You are on page 1of 19

From GEF to GEM?

A Quest for Legal Personality amid the


Unfinished Restructuring of the Global Environmental Facility

Filippo Ravalico, LL.M. 2010, The Fletcher School of Law and Diplomacy, United States

1 Introduction
The GEF is one of the hubs of the international governance architecture built over the last 20 years to
respond to the looming crisis of our civilization. It is probably the single most illustrative example of the
political and economic shifts triggered after decades of environmental blindness and neglect.
Unsurprisingly, it lies at the center of a complex system of financial arrangements, policy programs and
socio-ecological projects and experiments; it has been evolving relentlessly since its inception and it still
eludes most traditional categorizations and classifications.
The GEF history provides deep insights in the evolution of the global environmental governance (GEG),
kick-started in 1972 at the United Nations Conference on the Human Environment with the establishment
of the United Nations Environment Programme (UNEP). The biosphere (or the global ecosystem)
thereby joined the global political economy and the inter-state system as a third “dominant tendency” of
the world order dynamics (Cox 1996, 494). Within the emergence of global environmental policy, the
GEF entered the world stage at the critical junction marked by the run-up to the 1992 Earth Summit in
Rio de Janeiro. It was accordingly gifted with unique theoretical and practical significance, and it turned
out to be a core instrument in both the contextualization of GEG within the broader framework of
sustainable development (Najam et al. 2006, 9-12; Speth and Haas 2006, 52-81), and the
“operationalization” of the sustainable development paradigm in the environmental field (Young 2002,
11-13, 128-173).
Furthermore, GEG has kept expanding since 1972 with the appearance of many new actors, ranging from
NGOs to a “patchwork of international institutions” (Bodansky 2010, 117-127), including multilateral
environment agreements and conventions, their secretariats and implementing bodies, civil society
organizations and epistemic communities. Especially after Rio, also the private sector assumed a crucial
role in the evolution of GEG. All this was made possible by (and implied) a corresponding steep increase
in rules and norms dealing with environmental, local and global issues, so that GEG contributed
significantly to the fragmentation of international law (ILC 2006). As a consequence, like the UN system
in general, GEG is also in perennial state of reform and the GEF vicissitudes since 1991 aptly underscores
the point (Andler 2009, 216-217; Smyth 2009; Najam et al. 2006, 21-23).

1
Climate change is today the most popular and widely studied policy issue, but it is important to remember
that the GEF is institutionally in charge of dealing with all the gravest as well as other, slightly less
severe, environmental threats. Its unchanged original mission as set out in the sui generis constitutive
document provides that the GEF must operate “for the purpose of providing new and additional grant
and concessional funding to meet the agreed incremental costs of measures to achieve agreed global
environmental benefits in [its] focal areas” (Paragraph 2, GEF Instrument). The Conference of the
Parties (COPs) of the 1992 climate (UNFCCC) and biodiversity (UNCBD) conventions have so far
confirmed the status of the GEF as operating entity of their financial mechanism. Furthermore, two other
conventions have also agreed to “retain” the GEF’s services: the persistent organic pollutants convention
(POPs), in 2001, and the desertification convention (UNCCD), in 2003. The early mandates were
negotiated as provisional appointments on the background of bitter confrontations between rich and poor
countries and, by reason of various institutional shenanigans and quite limited mutual gains and progress
since then, they still convey the legacy of a long history of mutual distrust that has festered official
development assistance over the last decades (Gomez-Echeverri 2009; Ghosh and Woods 2009) and has
virulently infested climate finance in the Copenhagen aftermath (Brown et al. 2010; Müller 2010c).
Against such an explosive political background, the clear allocation of its internal and external powers
and responsibilities has proven the most difficult exercise for the GEF since its troubled adolescence,
fostering a hopefully forerunning and transferable “strong ability of adaptation to a changing
environment” (Streck 2001). The bold bid for independence by the Secretariat and the CEO during the 3 rd
Replenishment in 2002-2003 has however resulted in a weak bureaucratic compromise (Smyth 2009, 63-
69), the structural limitations of which have long been incompatible with the rapidly evolving situation.
Unavoidably, many thorny issues have re-emerged during the 5th Replenishment meetings, in relation to
which it is dispiriting to note how the most important ones have been progressively sidelined in the
reform package eventually agreed upon (GEF 2010a). Honoring an unsurprising tradition of irrelevance,
the 4th Assembly rubber-stamped in May the negotiated compromise and only approved two minor
amendments to the GEF Instrument (dealing with the appointment and term of the CEO and the formal
adjustment to reflect the new competences under the UNCDD). The Council could then push forward in
June yet another ‘restructuring’ round wrapped in policy recommendations and actions that offer no clear-
cut solution as to the GEF legal status and only superficially tinker with the symptoms rather than the root
cause of growing legitimacy pains.

2 GEF (r)evolution: much more than just another international bureaucracy


A quick comparison of how the GEF has been referred to and tentatively defined over less than two
decades delineates an unprecedented institutional-change path. Conceived in the hectic preparation of the

