tag:theconversation.com,2011:/fr/topics/asian-development-bank-2887/articlesAsian Development Bank – The Conversation2022-11-14T07:42:14Ztag:theconversation.com,2011:article/1943452022-11-14T07:42:14Z2022-11-14T07:42:14Z4 signs of progress at the UN climate change summit<figure><img src="https://images.theconversation.com/files/494986/original/file-20221114-29604-dwm11g.jpg?ixlib=rb-1.1.0&rect=24%2C24%2C8155%2C5432&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Developing countries are calling for more funding and for changes at the World Bank.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/activists-demanding-climate-finance-and-debt-relief-for-news-photo/1440171310">Sean Gallup/Getty Images</a></span></figcaption></figure><p><em><a href="https://theconversation.com/cuatro-senales-de-progreso-en-la-cumbre-de-la-onu-sobre-el-cambio-climatico-194661">Leer in español</a></em></p>
<p>Something significant is happening in the desert in Egypt as countries <a href="https://unfccc.int/cop27">meet at COP27</a>, the United Nations summit on climate change.</p>
<p>Despite frustrating sclerosis in the negotiating halls, the pathway forward for ramping up climate finance to help low-income countries adapt to climate change and transition to clean energy is becoming clearer.</p>
<p>I spent a large part of <a href="https://fletcher.tufts.edu/people/staff/rachel-kyte">my career</a> working on international finance at the World Bank and the United Nations and now advise public development and private funds and teach climate diplomacy focusing on finance. Climate finance has been one of the thorniest issues in global climate negotiations for decades, but I’m seeing four promising signs of progress at COP27.</p>
<h2>Getting to net zero – without greenwashing</h2>
<p>First, the goal – getting the world to net zero greenhouse gas emissions by 2050 to stop global warming – is clearer.</p>
<p>The last climate conference, COP26 in Glasgow, Scotland, nearly fell apart over frustration that international finance wasn’t flowing to developing countries and that corporations and financial institutions were greenwashing – making claims they couldn’t back up. One year on, something is stirring.</p>
<p>In 2021, the financial sector arrived at COP26 in full force for the first time. Private banks, insurers and institutional investors <a href="https://www.gfanzero.com/press/amount-of-finance-committed-to-achieving-1-5c-now-at-scale-needed-to-deliver-the-transition/">representing US$130 trillion</a> said they would align their investments with the goal of keeping global warming to 1.5 degrees Celsius – a pledge to net zero. That would increase funding for green growth and clean energy transitions, and reduce investments in fossil fuels. It was an apparent breakthrough. But many observers cried foul and <a href="https://www.greenpeace.org/aotearoa/press-release/offsets-taskforce-hit-by-protest-at-cop26/">accused the financial institutions of greenwashing</a>.</p>
<p>In the year since then, a U.N. commission has <a href="https://www.un.org/en/climatechange/high-level-expert-group">put a red line around greenwashing</a>, delineating what a company or institution must do to make a credible claim about its net-zero goals. Its checklist isn’t mandatory, but it sets a high bar based on science and will help hold companies and investors to account.</p>
<h2>Reforming international financial institutions</h2>
<p>Second, how international financial institutions like the International Monetary Fund and World Bank are working is getting much-needed attention.</p>
<p>Over the past 12 months, <a href="https://www.nytimes.com/2022/11/09/climate/david-malpass-world-bank-cop27-climate-change.html">frustration has grown</a> with the international financial system, especially with the World Bank Group’s leadership. Low-income countries have long complained about having to borrow to finance resilience to climate impacts they didn’t cause, and they have called for development banks to take more risk and leverage more private investment for much-needed projects, including expanding renewable energy.</p>
<p>That frustration has culminated in pressure for World Bank President David Malpass to step down. Malpass, nominated by the Trump administration in 2019, has <a href="https://www.politico.com/news/2022/09/23/world-bank-president-not-resigning-apologizes-for-climate-science-remarks-00058612">clung on for now</a>, but he is under pressure from the U.S., Europe and others to bring forward <a href="https://www.reuters.com/business/environment/world-bank-chief-says-will-keep-intense-focus-addressing-climate-change-2022-10-07/">a new road map</a> for the World Bank’s response to climate change this year.</p>
<figure class="align-center ">
