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Building on Quicksand: The Collapse of the World Bank's Judicial Reform Project in Peru (April 2000) OUT OF PRINT Since 1994, Human Rights First has followed developments at two multilateral development
banks (MDBs) related to human rights and the administration of
justice: the World Bank and the Inter-American Development Bank
(IDB). As bilateral aid levels in this area decreased, both Banks
increased the number of loans for judicial sector reform, and Human Rights First began to shift its focus from the United States
Agency for International Development's (USAID) "Administration of
Justice" projects to larger bank-financed judicial and legal reform
initiatives. Human Rights First has sought to assess the banks'
progress toward the stated objectives of promoting proper judicial
values through such projects. The Committee's first detailed effort
targeted the World Bank's "flagship" project, its first devoted
solely to judicial reform, in Venezuela.(1) The Committee's analysis
identified a number of fundamental flaws (2) in Venezuela's justice
system that the reform, dedicated to improvement in administrative
practices and information management, did not address. Human Rights First and the Programa Venezolano de
Educación-Acción en Derechos Humanos (Provea) convened a
follow-up conference in Caracas in 1996 to bring 21 environmental
and human rights lawyers from 10 countries in Latin America together
with representatives of the Venezuelan government, the World Bank,
and the Inter-American Development Bank to discuss the banks'
justifications for and approach to judicial reform. The conference
signaled to the banks the strong interest of non-governmental
advocates in judicial reform as well as their frustration at being
excluded from discussion of the shape of reform. (3) Following the Caracas meeting, Human Rights First sought to build on the remarkable degree of consensus
between diverse groups of lawyers and NGOs about judicial reform
priorities. Working with environmental advocates in Bolivia and
Paraguay, Human Rights First examined aspects of World Bank and
IDB judicial reform efforts underway in both countries.(4) Human Rights First
also examined the World Bank's judicial reform project in Peru,
approved in December 1997. This paper tells the story of the
collapse of that project following maneuvers by Peru's Fujimori
government that undermined judicial independence there. This paper was written by Jeffrey A. Clark,
with substantial contributions from Patricia Armstrong, Christine
Pendzich and Robert O. Varenik. Robert O. Varenik edited the paper.
We thank Ernesto de la Jara and his colleagues at the Instituto de Defensa Legal in Lima for
providing us with invaluable archive material, as well as comments
on an earlier draft. We also thank World Bank staff that read an
earlier draft, as well as Patrick Gavigan, for their comments. We
are very grateful to the John D. and Catherine T. MacArthur
Foundation for its support of Human Rights First's work in this
area. The responsibility for the content of this report is
exclusively that of Human Rights First. Throughout Latin America, governments are
undertaking the long-overdue task of modernizing their justice
systems. Driven primarily by the desire to attract and hold foreign
investment, these governments seek to enhance the protection of
property and contract rights. Governments have attempted various
tactics, including modernizing antiquated property registries,
streamlining judicial procedures, establishing alternative dispute
resolution systems, improving judicial training, and establishing
career systems with performance incentives and sanctions. Taken
together, these programs represent one of the region's most
far-reaching and sustained efforts ever to address the limitations
of national judicial sectors that have been largely neglected. The World Bank and other multilateral
development banks can play an important role in the funding and
design of judicial reform projects. By offering both the financial
resources and technical assistance, the World Bank can promote
reforms that governments might otherwise be reluctant to consider.
In Peru however, the World Bank found itself in partnership with a
government that had repeatedly demonstrated its willingness to take
steps that would set back the cause of judicial reform. In late 1997, the World Bank approved the
Peru Judicial Reform Project ("the Project"), with a loan of $22.5
million. Only a few months after the Project's inception, the
government's persistent and highly publicized interference in the
judicial branch prompted the Bank to announce it would postpone loan
disbursements pending the government's restoration of conditions
necessary for the Project to meet its goals. After the Peruvian
government failed to correct the harm done, and facing a probably
adverse decision by the Bank, it requested cancellation of the
Project. The Bank formally terminated the Project in September 1998,
before implementation ever began. This paper examines the circumstances that
led to this unusual outcome and the lessons they hold for future
World Bank support of judicial reform efforts. The Peru experience
raises three issues that are fundamental to the success of judicial
reform initiatives, particularly those financed by external donors:
1) the degree to which executive interference in judicial matters
offers a more accurate barometer of the government's commitment to
reform than any expressions of good will; 2) how and when donors
should make the determination about whether a government's
commitment is sufficient to warrant the investment of time and
resources in a reform project; and 3) what approaches optimize the
chances for success and minimize the potential for wasted time and
money. The paper first briefly reviews the World
Bank's activities in the area of judicial reform and then describes
the Peruvian judicial system, its recent problems, the government's
efforts to address those problems, and ensuing controversies. The
decisions to postpone and then cancel the loan are reviewed and
analyzed. We find that a conditionality framework permitted the
World Bank to withhold support in the face of government action
that, in undermining judicial independence and narrowing
unacceptably the scope of legitimate judicial action, severely
impaired the Project's ability to meet fundamental objectives. We
conclude with an assessment of the three issues raised above. We
hope that the experience of the Peru Judicial Reform Project will be
a cautionary tale for donors supporting judicial reform efforts in
countries where a government fails to demonstrate meaningful and
sustained commitment to judicial independence. II. THE WORLD BANK AND JUDICIAL REFORM IN LATIN
AMERICA The mid-1980s witnessed a growth of bilateral
and multilateral development assistance devoted to reform of Latin
America's justice systems.(5) USAID led the way with a series of
administration of justice programs in Central America. The World
Bank ("the Bank"), followed by the Inter-American Development Bank
