The possible reasons for the M-R project’s slow start

217. The M-R Basin project represents an interesting example of the persistence of the law and development approach. The very slow start of the project during the first seven years can be assessed with some of the concepts developed by the law and development literature.⁷⁰⁵

3.1. Obstacles to the Borrower’s implementation of environmental and social conditionality 218. The concepts developed by the law and development literature help in analyzing the obstacles to legal transplants and legal reform on the Borrower’s side. Adapted to environmental and social conditionality, these obstacles correspond to the group of criticisms aiming at the inadequate design of conditionality, which is briefly introduced in Chapter Two. According to the views of most law and development scholars, at least since

“Scholars in Self-Estrangement”,⁷⁰⁶ the reason for such a difficult implementation is simply that the Donor’s policies can hardly be transplanted into a country’s unique context. The Recipient’s context is deemed incompatible with the Donor’s. In consequence, the project, including its conditionality, cannot be easily implemented. There are several commonly

703 On the subject of law and development and soft law, see Kerry Rittich, “Second Generation Reforms and the Incorporation of the Social”, in D.M. Trubek and A. Santos (eds.), The New Law and Economic Development (Cambridge: Cambridge University Press, 2006), pp. 206, 215.

704 On three kinds of law reforms, see J.H. Merryman, “Comparative Law and Social Change: On the Origins, Style, Decline & Revival of the Law and Development Movement”, 25 American Journal of Comparative Law no. 3 (Summer 1977), pp. 462, 463.

705 On the relevance of such a field of study, see Davis, Trebilcock, “The Relationship between Law and Development”, op. cit., p. 946; Gessner, “Law as an Instrument of Social Change”, op. cit., p. 8495; F. Charles Sherman, “Law and Development Today: The New Developmentalism”, 10 German Law Journal no. 9 (2009), p. 1272; David M. Trubek, “Toward a Social Theory of Law: An Essay on the Study of Law and Development”, 82 The Yale Law Journal no. 1 (1972), p. 2; David M. Trubek, “Law and Development”, in N.J. Smelser and P.B. Baltes (eds.), International Encyclopedia of the Social and Behavioral Sciences (Oxford: Pergamon, 2001), p. 8445.

706 Trubek, Galanter, “Scholars in Self-Estrangement”, op. cit., p. 1062.

cited obstacles stemming from the uniqueness of contexts.⁷⁰⁷

219. First, the lack of resources: the implementation of a sustainable project and its maintenance after completion require dedicated time and important sums of money.⁷⁰⁸ With the transplantation of MDB policies into a national context through conditionality, which foregoes any usual democratic process of law reform,⁷⁰⁹ there should be consultation and capacity building to ensure that the conditionality is as much as possible locally adapted, and that it is well understood and implemented. This process is inevitably lengthy and costly, principally for the Borrower but also for the MDB. However, the more thoroughly this process is undertaken, the more chances the conditionality has to be complied with.

This also increases the chances for the change to last past the completion of the project. A second frequently mentioned obstacle is path dependency, whereby development can hardly occur by design.⁷¹⁰ Instead, evolution “is path-dependent in the usual sense that directions for future development are foreclosed or inhibited by directions taken in past development”.⁷¹¹ Environmental and social conditionality can therefore not alter a Borrower’s institutional development context, already set on a particular course.⁷¹²

220. A third obstacle is the political situation of the Borrower, which can make the Borrower unwilling or unable to implement environmental and social conditionality. Indeed, a predatory political power is interested in its own benefit rather that in the public good.⁷¹³ In this case, as coined by William Easterly, “the imposition of conditions is no more than a wistful hope, rather than a policy with consequences”.⁷¹⁴ Furthermore, violent political struggles and political instability lead to legal instability.⁷¹⁵ A fragile government that

707 Enumerating these most cited reasons, see Channell, “Lessons Not Learned About Legal Reform”, op. cit., pp. 138-139 and in general Davis, Trebilcock, “The Relationship between Law and Development”, op. cit., p.

921. Also insisting on the importance of sub-national context, see Richardson, “Environmental Law in Postcolonial Societies”, op. cit., p. 11.