2
Rio’s Summit as a World Bank’s pilot program, a “shadow” vehicle to pre-empt excessively “automatic”
financial assistance mechanisms potentially inspired by the successful experiment under the Montreal
Protocol to fund the elimination of ozone depleting substances (Young 2002), the GEF has evolved into
an increasingly autonomous and original entity, a “model” of network-based governance (Streck 2001)
and institutional hybridization (Heyvaert 2009), a “watershed in institutional design” (Ballestreros et al.
2009, 12).
According to the alleged masterminding, in 1992 the GEF was designated as operating entity of the
UNFCCC financial mechanism, given the lack of any suitable alternative. Over time, the caution codified
in Article 21(3) UNFCCC (explicitly providing for an ad interim entrustment only), was bypassed in part
by virtue of the savvy entrepreneurship and bureaucratic diplomacy of its leadership and in part by certain
inherent merits of the new institution. Despite the opposition to the idea of creating yet another
bureaucracy of most member states engaged in the GEF’s early restructuring (Andler 2009, 218), the
creation of the Secretariat combined with the growing prominence of global environmental policy rapidly
brought about an idiosyncratic institutional complex (Bauer et al. 2009, 59), directly linked to almost all
the components of the prolific family of international organizations, specialized agencies, and hybrid
bodies that comprise today’s global environmental governance. Ostensibly, such “complexification”
(Szasz 1999, 44-45) has become particularly problematic within the increasingly exoteric realm of
climate change policy, recently reconstructed in terms of regime complex (Keohane and Victor, 2010)
and fragmented architecture (Biermann et al. 2010). More prosaically, it is hard to resist the temptation to
regard the GEF as a proxy of what is wrong with GEG and, at the risk of some reductionism, international
law and politics.
Initially, the GEF was strongly opposed by the Group of 77 developing countries on the grounds that it
had been set up without consulting them and by virtue of the growing mistrust of the World Bank,
increasingly perceived as an institution in thrall to its donors (the industrialized countries) rather than at
the service of its clients (the borrowing countries) (Woods 2006, 15-38). The G77 insistence for a
governing structure based on the UN model of full equality for all participants (with decisions made by a
simple majority) led to an innovative double-weighted majority voting system, in which both 60% or
more of the Participants represented in the GEF governing body (the Council) and 60% or more of the
Participants contributing to the GEF (the donors) need to approve any decision on which consensus in not
viable (Paragraph 25, GEF Instrument). Following its hardly negotiated restructuring completed in
Geneva in 1994, the states realized that the GEF innovative governance, its periodic replenishment
process and several other features represented a promising bridge between the UN and Bretton Woods
systems (Matz 2005, 282). Albeit imperfect, it could have played (as it did) an important role in the
increasingly sophisticated dynamics of GEG. The UNFCCC decided in 2001 to establish a Special

3
Climate Change Fund (SCCF) and a Least Developed Country Fund (LDCF) to finance projects relating
to climate change adaptation, technology transfer and capacity building. The GEF was directed to be the
manager for the LDCF and SCCF, which became operational in 2002 (Freestone 2009, 23-26). As noted,
the GEF has however significantly enlarged its scope of action and operational coverage well beyond
climate change, and currently spans five other focal areas: biodiversity, international waters, persistent
organic pollutants, ozone depletion, and land degradation (desertification and deforestation). Its
management tools and organizational techniques have accordingly followed a steady process of
complexification, spurred by a constant scrutiny by the “civil society” and an endogenous proclivity to
self-assessment and stock-taking (Aldler 2009, 209-210). Unsurprisingly, the recent reform package
confirms the GEF’s leadership in terms of innovative approaches to resource mobilization and allocation,
including bold steps toward programmatic financing, thorough M&E policies and oversight, national
portfolio exercises and other country ownership initiatives (GEF 2010a).
In summary, for better or worse, the GEF “experience” is a vibrant lesson of contemporary international
cooperation, it is regarded as a milestone in international development finance (Smyth 2009), and it is
without much doubts the most elaborate model of multi-actor fund and most advanced collective
financing effort put together by the world order emerged from the ashes of World War II, at least pending
an agreement on the reformed financial mechanism proposals (Müller 2010c). Like most human
endeavors, the GEF experiment is fraught with biases and sub-optimal compromises, but it is an
important step in the right direction and offers valuable lessons for any future attempt to finance the fight
against climate change (Ballestreros et al. 2009). Indeed, there is no risk of overemphasizing the historic
importance and transformative potential of global governance arrangements aimed at procuring a truly
global public good (environmental protection), the bottom line being to tax and spend at the international
level, the ultimate sovereign power. Strong resistance and bitter conflicts are part of the deal and will
remain plentiful, but it is somewhat intriguing remembering how the Magna Charta was also born out of
power fights over taxes and money.
Yet, it is precisely the status and dynamics of the current fight that elicit an unpleasant déjà vu sensation,
not disguised by the lavishly upgraded venues or the unrelenting specialization of every little niche and
operational detail. The climate crisis is already levying heavy burdens on the most vulnerable people in
the world, science is loudly telling us that things could easily spin out of control much faster than
anticipate until just a few years ago (World Bank 2010, World Watch Institute 2010), multilateral and
bilateral financing initiatives are mushrooming at an unprecedented speed, and yet, global politics is
falling short and international negotiations are mired in ever deepening divides and apparently
irreconcilable local interests. True to its history, the GEF is situated once more in a strategically unique
and crucial position. Although less than impressive commitments by the donors have been secured for

4
the 2010-2014 GEF period (totaling a paltry $1.35bn for climate mitigation, a drop in the ocean of
reasonably expected funding needs no matter how creative co-financing, public-private leveraging and
focal areas synergies could be), far-reaching financial and policy options are at stake in the ongoing
negotiation of a post-Kyoto climate change regime. In this regard, the mixing of the “Rio+20” formula
with a “cosmetically” reformed GEF (along the timid proposal ferreted out during the 5 th replenishment)
is highly unlikely to deliver any workable compromise on the post-Kyoto financial architecture, despite
the remarkable progress achieved by the complementary and increasingly encouraging efforts
surrounding the Adaptation Fund and REDD+ mechanisms. In other words, there is no time, reason or
way to stage the uncanny replay of the Earth Summit bargain to bridge the North/South divide and only a
radically transformed GEF could help find the missing ingredients for the UNFCCC reformed financial
mechanism recipe.
Although the deepening impasse on the broader climate talks provide an easy explanation for the watered
down reform package attached to the just finalized replenishment, the insubstantiality of the latest round
of restructuring is strikingly obvious. Most goals articulated in terms of increased country ownership and
efficiency and effectiveness of the partnership (including – yet again – the streamlining of the project
cycle, flexibility in the resource allocation, better engagement with the private sector and cooperation
with the civil society organization) are certainly worth pursuing, but they would be much better served by
resolving, in one way or another, the lingering issue of the GEF legal status. Somewhat ironically,
Participants to the 5th Replenishment emphasized “the raison d'être of the GEF as the operating entity of
the financial mechanism of three international environmental conventions” (GEF 2010a, 108). Yet, it is
precisely in connection with those conventions that the “indeterminate nature” of the “personalities” on
both side of the relationship is critical and problematically recurs each time a new fund or similar
relationship is created (Ballestreros et al. 2009, 13). In addition to fixing certain inherent flaws (Horta
2002) or original sins of the “GEF Partnership”, the bestowal of legal personality unto the GEF alone
could therefore reverberate positively across GEG.

