India is the fastest-growing major economy in the world with significant Government investments in infrastructure. According to estimates by WTO and OECD, as quoted in a report from the United Nations Office on Drugs and Crime, India: Probity in Public Procurement, the estimated public procurement in India is between 20 and 30 percent of GDP.
This translates to Indian government agencies issuing contracts worth an estimated US$ 419 billion to US$ 628 billion each year for various aspects of infrastructure projects. Ideally, in contractual agreements no disputes would arise and both sides would benefit from the outcome. However, unexpected events occur and many contracts end in dispute. Contractual legal disputes devoid project benefits to the public as time and resources are spent in expensive arbitration and litigation. As a result, India’s development goals are impacted.
In public private partnerships (PPPs), it’s easy to forget that third “P,” but it’s this concept of a partnership that ensures the health and sustainability of the public-private relationship.
Mediation is simply a facilitated negotiation. It is a very flexible format for resolving differences in international infrastructure projects, as each mediator can structure the process in the manner most appropriate to the situation. Resolution achieved by mediation is not limited to remedies provided by law, allowing for bespoke settlements that satisfy both parties.
It is a year since I blogged about my early impressions of the Inspection Panel and specifically a complaint from a Maasai community that was resettled to accommodate a geothermal plant in Kenya.
Since then I have heard variants of the question: Do accountability mechanisms make a difference? In this case, I believe the Inspection Panel has made a positive contribution. But the ultimate test of the effectiveness of the Bank process, of which the Panel is only one part, must be the redress of any harm caused. Signs are encouraging, and we shall see.
We submitted our investigation report in early July. The Board meeting in October resulted in a clear direction for the future (see press release). This was followed by the Panel’s debriefing of the community and other stakeholders in Kenya.
As we analyzed the facts it became clear the Bank had failed to bring to bear its rich experience with resettlement and the full force of its safeguard policies. This had negative repercussions for many of the project-affected people, especially the poor and vulnerable.
In a nutshell, the requirement to engage resettlement expertise was not met, consultations were hampered by the absence of Maa language and by sidelining the traditional Maasai authority structure, and there was no effective monitoring against a comprehensive socio-economic baseline. We also highlighted many positive aspects, including the climate-neutral generation of electricity and the investment in new infrastructure for schools and dwellings in the resettlement area.
In a few weeks the Arab League will meet. The 2002 Arab Peace Initiative will again be placed on its agenda with the hope to push for the quest of a two-state solution.