The Asian Development Bank (ADB) held its 55th Annual Governor’s Meeting last September 26-30, in a hybrid manner at its headquarters in Manila, Philippines. With the theme, “Positioning Climate Resilient Green Economy for the Post COVID-19 World”, the ADB tackled the most urgent challenges faced by the region and how they propose to solve these. However, in the face of the ongoing pandemic, rising debts, increasing conflicts and the worsening climate crisis, the ADB continues to forward neoliberal solutions that have entrenched the region in the same crises in the present.
The bank remains to be a major source of development finance in the region but it lacks accountability and transparency for the negative impacts it has brought to people’s economy, security, development and the environment. The ADB walks free from the shortcomings it has committed in the past and it continues to forward profit-oriented solutions masked as ‘climate resilient’, ‘green’ and ‘sustainable’. As the bank discussed its new policies related to the economic crisis, energy transition, safeguards, and conflict, CSOs in the region provide critique and alternatives in order to ensure respect for human rights, environmental preservation, and people-centered development.
A win for the neoliberal agenda, a loss for the people
The cracks in the neoliberal framework were highlighted during the pandemic, particularly those related to the vulnerability of market-based economies and incapacity of public social and health infrastructure to address shocks. Despite this, the ADB has continued to reinforce the status quo. The current economic and health crisis faced by the region is addressed with more loans and policy conditionalities, which contributes to debt distress and puts the burden on the people.
In the case of Sri Lanka, the ADB provided 13% of the country’s debt, which reached USD 51 billion in May 2022, contributing to the rise of the inflation rate to 54.6% in July this year. As of July 2022, the bank currently has 479 public sector loans, grants, and technical assistance totaling USD $11 billion to Sri Lanka. While the people are still reeling from the impacts of the economic crisis, the ADB disbursed an additional USD 200 million emergency assistance loan to supposedly equip the country to recover. The people bear the cost of overwhelming loans as governments implement austerity measures with an increase in taxes, rising prices for basic needs and decreasing public expenditure for social services.
Moreover, lending projects such as the COVID-19 Active Response and Expenditure Support (CARES) Program pursued by the bank during the height of the pandemic in countries like the Philippines and India failed to take into account transparency measures. The bank’s lack of safety nets on where loans are being used enabled authoritarian regimes in the Philippines and India to incur soaring debts used to finance restrictive measures and human rights violations.
Financing instability in the region
As a response to increasing conflict in the region, the ADB launched its FSA or fragile and conflict-affected states (FCAS) and small island developing states (SIDS) approach. The FSA, which entails securitization of aid and the entry of the private sector in essential development projects, is seen to be a tool that perpetuates fragility in the region. In effect, the root causes of conflict and the impacts of the climate crises are not sufficiently addressed.
In the past, the ADB has continued to fund development projects in line with the interests of its member countries such as Japan and the United States, further militarizing aid. Dam projects, dirty energy plants and roads in countries like Myanmar and Bangladesh, for example, led to land grabbing, displacement of Indigenous Peoples, violation of human rights, crackdowns on activists and environmental degradation.
Hypocrisy of ADB’s just energy transition
CSOs have long been calling for the bank to stop financing dirty energy, but only heeded these calls years too late with the update of its 2009 Energy Policy only last year. Even with the updated policy and an increase in climate financing, there is still continued construction of fossil fuel power plants and large hydropower dams, despite the socioeconomic and environmental setbacks it would cause to communities. The 2021 Energy Policy also includes propositions on the just transition, and how the needs of affected communities and workers will be addressed. The bank is also forwarding the Energy Transition Mechanism, as a part of their decarbonization and energy transition efforts in the region. However, as long as these solutions are rooted in providing favor to private sector entities rather than democratizing energy sources for the people to ensure access and supply, the ADB-led energy transition still fails to be people-centered and climate-resilient.
Further narrowing of spaces for civil society participation
Underlying the lack of accountability for its negative impacts is the bank’s lack of inclusive, participatory processes for its policies and projects. The spaces provided to the civil society by the bank remain tokenistic, with even this year’s Annual Meeting limiting the online participation of affected communities, civil society organizations and people’s organizations. Furthermore, the majority of the bank’s development projects have failed to incorporate the grievances posed by the communities and sectors during its implementation, which can be seen in the case of the Imphal Town Ring Road Project in Manipur, India.
To address this, the bank has started to revise its Safeguard Policy by strengthening provisions on environmental protection aligned with the Paris Agreement, gender inclusivity, better labor conditions, and more efficient mechanisms for consultations and grievances at the community level. However, all of these remain futile as the bank fails to provide for the genuine participation of civil society in its processes and listen to the needs of the communities on-ground.
Towards a better post COVID-19 world
As long as the solutions proposed by the ADB promote the neoliberal agenda that puts people’s lives and rights at risk, initiatives will never result in a rights-based, people-centered and climate-resilient development for the people. Furthermore, their lack of accountability from the negative impacts they have imparted in the past is testament to their non-commitment to truly help vulnerable populations.
The ADB must either reform their policies or end them altogether as they have been proven to be harmful to many of their developing member countries. The bank must cancel debts that only burden the people and serve financing institutions. Issues on conflict and climate must be addressed by recognizing and resolving the root causes of these crises, based on the needs and realities of affected communities and sectors. Lastly, the revised Safeguard Policy must also be able to address people’s grievances from the gaps in the last framework. Solutions must be based on inclusive and participatory processes with affected communities, CSOs, community-based organizations and people’s organizations.
The Reality of Aid – Asia Pacific continues to call on the bank to enact genuine rights-based, people-centered and climate-resilient development for all, by reforming their policies and taking accountability for its past, which can only be possible by addressing the grievances and needs of affected communities and ensuring their participation in the bank’s processes.