3 GEF’s (too) many partners: “Who is principal, who is agent?”


All the various institutions that have been interacting with the GEF since the early ‘90s have also evolved
over time, developing and nurturing a mutually conditioning relationship with it. The World Bank is
certainly the paradigmatic example, but also the two other Implementing Agencies and, even more
significantly, the Executing Agencies that only recently gained equal standing in terms of direct access to
GEF funds have learned and adapted a lot (including in their own mutual interactions). Moreover, there
are the just evoked conventions, with their governing bodies, executive boards, secretariats, incessant
meetings and proliferating operating bodies.
5
To better understand the rationale and potential of the radical change needed, the next two sub-sections
highlight some key issues emerging from the evolving interaction between the hub and the main spokes
of the GEF wheel (Young 2002, 105), in the context of the increasingly crowded GEG arena.

3.1 Reassessing the role of the Implementing Agencies

The GEF works with 10 multilateral agencies, three Implementing Agencies (IAs, i.e. World Bank,
United Nations Development Programmes (UNDP) and UNEP), and seven Executing Agencies (EAs):
International Fund for Agricultural Development (IFAD), Food and Agriculture Organization of the
United Nations (FAO), United Nations Industrial Development Organization (UNIDO) and four regional
development banks (Inter-American Development Bank or IADB, African Development Bank or AfDB,
Asian Development Bank or ADB and European Bank for Reconstruction and Development or EBRD).
All these agencies collaborate with eligible countries to develop, submit and implement projects and
programs in line with the GEF goals, objectives, “results chain”, overall approach and strategic
positioning (GEF 2010a). If up to 1999 only the three IAs had direct access to GEF resources and from
1999 to 2006 the seven EAs progressively gained direct access to GEF resources, in the post-2006 period
a level playing field was established for all ten GEF Agencies. Yet, as “co-founders”, the IAs still have a
special (and equal among them) standing in the constitutional design of the GEF (Paras. 22 and 23, and
Annex D, GEF Instrument), which has traditionally slowed down progress on direct access.
Unsurprisingly, the decision on the latest proposals by the Secretariat, introducing the new categories of
GEF Project Executing Agency and Executing Entity, has been further put off in June (GEF 2010b).
From an historical perspective, the original involvement of the IAs in the GEF experiment marked the
“green” turn of developmentalism (Goldman 2005), providing a major boost to the environmental
capacity building of both UNDP and the World Bank. The World Bank case is particularly interesting as
the GEF came into being at the same time of the reorganization of its environmental department (late
1992), whose former head (Mohamed Al-Ashry) became the influential and entrepreneurial first CEO of
the GEF (Adler 2009, 218; Young 2002, 70-72). Unsurprisingly, the GEF played a crucial role in helping
the World Bank emerge substantially unscathed from the “50 Years is Enough” campaign staged by the
civil society in the mid-‘90s (Goldman 2005, 7-9; Young 2002, 98).
The unique position of the World Bank with respect to the GEF and, more broadly, the reshaping of
global financial institutions is however stressed by its evolving role as Trustee of the many funds set up
over the last two decades to deal with a swelling range of global problems (Heymans 2004). The
progressive enlargement of the GEF partnership has kept raising new pressures on the delicate
compromise reached upon the original restructuring of the GEF pilot phase (see Annex B, GEF
Instrument on the Trustee’s Role and Fiduciary Responsibilities). Indeed, the donor countries’

6
determination to retain as much control as possible over the sizable new pools of resources conflicted
with the World Bank officers’ entrenched habit of handling money “in a World Bank-dominated
universe, rather than serving as a financial functionary for a donor-driven governing body” (Smyth 2009,
41). Stripping the IA status of their operational privileges through the rapid expansion in the access
accorded to EAs had soon prompted (largely legitimate) concerns by the World Bank regarding its
fiduciary duties and has eventually led to the strengthening of the EAs fiduciary responsibilities (Smyth
2009, 61; GEF 2007). The new policy approved by the Council in 2007 crucially rebalanced the
functions of the Trustee and the Secretariat, as the EAs have been required to report directly to the latter
on their compliance with applicable standards (Smyth 2009, 90-91). Yet, for essentially the same reason
undermining the relationship between the GEF and the COPs, the current solution is just another
provisional and unsatisfactory compromise, especially considering daunting the tasks awaiting the GEF in
the future.
In this respect, a clarification of the legal status of the GEF could also facilitate a higher fidelity to
financial industry models clearly alluded to in setting up “facilities” and international multi-actor pools of
money rather than full-fledged international organizations. For instance, it would become clearer that the
agency problems vexing the relationship between the donors/principals (investors) and their
delegates/agents are not limited to the crucial role of the Trustee (custodian or depositary bank), but
primarily involves the GEF itself, which is de facto entrusted with the lead role of the manager. Subject
to the admittedly unusually activist stance of all the “investors”, the duty of crafting the general policies
or investment guidelines (“asset allocation”) and of screening, selecting and choosing the specific projects
to be funded (“stock picking”) rests ultimately with the manager, as directed by an investment committee
or supervisory board (e.g. the Council, allowing for the necessary political oversight and buy-in) and
supported by many agents, discretionary appointed but with full responsibility. Indeed, for the purposes
of better executing its mandate (while avoiding bureaucratization and politicized micro-management), the
GEF needs to retain a plethora of “sub-delegates” (ranging from accountants to legal advisors, from
administrators to sub-managers) and the overall efficiency of the operations is obviously hampered if the
lack of legal personality forces it to rely on the Trustee’s initiative and cooperation, especially
considering the latter’s competing (i.e. conflicting) interests in almost all the business decisions and
opportunities arising from the abovementioned functions. Of course, “performance measurement” and
oversight still have to deal with the weak commensurability inherent to sustainability affairs, but the GEF
and its stakeholders could always count on the output of highly specialized institutions.
In particular, the World Bank’s expertise in dealing with “sovereign fund raising” is certainly worth
preserving and expanding, as needed, into ODA tracking and additionality baselines negotiation,
monitoring and enforcing (Stadelmann et al. 2010). But this should not prevent the GEF from going its

