From the CIAO Atlas Map of South America 

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CIAO DATE: 1/99

Halfway to Reform: The World Bank and the Venezuelan Justice System

Lawyers Committee for Human Rights

August 1996

To order a copy of the full text of this report and other publications of the Lawyers Committee on Human Rights follow this link: http://www.lchr.org/pubs/pubs.htm#INTERNATIONAL

Introduction

The last fifteen years have witnessed a dramatic shift from authoritarian to democratic forms of governance in most of Latin America. States attempting to consolidate still-fragile democratic reforms are turning to the judiciary to institutionalize and enforce the new rules for the maintenance of democratic order. Many Latin American judicial systems, however, are institutionally weak, heavily politicized and corroded by corruption, and thus unable, absent significant reforms, to serve as independent and effective guarantors of political and economic rights. Many governments have sought external financial assistance to address these problems. The World Bank has been the most significant non-state actor in the field since the early 1990s, though the U.S. Agency for International Development has made grants and technical assistance in the region since the mid 1980's, and the Inter-American Development Bank began to invest in legal reform in 1994.

This report examines the Bank's first loan dedicated solely to judicial reform, the $60-million Venezuela Judicial Infrastructure Project (supported by a $30-million Bank loan), approved in 1992. The Venezuela project (the Project) has been "marketed" as the Bank's flagship investment in this area, setting the stage for a number of other judicial reform projects in Latin America and elsewhere. It has unfortunately demonstrated — at times, in a particularly dramatic way — the problems inherent in trying to undertake a judicial reform project without broad government, judiciary and civil society commitment and participation. Although the Project is finally underway — it was delayed for two years by political turmoil in Venezuela — the Lawyers Committee and Provea believe that it can still be substantially strengthened with the participation of government and non-government actors interested in reform. Important steps have already been taken in this direction.

 

The World Bank and Judicial Reform

In its efforts to promote economic development, the World Bank has come to view respect for the rule of law as necessary for the provision of a stable and predictable environment for economic transactions. The absence of a functioning legal framework could, in the Bank's view, "greatly hinder development, discourage and distort trade and investment, raise transaction costs and foster corruption."

While the Bank may assist member states with reform efforts, it has concluded that its charter limits the kinds of reform initiatives it can support. Article IV of the charter directs the Bank and its staff to consider only economic issues in lending decisions and prohibits the Bank from interfering in the political affairs of its members. The Bank's General Counsel has stated that these provisions restrict Bank involvement to projects that are related to the development of a legal framework appropriate to a market economy and that any Bank-financed reform initiative must have "direct and obvious" implications for economic development.

This interpretation of the charter has created tensions in the Bank's approach to reform, particularly in relation to the issues of judicial independence and autonomy. The tension arises when the achievement of the reform goal of a judiciary able to make fair, consistent and transparent decisions runs up against the necessity for constitutional changes in the manner in which judges are selected, governed and removed. This tension was resolved at the beginning of Bank involvement in judicial reform by avoiding the structural (constitutional) issues entirely and focusing instead on reforming the administration of the judicial system. Consistent with the Bank's early view of its role in legal reform, the Venezuela Project was originally designed to focus on administrative and management reforms and the training of judges.

A 1995 Bank report on its early activities in this area reached a number of important conclusions. The review asserted that: i) the role of the reforming state is critical to the success of any judicial program; reform should not be imposed from outside; ii) reform measures benefit from a prior comprehensive diagnostic study that lays the groundwork for a comprehensive strategy; iii) judicial reform should be viewed as a long-term process, with states prioritizing reform measures and phasing them in over time; iv) judicial sector reform should be centrally coordinated from within the country, as reform programs often involve or affect several governmental organizations with diverse and sometimes competing interests; and v) reform should not be a closed operation between the Bank and the justice ministry but should reflect the participation of those individuals and groups in the country particularly affected by reform — the judiciary, bar associations, lawyers, and law professors. The Lawyers Committee and Provea believe that these "lessons" — with a few additions and some important clarifications — are crucial for the success of judicial reform. As noted in the critique of the Bank's role in the Venezuela Project, the Bank's record to date in each of these areas has, unfortunately, been mixed at best.