708 Channell, “Lessons Not Learned About Legal Reform”, op. cit., pp. 138-139.

709 Ibid.

710 Davis, Trebilcock, “The Relationship between Law and Development”, op. cit., pp. 920-921.

711 Bart Nooteboom, “Path Dependence of Knowledge: Implications for the Theory of the Firm”, in L.

Magnusson and J. Ottosson (eds.), Evolutionary Economics and Path Dependence (Cheltenham, U.K.:

Edward Elgar, 1997), p. 57.

712 Davis, Trebilcock, “The Relationship between Law and Development”, op. cit., p. 921, citing Douglass North, Institutions, Institutional Change and Economic Performance (Cambridge: Cambridge University Press, 1990), p. 99.

713 Davis, Trebilcock, “The Relationship between Law and Development”, op. cit., p. 923.

714 William Easterly, “Can Foreign Aid Buy Growth”, 17 The Journal of Economic Perspectives no. 3 (Summer 2003), p. 38.

715 Davis, Trebilcock, “The Relationship between Law and Development”, op. cit., p. 927.

cannot exercise power within its territory⁷¹⁶ is unlikely to thoroughly implement conditionality. Cultural factors are also cited, such as informal alternatives to the legal system or non-recognition of the formal legal system.⁷¹⁷ Indeed, norms can often only be understood in conjunction with other legal concepts. Therefore, environmental and social norms transplanted by MDBs are difficult to implement for the Borrower without a certain knowledge of the legal concepts from which they emanate.⁷¹⁸

221. Finally, another obstacle relates to the possibility that the Borrower would resist the transplantation,⁷¹⁹ which is similar to a finding of lack of ownership in the project.Here, the literature on aid effectiveness sometimes joins the findings of the law and development literature, especially when identifying the lack of ownership, commitment and institutional capacity and efficiency as obstacles to the implementation of the safeguards.⁷²⁰ These criticisms are grouped under the ineffectiveness of conditionality in Chapter Two.

3.2. The obstacles to the Borrower’s implementation in the M-R case

222. According to the different obstacles to implementation exposed above, the reason for the implementation difficulties that translated into important delays in the M-R case could be that the World Bank’s vision of sustainable development and its legal implications can hardly be transplanted into a country’s unique context, which is deemed incompatible with the World Bank’s vision. Indeed, law and development scholars have long said that law is

“society specific”.⁷²¹ Each society is thereby to be composed of a unique set of political, cultural, historical, economic and geographical elements, from which law derives.⁷²² Law is thus connected, and secondary, to society.⁷²³ It is particularly difficult for any external initiative to, first, identify areas in a system that can be reformed and, then, to implement these reforms,⁷²⁴ even if the reform, as in this case, is project-bound.

716 Christopher Clapham, Africa and the international system: the politics of state survival (Cambridge, Cambridge University Press, 1996), p. 21; E.A. Brett, “Explaining Aid (In)Effectiveness”, op. cit., pp. 4-6.

717 Davis, Trebilcock, “The Relationship between Law and Development”, op. cit., p. 921

718 Ibid., pp. 904-905.

719 Ibid.

720 IEG, Safeguards and Sustainability Policies, op. cit., p. 46.

721 Merryman, “Comparative Law and Social Change”, op. cit., p. 479.

722 Tamanaha, “The Lessons of Law-and-Development Studies”, op. cit., p. 484.

723 Ibid.

724 Davis, Trebilcock, “The Relationship between Law and Development”, op. cit., p. 896; Tamanaha, “The Primacy of Society”, op. cit., p. 243.

223. Interestingly, several of the obstacles above, traditionally cited for the difficulties or failure of law and development projects, do not apply here.⁷²⁵ First, there is no directly insurmountable economic barrier for the implementation of the project and corresponding cleanup of the river, as the country is comparatively wealthy. It ranks 21^st on the World Bank’s GDP index, just after Saudi Arabia and Switzerland and before Sweden,⁷²⁶ and 54^th on the organization’s GDP per capita index.⁷²⁷ Nor are there questions of path dependency, as Argentina – a democracy for over 30 years – has alternated political tendencies and reforms, from liberal politics in the 1990s to protectionism since 2003 and liberalism again since 2016. Nor are there any cultural factors, such as informal alternatives to the legal system, to blame for the delayed implementation of the project. The government and parliament’s electoral process is fairly uncontroversial. The civil law legal system is an effective mechanism of social control, and the checks and balance system, with the Supreme Court at its top, functions correctly.