7
way, retaining private sectors providers even with respect to custodial and administrative services or
reshaping the advisory relationships underpinning and enabling its own core investment decisions.
Conversely, singling out and formally acknowledging UNEP’s unique contributions to the GEF
operations could be a much promising adjustment. Myopically neglected in the early years of the GEF
and relegated to the Scientific Technical Advisory Panel (STAP), UNEP has indeed demonstrated over
decades a rare “low-cost” leadership and vision and managed to build an unusually strong reputation
among the international organizations (Speth and Hass 2006, 60-68), including milestones such as the
launch of the International Environmental Governance process (IEG), the groundbreaking Millennium
Ecosystem Assessment and, more recently, the mainstreaming of the economics of ecosystems and
biodiversity (UNEP 2009).

3.2 From Bali to Copenhagen: beginning of the end or new beginning?


The foregoing suggestions are less far-fetched than they might appear if one considers the most recent
evolution of international climate finance architecture. In the wake of the strong warning contained in the
fourth assessment of the Intergovernmental Panel on Climate Change, the COP13 reached an ambitious
agreement (documented by the so called Bali Road Map, paving the road to the now (in)famous COP15)
(Sterk et al. 2010). The agreement included the decision to establish a separate governance structure for
the keystone Adaptation Fund (originally introduced by the Kyoto Protocol in 1997), featuring an
Adaptation Fund Board chosen by the COP itself from among its members. The GEF suffered an even
major blow, as the Bali Road Map followed up an initiative launched in 2005 by a number of donors,
leading to the creation of the Climate Investment Funds (CIF), formally established by the World Bank on
1 July 2008 and handsomely funded with pledges totaling USD 6,2 billions within few weeks (World
Bank 2009). The new funds adopted the GEF model of equal representation of donors and recipient
countries and, in recognition of the primacy of the UNFCCC negotiations, all their funding and programs
provide for a sunset clause not to prejudice UNFCCC deliberations regarding the future regime
(Freestone 2009, 30). The inglorious end of COP15 has however put off any reconciliation of the
different funding schemes that have mushroomed around the UNFCCC umbrella and the negotiations
look now even more garbled as a result of the appearance of a Copenhagen Green Climate Fund in the
(politically binding) Accord (Müller 2010b).
In any event, the alarming news for the GEF in Bali was it being suddenly shunned by both donor and
recipient countries. Apparently, donors might have been increasingly uncomfortable with the GEF
proactive attitude (increasingly inappropriate for a mere financial mechanism), while recipient countries
have been historically unimpressed by the actual performance in terms of power distribution,
accountability and overall impact of the GEF (Ballestreros et al. 2009, 12-17; Mohner and Klein 2007).

8
From a different perspective, and compared to other international institutions, the interaction with the
private sector has also been fairly limited and unsatisfactory, at least until the establishment in 2008 of the
Earth Fund, a partnership between the GEF and the IFC, whose main rationale was the recognition that
private sector engagement under preexisting forms had not produced adequate results (Porter et al. 2008).
The more substantial issue, however, brings us straight back to the legal status of the GEF. In its capacity
as financial mechanism for several conventions, the GEF is “obliged” to respond to the guidance
elaborated by their governing bodies, including the programming of funds in the respective GEF focal
areas relevant to each convention. The hybrid structure of the GEF governance, coupled with the
involvement of several different players, has negatively affected these relationships from the very
beginning, in terms of both responsiveness to their periodic guidance and overall accountability to them
(Heyvaert 2009). The COPs’ own institutional unsuitability (Wiersema 2009) and growing frustration
have certainly made things worse, leading to an implausibly dense stream of instructions often submitted
even before that previous inputs could be reasonably acted upon and monitored (Young 2002, 119-127).
But the key driver of such poor performance is however identifiable in the overlap of too many ad hoc
arrangements characterizing both the GEF and many of the international institutions it has to deal with, all
laying “somewhere in between the two extremes of intergovernmental creature and autonomous actor”
and, as far as environmental institutions are concerned, more “towards the intergovernmental rather than
the supranational end of the spectrum” (Bodansky 2010, 120-121; Wiersema 2009). In other words, one
political compromise could reasonably be expected to work out its purpose, even by virtue of a half-baked
delegation of soft powers to sui generis institutions, but bundling together several of such compromises,
usually coordinated only by the mercantilist balancing of power politics, and expecting effective and
synergistic results is a bit too optimistic.
The recent developments regarding the Adaptation Fund (AF) and, more generally, the climate finance
reformed financial mechanism illustrate the salience of the GEF legal status even more clearly. Unlike
UNFCCC Article 11 (according to which the financial mechanism “shall function under the guidance of
and be accountable to” the COP), under the Bali Adaptation Fund Decision the Adaptation Fund Board
(AFB, the equivalent of the GEF Secretariat) is stipulated to be not only accountable to and under the
guidance of the CMP (the governing body of the Kyoto Protocol) but also under its authority
(Ballestreros et al. 2009, 21-23; Müller 2009). Such an arrangement is capable of ensuring a high level of
trust among the Parties and has significantly raised the effectiveness/legitimacy bar for the GEF, at least
within the climate change regime. A neat separation of the GEF’s operation from the World Bank and the
bestowal of full legal personality (ideally to be imitated with the AFB too) offer the only reasonable way
out of the conundrum. Otherwise, the GEF will remain “legally and practically speaking, functionally

9
autonomous from the conventions it serves” without effective sanctions available to enforce control and
compliance with the applicable guidance (Wiser 2007).