(IDB), took up these concerns in the early 1990s. As of July 1999,
between them the Bank and the IDB had approved or had under
consideration 30 judicial or legal reform projects in 17 countries
in Latin American and the Caribbean. At that time, loan amounts
approved by both banks for the region totaled more than $302
million.(6) Although both the Bank and the IDB developed judicial
reform projects in Peru, this paper focuses on the World Bank
project.(7) In contrast to USAID, which has made criminal
justice its primary focus, the World Bank began its lending and
technical assistance in the area of judicial reform with a narrow
focus on commercial and related legal matters thought to be most
relevant to economic development. In an effort to define the
permissible scope of "governance" lending into which judicial reform
falls, the Bank's General Council stipulated in 1990 that any
Bank-financed reform initiative must have "direct and obvious"
implications for economic development.(8) Pursuant to this
interpretation, the Bank's early judicial reform activities were
oriented toward improving the efficiency of the judiciary in ways
that provided a more secure legal framework for private investment,
including lowering the transaction costs associated with securing
property and contract rights through the court system.(9) The Bank
supported activities such as strengthening of member countries' key
judicial and related administrative agencies (including supreme
courts and judicial councils) through funding to enhance their
planning, budgeting, and general management capacities;
reorganization and streamlining of courtroom management systems;
training for judges and improvement of the buildings housing
judicial offices. The Bank avoided aspects of the judicial system
that did not fall within the narrow definition of its mandate, and
therefore did not address issues related to judicial independence,
access to justice, constitutional law, criminal law, or the
protection of human rights. Despite the initial predisposition toward a
narrow technical focus(10), the Bank came to recognize the demand
for a more comprehensive view of judicial systems and the need to
address some of the thornier problems such as judicial independence.
A 1996 Bank study identified measures to guarantee judicial
independence, enhancing the public's access to justice, and
incorporating gender issues in the reform process as among the "main
elements necessary to ensure an equitable and efficient
judiciary."(11) Judicial independence was deemed an "imperative
feature of any judicial reform project."(12) The Bank's emerging acknowledgment concerning
judicial independence followed from its recognition of a more
general principle: that project success required "ownership" of a
project by a borrower government.(13) Implicit in "ownership" is a
commitment to reforms necessary to make the project successful,
which presents challenges in the case of judicial reform projects.
In the case of legal reform work, the Bank has conceded that
"[u]nless a country is committed to reforming its legal regime...
legal technical assistance may be a waste of resources."(14) Perhaps
the most significant measure of such a commitment is concrete
governmental support for judicial independence. Ideally, such an
assessment should be made early in project planning, before project
approval. The challenge in practice is how to make that
determination. In the case of the Peru Judicial Reform Project, the
Bank was apparently satisfied with the government's position.
However, this conclusion was called into question very soon after
the Project was approved. III. THE JUDICIAL SECTOR IN PERU A. President Fujimori's Dismantling of the
Decrepit Justice System Peru's justice system entered the 1990s
discredited and in crisis. For decades, it had been "increasingly
characterized as corrupt, incompetent, inefficient, or simply
irrelevant."(15) Attempts at reform by the military government that
came to power in 1968(16) and some subsequent civilian
governments(17) did little to restore flagging public confidence.
There was no credible attempt by the judiciary to purge its ranks of
corrupt judges. Poorly managed courts resulted in enormous case
backlogs and inordinate delays. Judges were insufficiently educated,
and infrastructure was crumbling.(18) Police investigations and criminal
prosecutions were often ineffective, and judges appeared to a
skeptical public to dwell on irrelevant formalities and miss the
point of the cases before them.(19) The spread of the Shining Path and MRTA guerrilla movements and the growth
of drug trafficking brought an onslaught of particularly difficult
and politically charged cases into the courts, which were seen as
too weak to resolve tough cases impartially.(20) For example, public
outrage followed the Supreme Court's not guilty verdict in the in absentia trial of Shining Path leader
Abimael Guzman.(21) By the 1990 elections that brought Alberto
Fujimori to power, the state of the entire legal system, including
the judiciary, was dire. Short of resources, riddled with corruption,
constrained by archaic procedures designed for an epoch long past,
beset by conflicts between and within its major institutions,
disdained by the public opinion and by the more talented
professionals who formerly might have joined its ranks, the justice
system was widely acknowledged to represent the worst of the public
institutions in a country where the entire public sector was in
crisis.(22) An electorate disillusioned with traditional
political parties swept little-known Alberto Fujimori to a surprise
victory in the 1990 presidential campaign. President Fujimori's
attempts to put emergency powers in place resulted in conflict with
Congress,(23) leading him to rely increasingly on authoritarian
measures.(24) In an April 5, 1992 autogolpe ("self-coup"), President Fujimori dissolved Congress,
suspended the 1979 Constitution, and proceeded to rule by decree.
Part of Fujimori's justification for the autogolpe was that exceptional powers were
needed to reform the judiciary and win the battle against
terrorism.(25) Decree Law
25.418 of April 5 accordingly promised the "reorganization" of the
judicial branch.(26) The Decree Law "abrogated the scheme set out in
the 1979 Constitution for nominating, confirming, removing and
promoting judicial personnel and, in effect, ceded to the Executive
the virtually unchecked exercise of these prerogatives."(27) Through
a series of further Decree Laws issued in the next three weeks, the
Fujimori government embarked on a sweeping purge of the judiciary,
firing 13 Supreme Court Justices, all members of the Constitutional
Tribunal, all members of the National and District Councils of the
Judiciary, and the Attorney General. Likewise, "130 judicial
personnel in the Lima and Callao district were fired, including
superior court judges, chief prosecutors, judges in court districts,
provincial prosecutors and juvenile court judges."(28) The
government named new members and President of the Supreme Court,
which was then empowered to fill vacancies in the superior courts.
