The World Bank and the internalization of indigenous rights norms.

• Author: Sarfaty, Galit A.

CONTENTS INTRODUCTION I. HOW THE WORLD BANK SHAPES DOMESTIC LAW A. Policy Conditionalities B. Operational Policies II. OPERATIONALIZING THE BANK'S INDIGENOUS PEOPLES POLICY: A CASE STUDY OF A LOAN TO MOROCCO A. Deciding Who Are Indigenous Peoples B. Domestic Political and Legal Constraints C. Civil Society Activism III. INDIGENOUS RIGHTS NORM COMPLIANCE A. Rethinking the Dynamics of Norm Emergence and Internalization B. A Two-Pronged Strategy for Norm Internalization CONCLUSION INTRODUCTION

International organizations, particularly international financial institutions, are becoming central players in promoting compliance with human rights norms and the adoption of social and environmental standards. The policymaking of the World Bank exemplifies this trend. By adopting operational policies on issues like indigenous peoples, involuntary resettlement, and environmental assessment, the World Bank has emerged as an important actor in the interpretive community for public international law. (1)

World Bank operational policies are becoming de facto global standards among other development banks as well as institutions engaged in project finance. For example, they serve as a model for the Equator Principles, a set of voluntary social and environmental guidelines that have been adopted by at least twenty-nine private banks. (2) Export credit agencies (ECAs) are another type of economic actor applying Bank policies on environmental and social issues, largely in response to outside pressure. (3) In 2000, a group of more than 300 nongovernmental organizations (NGOs) signed the Jakarta Declaration for Reform of Official Export Credit and Investment Insurance Agencies, which includes a call for "[b]inding common environmental and social guidelines and standards [that are] no lower and less rigorous than existing international procedures and standards for public international finance such as those of the World Bank Group." (4) Although the Bank has faced protests over controversial projects, (5) NGOs nonetheless consider its standards "a minimum floor that any environmentally and socially sensitive project should meet." (6) Given the adoption of Bank guidelines by various economic institutions, it is important to understand the process by which these standards shape the policies of borrower countries and influence the interactions among a range of actors, from government officials and Bank staff to civil society activists.

Transnational legal process, one of the leading theoretical approaches to international law, can help explain the increasing importance of nonstate actors like the World Bank in enforcing international norms such as human rights. (7) According to the traditional form of the theory, international norms penetrate domestic legal systems through norm internalization. Nonstate actors, including individuals and institutions like the Bank and NGOs, cooperate with state actors to internalize international norms into domestic law. A study exclusively of government-to-government interactions would thus overlook a crucial way in which domestic law is shaped.

The conventional version of this theory, however, fails to account for the internal dynamics of the transnational legal process as applied to international institutions like the World Bank. This Note demonstrates that the processes of norm emergence and internalization are more nuanced than has been suggested in contemporary normative theories. (8) Understanding these processes requires not simply an examination of the Bank's written policies but, more importantly, an analysis of the internal deliberations within the institution over how to interpret and implement those policies. I argue that a number of factors shape the Bank's influence over human rights norm compliance in borrower countries. These factors can constrain or facilitate norm internalization.

The Bank's effectiveness in bringing about the internalization of indigenous rights norms in borrower countries depends on both external factors (domestic legal and political constraints and the level of civil society resistance) and internal ones (power relations within the institution). Domestic constraints exist in countries with inadequate legal frameworks for recognizing indigenous rights. In the face of these constraints, the institutional culture of the Bank is often divided on whether to apply the Bank's policy on indigenous peoples. Civil society activists may then exploit internal tensions and forge alliances with advocates within the Bank who are pushing for policy compliance. As a result, minority voices within the institution, often including non-economist social scientists, can exert greater influence on how indigenous-peoples-related issues are addressed in development projects. Studying how tensions are resolved and what factors lead staff to apply or not apply the Bank's indigenous peoples policy requires an analysis of the organizational culture of the Bank and how the institution (acting as a single unit) interacts with outside actors. A revised version of transnational legal process theory must account for these external and internal factors.

When studying the relationship between state and nonstate actors, one must recognize that all actors--including international institutions like the Bank--are diverse and may be rife with internal conflict. Most studies of the Bank have overlooked the internal divisions between departments and between individuals, instead treating it as a monolithic institution. (9) My analysis of one aspect of the Bank--its approach to indigenous peoples, who are among the most disadvantaged and marginalized populations in many areas of the world and are particularly vulnerable to changes caused by development projects--helps uncover internal disagreements. In projects affecting indigenous peoples, Bank staff must balance competing interests in deciding whether and when to apply the indigenous peoples policy and how to implement the policy once it is applied. As a result, actions are continuously contested and renegotiated within the institution itself. These internal contestations often correspond to divisions between competing interest groups and are most pronounced in regard to countries where domestic legal systems do not recognize indigenous peoples or sufficiently address indigenous-peoples-related issues. For example, economists may disagree with environmentalists and anthropologists over whether to apply the indigenous peoples policy in a borrower country where there are no legal provisions that recognize special rights for indigenous peoples.

The Bank's approach to indigenous rights is, therefore, a useful lens for understanding the institution's role in the transnational legal process, where international norms seep into domestic law, often in the face of competing national self-interest. The dynamics of this process shed light on how the Bank balances its mandate of poverty reduction with human-rights-related concerns. They also have implications for the role of international institutions in the transnational legal process. In rethinking this theory, I offer a more nuanced model of norm emergence and internalization that takes account of the experience of the Bank with respect to indigenous rights. I acknowledge that my argument assumes that the Bank should be involved in the promotion of human rights in general and indigenous rights in particular. While there are counterarguments in favor of an exclusively economic focus for the Bank, a discussion of that debate is beyond the scope of this Note.

This Note proceeds in three Parts. Part I demonstrates how the World Bank shapes the domestic law of borrower countries. I examine the Bank's exercise of legal authority over countries through two mechanisms, attaching policy conditionalities to loans and incorporating its operational policies into loan agreements, both of which enable international norms to penetrate domestic legal systems.

Part II traces the Bank's involvement in indigenous rights and presents a case study of a Bank loan proposed for Morocco in the early 1990s. Through this case study, I highlight the domestic political and legal constraints Bank staff sometimes face when operationalizing the indigenous peoples policy, as well as the role of civil society activists in influencing how the Bank overcomes these constraints.

The experience of the Bank with respect to indigenous rights offers lessons for how to rethink transnational legal process theory. In Part III, I analyze the processes of norm emergence and internalization from the vantage point of one institution and its internal and external relations. I then turn to a prescriptive account of how to achieve internalization of indigenous rights norms in the Bank and in borrower countries. The Conclusion suggests possible implications of this analysis for the anthropology of international institutions more generally.

1. HOW THE WORLD BANK SHAPES DOMESTIC LAW

   The World Bank has emerged as an important actor in the international law community since its founding in 1944. It exercises political and economic leverage over countries through loan and credit agreements, which are binding under the international law of treaties. (10) Because it conditions these agreements on compliance with its operational standards, it can incorporate specific policy and institutional reforms into domestic legal systems. By exerting control over the policies of borrower countries, the Bank can play a vital role in the internalization and domestic enforcement of international law.

   As an international organization, the Bank is more than just a collection of individual member states; it also serves as a governance institution with its own international legal personality. Its status as a legal person means it can both execute and be subject to international responsibilities and obligations, possibly including obligations incumbent on it under international...