 

The Venezuelan Judicial Sector

Although Venezuela's Constitution established an independent judiciary, the role of the courts was marginalized by the efforts of the party-controlled state to provide for the economic, social and cultural development of its citizens. The parties came to dominate all aspects of social and economic life, and led to the heavy politicization of — and corruption in — most state functions, including the judiciary. In the 1980s, the break-down of OPEC and the dramatic fall of international oil prices triggered an economic and political crisis which shook Venezuela's party-dominated political structure to its roots. The austerity measures imposed by President Carlos Andrés Pérez to address the country's economic problems led to daily protests which were often violently repressed by the police. The resulting political unrest, including two coup attempts in 1992, buffeted Pérez and corruption charges finally drove him from office in 1993. After a brief pause during the interim Velázquez administration, the unrest has continued under President Caldera.

In many ways, the judiciary symbolized all that had gone wrong with Venezuela's political system. The roots of the crisis in the judiciary intertwine several areas: political interference, corruption, institutional neglect, and the failure to provide access to justice for the vast part of the Venezuelan population.

The administrative and management problems resulting from years of institutional neglect and the lack of judicial training are areas the Project specifically targets. However, the extraordinary corrosion of the judicial function brought about by extensive political interference and corruption are areas neither the Bank, the Judicial Council, the Congress or the President have yet to address credibly. The most egregious manifestation of the collapse of the judicial sector, beyond the disdain for the courts reflected in the citizenry, has been the wholesale eclipse of the fundamental role of judges in the protection of the human rights of Venezuelan citizens.

 

Human Rights in Venezuela

The violent repression of social protest in the wake of President Pérez' austerity measures left hundreds dead. By 1992, the list of problems had become lengthy, including persistent arbitrary and excessively lengthy detentions, abuse of detainees, extrajudicial killings by the police and military, the failure to punish police and security officers accused of abuses, corruption and gross inefficiency in the judicial and law enforcement systems, deplorable prison conditions, a lack of respect for the rights of indigenous peoples`, and violence and discrimination against women.

The economic and social rights of Venezuelans have also deteriorated significantly during this period, particularly following the launch in 1989 of the World Bank/IMF-assisted structural adjustment program. Several years of high inflation, currency devaluation and diminishing government social spending have contributed to a dramatic rise in poverty and its attendant social and health ills. These conditions served to increase social unrest, as well as the possibility of inappropriate or excessive reaction by the governmental authorities.

Recent Venezuelan presidents have returned to a tradition of suspending constitutional guarantees whenever an economic or political crisis appears. President Carlos Andrés Pérez suspended guarantees after each of the 1992 coup attempts; in June 1994, President Caldera suspended several constitutional guarantees, allegedly to address the economic crisis triggered by the collapse of the banking sector. Although purportedly based on an economic need, the government took advantage of the suspension to take aggressive actions far removed from the economic sphere, including numerous raids in poor urban areas of Caracas, and the detention of social activists, popular leaders, and members of leftist parties.

These violations of the human rights of Venezuelan citizens have continued unabated in recent years in large part because those officials responsible have acted with de facto impunity and citizens have not had access to a judiciary free of executive and party control.

 

The Struggle for Reform

Judicial reform had been nominally on the Venezuelan political agenda for a number of years prior to the development of the World Bank Project. In 1984, the Presidential Commission for the Reform of the State (COPRE) was created to develop proposals for the modernization of the Venezuelan state and to draft the legislation and constitutional changes necessary to permit the implementation of the recommendations. In 1990, COPRE set forth detailed recommendations for judicial administrative and code reform, bills subsequently introduced into the Congress were immediately tabled by opposition to judicial reform and the political crisis triggered by President Pérez' economic reforms. The Pérez cabinet and the Judicial Council ended up negotiating an agreement with the Bank to pursue administrative reforms through the Judicial Council, which would not require legislative approval. The Project thus focused on improving the management and operation of the judicial system and the training of judges, gambling that changes in court and case management, if successful, would serve to stimulate broader reforms later. The Bank's Board approved the Project in August 1992. The final step in project approval required the signing of the loan documents by the Bank and the Venezuelan government.

However, the Project stalled in the chaos generated by the economic and political tumult. President Pérez' ouster from office in May 1993 put the Bank in the position of re-presenting the Project to an interim government, some of whom did not support the Project. In addition, Rafael Caldera, elected president in December 1993, was a staunch opponent of Bank involvement in Venezuelan economic policy. Only at the very last moment, on December 31, 1993, did the government authorize execution of the loan documents.

