Tata Mundra Project: Time to End World Bank Immunity

21 September by Sushovan Dhar

Fisher-folks, farmers and marginal wage earners in Gujarat, India were shocked to hear about the US federal district court ruling in March this year that the International Finance Corporation (IFC), the private lending arm of the World Bank World Bank
WB
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 180 members in 1997), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

http://worldbank.org
Group, enjoys absolute immunity and therefore cannot be sued in the US.

Earlier, Budha Ismail Jam and others filed a suit against the IFC. The plaintiffs accused the IFC-financed Tata Mundra Ultra Mega Power Project - a 4000 MW giant coal-fired project- of destroying their lives and livelihoods. According to the plaintiffs “who live, fish, and farm in the shadow of the Plant, its main legacy has been environmental and social harm—to the marine ecosystem, to the quality of the air, to plaintiffs’ health, and to their way of life.” |1| They complained that “the IFC, which provided $450 million for construction of the Plant, is primarily responsible for their injuries” |2| and therefore sued IFC in the US federal district court “seeking several forms of equitable relief or, in the alternative, compensatory and punitive damages.” |3|

To their dismay they heard from John D Bates, the United States district judge that that IFC enjoys immunity from suits in the US courts and therefore the case was discharged. The judgment says “It is well established that statutes like the IOIA that grant immunity to foreign nations and international organizations limit the District Court’s jurisdiction over parties that are entitled to such protection.” |4|

Background

In 2008 the IFC announced a US$ 450 million loan |5| to a Tata Group |6| subsidiary for building the power plant in Gujarat. The promoters claimed the project as essential to help fuel India’s ongoing “economic growth.” However, the locals charged the project with severely damaging the local environment and lives of the local residents. The plant had damaged the local marine environment, causing fish to move further away from the coast, and damaged local water supplies used for drinking and irrigating farmers’ fields. As Bharat Patel, head of the Association for the Struggle for Fishworkers’ Rights in the Kutch area of Gujarat observed: “The Indian government’s motto is all about industrial development, but traditional communities – like fishermen and farmers – are going into poverty because of the IFC.” |7| They accused the IFC of “irresponsible and negligent conduct (…) in appraising, financing, advising, supervising and monitoring its significant loan to enable the development of the Tata Mundra Project in Gujarat, India.” |8|

The project is located on the Kutch coast, in the western part of India. This area around the Arabian Sea is replete with abundant natural resources. The construction phase already witnessed huge losses due to the displacement and devastation of mangrove forests. The dredging of streams and waste dumping destroyed precarious natural resources. It is important to remember that mangrove forests play a central role in transferring organic matter and energy from the land to the marine ecosystems. It is apprehended that after the completion of the project, the region would be severely impacted by pollution from flying ash, coal dust, and hot water. Tata Mundra uses open cycle cooling, which is less efficient that closed cycle cooling. The latter also has the capacity to reduce water usage by 85%. Secondly, coal for the project would be imported from Indonesia, supposed to be high in sulphur. Tata Mundra decided to forego installing flue gas desulfurizers in their chimneys. A decision which would result in higher sulphur emissions in the atmosphere.

The pollution from the plant has already negatively impacted the fisheries and marine life that the fish workers rely on for their livelihoods, and the environmental impacts are very closely linked to the economic ones. Independent fact finding missions reveal that severe respiratory diseases among children have increased by 20% in the villages around the power plant. The danger of coal dust and flying ash is endangering horticulture and the lives of people and animals. Water in the outlet channel is at a whopping 35.6-35.8 degree centigrade, which no marine life accustomed to a Gulf of Kutch ‘normal’ of 30-31.8 degree centigrade would be able to bear.

Releasing the report, senior activist Soumya Dutta said, “The impacts which was noted by the fact finding team was at a time when only one unit of the 4000 MW plant was operational. Today, since all units of the project are on steam, the impacts are manifold and no agency, either of the Governments or of the financial institutions, are monitoring it and people and the environment is at high risk.”

Faced with such charges, the IFC could not, in any reasonable or sustainable manner, refute the merit of the argument. In order to dodge genuine concerns it resorted to a deviant route. It claimed immunity under International Organisations Immunities Act (IOIA). A federal law enacted in 1945 provided IFC the same immunity from suit and every form of judicial process as is enjoyed by foreign governments. The IFC also claimed that waiving this immunity could “produce a considerable chilling effect on IFC’s capacity and willingness to lend money in developing countries” by opening “a floodgate of lawsuits by allegedly aggrieved complainants from all over the world”. |9|

This carapace of protecting capital from any sort of environmental, socio-political, economic or moral safeguards relieved IFC of any commitment towards popular democratic opinions. It acts to justify false intentions and flawed processes. By fooling people through shams and dubious acts, the attempt is to push private investments in all possible sectors, with scant regard for social and environmental impacts without any democratic and participatory processes.