4 Governance, legal personality and responsibility


As a result of the outlined developments, the current situation of environmental finance, especially in the
crucial area of climate change, is characterized by an increasing number of funds with complex
administrative processes, varying degree of transparency or accountability, conflicting mandates that do
not always address or respond to developing country concerns (Gomez-Echeverri 2009; Ballestreros et al.
2009). The internal evolution of the resources entrusted with and managed by the GEF also reflects a
general fragmenting trend inherent in collective financing mechanisms aimed at addressing global
problems: “as the funding agenda expands, fissures arise over how to set priorities … [that] ultimately
tend to overwhelm the priority of having a single, unified pool of funds” (Smyth 2009, 35). Yet, a
consolidated international financial vehicle is unlikely to be feasible and, also taking into account the best
practices developed in the financial industry, not even desirable. The key priority is thus to allocate
mandates and responsibilities clearly to and within the different institutions, especially with respect to
their overall governance system, financial management and investment decision-making. Diverse
solutions are possible and commendable, so that the GEF may end up learning from the AF/AFB how to
best enable and operationalize “direct access”, while sharing with the broader GEG community the urgent
lessons of full legal personality and responsibility.
Given the GEF unique structure and background, its governance reform needs to take into account several
dimensions (Pérez del Castillo 2009). The original design drew on elements of both the UN and the
Bretton Woods systems, establishing a permanent Secretariat housed within the World Bank and yet
“functionally independent” from it (Para. 21 GEF Instrument). The dynamics of the ever-expanding GEF
partnership is a function of the evolving interaction of the many agencies and organizations working with
the GEF (see 3.1 above). Furthermore there is the inherently special relationship with the World Bank,
which remains as of today the sole legal owner of the GEF resources in its capacity of Trustee. Finally,
there are serious issues of accountability both at the top (with the troubled relationships with the
conventions serviced by the GEF) and at the bottom, where long standing, and at least in part mutual,
ambiguities in an otherwise strong and relatively open relationship with civil society have become less
and less manageable and are now calling for “new terms of engagement” (Sharma 2010). In light of the
foregoing, the “administrative” arrangements devised in 2003 and cosmetically revised this year to avoid
revising the botched compromise patched together under the GEF Instrument are unsatisfactory to say the
least.

10
The detailed matrix of roles and responsibilities refined during the 5 th Replenishment negotiations
“identifies the GEF entity with the lead responsibility for a function in the partnership. The identified
lead entity will work with other entities in the partnership, as appropriate, to ensure that the referenced
function is executed appropriately. It is important to note that lead responsibilities identified vis-à-vis
various functions listed in the 2003 document have not changed” (GEF 2010a, 116). Unfortunately, the
lingering issue of the GEF legal status has been ignored or sidelined and the renewed reformatory efforts
and good intentions are doomed to prove irrelevant at best, as the newly created function of organizing
“mediation, and conflict and dispute resolution for issues brought to the attention of the GEF Secretariat”
is tellingly most likely to show.

4.1 What is the GEF?

After the United Nations Office of Legal Affairs’ opinion rejected the idea that it could be regarded as a
legal independent entity or otherwise capable of entering into legally binding agreements, the World Bank
lawyers’ view that the GEF was to be characterized as a “sui generis international arrangement with
special characteristics” has prevailed over an alternative characterization as “joint subsidiary body in the
form of financial mechanism” (Smyth 2009, 65-66). Either solution was hardly satisfying, however, and
the simmering tensions underlying the increasingly competitive relationship between the World Bank and
the GEF have inevitably converged on the legal personality issue. As banal it could sound, personality is
crucial, and also for international financial institutions, without legal personality there can be no legal
relations (Matz 2005, 285). Of course, legal personality is a “relative phenomenon varying with the
circumstances” (Shaw 2008, 196) and the international arena provides a wild kaleidoscope thereof.
Accordingly, international law tends to locate the concept of legal personality along the spectrum between
mere intergovernmental forum and autonomous actor with a budget and independent powers (Bodansky
2010, 120). When surveying said spectrum, it is useful to bear in mind that, in the end, personality arises
from “participation and some form of community acceptance”, and that the latter depends also on the type
of personality at issue, “it may be manifested in many forms and it may in certain cases be inferred by
practice” (Shaw 2008, 197). Regardless of the many factors to play with, the latest developments in
international negotiations evoked in the previous sections cast a thick shadow on the level of acceptance
of the GEF, further stressing the need for a fully (re)established legal personality.
Even if it is reasonably undisputed that the GEF is to be regarded as an autonomous organization as
opposed to a mere forum of power politics between states, the extent of its powers is the crucible of all
problems stemming from its unresolved legal puzzle. The literature on powers was traditionally not so
helpful in clarifying matters of personality, but has recently hinted at the far-reaching, constitutional
consequences of the GEF indeterminate legal status. In fact, whereas a inherent powers doctrine

