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Arab CSOs Joint Statement on the EBRD’s interventions in the Mediterranean Region

Joint Statement by Civil Society Groups from the Arab region on the EBRD’s interventions in the SEMED region

To the attention of EBRD officials,

The EBRD has expanded its area of work to include the Southern and Eastern Mediterranean (SEMED) region with five projects signed up to date in Morocco, Jordan, Egypt and Tunisia. Given the focus of the projects on areas of energy, private equity, agribusiness and projects through financial intermediaries (FI), we perceive that the kind of operations and interventions by the EBRD merely come to re-enforce and strengthen a certain model of economic and market liberalization and privatization operations that are not pro-development but -on the contrary- divert development-focused reform processes that started in these countries by late 2010. Accordingly, disclosure of information about the EBRD financial intermediaries (FI) projects must be improved in order to ensure greater accountability and transparency and to prove that FI operations are actually used for socially and environmentally sustainable projects that would carry positive benefits to local communities as well as the environment. Furthermore, the Bank should routinely disclose information on the average loan size, the disbursed proportion of intermediated loans, and most importantly the sectors that such loans are supposed to be backing. Whereas channeling development funds through private equity does not guarantee the nature of the end beneficiaries and allow for monitoring and evaluation of development outcomes, the lack of effective monitoring mechanisms of development, environmental, and social outcomes of the projects on financial intermediaries is equally problematic.

We take the participation of civil society organizations from the Arab region in the 2013 EBRD Annual Meeting as an important opportunity to interact and exchange views with the EBRD’s staff and senior management and with this joint statement we aim at raising our concerns with regard to the impact of the Bank’s intervention on overall economic and social rights of the people in Arab countries. Moreover, we highlight that development from all its facets is hard to achieve when lacking an inclusive scope of discussion over all relevant issues and among all relevant stakeholders including the state, civil society organizations, academics, labor unions, media, etc.

1. Arab countries long adopted “economic transition toward an open economy”, and thus they constitute a different case than the East European countries where the Bank has substantial experience. It is important to note that these policies including liberalization of trade and finance, privatization, and attraction of foreign direct investment have indeed shown to have conveyed undesirable impacts on development in the Arab region as they hindered policy space that could be utilized for implementing more sound social and economic policies. Therefore, EBRD focus on promoting further liberalization and withdrawal of the role of the state by taking an active role in promoting certain legislative and regulatory reforms pertaining to laws on competition, institutional reform and development is a primary concern for us civil society in the Arab region. We perceive that these reforms design the framework of a further liberalized market economy, which ultimately diminishes the policy space for development purposes. Last but not least, it is imperative to underline that regulatory reform should tackle a diversity of public policy objectives, including at the development, economic, social, cultural, and environmental dimensions, as well as should be sustained.

2. There is a need that the EBRD focuses on sectors, which are of priority to the country itself, and not according to what the Bank perceives as priority. The Bank’s propositions for initial intervention in each of the Arab countries of focus, namely Egypt, Tunisia, Morocco and Jordan, focus primarily on the energy sector, infrastructure, financial sector, and to smaller extent on agriculture through addressing the agribusiness value chain. The EBRD has the responsibility to select projects with clear and assured contribution to employment generation and poverty alleviation, since employment and poverty do not seem to be among the Bank’s priorities. The UK Department for International Development in its Multilateral Aid Review noted that “the link between the impact of EBRD’s programs on transition, and their impact on people’s lives is not always well articulated.”
On a different note, there is a need that the Bank displays clear procedures on how environmental and social standards would be applied for EBRD funded projects in the SEMED region. Furthermore, the bank is requested to conduct an evaluation of its projects in the Arab countries of focus from the perspective of the application of “highest environmental and social standards” which ensures that the Bank moves on par with standards established by the EU and international institutions operating in the region, or those derived from international conventions and agreements including the adequacy and quality of environmental and social assessment, public participation and access to environmental information. The Bank’s current engagement does not contribute to these countries’ transformation from the rentier nature of the state to the productive one that entails consistent job-generating growth and enhanced productivities. Accordingly, the EBRD should give more importance to the three main productive sectors, particularly agriculture, industry, and services, which are associated with decent links to production capacities, longer-term employment generation, as well as enhanced standard of living in the long run. For instance, the EBRD could be of huge benefit to national economies and contribute largely to their development when it directs its funds to industries that are expected to be of added value in the future, particularly in the manufacturing sector. These types of industries shall be determined by way of national and inclusive consultations with all relevant stakeholders including civil society.

