The Asian Infrastructure Investment Bank (AIIB) held its seventh Annual Meeting last October 26 to 27 in a virtual manner. With the theme, “Sustainable Infrastructure Toward a Connected World”, the bank reasserted the role of infrastructure in supporting recovery, growth and connectivity in Asia-Pacific and beyond. Throughout several multi-stakeholder sessions and dialogues with CSOs, the AIIB reported on their work for the past years and presented their plans for their developing member countries.
During the Annual Meeting, the AIIB continues to echo faulty solutions and processes of other international finance institutions (IFIs) that favor private sector interests over people-centered, rights-based and climate-resilient actions. In effect, many of their approaches will continue to worsen the conditions of marginalized communities who bear the brunt of socioeconomic crises and climate emergencies.
Tethered frameworks with other IFIs
As a purportedly Southern-led development bank with 7 years of experience, the AIIB, during its inception, presented a chance to forward an alternative paradigm to the Northern-led IFIs. In spite of obvious impacts, the AIIB considers their parallelism and partnerships with other IFIs as signals of success. This essentially shows their disregard in the faulty systems of Northern-led IFIs, which have long been recorded by different CSOs and grassroots communities. With this, the AIIB also contributes to the corporatization of development and pursuance of neoliberal reforms that put the lives and rights of the marginalized further at risk.
The bank’s Corporate Strategy for 2021-2030 is a manifestation of this – a framework hinged upon private capital mobilization to promote green infrastructure, connectivity and regional cooperation and technology-enabled infrastructure. Pursuing infrastructure allows for the entry of the private sector, mostly Chinese companies as contractors, and often leads to unfair loan modalities that contribute to the economic crises faced by developing countries. Coupled with this is the AIIB’s recent push to invest in sustainable development bonds to be used in mobilizing additional financing for development projects, but are essentially repackaged loans that can further debt distress.
Discord between policies and realities
Like other IFIs, the bank’s policies and safeguards provide inadequate and ineffective protection to affected communities and the environment. Massive infrastructure projects pursued by the AIIB also often lead to negative impacts, with reports to the CSO Observatorio showing that the bank’s presence in the region has led to worsening poverty, serious security risks, large-scale displacement, and human rights violations and environmental degradation.
Hands-off lending is also utilized by the bank to neglect responsibility over safeguards, leading to the lack of transparency and accountability to where their financing goes. During the Annual Meeting, multiple CSOs raised concerns about the lack of access to project information. While there were sessions organized to hear grievances from CSOs during the Annual Meeting, affected communities and CSOs have yet to see the bank’s immediate action to incorporate CSO inputs into their policies and to address complaints raised by CSOs.
Furthermore, their statement on Retaliation is afflicted with loopholes, as seen in the case of the Mandalika Tourism Project in Indonesia. Indigenous communities are being harassed and displaced by the bank’s client, the Vinci Group, and the Indonesian government, but the AIIB continues to fund and implement the project. Despite the cases reported by Indonesian CSOs and the call of the United Nations experts to stop the project, the bank maintains that there were no violations inflicted against affected communities.
Their branding as a lean, clean and green bank is yet to translate into action as long as their Environmental and Social Framework does not guarantee proper grievance mechanisms and environmental protection. Similarly, their Energy Sector Strategy update remains to be largely critiqued by CSOs as it fails to promote sustainable renewable projects, universal energy access and development effectiveness – a departure from their plan to be Paris-aligned. For its climate finance commitments, while some forms of data can be found in a number of platforms, there are no comprehensive reports done by the bank, which casts doubts on whether they are truly committed to sustainable development and the Paris Agreement.
Strings attached beyond Asia
In pursuing connectivity, the AIIB is now spilling over to different continents, like the Latin America and the Caribbean (LAC). Since 2017, the bank has shown interest in pursuing infrastructure projects and lending programs in LAC. A part of the AIIB’s involvement in the LAC region is their participation in building and investing in green infrastructure together with the Development Bank of Latin America. The COVID-19 pandemic also allowed for the bank’s entry into LAC, with its CRF or the COVID-19 Crisis Recovery Facility. Even in LAC, the AIIB is working to “accelerate the mobilization of critical private finance flows” that can put communities and the environment at extreme risk.
In their expansion towards LAC and continued work in Asia-Pacific, the AIIB must ensure that they are in adherence with South-South Cooperation (SSC) principles. Currently, the bank’s policies are alarmingly incompatible with SSC principles, specifically on giving mutual benefits that give way to corporate interests. The AIIB must prioritize the fulfillment of democratic ownership and solidarity with marginalized communities in order to actualize the true objective of South-South Cooperation.
Peoples’ continued demands
For the AIIB to truly fulfill their agenda of “infrastructure toward a connected world”, they must firstly end the corporate capture of development that abandons the democratic rights of the marginalized and further aggravates environmental degradation during climate emergencies. They must also fulfill their responsibility to uphold development effectiveness and SSC principles for the growth of national and local economies and promotion of democratic ownership in their member countries.
As a young bank who prides itself with a new breed of infrastructure financing, the AIIB must take the necessary steps to genuinely contribute to development. The bank should listen to affected communities, CSOs and people’s organizations, by providing participatory and inclusive processes that cater to the needs of concerned groups and communities. Beyond this, inputs from civil society must be incorporated into their frameworks and processes, in order to ensure development effectiveness on ground. Furthermore, the bank’s policies, projects and processes must immediately adhere with the Paris Agreement to alleviate the negative impacts of climate change on people, their livelihoods and their democratic rights.