Now dominated by members appointed by the Fujimori government, the
Supreme Court began evaluating all remaining Peruvian judges; the
majority were thereafter dismissed.(29) Another evaluation process
implemented by decree in September 1992, which involved a one-day
questionnaire/exam, led to the dismissal of some 166 prosecutors and
646 administrative personnel.(30) Fired judges and prosecutors were
replaced by provisional appointees, subject to dismissal and
transfer at any time, without cause.(31) The result was that
virtually all judges and prosecutors were denied even minimum job
security.(32) While these conditions of uncertainty may
have temporarily created a more honest Supreme Court and perhaps
reduced corruption at other levels, it soon became evident that
susceptibility to political interference of the Supreme Court and
Public Prosecutor's office was higher than ever.(33) Many Peruvians
initially welcomed the President's extreme measures to tear down a
thoroughly discredited legal system,(34) but both domestic and
international criticism followed. A commission of prominent jurists
from Argentina, Italy and the United States that visited Peru in
September 1993 to review key features and projected reforms of the
justice system in Peru concluded that the effect of these measures
"has been to grievously erode, if not eliminate, the institutional
independence of the civilian judiciary." (35) B. President Fujimori's Rebuilding
Process President Fujimori claimed that his autogolpe was intended not to eliminate
democracy but to strengthen it.(36) Reforming and fortifying the
judiciary was to play a major role in that effort. In response to
the perceived weakness of the judiciary in dispensing justice in
cases of terrorism, in 1992 Fujimori established by decree a system
of anonymous ("faceless") courts,(37) both civilian and military, to
prosecute and try a range of broadly defined crimes relating to
terrorism. Military judges, predominantly career military officers
with no legal training, were empowered to try civilians for some of
these crimes.(38) Disregard for due process led to "a breath-taking
record of human rights violations,"(39) including many wrongful
convictions as well as unacceptably long pre-trial detentions. In 1993, the Fujimori government adopted a
new Constitution that provided for independent courts and the
re-establishment of the legislature. However, it became clear early
on that the new legislature would not create a meaningful
counterbalance to the power of the executive. To the contrary, the
new arrangements created an obsequious legislature,(40) which passed
"surprise laws" at the behest of the executive, including a 1995 law
giving amnesty to armed forces personnel for human rights
abuses.(41) The government's rebuilding of the judicial
system began in earnest in November 1995, when Decree Law 26.546
established an Executive Commission composed of three Supreme Court
justices who chose retired Admiral José Dellepiane to be the
Commission's Executive Secretary. The Commission was mandated to
undertake internal judicial reforms including administrative
reorganizations and improvements.(43) After a series of cosmetic
changes implemented with great fanfare, it became clear by mid-1996
that the Fujimori government's goals for the judiciary were more
ambitious. In June, at the executive's behest, Congress passed a
controversial Law 26.623 providing for the future creation of the
Judicial Coordinating Council to oversee judicial reform. Pending
the establishment of this entity, the legislation set up an interim
commission, also chaired by Dellepiane, with a broad mandate,
including power to reorganize external entities responsible for
judicial appointments and training.(44) The law also further
bolstered the Dellepiane-headed Executive Commission,(45) to which
it transferred control over further reforms from the Supreme Court
and senior prosecutors. The newly empowered Executive Commission and
the interim commission were all closely allied to President
Fujimori, providing him with greater control over judicial reform.
The initiative was opposed by several Supreme Court justices and
senior officials of the Public Ministry(46) who lost control over
reforms to the President's point man, Dellepiane. He was given great
leeway to spearhead what was to become the country's most ambitious
judicial reform effort: a three-year, $100 million plan, $40 million
of which was to be provided by the government. Foreign donors were
expected to contribute the balance.(47) Some observers suggested that one of the
motivations for the development of this judicial reform plan was to
prepare the ground work for assistance from international donors
such as the World Bank, the Inter-American Development Bank, and
USAID. The World Bank had already begun preliminary work and
discussions on a possible reform program,(48) and interest from
other major donors soon followed. The Bank enthusiastically backed
the Fujimori government's dramatic economic liberalization policies
and its efforts to integrate Peru's economy into the global
economy.(49) From the Bank's perspective, sustaining the economic
growth that these reforms were expected to achieve required changes
in the role of the State that would "increase the government's
capacity to govern" and "provide the appropriate environment for
private sector led development." In this view, an appropriate
framework for the administration of justice was a vital ingredient
of market-driven economic progress. Accordingly, judicial reform was
a focus of Bank attention for several years leading to the approval
of the Project in 1997. On December 4, 1997, the Bank's Board
approved a US$22.5 million Judicial Reform Project for Peru. Its
stated purpose was to "provide better justice in civil and
commercial dispute resolution by improving the access, efficiency,