224. In addition, the Supreme Court, now highly respected in Argentina, had ordered the cleanup of the area to take place based on laws passed by the parliament.⁷²⁸ Following the ruling, laws and executive decrees were passed to support its implementation. Two tribunals are in charge of controlling the implementation of the cleanup plan. Thus, the process was internally driven and one cannot conclude that there was an apparent lack of ownership of the project, or that conditions were simply imposed on Argentina by the World Bank. On the contrary, the World Bank found strong ownership of the project in the country.

3.3. The “hidden” political obstacle to the Borrower’s implementation in the M-R case 225. Although there is no predatory political power and there are no violent political struggles, it seems that a political obstacle is still to blame for the very slow start of the project. ⁷²⁹ The river area covers three political districts, governed respectively by the City

725 Enumerating these most cited reasons, see Channell, “Lessons Not Learned About Legal Reform”, op. cit., pp. 138-139.

726 World Bank, “Gross Domestic Product 2017”, available at:

http://databank.worldbank.org/data/download/GDP.pdf.

727 World Bank, “GDP per capita, 2017”, available at:

http://data.worldbank.org/indicator/NY.GDP.PCAP.CD?order=wbapi_data_value_2013+wbapi_data_value +wbapi_data_value-last&sort=desc.

728 Following the introduction of an environmental clause by the constitutional reform of 1994, the Parliament passed the general laws of environmental protection, for instance law 25.612 (industrial waste), law 25.670 (PCBs), law 25.688 (water), law 25.831 (information), law 25.916 (domestic waste), law 26.331 (forests), law 26.562 (burnings) and law 26.639 (glaciers).

729 Channell, “Lessons Not Learned About Legal Reform”, op. cit., pp. 149-156.

of Buenos Aires, the Province of Buenos Aires and the federal government. Until the December 2015 elections, the federal government was at times an ally of the Province of Buenos Aires, while the city was a strong political opponent of the federal government.⁷³⁰ Moreover, in this political context, the strongest actor was and still is the federal government because of an “ultra-presidential” system and the centralized organization of its federal system. Political differences had weakened the Province of Buenos Aires, leaving the thirteen municipalities bordering the Riachuelo with varying degrees of alliance or opposition to the federal government. A common understanding and implementation of the project by these three political entities was, from the start, challenging. In practice, the political context has translated into a multitude of project stakeholders, namely: the three governments, but also their specialized agencies and departments. For the World Bank, this means over twenty official stakeholders to be reckoned with.⁷³¹ Furthermore, in these seven years, most cited entities underwent changes of political authorities, often accompanied by changes of vision regarding the implementation of the project. Finally, and most importantly, although backed by the Supreme Court and the Parliament, the project lacked the support of the executive branch in all three districts, most importantly the federal government.⁷³²

226. In 2016, for the first time, the three political districts – the City of Buenos Aires, the Province of Buenos Aires and the federal government – elected the same political party.⁷³³

730 The World Bank may have been barred from this specific consideration because of the “political prohibition” provision of art. IV, § 10 of the IBRD, “Articles of Agreement”, op. cit.

731 The number of stakeholders is likely to have been identified as a risk in the World Bank’s evaluation of the project.

732 The former government had described its development model as a political, economic, social and cultural model in favor of inclusion and equity - “Acto de anuncios de desarrollo social y salud: Palabras de la Presidenta de la Nación” (15 October 2014), formerly available at:

http://www.presidencia.gob.ar/discursos/28032-acto-de-anuncios-de-desarrollo-social-y-salud-palabras-de-la-presidenta-de-la-nacion, accessed 10 February 2015 - with three main challenges: becoming self-sufficient in energy supply, obtaining a fiscal surplus through import substitution and the increase of exports, and preserving and creating jobs - “Capitanich: «Con este modelo Argentina logró inclusión, equidad y desarrollo productivo»” (23 October 2014), formerly available at: http://www.presidencia.gob.ar/informacion/actividad-oficial/28057-capitanich-qcon-este-modelo-argentina-logro-inclusion-equidad-y-desarrollo-productivoq, accessed 10 February 2015.- The federal government very seldom mentions environmental protection and has practically never conducted an environmental protection campaign - “La explotación de los recursos naturales es la única opción” (1 December 2014), formerly available at:

http://www.ambiente.gob.ar/?aplicacion=noticias&idarticulo=13333&idseccion=12, accessed 10 February 2015 - because natural resources are considered to be a means of economic development.

