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“Missions Suspended”: Does The Bank Need to Worry about ‘Political Risks’ - and What Does That Mean?

Verena Fritz's picture

For World Bank staff, it’s the announcement on the intranet: at a rate of about once a month, missions are being suspended to some country. All upcoming trips to the concerned country are being cancelled. Sometimes, the events – a disputed presidential election, riots against rising food prices, an increase in bus fares or the price of electricity, or a sudden clash between different ethnicities who previously seemed to live together peacefully – makes international news. At other times, the country concerned is too obscure and the instability is either too short-lived or too recurrent and there is barely a mentioning in the media.

For most of us most of the time, this is just a notice. For those working with the country concerned, it means grappling with questions such as: how is this going to affect the country’s economic dynamic and efforts at poverty reduction? Is there going to be a protracted period without a credible and effective government? Are recent efforts to improve service delivery to the urban poor or to rural areas going to be left to deteriorate again? Or is this just a temporary event – reminding us about the constant risk of instability – but without a major impact?

Instability can have many sources, drivers, and dynamics. Demographic pressures and environmental degradation can intensify already simmering tensions between different groups. Incomplete transitions from authoritarian to democratic regimes have gotten a number of countries stuck with regimes that experience periodic instability. In other cases, ineffective and oppressive governments maintain stability for considerable periods of time – until a strong leader passes away or discontent by excluded groups suddenly boils over.

Political and security risks and instability are not all home-grown. Rather, they are frequently re-enforced by external factors such as international drug policies and crime, external demand for natural resources from timber to metals and oil fuelling irresponsible exploitation, and by various forms of external interventions driven by foreign policy interests of large countries. A significant number of countries experiencing instability are affected by drug trafficking and organized crime.

Given the range of challenges and social tensions that many low income countries face, many countries are surprisingly stable. Certain types of instability such as military coups have significantly declined since the 1970s. In many instances, the international community has dealt more or less successfully with localized instability. However, with an ongoing war in Afghanistan, growing effects of climate change, and headed for a global population of 9 billion, as well as a global economic recession that appears far from digested we do not live in a stable world.

Within the World Bank, the ‘authorizing environment’ to think about political and security issues and how these affect the Bank’s core mandate of poverty reduction and economic development is evolving. The upcoming World Development Report on fragility and conflict is an indicator of this on the security side of the spectrum. On the political economy side of a spectrum there is a surge of interest in understanding political economy constraints to and drivers of policy reforms for many areas – service delivery, agriculture, natural resource management– and a nascent use of such insights to design operations in ways that are mindful of political feasibility, and also of potential opportunities to expand the space for reform.

However, in terms of monitoring risks of instability, regular World Bank briefs largely still focus on the economic side only. The traditional mode of risk monitoring is rather implicit and behind-the-scenes. Country teams are aware of upcoming elections or other major planned events; country managers or directors confer with local staff or other local contacts and are informed by the diplomatic community. This is important, but has limitations. A few teams have invested in major pieces of country level political economy work. While laying an important fundament for understanding risks and dynamics, such analysis is usually not updated at regular intervals. The new Operational Risk Assessment Framework – required for Investment Lending operations – is asking about country level risks, but seems to assume that there is some existing analysis that teams will draw on.

A real effort to monitor risks only exists for periods after the onset of instability. One of the Bank’s policies (BPs) that guide the institution’s operational work, BP 2.30, sets out the nature of ‘watching briefs’ for situations in which assistance has to be suspended. Trying to understand the nature of tensions and threats primarily after they have triggered instability and conflict – while important – may not be ideal. 

Teams in various regional units of the Bank have started to experiment with the idea of country governance and/or political risks briefs. This reflects a sense that better information about political and political economy dynamics – and a better and more regular tapping and summarizing of existing information – is a real gap. These are still very nascent ideas. Given the Bank’s unique global reach and its ambition to foster change in some of the most challenging environments, it is inevitable that Bank teams have to grapple with political instability and a range of ‘political risks’. Perhaps the Bank can and should do so more explicitly and openly.

 

Photo Credit: Flickr user DEMOSH

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Comments

Submitted by bernard harborne on
Verena, you raise an extremely important issue that those of us working on fragile and conflict affected states commonly confront - how to better understand, mitigate and respond to political-security risks. i think as you suggest that we are beginning - from different sectors to build up the expertise and instruments (conflict analysis, p/e community of practice etc) necessary to contend with a turbulent world. However, as a pretty 'autistic' global institution i think we need to be wary of a number of factors: i) the lauding of technical expertise over country knowledge (most meetings are about Bank processes and products rather than context); ii) the relative naivity associated with understanding political-security risk - even in the most benign situations this can get you shot; iii) the institutional imperative to do and lend rather than stand there and watch; iv) the reputational risks associated with touching upon this stuff - the Kenya 2007 elections are probably the most evident. Picking up on what you say, two signs of positive change: i) the ORAF and investment lending - with an emphasis on better management of dynamic risk over time; ii) the use of informal brainstorming meetings on a regular basis pulling in outside/ country expertise to examine context and work out our appropriate response. Bernard

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