Last October 26 to 28, 2021, the Asian Infrastructure Investment Bank (AIIB) held its 6th Annual Meeting with the theme, “Investing Today, Transforming Tomorrow”. The Meeting aimed to discuss the bank’s priority areas and solicit feedback from various stakeholders regarding its plans.
The events in this three-day meeting highlighted ‘Infrastructure for Tomorrow’ as the AIIB’s approach in addressing the COVID-19 pandemic, climate emergency, and persisting development challenges. The Annual Meeting further expounded on the bank’s Corporate Strategy that focuses on promoting green and technology-enabled infrastructure, cross-border connectivity, and private capital mobilization.
Delayed climate action
In addressing the climate crisis, the bank has announced its target to boost infrastructure solutions for climate change resilience, with the AIIB aiming to reach no less than 50%, or an estimated of USD 50 billion, of their total financing allocated for climate financing by 2025, and to fully align their capital flows with the Paris Climate Agreement by July 2023 through different methodologies and frameworks developed with other multilateral development banks (MDBs). While this is a welcome development, the AIIB must adopt a more urgent approach, given that this has been called for by the civil society since its inception as a bank.
To genuinely address the climate crisis, the bank must halt its financing for fossil fuels and further scale up funding for climate mitigation and adaptation measures. It is also imperative for the AIIB to ensure that energy is addressed as a public good, see to it that its projects comply with strict emission performance, and realign its investments towards genuinely sustainable renewable energy projects with a people-centered approach.
Development projects pursued by the AIIB that have led to environmental degradation must be stopped too, and sufficient measures to rehabilitate and repair the damage to affected communities and the environment must be given. The bank’s Environmental and Social Framework (ESF) proves to be ineffective in mitigating the impacts and risks of its projects.
The Reality of Aid-Asia Pacific (RoA-AP) documents in its research and other knowledge materials, Paradigm Shift or Rehashing Corporate-Led Development? and Paving an Unsustainable Development Path: AIIB Road Infrastructure Projects and its Adverse Impacts, as well as on its monitoring platform, the CSO Aid Observatorio, how AIIB-financed projects have led to environmental degradation, ballooning of debt and human rights violations.
Today’s pandemic response is debt for tomorrow
In responding to the COVID-19 pandemic, the bank has disbursed additional financing to its member countries, largely in the form of loans. Like other international finance institutions (IFIs), the AIIB presents an agenda for recovery that is heavily reliant on pursuing loan modalities to fund physical and social infrastructure in member countries. With this, the bank pursues the ballooning of debt for governments, and an increase in profit for the corporations and financial intermediaries who are contracted for these projects. While the burden in repaying these debts is shouldered by the people, corporate-led development increases profit for the few.
Likewise, the AIIB’s priority of pursuing cross-border connectivity to build the necessary infrastructure for energy, transportation and communication facilitate the entry and stronghold of the private sector on the delivery of public goods and services, opens up borders to markets and allows for the transfer of natural resources by other countries. As developing and fragile countries are forced to open up their markets and borders to foreign capital, this could further endanger their local industries, security and sovereignty.
Persisting and worsening gender divides
In promoting “Infrastructure for Tomorrow”, the AIIB has also claimed that it will adopt a gender-sensitive approach in its infrastructure projects and policies. As RoA-AP raised in the Complaints-resolution, Evaluation and Integrity Unit (CEIU)’s Forum with civil society organizations (CSOs) regarding the bank’s resolution to the adverse impacts of women caused by the Gujarat Rural Roads project, the bank has declared that they are in the process of rectifying their project design errors, but was not able to resolve cases of sexual harassment experienced by female construction workers in the project site. Despite the AIIB’s pronouncements, the lack of consultations and a gender-responsive approach to the planning, design and implementation of its projects have only served to deepen inequalities.
Furthermore, while the AIIB is also intent on accelerating digitalization through the use of technology, failing to recognize and address the already existing gender and socioeconomic gaps present in the region will lead to further exacerbating the digital gender divide in its technology-focused projects. As digitalization provides a recourse for those who have sufficient and stable access to technology and connection, it poses a danger to leave the most vulnerable even further behind. In using digital technologies in development projects, the bank must recognize already existing inequalities and vulnerabilities, and not maximize these for profit.
Investing in inclusivity and sustainability
Moreover, the bank’s mechanisms for participatory processes such as the Project-affected People’s Mechanism (PPM) and Early Learning Assessment (ELA) are lacking in implementation and inclusivity. As the bank co-finances projects with other IFIs and disburses funding through financial intermediaries, these projects are not eligible for the PPM, lacking the necessary grievance redress mechanisms for affected communities. The ELA, designed to provide an early evaluation of development projects to mitigate adverse impacts, excludes CSOs, people’s organizations or affected communities in its processes.
The Annual Meeting provided spaces for CSOs to participate, engage and ask questions — albeit limited — and this feature has to be sustained and the space for participation must be expanded, especially for consulting CSOs, peoples’ organizations and communities regarding future development projects. In order to genuinely uphold sustainability, the AIIB must ensure that its processes are inclusive and participatory, especially its PPM, regardless of its financing modality. The ELA must consult organizations and affected communities, as the ones on-ground and directly experiencing the impacts of the projects.
The AIIB, being one of the main sources of development finance in the region, has a vital role in contributing to sustainable development and hence, must stop its exploitative policies. To genuinely finance ‘Infrastructure for Tomorrow’, the bank must promote democratic country ownership of development projects, where development is not corporatized and development projects are pursued in line with the people’s interest and the genuine free, prior and informed consent (FPIC) from affected Indigenous Peoples.
It is also critical for the AIIB and its partners to ensure inclusive and participatory processes in all its projects, stop fostering debt dependence and cease projects with negative environmental impacts to prove its commitment to sustainability. Apart from this, the bank must also be accountable and transparent. A way to ensure this is for AIIB to provide grievance redress mechanisms to communities, and above all, uphold the rights of the people and the preservation of the environment.
Lastly, the bank must also exhibit commitment to the development effectiveness and South-South cooperation principles that promote self-sustaining economies, as well as the growth of local industries and micro, small and medium enterprises (MSMEs), and forward people-centered, rights-based development in the long run.