 

Evaluation of the Bank's Role

Although Venezuela was the Bank's first free-standing judicial reform project, it has since responded to requests for assistance in this area from other governments in Latin America, Eastern Europe and Asia. This role gives the Bank a great degree of influence to affect the shape of reform. The influence derives from the kind of programs it is willing to finance itself and its willingness to insist that a state commit itself to certain reforms as a prerequisite to Bank involvement.

Recent Bank policy statements suggest that judicial reform programs should "address the political, economic and legal causes at the root of an inefficient and inequitable judiciary," recognizing that "if such a holistic approach is not adopted, there will be a minimal probability for success." Basic elements should include "measures with respect to guaranteeing judicial independence."

In evaluating the Bank's performance in Venezuela, several problems surface: i) the Project was not part of a comprehensive reform strategy; ii) the was no broad government commitment to reform; iii) reform strategies failed to address crucial structural impediments to judicial independence; iv) the reform strategies were premised on artificial economic and non-economic distinctions in key areas; v) access to justice concerns were not addressed; and vi) there was no broad-based participation in the design and development of the Project.

 

Comprehensive Reform

The methodological debate over the proper approach to reform involves two issues. First, should a state develop a comprehensive, long-term plan for reform, based on a diagnostic study of the entire judicial sector, before Bank involvement in discreet reform initiatives? And, second, how should reform be sequenced — should constitutional and legislative measures precede other reforms? The consensus among those with experience with judicial system reform efforts, including the World Bank, is that reform should occur within the context of a comprehensive, long-term strategy.

Comprehensive reform requires that a government — in conjunction with the broad range of actors in civil society — acknowledge the fundamental impediments to the functioning of the rule of law and the source of failure to protect constitutionally guaranteed economic, political, civil, social and cultural rights. A genuine reform effort contemplates the involvement of all judicial system actors in order to secure administrative and procedural coordination, and it logically sequences institutional changes and budgetary resources — and financing from international sources — for each reform phase or project.

An incremental initiative such as the Venezuela Project often lacks the base of support within the branches of government, political parties and civil society to guarantee the long-run viability of the project's reforms. The Project's improvements, however meritorious, may well be short-lived if the courts remain heavily influenced by political and private economic interests. One of the assumptions underlying an incremental approach to reform is that judicial independence is ultimately a characteristic of the way judges act, that is, of judicial character and culture, not the result of constitutional or legislative norms designed to provide greater institutional distance between the judicial system and political influences. While such an assumption may be reasonable, the reform sequencing implications that follow conflict with broader reform principles, in particular the need for broad government commitment prior to the initiation of a reform plan involving the entire judicial system, supported with input from the government, the legal community and relevant representatives of civil society.

The Project ended up adopting (if not developing) a judge-first strategy as early work revealed a need to move beyond judiciary infrastructure improvements and focus on the manner in which judges perform their work. Consequently, neither the Bank nor the Judicial Council desired much exposure for the Project (even within the judiciary) until the development of management reforms and a core of reform judges were well under way. As a result, the Project seems to have survived (barely) the 1992-94 economic and political crises, but with no broad support or consensus on the direction reform should take.

 

Government Commitment

In order for legal technical assistance to bring about the desired results, recipient governments "need to establish law reform agendas and prioritize areas where legal assistance is most needed." As the Bank concedes, "[u]nless a country is committed to reforming its legal regime . . . legal technical assistance may be a waste of resources."

No such commitment was ever requested of the Venezuelan government. In fact, as noted earlier, the Congress had demonstrated no enthusiasm for legal reform, refusing to address the legislative changes proposed by COPRE between 1987 and 1991. The value of the Pérez administration's commitment to reform evaporated with Pérez' ouster on corruption charges in May 1993. By the middle of 1993, not a single government minister involved in the development of the Project remained in office; entering 1994, therefore, the Bank had almost no official base of support for the Project.

 

Judicial Independence

The most serious problems of the Venezuelan courts — arbitrariness, corruption, delays — grow out of the lack of institutional independence of the judicial sector. While the Bank fully agrees that judicial independence is the critical issue in most Latin American states, and certainly in Venezuela, none of these elements has yet been addressed in the Venezuela Project.