11
grounded on the objective theory of personality posits that attribution and implication of an international
person’s powers inhere in “organizationhood” (which nobody could reasonably deny with respect to the
GEF), the éffet utile principle underpinning the implied powers doctrine works against the assertion of the
GEF’s full personality, given the GEF Instrument provisions designing an organizational set-up
impinging on the Trustee’s legal capacity as well as the lack of any actual commitment of the Participants
to be bound by the GEF Instrument (Klabbers 2009, 53-73). Moving beyond a functionalist approach,
however, a more systemic analysis of powers within the international community addresses the
implications of the GEF’s “identity” with refreshing and unexpected clarity, on the premise that “the
extent to which states and their organs of government are lawfully able to contest the exercise of
sovereign powers by an international organization depends largely on the degree (or type) of conferrals
of powers that have been made to the organization” (Sarooshi 2005, 121). As conferrals come in three
variety (agency relationships, delegations and limited or full transfers) and the lack of legal personality
disallow any legally binding agency relationships, the current sui generis characterization of the GEF
(and so many other players of GEG) rules out from the outset the possibility for the stakeholders to avail
themselves of the broadest range of measures to check (and balance) its activity (Sarooshi 2005, 108-
110). The paradoxical (and somewhat schizophrenic) reaction is thus manifested by the excessive
politicization of the management structures and investment activities of institutions that, more often than
not, end up anyways being mere “placebo funds” (Müller 2010c, 16), chronically underfunded in spite of
highly resounding (but only politically binging) pledges. Moreover, the systemic misalignment of the
GEF’s purpose (as detailed in the section below) and its institutional set-up also prevents reliable
predictions about the legal consequences of its actions and/or omissions, in terms of attribution, authority
and responsibility, further eroding the foundations of international system’s legitimacy and thereby
feeding back into even more acrimonious “contestation” by domestic interests and constituencies
(Sarooshi 3-14).
Apparently insensitive to such theoretical implications, the World Bank is adamant that the GEF is devoid
of legal personality and the only way to remedy this is by way of re-establishing it either as (i) an
international organization or (ii) a legal entity under laws of a host State (e.g. following the example of
the Global Fund to combat malaria, aids and tuberculosis) (Triponel 2009). If the GEF were to be
(re)established as an international organization, it could be established either as an affiliate of the Bank
(similar to the IFC or MIGA) or as a separate unaffiliated institution. Each of these options would
however require the termination of the GEF Instrument (and the existing GEF Trust Fund) and, in all
likelihood, the launch of a new round of international negotiations. Conversely, the GEF Secretariat and
CEO are more in favor of an objective or inductive approach to legal personality, focused on the
consequences, and they have accordingly endorsed the view that, both on the basis of the relevant terms

12
of the GEF Instrument, the rules of international law and international practice, the GEF and the GEF
Secretariat already possess all of the key elements of legal personality (including the legal capacity to
sign agreements and contracts) (White 1996, 27-31). The interests at stake and the forthcoming
“supersized” challenges call however for a much more neatly defined and broadly shared solution.
Early in the 5th Replenishment process, the GEF Secretariat had suggested reforms to address the conflict
of interest concerns and the new demands being placed on the GEF as financial mechanism for the
conventions, including, (i) a primary role for the Secretariat in the resource mobilization; (ii) direct
accessibility of GEF resources by recipient countries (without the intermediation of any agency); (iii) the
authority of the GEF Council to determine which rules apply to the GEF by requesting the Bank to
exempt the GEF from the application of certain Bank policies and rules; (iv) the permission for the GEF
to retain its own legal advisor (GEF 2009). All such proposals (along with other specific financial
management issues) still resonate with many crucial variables in the negotiations over the UNFCCC
reformed financial mechanism as well as the rationale underpinning the decision to establish the Global
Fund as an independent legal entity: “First, the Fund needed to be a legal entity in order ‘to enter into
legally enforceable contracts in the ordinary course of business.’ Second, an independent formal
organization could help promote public confidence in the institution. Third, a formal status would enable
the Fund to receive contributions from both public and private sources. Ultimately, the arguments that
prevailed were that the Fund needed ‘autonomy’ and an ‘ability to enter into robust collaborations with
national and international partners’” (Triponel 2009, 183). Considering its even more “vital” mission, it
is hard to see how the GEF can be expected to deliver without being provided with an independent legal
personality of its own.

4.2 What is the GEF’s purpose

The overall performance survey conducted in relation to the 5th Replenishment stressed, among other
things, that when projects are developed in a strategic context in a country, there are higher success rates
in terms of impact (OPS4 2009). Although there is no room to disagree with it, much more caution is
advisable with respect to the consequences and conclusions being drawn from such “finding”.
The GEF was initially created “to assist in the protection of the global environment and promote thereby
environmentally sound and sustainable economic development” (GEF Instrument, letter (a) of the
preamble). Since its restructuring in 1994, the GEF has operated as “one of the principal mechanisms for
global environment funding” (Ibid., letter (c)). It has been an international cooperation mechanism for the
purpose of channeling money needed for environmental protection (Ibid., para. 2). The Council’s
responsibility “to approve and periodically review operational modalities for the Facility, including …
means to facilitate arrangements for project preparation and execution by organizations and entities”

13
(Ibid., para. 20(f)), coupled with the sensible requirement to take into account national priorities when
planning for “GEF project preparation and execution by multilateral development banks, specialized
agencies and programs of the United Nations, other international organizations, bilateral development
agencies, national institutions, non-governmental organizations, private sector entities and academic
institutions” (Ibid., para. 28) has progressively pushed the GEF away from core financial activities into
“softer” development initiatives. This tendency is further abetted by certain policy recommendations
emerged from the 5th Replenishment negotiations but it should rather be reversed. The overall policy goal
of enhancing “country ownership” (already enshrined in the original GEF mandate to “ensure the cost-
effectiveness of [its] activities in addressing the targeted global environmental issues, [and] fund
programs and projects which are country-driven and based on national priorities designed to support
sustainable development”, GEF Instrument, para. 4) is beyond contestation, like the OPS4
commonsensical remark. Nonetheless, it is at best disputable that the GEF has to deal with the
development of the strategy context of its projects or engage in equivalent capacity-building exercises.
There are plenty of domestic and international agencies already doing this, not to mention an increasingly
thriving civil society; the GEF has a clear mandate to cooperate with them, which does not mean to
duplicate their functions and activities. The GEF mission and priority, especially in the current situation
of relatively aggravated underfunding, is and remains to allocate funds in the most cost-efficient and
environmental-friendly way. In other words, the GEF must acknowledge and financially reward the most
suitable funding needs and plans fostering global environmental benefits, rather than (help) design them.
To pursue effectively cost-effectiveness and environmental integrity, the GEF should rather accelerate a
radical simplification of its operational procedures and internal governance. Once again, all this
presupposes structural changes, beginning with a full-fledged legal personality, so that the GEF could
eventually become a gem in twenty-first century international relations.
As mentioned at the outset, the governance impasse of the GEF is only one instance of the broader GEG
stalled reform, which in turn reflects more general problems of global governance and international law.
Paradigmatic in this regard is the predicament of the World Bank, whose “structural adjustment” is
constantly put off notwithstanding reiterated calls for reform (Müller 2010c, 17-18; Hudes and
Schlemmer-Schulte 2009), and much of whose routine operations floats in a legal limbo that is at best
problematic, given the quantitative and qualitative interests involved (Smyth 2008).
Within the specific context of GEG, the spreading complacency is extremely dangerous, as the
“comparative weakness” of most environmental institutions cannot anyhow attenuate their chronic lack of
accountability (Bodansky 2010, 123), especially in view of substantially increased means and
expectations. The core questions remain “Who is Principal, who is Agent? Who are the stake holders?”
(Weiler 2004), and the core issue is about sovereignty and how its inherent values shape authority and

