicitly encourages foreign direct investment in its land and natural resources, including “(a)ctivities relating to agriculture or forestry, and agricultural, forestry and handicraft processing activities” as among its “promoted activities” in its Law on Foreign Investment (Article 16, Law on the Promotion of Foreign Investment). This policy framework is supported and encouraged heavily by International Financial Institutions (IFIs) like the Asian Development Bank that, by all appearances, will not rest until industrial plantations of rubber, eucalyptus and biofuel have been carved out in all of Laos’ rainforests. In 2006, the ADB gave a US$7 million loan and US$ 3 million grant to set up a Lao Plantations Authority – this despite its own findings that an earlier similar project, the Industrial Tree Plantations Project, has “increased poverty” (Lang and Shoemaker: 2006). The Bank then encouraged investments from two giant corporations, the Oki Paper Company Ltd. of Japan and the Aditya Birla Group of India, both of which were interested in setting up pulp mills from eucalyptus pulp. ADB has justified its actions by repeated pronouncements that the land is “degraded” – a legal fiction invented to justify unabated incursions. In truth, however, the forestlands of Laos are populated by Lao villagers who use the forests as swidden fields and lands to cultivate livestock. In contrast to the corporations that enjoy privileged status in a country where investment in agriculture and forestry is “promoted”, rural peoples in the forestlands do not have tenurial security, as their land is still considered owned by the State. In project preparation reports conducted by the ADB itself, the villagers opposed suggestions that their land was degraded (ibid) and asked that the development process build upon what they already know – swidden fields, livestock and forest – instead of small monoculture plantations (ibid). III. Relationships The relationships that we see at play here are the asymmetrical relationships between the actors: the World Bank and the host governments that depend on the former and thus will acquiesce to the Bank, the corporation and the local populations, and even concept such as the law and how it is implemented. What brings these relationships together is the interest and the dominant overriding need to make global land grabbing palatable, because – as a result of the global chain of events in recent decades -- continuation of the North-dominated status quo has now become hinged on access to agricultural resources. (Harvey, 2006) The triangulation of food-feedstock-fuel is the new basis of power and hence must be kept under the control of the North (McMichael, 2006), if the status quo is to be maintained. But because the resources from which the food-feedstock-fuel triangulation can be obtained are not under the geographic and territorial control of the North, control must first be wrested by policy design and then, sustained by “legitimization” and “normalization”. The principles for responsible agro investment fills in the “legitimization” and “normalization” component. Since the principles cannot be enforced anyway, and since it is not possible to carry any reasonable belief that it would hold moral suasion over both investor and host countries, the only conceivable outcome of it is the legitimization and ratification of the current phenomenon, while leaving uninterrogated deeper issues of unevenness and exploitation. Van Dijk argues that “a discourse is like the tip of an iceberg: only some of the propositions needed to understand a discourse are actually expressed; most other propositions remain implicit, and must be inferred from the explicit propositions… It is the model that provides these ‘missing propositions’. Implicit or implied propositions of discourse are thus simply defined as those propositions tht are part of the mental model for that discourse, but not present in its semantic representation.” (2001: 77). That the World Bank discourse is embedded in policies and articulated in broader social and political acts is not too difficult to see. Many of the lease contracts for large-scale farmland investments contain in varied forms articulations of the RAI principles. For example, in the Memorandum of Agreement between the Philippines and Jilin Fuhua Corporation (a Chinese corporation) for the lease of 1,000,000 has. of land in the Philippines, provisions on consultation with stakeholders had been written in into the contract. (PADCC, 2009) Of course, proponents of the contract and government agencies have taken consultations to mean consultations with “friendly and agreeable farmers”. The emphasis on the “formalization of rights” (De Soto, 2000) finds policy articulation in the land titling programs that the World Bank has aggressively pushed in the developing world – from Latin America to Asia to Africa. But as earlier discussed, in many cases, the land titling had only been problematic, and had only succeeded in entrenching the land claims of the local elite. Even in cases where small farmers had been the beneficiaries, because no adequate safeguards were given, the granting of titles had only made farmers even more vulnerable to the vagaries of the market. Lastly, with respect to democratic governance and the widening of democratic space, the World Bank discourse has also informed the political respo nses of the different NGOs, social movements and people’s organizations towards large-scale farmland investments. Big organizations like IFAD contend that foreign investments have the potential to make positive contributions to rural livelihood and can support small-holder farmers through “mutually beneficial partnerships between small-holder farmers and private sector investors”(Liversage, 2010: 2). Organizations like La Via Campesina, more radical in nature, resist these investments as inherently objectionable and immoral. Activists Borras and Franco have formulated their alternative seven principles in response to the World Bank principles, which they call a “pro-poor land policy”: (1) class conscious, (2) historical, (3) gender-sensitive, (4) ethnicity-sensitive, (5) productivity-increasing, (6) livelihood-enhancing, and (7) rights-securing. (2010: 523). It can be said therefore, that in a sense, the World Bank principles have been instrumental in shaping the resistance discourse because it gave activists a peg to respond to and a clear discourse to critique. References Borras, S. And J. Franco. (2010). “From Threat to Opportunity: Problems with the Idea of a ‘Code of Conduct’ for Land Grabbing.” Yale Human Rights and Development L.J. Vol. 13: 207-523. Borras, S. (2009). “Agrarian Change and Peasant Studies: Changes, Continuities and Challenges – An Introduction.” Journal of Peasant Studies, 36: 1, 5-31. De Soto, H. (2000). “The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else.” New York: Basic Books. Harvey, D. (2006) Spaces of Global Capitalism. Towards a Theory of Uneven Geographical Development. London: Verso. LICADHO Cambodia (2009) 'Land Grabbing and Poverty in Cambodia: The Myth of Development', Licadho Report Phnom Penh. Cambodian League for the Promotion and Defense of Human Rights (LICADHO). Accessed 20 June 2011 . Lang, Chris and Shoemaker, Bruce. (2006) 'Creating Poverty in Laos: The Asian Development Bank and Industrial Tree Plantations', Uruguay. World Rainforest Movement. Accessed 20 February 2011 . Liversage, L. (2010). “Responding to Land Grabbing and Promoting Responsible Investment in Agriculture.” Accessed on 21 June 2011 at http://www.tni.org/article/responding-land-grabbing-and-promoting-responsible-investment-agriculture. McMichael, P. (2006). “Feeding the World: Agriculture, Development and Ecology” in Coming To Terms with Nature. L. Panitch and C. Leys (eds.) London: The Merlin Press. Philippine Agricultural Development and Commercial Corporation, 2009. Agri-Business Investments in the Philippines. Powerpoint Presentation. Quezon City, Philippines. The Economist. (2009). “Outsourcing’s Third Wave.” Accessed on 3 November 2011 at http://www.economist.com/node/13692889 Van Dijk, T. (2001). “Critical Discourse Analysis: a sociocognitive approach” in Methods of Critical Discourse Analysis. R. Wodak and M. Meyer (eds.) California: SAGE Publications. World Bank. (2008) “World Development Report 2008: Agriculture and Development”. Washington DC: World Bank. World Bank (2010). “Rising Global Interest in Farmland: Can it Yield Sustainable and Equitable Benefits. Washington DC: World Bank. Read More