quality, integrity and independence of the justice system."(51) The
loan was to help finance consulting services, training, equipment,
and physical infrastructure improvements. According to Bank
documents, the Project was to focus on three areas that overlapped
significantly with the Fujimori government's existing reform
initiative: administration of justice, access to justice, and
judicial selection, training, and evaluation. The administration of
justice component would concentrate first on strengthening the
general management capacities of the Supreme Court and the Superior
Courts, through management training and a new management information
system. It also would contribute to improving the performance of
lower courts through training, better information systems and
physical improvements. The access to justice component would provide
training to justices of the peace, reform the justice of the peace
system, create a fund for NGO involvement,(52) and would supply
funding to the Office of the Public Defender (a national ombudsman's
office responsible for the defending fundamental rights of
citizens).(53) The judicial selection, training and evaluation
component would support key activities of the National Council of
the Judiciary (NCJ) (responsible for the selection, periodic
ratification or removal of judges and prosecutors), the Judicial
Academy (responsible for judicial and prosecutorial education and
training), and the Office of Judicial Supervision (responsible for
judicial discipline), respectively. The Project was to be carried out by two
judicial branch entities as well as three external agencies. The
internal entities were Dellepiane's Executive Commission and the
Office of Judicial Supervision. The three external agencies were the
Office of the Public Defender, the National Council of the
Judiciary, and the Judicial Academy. IV. JUDICIAL REFORM AND THE INDEPENDENCE AND
AUTONOMY OF THE JUDICIARY The Bank's Project was beset with controversy
long before it was approved. The entrenched public mistrust of the
justice system was not assuaged by President Fujimori's judicial
reforms, as the judicial system in Peru appeared to become more, not
less, politicized. Several controversial moves by the Fujimori
administration, described in more detail below, attracted intense
criticism within Peru from human rights and other non-governmental
organizations, scholarly observers, and the media. These moves, and
the behavior of the Peruvian Congress, fueled suspicions that the
"reform" was primarily intended to solidify executive control of the
judiciary rather than improve the administration of justice. Growing
doubts about the government's reform program(54) became closely
linked to the Project: to many, it appeared inappropriate for the
Bank to partner with a government whose own judicial reform
initiative lacked credibility, and futile for it to attempt to
improve a judiciary that was subject to such pervasive political
interference. One of the few potential enhancements of
judicial independence after the autogolpe
was the 1993 constitutional provision giving the National Council of
the Judiciary (NCJ) sole authority to select, dismiss and ratify or
confirm the country's judges and prosecutors. Prior to 1993, the
NCJ's role had been largely advisory. The revival and strengthening
of the NCJ was seen as a rare positive government initiative to
promote judicial independence in Peru.(55) Subsequent efforts to
scale back new powers of the NCJ became the lightning rod for
resistance to the Project and led directly to the Bank's decision to
withhold loan disbursements. As in many countries in Latin America and
beyond, the Peruvian executive and legislature traditionally played
a significant role in the appointments of judges and public
prosecutors.(56) However, particularly after the autogolpe, Peru was an extreme case. Even as
late as August 1997, "the overwhelming majority" of the replacements
for judges purged during the autogolpe
had only provisional appointments.(57) The government exploited this
situation for political purposes, frequently "punishing" judges who
issued rulings unfavorable to the government or the military by
transfers or outright removal. The strengthening of the NCJ in 1993
was seen as a step towards the depoliticization of an inadequate
appointment process that had "plagued Peru for years."(58 )The NCJ,
which already had an important practical role in the Project as one
of its four executing agencies, accordingly took on an important
symbolic role as well. By 1996, the NCJ began to exercise the powers
vested in it by the 1993 Constitution by confirming or "ratifying"
the appointments of provisional judges, particularly at Supreme and
superior court levels,(59) thereby providing them with greater
security of tenure. This led to optimism among critics of President
Fujimori's judicial reform plans, as it appeared the process would
effectively end the problem of provisional judges.(60) As it sought
to continue that ratification process with the bulk of the
judiciary, which sat in the lower courts, it clashed with Admiral
Dellepiane. Dellepiane's group suggested that the NCJ postpone this
activity for a year, "pending further decisions on the judicial
career and requirements for appointment to it."(61) Soon after, on
December 3, 1996, a new law was passed suspending the NCJ's
authority to name tenured judges until the Judicial Academy was able
to develop and provide adequate training to judicial candidates.
This seemingly innocuous initiative, which received little media
coverage, effectively suspended indefinitely the NCJ's
appointments.(62) The NCJ never fully recovered. The power to review the legality of executive
and legislative actions and to pass judgment on the applicability of
legislation is inherent to an impartial and independent judiciary.
