Engagement and Access to Justice In International Development Finance Case Study

1. Engagement and Access to Justice In International Development Finance Case Study PULP Mills in Fray Bentos - Uruguay August 3, 2007 – UNEP/University of Geneva Civil Society and Public Participation Module Presented by Center for Human Rights and Environment (CEDHA) - Argentina Jorge Daniel Taillant – jdtaillant@cedha.org.ar

2. Common Myths and Realities about Participation • We have a right to Participate always! • Information is Power, Don’t Give it – or measure it carefully! • Participation is About Accountability • If you allow for Participation you open Floodgates • NGOs want irrelevant information - time/resource consuming • NGOs represent Society/Community (Legal/Powers) • NGOs are all the same; NGOs are all vying for power; • What they don’t know wont hurt them • Elected Governments are already Participatory • Govt’s never allow for participation in real decision-making • Participation make projects more democratic – self owned • Participation and information should be strictly regulated • NGOs represent Social Movements • Access to Information is about getting a timely response • Legal action leverages participation and access to information

3. Participation and Engagement Generally Suffer from GROSS communications errorsAs well as misalignment of stakeholder objectives Actors Speak Different LanguagesDifferent “Drivers” Influence Their InterestsThey Rarely Engage on Same IssuesRarely Aim for Common Objectives

4. Uruguayan Pulp Mills Case

5. Ence Botnia Rio Uruguay Argentina Uruguay

7. Key Source of Problem • Sensitive Mega Sized Border Investment • Failure of Argentine & Uruguayan Govts to Anticipate Local Conflict • Failure to Include Community in Global/Local Investment Decision • Failed International Environmental Governance Procedures (IFC, EPs) • Nascent and Evolving Social Movement • Problematic Environmental Impact Assessment • Two Mills ENCE/Botnia measured separately • Incomplete EIAs • Failed community engagement leads to mistrust • IFC says on April 20, 2005 that “Consultations indicate that the project enjoys broad public support”

8. Broad Public Support!Just 10 Days Later!

9. A Few Questions to Pose • What is the case really about? • Contamination? Business? Politics? • Who and what relations govern the case? • Who is responsible/accountable? • Who to engage to resolve the case(Company, IFIs, Governments, others) • On What to Engage? • How to Engage? • What are the Rules that Govern Engagement?

10. Principal Proponents • Companies - Botnia/ENCE • IFC • MIGA • Private Banks (ING / BBVA / Nordea / NIB / Calyon ) • Finnvera (Finnish Export Credit Agency), CESCE, ICO • Uruguayan Government (National and Local) Spain Netherlands Uruguayan Gov

11. Entre RíosGov Gualeguaychú Assembly40,000 persons Taking to Bridge Argentine Gov Principal Opposition • Gualeguaychu Assembly (40,000 personas) (Public/Business/NGOs) • Select NGOs and Public in Uruguay • Argentine Government (National, Provincial and Municipal) • Uruguayan Prosecutor • Press • CEDHA (later added others)

12. What Governs Engagement and Participation? • An Established Right • A Voluntary Agreement • A Standard Practice • A Regulation or Rule (A financial sine qua non) • A Political Circumstance (Votes/Investment) • The Market • The Capacity of the Claimant • The Media • A Social Movement • A Shareholder • Public Opinion • Others? • IT IS NOT ALWAYS A FORMAL STRUCTURE!

13. Engagement Dimensions in Pulp Mill Case Community Company Government IFIs Local Nat’l ECAs CAO Foreign NGOs Prvt Banks Int’l OECD UN

14. Key Power Relations Weak Links • Company - IFC • Company - Prvt/State Banks • Company - Foreign Govts • Assembly - Local Government • Assembly - Local Media • NGO - Local Government • NGO – Assembly (CEDHA) • NGO - CAO • NGO - Human Rts Tribunal • Company - Assembly • Company – Nat’l Government • Assembly – NGO (others) • Assembly - Pcial/Nat’l Govt • Assembly - CAO • Assembly - Private Banks • CEDHA - National Government • CEDHA - Media Engagement and Advocacy Generally Falls Into KPRs, not WLs(It’s what we know and are comfortable with) Successful Engagement Can be Leveraged by Building Capacity into WLs(It’s what we feel UNEASY with but need to face)