<img alt="Standing together in a meeting room, Mia Motley speaks and gestures while Ursula von der Leyen listens intently." src="https://images.theconversation.com/files/494962/original/file-20221113-24-3c3mzd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/494962/original/file-20221113-24-3c3mzd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=430&fit=crop&dpr=1 600w, https://images.theconversation.com/files/494962/original/file-20221113-24-3c3mzd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=430&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/494962/original/file-20221113-24-3c3mzd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=430&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/494962/original/file-20221113-24-3c3mzd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=541&fit=crop&dpr=1 754w, https://images.theconversation.com/files/494962/original/file-20221113-24-3c3mzd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=541&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/494962/original/file-20221113-24-3c3mzd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=541&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Mia Mottley, prime minister of Barbados and an advocate for international finance reform, speaks with European Commission President Ursula von der Leyen at the climate summit in November 2022.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/mia-mottley-prime-minister-of-barbados-chats-with-president-news-photo/1439748312?phrase=mia%20mottley&adppopup=true">Sean Gallup/Getty Images</a></span>
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<p>Barbados Prime Minister Mia Mottley, a leading voice for reform, and others have called <a href="https://geopolitique.eu/en/articles/breaking-the-deadlock-on-climate-the-bridgetown-initiative/">for $1 trillion</a> already in the international financial system to be redirected to climate resilience projects to help vulnerable countries protect themselves from future climate disasters.</p>
<p>At COP27, French President Emmanuel Macron supported Mottley’s call for a shake-up in how international finance works, and together they have agreed to <a href="https://foreignpolicy.com/2022/11/11/cop27-un-climate-barbados-mottley-climate-finance-imf/">set up a group to suggest changes</a> at the next meeting of the IMF and World Bank governors in spring 2023.</p>
<p>Meanwhile, regional development banks have been reinventing themselves to better address their countries’ needs. The Inter-American Development Bank, focused on Latin America and the Caribbean, is considering shifting its business model to take more risk and crowd in more private sector investment. The Asian Development Bank has launched an entirely <a href="https://www.adb.org/news/adb-adopts-new-operating-model-meet-rapidly-changing-needs-asia-and-pacific">new operating model</a> designed to achieve greater climate results and leverage private financing more effectively.</p>
<h2>Getting private finance flowing</h2>
<p>Third, more public-private partnerships are being developed to speed decarbonization and power the clean energy transition.</p>
<p>The first of these “<a href="https://ec.europa.eu/commission/presscorner/detail/en/IP_21_5768">Just Energy Transition Partnerships</a>,” announced in 2021, was designed to support South Africa’s transition away from coal power. It relies on a mix of grants, loans and investments, as well as risk sharing to help bring in more private sector finance. <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/11/15/indonesia-and-international-partners-secure-groundbreaking-climate-targets-and-associated-financing/">Indonesia announced a similar partnership</a> at the G-20 summit in November worth $20 billion. Vietnam is working on another, and Egypt <a href="https://enterprise.press/stories/2022/11/13/us-europe-pledge-more-than-usd-550-mn-to-fund-egypts-energy-transition-86885/">announced a major new partnership</a> at COP27.</p>
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<img alt="Kerry gestures with one hand as he speaks with Scholz amid other seated people." src="https://images.theconversation.com/files/494939/original/file-20221112-18-n0vxt9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/494939/original/file-20221112-18-n0vxt9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=409&fit=crop&dpr=1 600w, https://images.theconversation.com/files/494939/original/file-20221112-18-n0vxt9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=409&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/494939/original/file-20221112-18-n0vxt9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=409&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/494939/original/file-20221112-18-n0vxt9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=514&fit=crop&dpr=1 754w, https://images.theconversation.com/files/494939/original/file-20221112-18-n0vxt9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=514&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/494939/original/file-20221112-18-n0vxt9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=514&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">U.S. Special Climate Envoy John Kerry, who proposed new carbon offsets to pay for clean energy, speaks with German Chancellor Olaf Scholz.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/november-2022-egypt-scharm-el-scheich-german-chancellor-news-photo/1244584482?phrase=un%20climate&adppopup=true">Michael Kappeler/picture alliance via Getty Images</a></span>
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<p>However, the public funding has been hard to lock in. Developed countries’ coffers are dwindling, with governments including the U.S. unable or unwilling to maintain commitments. Now, pressure from the war in Ukraine and economic crises is adding to their problems.</p>