World Bank World Bank
WB
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 180 members in 1997), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

http://worldbank.org
immunities and associated perils

“The IFC’s defense boils down to this: ‘We are above the law,’” Rick Herz, the litigation coordinator for the human rights and environmental advocacy group EarthRights International, which represents the Gujarat farmers, said in a statement on July 13. “It argues that it is entitled to act with impunity, contrary to its own mission and accountable to no one, even though the risks were so obvious from the start and the IFC’s failure to act [has been] so devastating for precisely the people the IFC is supposed to help and protect.” |10|

In June, 2015 Human Rights Watch (HRW) came out with a document “At Your Own Risk: Reprisals against Critics of World Bank Group Projects” |11| that highlighted repression against the critics of the bank-funded projects in a number of countries. Reporting cases from India, Cambodia, Uganda, Uzbekistan and elsewhere, the document charges that the “World Bank and IFC officials failed to respond meaningfully to abuses that make a mockery out of their own stated commitments to participation and accountability.” |12| It also points out the Bank’s collusion with authoritarian governments, violating the right to free speech and opinion and also, minimum human rights for people affected by the Bank’s projects. Instead, the Bank has continued providing loans to governments that have carried on violating the minimum human rights standard set by itself. The report highlights terrible gender violence “where project critics and concerned community members have been the target of threats, intimidation tactics, and baseless criminal charges. Some women have faced sexual harassment or gender-based threats, attacks, or insults when they speak out” |13| and are even branded as “prostitutes.”

In another investigation by the International Consortium of Investigative Journalists (ICIJ), The Huffington Post and other media partners found out that “the bank has regularly failed to enforce its rules, with devastating consequences for some of the poorest and most vulnerable people on the planet” |14|

The key findings of the report are: |15|

  1. Over the last decade, projects funded by the World Bank have physically or economically displaced an estimated 3.4 million people, ousting them from their homes, taking their land or damaging their livelihoods.
  2. The World Bank has regularly failed to live up to its own policies for protecting people harmed by projects it finances.
  3. The World Bank and its private-sector lending arm, the International Finance Corp., have financed governments and companies accused of human rights violations such as rape, murder and torture. In some cases the lenders have continued to bankroll these borrowers after evidence of abuses emerged.
  4. Ethiopian authorities diverted millions of dollars from a World Bank-supported project to fund a violent campaign of mass evictions, according to former officials who carried out the forced resettlement program.
  5. From 2009 to 2013, World Bank Group lenders pumped $50 billion into projects graded the highest risk for “irreversible or unprecedented” social or environmental impacts — more than twice as much as the previous five-year span.

Time to end World Bank immunity

While we can sue individuals, private corporations or even the highest orders of our respective governments, inter-governmental organizations like the World Bank enjoy absolute immunity from any judicial procedure. Utilizing a number of privileges and immunities it acts like a supra-sovereign body, relieved of any obligation or willingness to accept responsibility or to account for its actions. It is therefore exempted from any jurisdiction, taxes or executions. We must remember that the World Bank operates like any other bank, i.e. it makes money by charging interests on its loans. However, the tag of “development” and its absolute immunities excuse the Bank from any accountability under any legal or democratic procedure. In a number of cases, this immunity violates the citizens’ rights to seek protection under law and the right to seek justice.

These immunities are at the roots of the Bank’s belligerent attitude towards anything that acts as an infringement on its profits. It is nowhere accountable, liable and chargeable for the terrible consequences that its projects, policies and actions inflict on human lives or the environment. It is also not interested in scrutinizing its policies against the international legal covenants, many of which are a result of immense socio-political struggles worldwide. It is only accountable to its shareholders.

This indiscriminate mockery of immunities to IFIs, including the World Bank, must immediately end since lives matter more than profits. Noreena Hertz, in her book “The Debt Threat: The Story of Third World Debt” commented on the problems of the third world debt and why it must be resolved soon if we are ever to see global stability. She also demanded an end to the immunity provided to the IFIs like the WB and the IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org
: “Where professional negligence or lack of due diligence in lending can be proven, a claimant, whether a village, an individual or a nation, must be able to hold the institutions liable in the same way that a bank can be held liable by law.” |16|


Author

Sushovan Dhar

CADTM India


Other articles in English by Sushovan Dhar (19)

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