After the autogolpe, judges who sought to
define an independent role for the judicial branch would struggle
with the Fujimori government.(63) Apart from the purge of the
judiciary itself, the first direct blow to judicial review following
the autogolpe was Decree Law 25.454 of
April 28, 1992, by which the government prevented judicial personnel
from challenging the legality of their dismissals.(64) Thereafter,
President Fujimori's emergency government, under the guise of
reform, transferred the leadership of the Public Ministry (under the
Attorney General), which had begun to establish a degree of autonomy
prior to the autogolpe, to an ally of the
President.(65) Empowered to challenge the constitutionality of laws,
the Public Ministry was well positioned to initiate a review of the
1995 amnesty law. Instead, the new Attorney General, Nélida Colán,
did not hesitate to remove a prosecutor who filed a challenge to
that law.(66) After the amnesty law finally reached the
courts, judicial review was further undermined when in 1995 Congress
passed controversial legislation purporting to prohibit the
judiciary from reviewing the constitutionality of the amnesty
law.(67) Congress passed this "interpretive statute" in response to
a split Supreme Court ruling that the amnesty law did not protect
those accused of the notorious 1991 Barrios
Altos massacre, in which a military death squad killed 15
people, including an eight-year-old child, even though the ruling
upheld the constitutionality of the amnesty itself. Perhaps the highest profile attack on
judicial review involved the Constitutional Tribunal(68), which was
closed after the autogolpe but revived in
June 1996. The revived Constitutional Tribunal was hampered from the
start by structural impediments that had the effect of undermining
its independence. Its seven members, elected by two-thirds vote of
the Congress, would serve five-year terms with no immediate
reelection permitted. The five-year term coincides with legislative
and presidential elections, making candidates vulnerable to
influence by political trends.(69) More troubling was the
requirement of a majority of six (out of seven possible votes) to
find a law or governmental action unconstitutional.(70) Since three
of the seven original appointees were closely allied with the
President and his party,(71) the six-vote rule allowed the executive
considerable control over the Court. Accordingly, when opponents of
the Fujimori government lodged a constitutional challenge in 1996 to
an interpretive law passed by Congress that appeared to permit
President Fujimori to run for a third term despite constitutional
provisions to the contrary, a bitterly divided Tribunal(72) was
unable to muster the six votes necessary to rule the law
unconstitutional. Three judges who had voted against a third
presidential term held a press conference to announce their
non-binding opinion that the interpretive law, although not
necessarily unconstitutional, did not permit the President to run
for a third term. In May 1997, Congress dismissed these three
judges, "thereby emasculating one of the few constitutional
constraints on the government."(73) The action prompted protests
across the nation and strong objections from the judiciary, the
Office of the Public Defender and the Catholic Church. The head of
the Tribunal resigned in protest and it effectively ceased to
function, not having the quorum necessary to review constitutional
matters.(74) C. Endemic Interference: Other
Examples Political interference in the judicial system
was endemic.(75) For
example, in late December 1996, a Lima criminal judge, Elba Minaya,
granted a habeas corpus petition in favor
of General (ret.) Rodolfo Robles, and ordered his immediate
liberation two weeks after a military judge had ordered him detained
and charged for military offences including "insulting the armed
forces." Three years earlier, General Robles had publicly accused a
special detachment of the Army Intelligence Service of abducting and
killing a professor and 10 students from La Cantuta University in
July 1992. The military judge who had originally ordered Robles
detained denounced Judge Minaya's ruling.(76) On the Monday after
the weekend ruling, Judge Minaya, was unexpectedly transferred to
another court.(77) After a storm of press coverage, Judge Minaya was
restored to her position by the President of Lima's Superior
Court.(78) However, three civilian judges of a Lima appeals court
that upheld this and other habeas corpus
decisions were relieved of their duties by a controversial June 1997
Supreme Court panel ruling on a disciplinary complaint lodged by
military judges. The complaint accused the three appeals court
judges of improper interference in the military's sphere of
jurisdiction. The three judges were subsequently transferred to
other Lima courts at the instruction of Dellepiane's powerful
Executive Commission.(79) These actions sent a strong warning to
judges who were in a position to decide cases involving the military
justice system, which continued to try civilians in Peru for an
increasingly broad range of matters even as the situation of
insurgency and terrorism they were allegedly created to address
ebbed significantly.(80) The appearance was given that judges who
decided jurisdictional battles between military courts and civilian
courts in favor of the latter would be removed from their posts,
effectively undermining judicial independence in these politically
sensitive cases. Political interference reached the point of
arbitrary closings and creation of courts in transparent attempts to
influence the outcomes of proceedings.(81) For example, in mid-1996,
the judicial branch created a two-level specialized
counter-narcotics court in an effort to bolster the justice system's
capacity to deal with counter-narcotics cases. The judges of the new
court soon gained a reputation for honesty and objectivity. In
particular, the chief justice of this court, Judge Inés Villa, was
known to resist improper influence, even in politically sensitive
cases. In early 1997, there were rumors that politically sensitive
drug trafficking cases were about to reach her court,(82) and, over
the objections of opposition members of Congress, the court was
suddenly closed and replaced by a three-level specialized arm of the
Supreme Court. The official rational was that the link to a higher
Court would further strengthen the struggle against the production
and trafficking of illegal narcotics. However, none of the judges
from the former anti-drug court were named to the new court, and no
explanation was given for the failure to transfer the judges.(83)
In subsequent months, in a move that would
have an impact on several sensitive cases, such as the customs fraud
prosecution against broadcaster Baruch Ivcher, Dellepiane's
Executive Council created specialized chambers of the Supreme Court,
which proceeded to assume control over customs and other crimes,
including Mr. Ivcher's case. Although by that time many sitting
Supreme Court judges had obtained the stability of permanent tenure,
these new specialized chambers were staffed by untenured judges.
