Shaping the frameworks for positive change

Ipso Facto: Our Law Feature 

Laws shape the world in which we operate. The rule of law is paramount to the functioning of societies. We make the laws and we live within the boundaries set by the laws. They create our everyday reality – as expressed in the phrase “ipso facto”, directly translated as “by the fact itself.” It is used when something is so obvious that it needs no elaboration or further explanation. Like the law itself. That’s why we have chosen this term as the name for our new column which will be dedicated to developments and activities in the legal sphere and become a new fixture of the OPEC Fund Quarterly on an intermittent basis. 

There are more than 30 multilateral development banks (MDBs) around the world today, and they do indeed cover the whole globe. They range from A as in African Development Bank to W as in World Bank Group. At a time of huge pressures on development and scarce resources, the expectations on MDBs are only ever growing. In order to deliver, coordination and cooperation are key. 

This is why the OPEC Fund and the International Finance Corporation (IFC) co-hosted delegates from two dozen international organizations for an inaugural legal conference on international finance and development in October in Vienna. Violet George, OPEC Fund General Counsel, said: “Whenever we have the opportunity to collaborate, it helps in solving our development challenges faster and more cost-effectively and efficiently as well.” 

The two-day conference entitled, “The Changing Development Landscape: Perspectives, Risks and Opportunities” offered plenty of food for discussion and thought. Across 10 sessions – including two plenaries and eight “focus” sessions – colleagues and counterparts covered pressing issues including artificial intelligence and legal operations, mechanisms for stronger collaboration amongst the legal departments of international financial institutions, litigation and access to remedy, the legal complexities of concessional finance, as well as the challenges of legal and institutional reforms. 

Cooperation alone, however, will not be sufficient to fulfill the enormous tasks the MDBs are facing. As public funding is far and few between and private sector mobilization for development remains a back-breaking job, MDBs are under huge pressure to use their funds as cost effectively as possible: “If we want to do things quicker and more efficiently, we’re going to have to do things differently,” said Julian Jackson, Assistant General Counsel at IFC. 

In addition, MDB shareholders, i.e. governments, are ramping up the pressure to eliminate duplication of work and secure the most impactful return on investment. Take for example a small, wealthy country like Austria which is a shareholder, among others, in the Asian Development Bank (ADB), the Asian Infrastructure Investment Bank (AIIB), the European Investment Bank (EIB) as well as the European Bank for Reconstruction and Development (EBRD). In each case taxpayers’ money has been provided with a duty to put it to best use. 

This challenge was also underscored by Michael Strauss, EBRD General Counsel: “There are several reasons why we need to collaborate – and it’s really an imperative, not an option. We are designed by very similar shareholders to do very similar things, and those shareholders will expect that we do them in the most efficient way.” Julian Jackson agrees: “Lawyers will have a key role in facilitating that.” 

Read more to see how Violet George, Julian Jackson and Michael Strauss consider the challenges facing MDBs and their legal departments as well as the lessons learned from October’s conference. 

Violet George, General Counsel, OPEC Fund 

OPEC Fund Quarterly: Why is it important for MDBs to collaborate in general – and share legal knowledge in particular – in support of the 2030 Agenda? 

Violet George: Essentially there’s no one MDB that can finance all the projects or solve the current development challenges so MDBs need to collaborate to achieve our objectives. When we collaborate, we make it easier for our partner countries – in terms of synergies, in terms of costs, or just their ability to work with us as a group – rather than having to follow the policies of each and every one of the different organizations. So whenever we have the opportunity to collaborate, it helps in solving development challenges faster and more cost effectively and efficiently as well. 

OFQ: Beyond events like this, how is the OPEC Fund partnering up for the Sustainable Development Goals (SDGs)? 

VG: Events like this are important because they facilitate knowledge sharing and the exchange of ideas. We can see what others are doing and learn lessons. But even outside this conference, we continue to engage virtually and brainstorm on legal questions and challenges. We are constantly sharing knowledge and benchmarking amongst our organizations. 

OFQ: What has been the biggest opportunity – and success story – for the OPEC Fund and its focus regions in recent years? 

VG: One success story is the Exposure Exchange Agreement that we recently signed with the Inter-American Development Bank (IDB). This agreement allows us to exchange our exposures in certain countries where we had reached our lending ceilings. We exchanged those exposures with IDB for similar exposures in other countries – to create more headroom and expand our development impact in those countries. 

The transaction with IDB has been a win-win signing and we are in fact the first non-AAA institution to sign such an agreement. 