15. Engagement Determinants E a1 a2 • Understanding of Macro/Micro Decision Drivers • Knowledge of Relative Power/Weaknesses Other • Willingness/Obligation to Engage • Leverage Capacity/ Negotiation Skill • Strength/Weaknesses of Alliances • Time

16. Accountability Determinants A a1 a2 • Are there Obligations in Power Relations? • Can they be enforced? • Does complainant have capacity to file? • Can complainant leverage compliance elsewhere? • Can public opinion affect decision of denounced? • Will the complaint affect investment drivers?

17. Example of Drivers of Accountability for Botnia CorporateBoard Clients Int’l NGOs EUPresidency Finnish Media Shareholders BOTNIA Private Bank Exp. CredAgency CSR Commit Labor Unions FinnishGov’t IFC Board OECD Children o/Directors

18. Possible Channels of Engagement and Accountability • CAO • Inter-American Commission of Human Rights • European Commission • Spanish/Finish Courts (Finnvera - ECA) • Criminal Actions in Argentina against CEOs • Media Campaigns / Shareholders / Clients / Family • International Court of Justice • Legal Action in Uruguay • Teaming up With Finnish Labor Unions • Equator Bank Compliance Claim (to BBVA and ING) • OECD Guidelines for Multinational Enterprises • UN HRts Norms for Transnational Corporations • UN Global Compact • Corporate Social Responsibility Commitments Corte Internacional de Justicia

19. Engagement– What We Did

20. Positive Results • Critical CAO Audit – Debate in Investment Scheme • Withdrawal of One Pulp Mill (ENCE) • Withdrawal of One Major Financial Bank (US$480m) • Improvement of Design Remaining Mill (Botnia) • 18 Month Delay Board Vote Date @ WB • Investigation process initiated at IAHRC • Greater Attention to Policy Procedures • Awareness Building • Experience • Possibility New Compliance Procedure at Equator Banks • Debate Opening at OECD of Bank Liability to Guidelines

21. Failures • CAO Could Not Sway IFC/MIGA or Board of Directors • Company Ignored Community Opposition / Local Conflict • Polarization and Conflict Between Argentina/Uruguay with Complaint Filing to ICJ • Roadblocks Affect Cross Border Community Relations • IFC Ignores Policy Compliance • Two Equator Banks decide to Ignore EPs & fund project (Calyon & Nordea; BBVA and ING withdraw) • Community Faces Imminent Installation of Mill

22. Lessons Learned • Understanding Actors, and Mapping out Power Relations and interests is Critical to Successful Engagement • Actors are generally far more inter-related than they seem • Participation, if it is not integrated en real terms and early stages of project design, is often fruitless with little or no impact on the evolution of important strategic financial/investment decisions • IFIs moving from Free Prior and Informed “Consent” to … “Consultation”, which is implying a huge paradigmatic shift and problem for outcomes • Key Actors are Fundamental to Devising Engagement Strategies • State/Govt play disparate, conflicting, and sometimes contradictory roles in Protection of Rights and Promotion of Economic Development; this is problem to integrity of the system; • Acquiring Knowledge about Relations Dynamics and Accountability Systems is Critical to more Successful Engagement • Engagement/Participation is more Successful if thought of “out of the box” – building capacity as you go while exploring unchartered territories • Information or Participation for its own sake is generally useless • Accountability is not always a formal / lineal process and may be in areas that are not anticipated

23. Engagement and Access to Justice In International Development Finance Case Study PULP Mills in Fray Bentos - Uruguay August 3, 2007 – UNEP/University of Geneva Civil Society and Public Participation Module Presented by Center for Human Rights and Environment (CEDHA) - Argentina Jorge Daniel Taillant – jdtaillant@cedha.org.ar