14
legitimacy. Unsurprisingly, the recent retrenching of the implied powers doctrine is interpreted as a sign
of international organizations losing their appeal and of “some dissatisfaction with the state of thinking on
powers generally” (Klabbers 2009, 73). To put it more bluntly, traditional business wisdom seems
enough to expose the ultimate limitation of many arrangements in the current international system: no
power without responsibility.

5 Conclusion
A fully capable and independent GEF would finally possess the necessary flexibility for directly entering
into ad hoc and/or general, binding agreements with all the agencies, entities and institutions that are
eligible to access its funds and execute its projects or are entrusted with its supervision and oversight.
Layers of wasteful coordination, mediation and compromise would be eliminated, and responsibilities for
actions and results would become much more clear-cut.
Goals like increased country ownership and efficiency and effectiveness of the GEF partnership are
important but fall way short, especially in the highly confrontational atmosphere of the ongoing
negotiations on the post-Kyoto regime. The GEF Secretariat, CEO and other influential advocates should
engage in relentless lobbying to convince all the stakeholders that the GEF is not out looking just for
increased status and budget, or to move a notch up in a trite, and by now supremely irresponsible, power
grab. To demonstrate that one is truly committed to improve the financing of global environmental
protection, he or she must demand the power to do so effectively, standing ready to assume the full
responsibility that goes with it and/or to sacrifice his or her own personal gain, if required by the general
and long-term interest.
In all this, the resolution of the GEF’s legal status riddle is a necessary precondition to rebuild trust
among all its stakeholders. No power without responsibility, as they say, keeping in mind that
responsibility is ultimately a personal attribute and experience. The momentous challenge of
environmental protection and its own institutional maturity make the GEF one of the best laboratories in
which to craft the change of pace and direction needed to build a more effective and legitimate GEG and
to spark a chain reaction capable of triggering the long overdue rebalancing of the world order.

References:
Andler, Lydia. 2009. “The Secretariat of the Global Environment Facility: From Network to
Bureaucracy.” In Managers of Global Change: The Influence of International
Bureaucracies, ed. Frank Biermann and Bernd Siebenhüner, 203-224. Cambridge
Mass.: The MIT Press.
Ballestreros, Athena, Smita Nakhooda, and Jacob Werksman. 2009. POWER, RESPONSIBILITY
AND ACCOUNTABILITY: Re-Thinking the Legitimacy of Institutions for Climate Finance.
15
Washington D.C.: World Resources Institute.
Bauer, Steffen, Frank Biermann, Klaus Dingwerth, and Bernd Siebenhüner. 2009.
“Understanding International Bureaucracies: Taking Stock.” In Managers of Global
Change: The Influence of International Bureaucracies, ed. Frank Biermann and Bernd
Siebenhüner, 15-36. Cambridge Mass.: The MIT Press.
Biermann, Frank, Philipp Pattberg and Fariborz Felli. 2010. Global climate governance
beyond 2012: architecture, agency and adaptation. Cambridge Mass.: Cambridge
University Press.
Bodansky, Daniel. 2010. The art and craft of international environmental law. Cambridge
Mass.: Harvard University Press.
Brown Jessica, Neil Bird and Liane Schalatek. 2010. Climate finance additionality: emerging
definitions and implications. Climate Finance Policy Brief No. 2. Heinrich Böll Stiftung.
Cox, Robert. 1995. Approaches to World Order. Cambridge Mass.: Cambridge University
Press.
Freestone, David. 2009. “The International Climate Change Legal and Institutional
Framework: an Overview.” In Legal aspects of carbon trading: Kyoto, Copenhagen,
and beyond, ed. Freestone David and Charlotte Streck, 3-32. Oxford; New York:
Oxford University Press.
GEF 2007. Policy Paper, Recommended Minimum Fiduciary Standards for GEF Implementing
and Executing Agencies, July 17, available at www.thegef.org.
———. 2009. Draft GEF Policy, Institutional, and Governance Reforms, GEF/R.5/15, June 1,
available at www.thegef.org
———. 2010a. Summary of Negotiations Fifth Replenishment of the GEF Trust Fund. GEF
Council Meeting May 24, available at www.thegef.org.
———. 2010b. Highlights of the Council's Discussions. GEF Council Meeting June 28-July1,
available at www.thegef.org.
Ghosh, Arunabah, and Ngaire Woods. 2009. “Developing Country Concerns about Climate
Finance Proposals. Priorities, Trust, adn the Credible Donor Problem.” In Climate
finance: regulatory and funding strategies for climate change and global
development, ed. Richard Stewart et al., 157-164. New York: New York University
Press.
Goldman, Michael. 2005. Imperial nature: the World Bank and struggles for social justice in
the age of globalization. New Haven Conn.: Yale Univ. Press.
Gomez-Echeverri, Luiz. 2009. “Developing Countries and a Proposal for Architecture and
Governance of a Reformed UNFCCC Financial Mechanism.” In Climate finance:
regulatory and funding strategies for climate change and global development, ed.
Richard Stewart et al., 165-170. New York: New York University Press.

