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28 June 1993
Doc. 6878
1403-25/6/93-4-E
OPINION
on the activities of the European Bank
for Reconstruction and Development1
(Rapporteur: Mr GUSENBAUER,
Austria, Socialist Group)
1. The approach of the Social, Health and Family Affairs Committee to this first debate of the Assembly on the activities of the European Bank for Reconstruction and Development is marked by one overriding concern. This concern is well expressed in the Bank's annual report for 1992. It is that the social and human costs of transition to market-oriented economies must form part of the political equation.
2. As the Committee on Economic Affairs and Development points out (Doc. 6861), the Bank is unique in having a clear political dimension to its mandate. Political and civil rights, democracy and the rule of law must be observed in its "countries of operation".
3. But social unrest, arising from neglect of social and human costs, can threaten the rule of law. It can challenge the functioning of newly-established democratic institutions. It can block the legislative process and prevent the passage of laws on which a market economy must depend.
4. Accordingly, the Social, Health and Family Affairs Committee has set itself the question whether the Bank, in its decision processes and modus operandi, pays enough attention to the "social dimension" in its countries of operation. To this end, it appointed a delegation to the Committee on Economic Affairs and Development's meeting at the Bank in London end-March 1993; it convened its Sub-Committee on Labour and Employment for the Committee on Economic Affairs and Development's important conference on progress of economic reform in central and eastern Europe in Helsinki earlier this month; and the Rapporteur held further discussions with Bank representatives during a conference co-sponsored by the Bank and Harvard University last week on the role of government in the economy.
5. The report of the Committee on Economic Affairs and Development refers to "a more explicit policy conditionality" in the Bank's operations than in the case of the Bretton Woods institutions.
6. Some would argue that social policy should be part of this "conditionality" and that appropriate criteria should be integrated into the Bank's investment and loan decisions. The Social, Health and Family Affairs Committee has considered this view (at its meeting in Tirana 23 June 1993) and concludes that such an approach is unrealistic at this level of decision.
7. There is however another level of decision at which social policy considerations should be fully taken into account. This is in the framing and review of country strategy papers, which establish the context of country-specific investment and loan decisions.
8. The Rapporteur has been given access to three such papers on countries of operation which he chose himself. He is impressed by the attention given in all three papers to the social and economic hardships entailed by the transition process, as well as by the detailed accounts in all three cases of multilateral and bilateral initiatives to alleviate these hardships while promoting transition.
9. For each "country of operation", the strategy paper permits the Bank's activities to be perceived (and designed) in an overall context. And there would of course be absolutely no virtue in having the European Bank seek to duplicate (for example) the World Bank's expertise and initiatives in design of social sector reforms and establishment of "social safety nets". The participation (actual or potential) of the countries concerned in the Council of Europe should be enough to ensure that acceptable principles are followed.
10. The important things are (i) that such initiatives in support of social hardship and reform are being taken; and (ii) that all actors (multilateral and bilateral) promoting transition are fully aware of what the others are doing. Both requirements are now being addressed.
11. The Social, Health and Family Affairs Committee is therefore satisfied that social policy considerations are appropriately integrated into the Bank's procedures at the level of country strategies.
12. In regard to specific investment and loan decisions, the Bank's project evaluations include, where relevant, an analysis of environmental impact and a statement on compliance with health and safety regulations.
13. The Social, Health and Family Affairs Committee considers that the Bank's project evaluations should also include a statement on compliance with the country's social legislation.
14. Again, it is for the Council of Europe — through pressure on governments, not on the Bank — through its Social Charter and Social Security Code, to see that social legislation is being adapted in these countries to the realities of a market-oriented economy. This is a natural area of complementarity, as spelt out in paragraphs 1 and 2 of the Committee on Economic Affairs and Development's draft resolution.
15. In fact, although the Agreement setting up the Bank focuses primarily on civil and political rights, the Bank has recognised (in a published commentary on the political aspects of its mandate) that "economic and social rights that advance multiparty democracy, pluralism and market economics, could be taken into account and fostered in connection with (its) normal operations". There follows a list which includes inter alia "the right to form trade unions and to strike".
16. "Pluralism" means a commitment to the establishment of that multiplicity of institutions intermediate between the state and the individual which characterises the fabric of "civil society". Markets count among these institutions, and so do arrangements for collective representation of the interests and aspirations of employees at their places of work. The Social, Health and Family Affairs Committee welcomes the Bank's recognition of this as an aspect of "pluralism"; the Bank, however, (unlike OECD) has no corresponding Advisory Council.
17. In the light of these and other considerations arising from the meetings referred to in paragraph 4 above, the Social, Health and Family Affairs Committee proposes the following amendments to the draft resolution:
i. Sub-paragraph 7.ii of the draft resolution to read as follows:
"to combine strictly, in co-ordination with all other forms of multilateral and bilateral assistance, the lending and investment operations of the Bank ..."
ii. Add the following words to sub-paragraph 7.vii of the draft resolution:
"... on their individual characteristics and needs; and to this end, intensify efforts to establish full-time representation in all countries of operation."
iii. Insert new sentence after first sentence of paragraph 9 of the draft resolution, to read as follows:
"The Assembly simultaneously urges the governments of central and eastern Europe not to overlook the prospects for increased trade and economic co-operation among their countries, and calls for the strengthening of regional initiatives to this effect (see "Helsinki Declaration" 2-4 June 1993)."
iv. Last sentence of paragraph 9 of the draft resolution to read as follows:
"On the basis of progress in both these directions, the Assembly would welcome the Bank's proposal to establish a clear time-table for a European multilateral trading framework that could eventually lead to a 'continental common market' favouring political integration and stable economic development".
Reporting committee: Committee on Economic Affairs and Development (Doc. 6861).
Committee for opinion: Social, Health and Family Affairs Committee.
Reference to committees: standing mandate and Bureau decision of 5 February 1993
Draft opinion unanimously approved by the committee 23 June 1993.
Secretaries to the committee: Mr Hartland and Ms Meunier.