These cases had previously been under the jurisdiction of tenured
judges of the Lima superior court.(85) Once again, in cases in which
the government was a party, the Fujimori government gave the
appearance that it was seeking to control the outcome by arranging
favorable judicial decision-making. V. THE PREPARATION OF THE PROJECT By the time the Bank's Board voted on the
loan, President Fujimori's targeting of the judicial system had
already raised concerns among many Peruvian NGOs.(86) The Bank
carried out two "pre-appraisal" missions to Peru in 1996 regarding
the Project, one of which included meetings with NGOs and other
civil society groups.(87) NGO members have mixed feelings about the
consultations. One NGO representative reported that the design of
the Project was largely in place by the time NGOs were involved, and
suggested that meetings held by the Bank were primarily informative
rather than consultative. Another stated that the Bank met with
large numbers of NGOs on various occasions, but that the requirement
of confidentiality the Bank instituted as a condition of
participation in the meetings troubled some of them.(88) At that
time, many human rights NGOs opposed any international support for
the Fujimori government in the area of judicial reform.(89) As the
Project took shape, Peruvian NGOs began to coordinate activities
with international NGOs through which they opened channels of
communication to the Bank, which strengthened their advocacy
efforts.(90) Because of well-known NGO critiques of the
government's actions,(91) Bank personnel were well aware of the
controversial nature of the Project early on. The loan was
apparently contentious within the Bank itself, with some staff
concerned about the wisdom of supporting the reform of a judicial
branch whose independence was already deeply compromised,(92)
especially after members of the Constitutional Tribunal were removed
by the executive-controlled Peruvian Congress in May 1997. Notwithstanding the controversy, the Project
was approved by the World Bank's Board of Executive Directors under
a "streamlined procedure" on December 4, 1997. The streamlining
meant that no vote was taken on the Project, as it was consistent
with the Country Assistance Strategy and none of the Executive
Directors requested full consideration.(94) VI. THE PROJECT'S CONDITIONALITY
FRAMEWORK While judicial independence is not an
explicit condition of the Peru Judicial Reform Project loan, it is
clear from Project documents that a fundamental goal of the Project
was the strengthening of judicial independence and autonomy. In
particular, its implementation would depend upon the independence of
existing institutions, particularly the National Council of the
Judiciary. The Project design allowed the Bank to consider the
subsequent attacks on the independence of the NCJ to be inconsistent
with the nature and structure of the Project and to take suitable
steps in response that ultimately led to the termination of the
Project. Early in Project planning, the Bank
acknowledged the lack of judicial independence as a problem in Peru.
A 1994 judicial sector assessment noted a number of positive
developments in the aftermath of the autogolpe, but also stated that the events
of April 5, 1992 (the date of the autogolpe) were "seen by many outside legal
observers as a severe blow to judicial independence."(95) At project
approval, the Staff Appraisal Report (SAR), the most comprehensive
description of the Project's objectives and plan of action,
emphasized the importance of an independent judiciary. The SAR
asserts that "a modern State requires an effective rule of law,"
expressed through a "solid and respected justice system capable of
guaranteeing in practice security of person and property." (96) The SAR recognized that the Peruvian judicial
system fails to meet "basic standards and principles of independence
and accountability, access, efficiency, and professional competence
and integrity" resulting in "very low public trust and confidence"
after a decades-long downward trend.(97) Specifically, it indicated
that judges are frequently corrupt or subject to political
influence. The SAR identified as a risk to the Project "political
interference and potential instability in the project
environment,"(98) which could undermine the objective of promoting
the independence of the judiciary. In light of these concerns, the
Project's orientation and design targeted the strengthening the rule
of law through an independent judiciary. Independence and
accountability were placed at the head of the list of issues to be
addressed in the Project, with judicial appointment, compensation
and evaluation, including tenure, as well as discipline and
resources, also at the forefront. Several of the eight Project
objectives related to promoting judicial independence and autonomy.
The objectives included strengthening the NCJ and consolidating and
improving its merit-based system of appointment, advancement and
removal of judges. Loan agreement provisions explicitly allowed
the Bank to suspend payment in the event that powers of the NCJ or
other implementing agencies were tampered with, or if "an
extraordinary situation" arose after the date of the loan "which
shall make it improbable" that the NCJ or other implementing
agencies would be able to carry out their respective duties under
the agreement.(99) Recall that several entities, including the NCJ,
were named to implement the Project in addition to the Executive
Council mandated by the Fujimori administration to lead Peru's
judicial reform effort. The Bank saw the NCJ as a key mechanism to
assure the independence of the judiciary, and stated that by
supporting it, the Project would "build a stronger, depoliticized,
and merit-base system of selection, appointment, advancement and
removal of judges."(100) By linking the future of the Project to the
survival of the NCJ, the Bank effectively conditioned the loan on
the continuing autonomy of an entity that was developing into a
cornerstone of judicial independence in Peru. A lengthy policy declaration was included in
the Project documentation that further sought to insure the Project
against the risk of political interference. In Bank projects, such
declarations, also known as "policy letters," are intended to
demonstrate that the loan arrangement is consistent with the
recipient government's policies and positions.(101) The policy
letter acknowledges the commitment of these agencies to the Project,
explicitly recognizes the importance of constitutional measures
designed to guarantee the independence of the judiciary, and sets
out the parties' commitment to related objectives, policies, and
actions. For example, it notes that the Judicial Academy shall
examine candidates for the judiciary in a "transparent and rigorous
manner" in order to create a pool of candidates from which the NCJ
would select appointees to the judiciary "in a transparent,
independent, merit-based and objective" fashion(102) The policy
letter was signed by the heads of the implementing agencies: the
NCJ, the Judicial Academy, the Office of the Public Defender, and,
significantly, the President of the Executive Commission of the
judiciary, of which Dellepiane was formally the executive secretary
and effectively its leader. While the policy letter did not commit
executive branch or executive-controlled legislature to respect
judicial independence and autonomy, it represented an important
statement of commitment on the part of the implementing agencies to
bring about the conditions necessary for judicial independence. The
Bank undoubtedly sought out the policy letter to encourage explicit
agreement from the key implementing agencies as to the conditions
necessary for successful implementation of the Project. It helped
established limits which, when exceeded, led to the termination of