3. Despite the limited success of public-private partnerships (PPPs) in the region, the bank has indicated a broad range of sectors, which its activities are expected to cover including parking, transport terminals, water and solid waste. However, the undersigned CSOs are concerned that EBRD policies supporting PPP projects, especially in sectors which supply citizens with basic needs such as education, health care, and public transportation, could lead to higher prices of these basic services which subsequently harms the lives of citizens. Therefore we ask that enough safeguards are set in place in case of PPPs to avoid that. In addition, in PPPs, sometimes the private sector abandons the partnership, and thus the burden is transferred to the public sector, thus carrying a negative impact on the state budget, where the funds could be used for development purposes. Last but not least, albeit limited, success of such partnerships often drowns in corruption, thus limiting further productive capacities. Hence, before engaging in such partnerships, we need a legal framework under which the rights of the communities are protected, and the responsibilities of each party in the partnership are clearly indicated. In addition, we emphasize the essential role of the state in providing affordable and quality services, namely those relating to education, public transportation, and health care.

4. While the EBRD funds agribusiness projects in the region, it should ascertain that such projects be tailored to benefit the specific developmental needs of each country, as well as consider the impact of agribusiness projects on food security, poverty, and employment. The Bank aims at enhancing the agribusiness value chain through financing the private agribusiness industry. Yet, EBRD has to realize that by supporting agribusiness companies, it is shaping the future of agribusiness in these countries in one way or another since projects in this industry are dominated by big companies. This will drive small farmers out of business, thus raising unemployment, inequality and poverty. In this respect, in its interventions, the EBRD should safeguard the rights of small farmers, and not seek to alter the way the agricultural sector and policy are organized for the benefit of big agibussinesses.

5. The EBRD, in its special report “The Low Carbon Transition” in cooperation with the Grantham Research Institute, has emphasized the importance of keeping pace with the “green industrial revolution” in the long run, and that the transition towards a low-carbon economy moves in harmony with transition towards a market economy. Consequently, we urge the Bank to act accordingly in the SEMED region by ceasing funding on projects that are not environment/climate friendly as they adversely impact the well-being of people in areas of operation. An example of such projects is the Egyptian Refinery Company (ERC) potential expansion-project that is to take place in Mostorod District in the Kalioubya Governorate, an already extremely polluted and densely populated industrial zone where its inhabitants suffer from air and water pollution. This project expansion is expected to raise the level of pollution further, despite the Environment and Social Impact Assessment’s claim that modern equipment used in the implementation of the project will not cause pollution. In this regard we support the position of the Egyptian Center for Economic and Social Rights (ECESR) delivered to the EBRD on April 14th 2013 which highlighted similar concerns.

6. Finally, whereas a certain space for civil society engagement is present at the EBRD level, civil society organizations in the Arab region believe that local communities, whose livelihoods are directly affected by EBRD funded projects, do not have any sort of influence over the implementation of such projects as well as do not have any space for participation in policy-making processes. In this respect, we ask the Bank to show more commitment in allowing civil society and local community participation in policy-making processes, especially when it comes to financing projects that directly impact their livelihoods. Accordingly, engagement of civil society organizations in the Arab region with the EBRD can be enhanced through consultations between the two parties. The scope of consultations has to include

  • Various Stages of Operations including the three stages of the EBRD intervention and operations in Arab countries, including Technical Cooperation, the use of Special Funds, and the Normal Operations
  • Technical Assessments (or similar other type of documents)
  • Country Strategy Papers
  • Sectoral Level Consultations
  • Special funds and projects of operation
  • Methodology of Project Assessment
  • Regional offices in Egypt, Morocco Jordan should play a significant role in facilitating consultations with CSOs of the region
  • Possible civil society advisory group for the civil society unit of the EBRD. Such group could be selected at the Annual Meetings, could change on a rotational basis, and could include 3 to 5 organizations, where its main role would be to advise on outreach to groups at the national and regional levels and support the process of organizing consultations of various kinds.

Finally, we underline the importance that the EBRD’s engagement in the Arab region does not disregard the mismatch between several areas of policy liberalization and the levels of development in these countries, and accordingly we ask the EBRD to enhance its ability to propose and develop interventions that are better entrenched with the development objectives at the national level.

Signatories:

  • Arab NGO Network for Development-Lebanon (www.annd.org)
  • Egyptian Initiative for Personal Rights-Egypt (www.eipr.org)
  • Egyptian Center for Economic and Social Rights-Egypt (www.ecesr.org/enz)
  • Lawyers for Defending Human Rights Society-Jordan
  • Phenix Center for Economic and Informatics Studies-Jordan (www.phenixcenter.net)
  • Espace Associatif-Morocco (www.espace-associatif.ma/)

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