 

The Bank's "Economic" Focus

Bank-supported judicial reform initiatives have stressed distinctions between what are deemed economic and non-economic elements of judicial systems. There is a Bank proclivity to work on commercial codes and civil procedures but to avoid penal issues and procedures and judicial entities that may protect constitutional rights generally but are not seen to have "direct" relevance for commerce or investment. Part of this discrete focus grows out of the Bank's concern about remaining within the scope of its charter mandate and part from the assumption that what investors and merchants primarily seek from judicial systems.

The Lawyers Committee and Provea believe such distinctions are artificial. While there is little research documenting the link between the performance of courts and economic development, available evidence suggests that political predictability is probably the more important variable in attracting investment. Moreover, the concerns expressed by foreign and domestic investors about the reliability of the judicial system appear to be a subset of a much broader concern about "judicial insecurity" arising from the fear that fundamental civil and political rights — the right to be free from arbitrary arrest and imprisonment, the right to fair pretrial and trial procedures, the right to be free of unconstitutional actions taken by the government — cannot be vindicated by a deeply politicized and corrupt judiciary. Economic issues are also implicated in the ability of many Latin American presidents to rule by decree or through the authority of broad emergency legislation without effective judicial oversight. Whether concerned about human rights, economic reforms or investments, none are secure if an executive can so easily and arbitrarily change a government's course.

 

Access to Justice

The ability of those with fewer resources to use the courts is a key measurement of the functioning of a judicial system. Access is critical for small business persons attempting to enforce contracts or defend intellectual property as well as individuals attempting to vindicate human rights guarantees. In fact, access to justice is an area that implicates the Bank's "overarching objective" of poverty alleviation. The Venezuela Project does not include an access-to-justice component, even though the courts are out-of-reach for most of the Venezuelan population.

 

Participation

Although long-criticized for failure to include non-governmental "consumers" in the design and implementation of economic development projects, the Bank has in recent years moved to increase the "participation" of a broader array of "stakeholders" in the projects it funds, recognizing that "[t]here is significant evidence that participation can, in many circumstances, improve the quality, effectiveness and sustainability of projects, and strengthen ownership and commitment of government and stakeholders."

Yet participation was not a recognized Bank policy in 1990, when discussions concerning the Venezuelan project began. Not surprisingly, many major actors in the judicial system — the Ministry of Justice and the Public Prosecutor most prominently — had very little input, and almost no actors in civil society — academia, bar associations, law faculties, NGOs — were contacted. More surprising is that only a handful of judges were consulted and the vast majority knew little of the contents of the Project other than that which they had read in newspapers as late as May 1995.

In spite of the expressed willingness of Bank officials and the Judicial Council to begin to reach out to civil society, the Project is only slowly emerging from the cloak of secrecy which has covered it since its inception.

 

Coordination of Donor Involvement

Because of its global scope and interdisciplinary expertise, the Bank views itself as well-positioned to act as coordinator of external legal technical assistance in its borrowing member countries. Yet coordination of activities among the various multilateral and bilateral donors is haphazard. Moreover, serious coordination problems exist among the four entities in the Venezuelan government which comprise the judicial sector. The Bank attempted to address this problem at the outset by establishing an inter-agency project advisory committee, but with nothing directly at stake in the Project, interest in the committee diminished and it ceased to function.

 

The Project on Its Merits

The Project does address a limited number of the difficulties plaguing the court system. Its broadest focus is on the catastrophic state of judicial administration and court and case management. And in proposing to strengthen the ability of the Judicial Council to actually manage and plan for over 1,000 courts, the Project is laced with studies that are to precede the development of new administrative procedures and technology systems. At the planning stages, then, the Bank seems to be taking a prudent approach to administrative restructuring.

The most dramatic change suggested for the courts by the Project is the manner in which individual judges work. Several new pilot courtroom models are to be tested in a number of different regions. The Project may also provide the basis for improved responsiveness from public defenders. And the revival of the judicial school is critical for preparation for the judicial career and continuing education for sitting judges. Finally, the Project provides a basis for follow-on proposals through a series of studies of various issues related to the functioning of the judiciary.

The success of these modest proposals, of course, depends upon factors originally avoided by the Bank and the Judicial Council: the depolitization of the courts and the Judicial Council, the weeding out corruption, and the political commitment to provide the resources for an independent judicial sector during years of economic crisis. Problems continue to plague the Project, now four years after Board approval. The government still has no broad reform strategy, the breadth and depth of its interest in substantive reform is unclear, and Judicial Council and Bank promises to expand participation are only slowly being realized.