the loan.(103) VII. THE TERMINATION OF THE LOAN The Project was approved by the World Bank's
Board of Executive Directors on December 4, 1997, and the Loan
Agreement dated December 17, 1997.(104) The "effective" date of the
loan, i.e. the date when disbursements
would begin, was originally scheduled for January 1998.(105)
However, no monies had yet been disbursed when on March 11, 1998, at
the behest of the Fujimori administration, the Peruvian Congress
again passed highly controversial legislation truncating the NCJ's
authority (which had already been sharply reduced by Congress in
1996). Law 26933 transferred disciplinary power over judges and
prosecutors from the NCJ to Executive Commissions of the Judicial
Branch and Public Ministry, respectively. Notably, Congress acted
just as the NCJ was making progress in an investigation of two
tenured and four provisional Supreme Court judges allegedly involved
in improperly softening a substantial monetary judgment against
Peru's Central Reserve Bank that was unfavorable to the
government(106). Many observers suspected the timing of the move was
aimed to shield the subjects of the investigation from further
scrutiny of a vigorous NCJ, which had shown its capacity and
willingness to take its dismissal powers seriously. (107) Two days after the legislation passed, all
seven members of the NCJ resigned and released a joint statement
declaring that the new law undermined the NCJ's constitutional
mandate, and deviated from the constitutional intent. The statement
also noted that the new law was the last step in a long process of
limiting the powers of the NCJ. (108)The legislative attack on the
NCJ galvanized broader public opposition to President Fujimori's
Bank-supported reforms. Prominent jurists such as Lima Bar
Association head Delia Revoredo vigorously denounced the legislation
and declared their solidarity with the resigning members of the
NCJ.(109) Representatives of Peru's prestigious Catholic University
denounced the legislation, calling it an attack on judicial security
and on the rule of law.(110) The legislation was particularly bitter
news for NGOs and others who had believed that the NCJ held promise
for increasing judicial independence. Róger Rodríguez Iturry, the
outgoing head of the NCJ, later said: "We are facing an
authoritarian government ... that has a specific, concrete plan to
hold on to power...," adding that an independent NCJ was not part of
that plan. (111) The attack on the NCJ's powers caused
significant discomfort within the Bank. On March 19, the Bank
notified the Peruvian government that the deadline for the
"effectiveness" of the loan (i.e., its
start date) would be postponed until September 17, pending a review
of the implementing framework of the loan. Press reports indicated
that the Bank saw NCJ involvement as critical to the Project's
moving ahead and had given the government six months to fill the
void left by the mass resignation.(112) The Bank's concerns appear
in a confidential letter to the government, which was leaked to the
press. The Bank indicated that disbursements would be postponed
because the resignation of the members of the NCJ rendered
impossible a required subsidiary agreement to be signed by the NCJ.
The Bank stated that the extension until September 17 was intended
to allow enough time for the NCJ to resume its functions, and
complete the activities envisioned in the August 22, 1997 policy
letter.(113) The Bank's action was widely seen as a
condemnation of the most recent attacks against judicial
independence as well as the Fujimori administration's authoritarian
tendencies.(114) A Bank official stated the decision related to the
need to be assured of project effectiveness given changed
circumstances.(115) While the Peruvian government suggested at the
time that the suspension was a technicality resulting from the
resignation of the members of the NCJ,(116) it is clear that Bank
sought a responsible legal basis for taking needed steps to defer
the starting date for disbursements in a context of rapidly
deteriorating prospects for an independent judiciary. During the six-month postponement period,
there were three World Bank missions to Peru, the purposes of which
are not known but undoubtedly included discussions about the
Project.(117) On September 10th, 1998, days before the expiration of
the period, the Peruvian Congress, in an apparent effort to convince
the Bank to initiate disbursements, passed Law 26973 to restore some
of the powers removed by the March legislation.(118) Human rights
NGOs denounced the new law as inadequate,
arguing that it did little to restore the NCJ's powers.(119) The
Bank did not initiate disbursements. Instead, it granted a 30-day
extension beyond the September 17th deadline, suggesting that
although the Bank's review had started, it needed further time to be
completed.(120) By now, the loan's considerable support
within the Peruvian government and judiciary had evaporated. Even
President Fujimori was no longer publicly supporting the loan,
preferring to focus his public statements on inefficiency and
corruption in the judiciary.(121) In late September 1998, the
government apparently reached the conclusion that the Bank would not
be moved by minor adjustments to the NCJ's powers. Members of
Congress in charge of judicial reform announced that the government
intended to withdraw from the loan. NGOs saw the government's
voluntary withdrawal from the Project as a face-saving move
calculated to avoid the embarrassment of outright rejection by the
Bank, though there was no doubt about the real reason for the
withdrawal.(122) In late September, the Minister of Finance wrote
the World Bank requesting withdrawal from the loan, indicating the
intention of the Peruvian government to pursue judicial reform with
its own resources. The Bank accepted the request and terminated the
Project. It now considers
the matter closed. The World Bank, in part due to its
recognition of the importance of good governance and the negative
effects of corruption on economic development and growth, has put
institutional reform high on its agenda. Within this broad rubric,
judicial systems and the independence of the judiciary are
justifiably key areas of emphasis. However, as Bank President James
Wolfensohn stated in his 1999 address at the World Bank's Annual
Meeting, governments must take the lead in these efforts if they are
to succeed. A 1996 report by Human Rights First and
the Venezuelan NGO Provea suggested that: While few working in the field, including the
World Bank, would disagree with the importance of government
commitment, the adequacy of this commitment may be hard to
determine. Governments generally are of more than one mind;
particular individuals or departments may be supportive of change
and others may not. The locus of support is also important, and
needs to include champions in both political and administrative
sectors as well as senior officials and those who will have
responsibility for implementation. Lastly, commitment may not be
easily reflected in public events, especially where a government
lacks the resources and the political clout to act decisively before the Bank's money and institutional
weight have been brought to bear on the issue. However, Peru is an indisputably clear case
of a government that actively demonstrated its disdain for some of
the essential ingredients for reform: the judiciary had been a
frequent target of the Fujimori administration and the
executive-controlled Congress before the approval of the Project. It
is of course possible to argue that at the time the Project was
initially conceived, Bank support was justified by both the manifest
need for reform (an obviously necessary but insufficient condition)
and indications from the Fujimori administration of an appreciation
that the rule of law could encourage investment and development.