16
Heimans, Jeremy. 2004. Multiactor Global Funds. New Tools to Address Urgent Global
Problems. UNU - WIDER (World Institute for Development Economic Research).
Heyvaert, Veerle. 2009. Levelling Down, Levelling Up and Governing Across: Three
Responses to Hybridization in International Law. European Journal of International
Law 20: 647.
Horta, Korinna. 2002. The Global Environment Facility – The First Ten Years: Growing Pains
or Inherent Flaws? Washington D.C.: Environmental Defense Fund, available at
http://halifaxinitiative.org/content/global-environmental-facility-august-23-2002.
Hudes, Karen and Sabine Schlemmer-Schulte. 2009. The Gentleman's Agreement:
Multilateralism or Hegemony? Accountability in Bretton Woods. 15 ILSA J. Int'l &
Comp. L.: 501.
International Law Commission. 2006. Fragmentation of international law: difficulties arising
from the diversification and expansion of international law. Report of the Study Group
of the International Law Commission. New York: United Nations.
Keohane, Robert O., and David G. Victor. 2010. The Regime Complex for Climate Change.
Cambridge Mass.: Harvard Project on International Climate Agreements.
Klabbers, Jan. 2009. An Introduction to International Institutional Law, 2nd ed. Cambridge
UK: Cambridge University Press.
Matz, Nele. 2005. Financial Institutions between Effectiveness and Legitimacy – A Legal
Analysis of the World Bank, Global Environment Facility and Prototype Carbon Fund.
International Environmental Agreements: Politics, Law and Economics 5, no. 3 (9):
265-302.
Mohner, Annette, and Richard J. T. Klein. 2007. The Global Environmental Facility: Funding
for Adaptation or Adapting to Funds?” available at http://www.sei-
international.org/publications?pid=777.
Müller, Benito. 2009. 'Under the Authority of the COP'?. Oxford Institute for Energy Studies.
———. 2010a. Copenhagen 2009. Failure or final call wake-up call for our leaders? Oxford
Institute for Energy Studies, February 2010.
———. 2010b. The Reformed Financial Mechanism. Post Copenhagen Architecture and
Governance. Oxford Institute for Energy Studies.
———. 2010c. The Reformed Financial Mechanism. Part II. The Question of Oversight. Post
Copenhagen Synthesis Report. Oxford Institute for Energy Studies.
Najam, Adil, Mihaela Papa and Nadaa Talyab. 2006. Global environmental governance: a
reform agenda. Winnipeg, Canada: International Institute for Sustainable
Development - Institut international du développement durable.
OPS4. 2009. Fourth Overall Performance Study of the GEF: Progress toward Impact. Full
Report. Washington D.C.

17
Pérez del Castillo, Carlos. 2009. OPS4 Technical Document: Governance of the GEF.
Washington D.C.: The GEF EO.
Porter, Gareth, Neil Bird, Nanki Kaur, and Leo Pskett. 2008. New Finance for Climate Change
and the Environment. WWF & Heinrich Boll Stiftung.
Sarooshi, Dan. 2005. International organizations and their exercise of sovereign powers.
Oxford; New York: Oxford University Press.
Sharma, Anju. 2010. The Reformed Financial Mechanism of the UNFCCC. Renegotiating the
Role of Civil Society in the Governance of Climate Finance. Oxford Institute for Energy
Studies.
Shaw, Malcolm. 2008. International law. 6th ed. Cambridge UK; New York: Cambridge
University Press.
Smyth, Sophie. 2009. A Practical Guide to Creating a Collective Financing Effort to Save the
World: The Global Environmental Facility Experience. Geo. Int'l Envtl. L. Rev. 22: 29-
97.
———. 2008. World Bank Grants in a Changed World Order: How Do We Referee This New
Paradigm? U. Pa. J. Int'l L. 30: 483-540.
Speth, James, and Peter M. Haas. 2006. Global environmental governance. Washington D.C.:
Island Press.
Stadelmann, Martin, J. Timmons Roberts and Saleemul Huq. 2010. Baseline for trust:
defining ‘new and additional’ climate funding. IIED Briefing.
Streck, Charlotte. 2001. The Global Environment Facility: A Role Model for International
Governance? Global Environmental Politics 1 (2): 71-94.
Sterk, Wolfgang, Christof Arens, Sylvia Borbonus, Urda Eichhorst, Dagmar Kiyar, Florian
Mersmann, Frederic Rudolph, Hanna Wang-Helmreich, and Rie Watanabe. 2010.
Something Was Rotten in the State of Denmark - Cop-Out in Copenhagen. Wuppertal:
Wuppertal Institute for Climate, Environment and Energy.
Szasz, Paul. 1999. The Complexification of the United Nations System. Max Planck UNYB 3:
1-57.
UNEP. 2009. TEEB –The Economics of Ecosystems and Biodiversity for National and
International Policy Makers. Responding to the Value of Nature. Summary for policy-
makers.
Triponel, Anna. 2009. Global Fund to Fight AIDS, Tuberculosis and Malaria: A New Legal and
Conceptual Framework for Providing International Development Aid. N.C.J. Int'l L. &
Com. Reg. 35: 173.
Weiler, Joseph H.H. 2004. The Geology of International Law - Governance, Democracy and
Legitimacy. ZaoRV, no. 64: 547-562.
White, N.D. 1996. The Law of International Organizations. Cambridge UK: Cambridge

18
University Press.
Wiersema, Annecoos. 2009. The New International Law-Makers? Conferences of the Parties
to the Multilateral Environmental Agreements. Mich. J. Int'l L. 31: 231.
Wiser, Glenn. 2007. Legal Analysis of the GEF Resource Allocation Framework. Washington
D.C.: Center for International Environmental Law (CIEL).
Woods, Ngaire. 2006. The globalizers: the IMF, the World Bank, and their borrowers. Ithaca
N.Y.: Cornell University Press.
World Bank. 2009. Building Partnerships for Climate Action. Annual Report. Washington D.C.:
World Bank.
———. 2010. World development report 2010: development and climate change.
Washington D.C.: World Bank.
Worldwatch Institute. 2010. Vital Signs 2010: the trends that are shaping our future.
Washington D.C.: Worldwatch Institute.
Young, Zoe. 2002. A new green order? The World Bank and the politics of the Global
Environment Facility. London, Sterling Va.: Pluto Press.

19