Partnerships, Emulation, and Coordination Toward the Emergence of a Droit Commun In the Field of Development Finance

Abstract

Cooperation among international organizations has developed in various ways. The need for cooperation was foreseen at their inception and is reflected in their constitutive agreements. The articles of the International Bank for Reconstruction and Development (IBRD), for example, state that 'the Bank, within the terms of this Agreement, shall cooperate with any general international organization and with public organizations having specialized responsibilities in related fields.' An example in this context of such means for cooperation is the agreement that the IBRD concluded with the United Nations (UN) in 1947.

In addition to this type of cooperative relationship, the IBRD and the other institutions of the World Bank Group (hereinafter, the 'World Bank') have developed relationships with regional development banks. This chapter focuses on these relationships and the legal consequences that arise from them. Because of the institutional features that the World Bank and regional development banks have in common (for example, their capital-based structure and their mandate), there is sometimes an emulation phenomenon in their legal and institutional practices. By emulation, what is meant is that the regional development banks emulate the policies, rules, and procedures in place at the World Bank. Emulation may also more broadly refer to the willingness of these regional organizations to put into place procedures framed around similar policies and rules, although the latter may present specific features. In some instances, this process can be multidirectional, with the World Bank and other regional financial institutions emulating the practice followed by a regional institution. These various practices often give rise to a harmonization trend around a standard, a policy, or a rule first developed by one of the concerned organizations. In some cases, this trend is complemented by organized coordination around common procedures. Based on this emulation phenomenon and the harmonization and coordination endeavors, one might wonder if a droit commun in the area of development finance is emerging. In the context of this chapter, the notion of a droit commun is defined as a process through which various organizations develop and implement similar standards, rules, or procedures. A droit commun allows for the emergence of a distinct legal corpus of the harmonized standards, rules, and procedures that the institutions have in common.

The emergence of droit commun indicates that international financial institutions (IFIs) and other actors feel the need to use policy instruments and a legal language presenting similar features in areas of common concern. Although efforts to obtain greater market share might be a reason for replicating the normative and institutional features of another institution and thus attract more interest, the need for increased cooperation and partnerships among these institutions appears to be a key driver in this direction. Decision makers in groups such as the Group of Seven (G7), Group of Eight (G8), and Group of Twenty (G20), or within the executive organs of financial institutions, often advocate the promotion of similar objectives, such as transparency and accountability by all concerned institutions. Civil society is also moving in this direction through domestic and transnational strategies. These trends do not follow from rules laid down in the articles of agreement of the concerned institutions, but rather are developed from practice and necessity. The institutions are involved in similar types of business activities, that is, development finance and assistance, and thus face similar challenges, such as the promotion of sustainable development.

It should also be stressed that the emulation of the World Bank’s practices by regional development banks is in part due to the gravitational force of the World Bank and the links that exist between the regional banks and the World Bank. The World Bank’s gravitational force can be explained by the fact that the Bank was established earlier than the other institutions, as well as by its size and financial power. The representative power of the World Bank is also partly attributable to the desire of regional development banks to use the World Bank as a proxy for access to forums such as the G8 and the G20. For example, the ten international organizations that were invited to the G20 Seoul Summit in November 2010 (the African Union, the Association of Southeast Asian Nations, the Financial Stability Board, the International Labour Organization, the International Monetary Fund [IMF], the New Partnership for Africa’s Development, the Organization for Economic Co-operation and Development, the United Nations, the World Bank Group, and the World Trade Organization) did not include one regional financial institution. The emulative process is therefore based, not on any formal or informal hierarchy between the institutions, but simply on political and economic dynamics.

This emulation and these cooperative and coordination processes have led to harmonization and mutual recognition, thereby cultivating the development of common practices in both normative and institutional terms. Three examples are discussed in this chapter. Before addressing them, the chapter presents the various types of partnerships that may develop among these institutions; partnerships that help forge an increasingly close relationship between the World Bank and regional development banks.