733 Pablo Tomino, “La distribución: Vidal y Larreta tironean para formar equipos”, La Nación (23 November 2015), available at: http://www.lanacion.com.ar/1848015-la-distribucion-vidal-y-larreta-tironean-para-formar-equipos. This tendency was confirmed at the 2017 legislative election, see Paz Rodríguez Niell,

“Elecciones 2017: euforia en el búnker de Cambiemos”, La Nación (22 October 2017), available

This represents a unique opportunity in terms of coordinated action that may explain the sudden amelioration in the status of implementation of the project. Moreover, the project may be more aligned with the policies of the new government.⁷³⁴ It remains to be seen whether the progress will be sustained. The “hidden” political obstacles also correspond to a “hidden” lack of ownership. Environment was not considered a priority by the Argentine population at the time of voting. Citizens are most concerned with drug trafficking, corruption, security, rising prices and poverty.⁷³⁵ In sum, Argentina’s political model of development, which traditionally focuses on economic and social pillars and where a multitude of political stakeholders function with varying degrees of alliance and opposition, represents a globally difficult context for the implementation of such a project with its environmental and social conditionality.

3.4. Two brief remarks on the relevance of the context for conditionality implementation 227. The M-R Basin case study illustrates two main points. Firstly, development banks provide important investment opportunities to Borrowers. They can help solve a critical environmental situation and bring model environmental and social safeguards. But for such an endeavor to be successful, the project and the conditionality must be adapted to the context. Because environmental and social safeguards are binding for the Bank, the suitability of the context for the implementation, including political factors, must be thoroughly assessed. Secondly, because the environmental and social conditionality is often stricter than national law, it can have, in practice, the same results as a project-bound legal

at: http://www.lanacion.com.ar/2074638-elecciones-2017-fuerte-operativo-de-seguridad-y-clima-tranquilo-en-el-bunker-de-cambiemos-a-la-espera-de-los-resultados.

734 “El Compromiso con el ambiente es central, afirmó Macri al inaugurar un parque”, Télam (21 December 2016), available at: http://www.telam.com.ar/notas/201612/174194-macri-parque-nacional-del-bicentenario-tucuman.html.

735 “El narcotráfico ya encabeza las preocupaciones de la sociedad”, La Nación (9 March 2014). This may explain why the federal government failed to act on the M-R Basin until the Supreme Court’s ruling in 2008, as well as the relative passiveness of the city and the province. The balance of economic gains and political support versus environmental protection is clearly at stake in the M-R Basin’s cleanup, where a great number of people could lose their jobs and incomes due to the potential closing of many small companies operating on its shores - see María Valeria Berros, “Relatos sobre el río, el derecho de la cuenca Matanza-Riachuelo”, I Revista de Derecho Ambiental de la Universidad de Palermo no. 1 (May 2012), p. 131, citing H. Bibiloni (Municipalities Representative), public hearing of 28.11.2007, Mendoza, Beatriz Silvia y otros c/Estado Nacional-. The Supreme Court ruling, although bolstered by previous and subsequent laws and decrees, as well as motivated by real and urgent needs in the area, is an example of judicial activism. Another reason for the difficulties in the project implementation and a consequence of the others, perhaps impossible to foretell even for an insider: during the long duration of the procurement process, Argentina’s economic policies have changed. Foreign exchange rules have been tightened and the Argentine peso has lost value. As a result, new and lengthy negotiations have arisen with the selected companies regarding works assessment and payment currency, increasing the delays in project implementation.

reform: environmental and social conditionality aims at regulating behaviors nationally, influencing the state, its departments or companies. This second point is examined in more details the next section.

4. The implementation of sustainable development through safeguards’ potential