Indeed, the creation-on paper-of a potentially robust National
Council of the Judiciary raised the prospect that appropriately
appointed, tenured judges could break the cycle of political
intervention that had plagued the Peruvian judicial system for so
long. Nonetheless, by the end of the Project's
preparation stage, well prior to approval, any misperceptions about
actual governmental support for increased judicial independence
should have been banished. For those within the Bank and familiar
with the Project's history, the more recent attacks should have been
seen as a culmination of similar concerns that had caused several of
the Bank's member countries to question loans to Peru since the autogolpe. Under the circumstances, the
decision to push forward to approval was not only unjustified but
also unjustifiable-except as a necessary
precursor to the Bank's invoking of the nuanced conditionality which
led ultimately to the loan's termination. In hindsight, precisely because of the
extreme circumstances attendant in Peru, the Bank's experience sheds
relatively little light on the calculus underlying an assessment of
official commitment to reform. Peru should have represented an
"easy" case, one not suited for the Bank's investment under any
conceivably credible criteria for entry. However, the answer to the
first question posed in the Introduction-about the best bellwether
of commitment-is unmistakable. Peru's actions spoke loudly and
consistently in opposition to a healthy and vibrant judiciary; no
official statements could or should have been allowed to obscure
their clear meaning. Whatever the purported rationale for the Bank's
approval of the Project, it was in error. Responding again to our
introductory queries, in this case as in others, an early
(pre-approval), comprehensive, and frank assessment of environment
in which reform is to occur is essential. As Human Rights First
has said in other contexts, an early assessment of the suitability
of a judicial reform project, including the government commitment to
judicial independence, ought to include gathering and vigorously
exchanging views with a wide range of societal actors including the
academic community, non-governmental organizations, opposition
figures, professional associations, etc. This could help reduce
risks of project failure-and the waste of resources that entails-by
exposing any faulty assessment of government commitment early in the
project development process. We are not privy to why the World Bank
decided to go forward with the Project even in such a negative environment.(125) Indeed, the Bank's
approval of the Project may have strengthened those in the Peruvian
government who opposed, rather than supported, true reform built on
judicial independence. This may have been one of the reasons that
the Fujimori government supported the loan. In future projects in
which judicial independence is a concern, the Bank must honestly
assess the degree to which a borrower government has taken
unmistakably concrete and consequential actions, without steps
backward, toward reform that is rooted in judicial independence. In contrast to the World Bank's decision to
go forward with the Peru Project, its reaction to events after
approval was appropriate and forthright. After the March 1998
legislation reducing the NCJ's powers was passed, the Bank put a
six-month hold on the Project and spoke publicly about its decision
to do so. While the Bank did not characterize its response as one
addressing a significant inroad to the independence of the judicial
system, the delay-an unusual step, particularly so soon after
project approval-spoke volumes. The Bank publicly justified its
action with reference to the policy letter signed by the four
implementing agencies. The Bank pointed out that as a result of the
March 1998 legislation, one of those agencies, the NCJ, had been
left with no members by the ensuing resignations and therefore could
not carry out its obligations under the loan agreement. The Bank remained steadfast when the Peruvian
Congress subsequently passed purportedly remedial legislation that
made insignificant changes to the March law. Faced with a clear
signal that the Bank would insist on a restoration of the NCJ's
powers, and apparently believing that the Bank would terminate the
Project in the absence of such action, the Peruvian government acted
to avoid this embarrassment by withdrawing from the loan. The Bank's
refusal to be swayed by a transparent government contrivance was
obviously interpreted by the government as an indication of the
gravity of the Bank's concerns, and its will to stand firm. Several elements of the Bank's response to
post-approval events are worth highlighting. First, the Bank's
monitoring of an evolving situation, and its responses, reflect an
understanding that the Bank's decision to partner with a government
is more of a process than a singular event; it demands continuing
oversight and a flexible set of responses. Second, the Bank came to
acknowledge, at least implicitly, that the government's deeds were
the most significant determinant of its suitability as a partner.
Third, by obtaining the policy letter the Bank built certain values
into the Project's approval procedure, laying an intelligent
foundation for a subsequent decision that led to termination.
Notably, the Bank achieved this by consensus, obtaining the signed
commitments of all implementing partners to respect the values set
forth in the letter. Fourth, the Bank afforded the government a
window of opportunity to demonstrate, once the stakes of
non-compliance were clear, that it would take effective steps to
salvage the Project. Lastly, when it took what was ultimately the
decisive step of postponing the Project, the Bank maintained an
appropriately diplomatic face while conveying an unmistakable
message about the negative impact of Peruvian government attacks on
judicial independence. Taken together, these elements offer hopeful
examples, and perhaps models, of how the Bank might prepare and
execute a reasoned response to a government that fails to meet the
required standard of commitment.
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