<p>The lack of public funds was the impetus behind U.S. Special Climate Envoy John Kerry’s proposal to use a <a href="https://climatechangenews.com/2022/11/09/john-kerrys-offsets-plan-sets-early-test-for-un-net-zero-standards/">new form of carbon offsets</a> to pay for green energy investments in countries transitioning from coal. The idea, loosely sketched out, is that countries dependent on coal could sell carbon credits to companies, with the revenue going to fund clean energy projects. The country would speed its exit from coal and lower its emissions, and the private company could then claim that reduction in its own accounting toward net zero emissions.</p>
<p>Globally, voluntary carbon markets for these offsets have grown from $300 million <a href="https://www.ecosystemmarketplace.com/articles/the-art-of-integrity-state-of-the-voluntary-carbon-markets-q3-2022/">to $2 billion</a> since 2019, but they are still relatively small and fragile and need more robust rules.</p>
<p>Kerry’s proposal drew criticism, pending the fine print, for fear of swamping the market with industrial credits, collapsing prices and potentially allowing companies in the developed world to greenwash their own claims by retiring coal in the developing world.</p>
<h2>New rules to strengthen carbon markets</h2>
<p>Fourth, new rules are emerging to strengthen those voluntary carbon markets.</p>
<p>A new set of <a href="https://icvcm.org/">“high-integrity carbon credit principles”</a> is expected in 2023. A <a href="https://vcmintegrity.org/">code of conduct</a> for how corporations can use voluntary carbon markets to meet their net zero claims has already been issued, and standards for ensuring that a company’s plans meet the Paris Agreement’s goals are evolving.</p>
<p>Incredibly, all this progress is outside the Paris Agreement, which simply calls for governments to make “finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.” </p>
<p>Negotiators seem reluctant to mention this widespread reform movement in the formal text being negotiated at COP27, but walking through the halls here, they cannot ignore it. It’s been too slow in coming, but change in the financial system is on the way.</p>
<p><em>This article was updated Nov. 15, 2022, with Indonesia’s climate finance deal announced.</em></p><img src="https://counter.theconversation.com/content/194345/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rachel Kyte is co-chair of the Voluntary Markets Integrity Initiative and served in different roles at the World Bank Group from 2000 to 2015.</span></em></p>The biggest issues at COP27 involve financing for low-income countries hit hard by climate change. A former World Bank official describes some promising signs she’s starting to see.Rachel Kyte, Dean of the Fletcher School, Tufts UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1871372022-07-18T17:42:25Z2022-07-18T17:42:25ZBehind the crisis in Sri Lanka – how political and economic mismanagement combined to plunge nation into turmoil<figure><img src="https://images.theconversation.com/files/474442/original/file-20220717-26-6pn18l.jpg?ixlib=rb-1.1.0&rect=16%2C107%2C5489%2C3549&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The sun sets on Sri Lanka's protest movement (for now).</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/protestors-gather-at-presidential-secretariat-in-colombo-on-news-photo/1241898185?adppopup=true">Arun Sankar/AFP via Getty Images)</a></span></figcaption></figure><p><em>Sri Lankan President Gotabaya Rajapaksa <a href="https://www.cnn.com/2022/07/14/asia/sri-lanka-gotabaya-rajapksa-thursday-intl-hnk/index.html">formally resigned</a> on July 15, 2022, having earlier fled the country amid widespread protests in the Southern Asian nation.</em></p>
<p><em>The man who replaced him, Prime Minister and <a href="https://www.bbc.com/news/world-asia-62176758">now interim President Ranil Wickremesinghe</a>, is <a href="https://www.ft.com/content/76f232c0-cac2-48be-819a-d81b883fa1ca">likewise facing calls to go</a> amid political and economic turmoil.</em></p>
<p><em>Although the drama escalated over a matter of days – during which the <a href="https://www.reuters.com/news/picture/sri-lankan-protesters-cook-swim-sleep-in-idUSRTS9KFY5">presidential palace</a> and the <a href="https://news.sky.com/story/sri-lanka-president-flees-as-thousands-of-protesters-storm-official-residence-12648619">prime minister’s residence were both occupied</a> by demonstrators – the crisis is years in the making, argues Neil DeVotta, <a href="https://politics.wfu.edu/faculty-and-staff/neil-devotta/">professor of politics and international affairs at Wake Forest University</a>.</em></p>
<p><em>The Conversation U.S. asked DeVotta, who grew up in Sri Lanka and specializes in South Asian politics, to explain what brought about the crisis and where the nation of 22 million goes from here.</em></p>
<h2>Can you talk us through the latest events?</h2>
<p>What happened in Sri Lanka was really quite revolutionary. For the first time in the country’s history, you had a president resign – and in the most humiliating manner.</p>
<p>Gotabaya Rajapaksa had earlier announced his intention to step down but did not do so immediately, because once he did that he would lose <a href="https://www.bbc.com/news/world-asia-62132271">his presidential immunity</a> from prosecution. Instead he fled the country, <a href="https://www.reuters.com/world/asia-pacific/sri-lanka-president-rajapaksa-set-fly-singapore-via-maldives-government-source-2022-07-13/">first going to the Maldives</a> and then to Singapore. Some claim he <a href="https://www.middleeasteye.net/news/sri-lanka-rajapaksa-saudi-arabia-safe-haven-ousted-leaders">may now be looking to get to Saudi Arabia</a> – all of which is somewhat ironic given that Dubai, the Maldives and Saudi Arabia are Muslim states, and during his tenure in power Rajapaksa stood accused of <a href="https://www.aljazeera.com/opinions/2019/11/21/sri-lankas-muslims-have-reason-to-fear-the-new-rajapaksa-era">encouraging Islamophobia to bolster his lock on power</a>.</p>
