Last September 25 to 26, the Asian Infrastructure Investment Bank (AIIB) held its eighth annual meeting at Sharm El-Sheik, Egypt. With the theme, “Sustainable Growth in a Challenging World”, the bank stressed on the role of multilateralism in order to address the interconnected economic, political and developmental challenges the world faces today. Discussions were organized along three thematic streams: sustainability, connectivity, and multilateral cooperation, highlighting the role of the bank to mobilize financing for infrastructure solutions to development and climate crises.
In trying to adequately address the crises the world faces today, the international financial architecture is being reformed to be fit for purpose. The other international finance institutions (IFIs), such as the International Monetary Fund-World Bank (IMF-WB), are pursuing changes in their existing structures and ways of working in order to evolve and adapt. There is expectation that the AIIB, as it is only in its eighth year of operations, is novel and innovative in its approach and solutions. However, it can be seen that the AIIB has only replicated the gaps and faults of its forerunners, and in some aspects, lagging much further behind, to the detriment of people’s lives, rights and environment.
World made challenging by who?
The AIIB Annual Meeting’s theme begs to ask the question – what and who generated these present challenges? Decades of operations of the IMF-WB and the Asian Development Bank (ADB) in the region have allowed for debt distress and corporate capture, largely through neoliberal policy conditionalities imposed on recipient governments. These conditionalities have led to the privatization of development, weakening state capacity to provide basic goods and services to its people. Furthermore, large infrastructure projects financed by these banks have caused massive negative social and environmental impact on farmers, workers, women, youth, urban poor, Indigenous Peoples, and other marginalized sectors.
The development challenges and climate crisis the world faces today are largely caused by the same actors that claim to have solutions for it. The AIIB, in its own operations and as it works with other IFIs, is complicit in further worsening these existing problems. It has worked closely with the other established IFIs in the region, even replicating their policies and structures in its own operations. The AIIB also continues to call for more strengthened multilateral cooperation with other banks and their member countries. It can be seen that the AIIB has failed to take heed of the decades of lessons from older institutions, which can be gleaned from decades of global South communities protesting IFI-funded projects and demanding for genuine development.
A short history, long track record of adverse impacts?
The AIIB claims that it has “special features of a multilateral development bank fit for the 21st century.” Despite being around for only a short amount of time, the bank has the second largest membership of 109 countries, recently expanding to three more countries – El Salvador, Tanzania and the Solomon Islands. With its character as a young bank, it also claims to have a “fresh balance sheet”, which can mobilize the financing needed for development and climate projects.
The emphasis on green and climate projects has been pursued by the bank since its inception, adopting the core values of “lean, clean and green” and highlighting its commitment to financial, social, and environmental sustainability. Furthermore, its Corporate Strategy 2030 also forwards green infrastructure, along with connectivity, cooperation, technological innovation, and private capital mobilization, as its main objectives.
Remaining as printed words on policies, the bank’s commitments are hardly upheld in the implementation of its projects. Despite being only around for eight years, the bank’s projects have led to debt distress, wide-scale displacement, loss of livelihoods, threats to security, human rights violations, and environmental destruction. These can be seen in the reports to the CSO Aid Observatorio, such as the Mandalika Urban and Tourism Infrastructure Project and the Colombo Urban Regeneration Project.
Plans of inaction or plans in action?
The Annual Meeting saw the launch of the AIIB’s Climate Action Plan, which guides the bank’s operations to meet the needs of its member countries in responding to the climate crisis. Like other IFIs, it continues to disburse climate finance in loans and uses modalities that can contribute to further corporate capture and debt distress. While climate finance is meant as reparations for developed countries to assist in addressing the impacts of climate change on frontline communities in the global South, these are now being used as means to support business operations and generate profit.
The action plan also fails to uphold the Paris Agreement and allows for the use of false, market-based and nature-based solutions that can aggravate, rather than alleviate, climate challenges. While claiming to contribute to the just energy transition, its Energy Sector Strategy and Climate Action Plan fail to end all financing for fossil fuels and uphold universal energy access for its members.
Instead of lunging forward, the bank has also lagged behind other banks in facilitating partnerships with civil society, safeguarding rights and environmental conservation, and ensuring accountability for its operations. The Project-Affected Peoples’ Mechanism (PPM) has failed to demonstrate its effectiveness due to the gaps in its framework and policy, leaving affected peoples without recourse from the bank’s projects. Various CSOs have highlighted the changes they would want to see in the review of the PPM, highlighting the need for proper information disclosure, stakeholder engagement and inclusive, meaningful consultations. The AIIB is still yet to demonstrate its commitment to the development effectiveness principles of democratic country ownership, focus on results, inclusive partnerships, mutual transparency and accountability.
In this challenging world, if the bank is genuine in promoting sustainable growth for its developing member countries, its operations should forward a people-centered, rights-based and climate-resilient development for all. The bank should be able to uphold its commitments in contributing positive development outcomes and alleviating the impacts of climate change on frontline communities. The AIIB must listen to the voices and demands of affected communities and civil society organizations, allow for the democratic ownership of their development priorities, and foster cooperation based on solidarity.