Julian Jackson, Assistant General Counsel, International Finance Corporation 

OPEC Fund Quarterly: How has your institution accelerated action or changed course since the Marrakech G20 meeting? 

Julian Jackson: The 2023 Marrakech meeting signaled a change in mood: donor countries recognized that if we’re going to achieve the SDGs, we’re going to have to enhance the way we operate. The challenges facing the developing world are so huge that we cannot meet them by continuing on the path of “business as usual”. 

MDBs have tended to approach our work individually. Now the G20 have called on us to operate as a system, which means we have to try to collaborate more deliberately and more effectively. That could mean collaborating at a policy level, e.g. by harmonizing policies, or working more efficiently – for example by avoiding duplication of efforts or identifying priority areas in a more systemic way. 

And of course, lawyers play a key role by advising the board and management, and by helping create mechanisms and structures that facilitate the tools that are necessary for collaboration. 

OFQ: What has been the most important challenge – and lesson learned – for your institution and focus regions in recent years? 

JJ: A challenge for IFC has been how to meet the ambitious aspirations of the Paris Agreement. A great example of collaboration is the development of the Joint MDB Methodological Principles. IFC has implemented those shared principles. One part of that is finding realistic, yet meaningful, ways to encourage borrowers to be ambitious about reducing greenhouse gas emissions and operating more sustainably. 

With respect to Paris Alignment generally, I think the MDBs have come a long way in a very short time. In large part that’s down to collaborating and learning from each other. 

OFQ: IFC is focusing on the private sector. Are there any particular opportunities and challenges you are facing? 

JJ: To invest on private sector terms in the most challenging markets means we have to be creative about ways to manage risk and develop sound structures to convene financiers. We are stretching our balance sheet to be able to do more in that regard. We are also looking for innovative ways of using capital as efficiently as possible. We are focused on mobilizing more private capital and tapping into the capital markets. 

Michael Strauss, General Counsel, European Bank for Reconstruction and Development 

OPEC Fund Quarterly: Why is it important for international financial institutions (IFIs) to collaborate in general – and share legal knowledge in particular – in support of the 2030 Agenda? 

Michael Strauss: There are several reasons why we need to collaborate – and it’s really an imperative, not an option. We are designed by very similar shareholders to do very similar things and those shareholders expect that we do them in the most efficient way. 

When collaborating on projects, I’ve seen many cases where the differences between institutions can cause problems for our clients. But it’s also an opportunity because we can learn how to improve systems and make things more straightforward for the people we work with. 

OFQ: Beyond events like this, how is your institution partnering up for the SDGs? How have you accelerated action or changed course since the Marrakech G20 meeting? 

MS: I have a unique perspective because I’ve worked with multiple IFIs over the years. When you see the similarities and differences between institutions, you realize that there’s quite a lot that can be done. EBRD is quite different in one sense because we were set up to do “transition” – not development per se. 

Nonetheless, as an institution, we still track ourselves against the SDGs. In my department, we even have a team called the Legal Transition Team that manages advice and technical assistance to emerging economies in our region to help them with legal reforms in support of these goals. We have enormous opportunities and there’s so much work that can be done to actually achieve the SDGs. 

One thing that I think is really important is that over the years we have sometimes measured inputs and outputs. That’s not appropriate. What we need to do as institutions is to work together to focus on outcomes and impact. So our team looks at that very systematically from an SDG perspective. 

OFQ: What has been the most important challenge – and lesson learned – for your institution and focus regions in recent years? 

MS: At EBRD we’re working on detailed mutual collaboration and reliance between institutions that are very similar to each other. We’re working with the European Investment Bank, IFC and the World Bank’s Multilateral Investment Guarantee Agency (MIGA). We have so much in common – but when you dig into the details, it’s a lot more complicated than it looks. Our shareholders, who are not the same from institution to institution, have to be on board too. 

OFQ: What has been the biggest opportunity – and success story – for your institution and focus regions in recent years? 

MS: Working with MIGA and the USA’s Development Finance Corporation we’ve collaborated in trade finance – which is a highly effective development tool on the private sector side. Our co-financing with other institutions has also been going strong for years and years. EBRD is overlapping with a lot of other institutions. In some ways we can be a beacon for how collaboration can be done well. 

OFQ: How important is it to have people with cross-cutting experience? 

MS: I think it’s really useful. The more cross-fertilization there can be across institutions, the more we can add to the discipline. Having worked at other institutions, I’ve seen models that I can apply at EBRD. Ultimately, the more mixing there is across institutions, the more institutional knowledge we can build up.