<p>The catalyst behind all this was a protest movement. Demonstrators have since left the president’s and the prime minister’s official residence, but the protest movement has only partly succeeded. They wanted <a href="https://www.aljazeera.com/news/2022/7/12/sri-lanka-crisis-no-to-all-party-govt-say-protest-leaders">Rajapaksa and his brothers</a> gone. But many <a href="https://www.aljazeera.com/news/2022/7/12/sri-lanka-crisis-no-to-all-party-govt-say-protest-leaders">also wanted the ouster of Prime Minister Wickremesinghe</a>.</p>
<figure class="align-center ">
<img alt="A man washes graffiti saying 'Go Home Gota' from a wall." src="https://images.theconversation.com/files/474620/original/file-20220718-22-m4yifv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/474620/original/file-20220718-22-m4yifv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/474620/original/file-20220718-22-m4yifv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/474620/original/file-20220718-22-m4yifv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/474620/original/file-20220718-22-m4yifv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/474620/original/file-20220718-22-m4yifv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/474620/original/file-20220718-22-m4yifv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">A staff member washes graffiti left behind by protesters.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/staff-member-washes-graffiti-left-behind-by-protestors-from-news-photo/1409431290?adppopup=true">Abhishek Chinnappa/Getty Images</a></span>
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<p>Instead, Wickremesinghe, who was not elected to Parliament and got a seat only through a national list that tops up the legislature, has now been sworn in as interim president. So a man with no mandate – his party got only a <a href="https://anfrel.org/wp-content/uploads/2020/09/Sri-Lanka-Report-2020-FINAL-ol.pdf">small fraction of the 11.5 million</a> valid votes cast in the <a href="https://www.nytimes.com/2020/08/06/world/asia/sri-lanka-elections-rajapaksa.html">2020 election</a> – is now acting president and may end up with the job full time once the <a href="https://www.thehindu.com/news/international/sri-lanka-crisis-live-updates-july-15-2022/article65642747.ece">Sri Lankan Parliament holds a secret ballot</a> on July 20, 2022.</p>
<h2>What was the spark to the crisis?</h2>
<p>The spark was really set off in April 2021 when Rajapaksa announced a <a href="https://www.reuters.com/markets/commodities/fertiliser-ban-decimates-sri-lankan-crops-government-popularity-ebbs-2022-03-03/">ban on fertilizer, herbicides and pesticides</a>.</p>
<p>Successive Sri Lankan governments have long been <a href="https://theconversation.com/sri-lanka-teeters-on-economic-edge-from-pandemic-fueled-financial-crisis-and-ukraine-war-spillovers-179741">living beyond their means</a> and employing a debt rollover strategy to keep the country afloat – in short, the country was relying on new loans, alongside revenue from tourism and international remittance, to pay down its debt.</p>
<p>But then came COVID-19, which <a href="https://www.scmp.com/week-asia/economics/article/3181671/can-sri-lanka-tourism-recover-triple-whammy-terrorism-covid-19">severely affected tourism</a> and contributed to what economists call a “<a href="https://www.imf.org/external/pubs/nft/op/186/index.htm">balance of payments crisis</a>.” In other words, the country was unable to pay for essential imports or service its debt. This pushed the government to abruptly announce a ban on herbicides and fertilizers – something they <a href="https://www.vox.com/future-perfect/2022/7/15/23218969/sri-lanka-organic-fertilizer-pesticide-agriculture-farming">hoped would save the country US$400 million dollars</a> on imports annually. The president had previously indicated that the move to organic agriculture would take place over 10 years. Instead, it was implemented abruptly despite warnings over the <a href="https://www.lemonde.fr/en/environment/article/2022/06/14/in-sri-lanka-the-sabotage-of-an-organic-revolution_5986670_114.html#:%7E:text=It%20was%20April%2027%2C%202021,nation%20the%20first%20country%20in">impact it would have on agriculture yields</a>.</p>
<p>That led to <a href="https://www.business-standard.com/article/international/lanka-s-agri-minister-forced-to-flee-as-farmers-protest-his-visit-report-122061800859_1.html">farmers’ protesting</a>. They were soon joined by sympathetic unions. The balance of payments crisis went far beyond farming. It got to the point when the government couldn’t pay for almost anything it was hoping to import, leading to <a href="https://apnews.com/article/covid-health-asia-south-5217195484ef4c8d858d86bbfb79d35c">shortages in medicines</a> and milk powder. And that led to people from other sectors also protesting.</p>
<p>On top of this, the government was <a href="https://www.timesnownews.com/world/sri-lanka-is-printing-money-to-pay-salaries-but-this-could-cause-a-further-economic-implosion-article-91612814">printing money</a> to pay for goods. This inevitably led to inflation – which is <a href="https://www.bloomberg.com/news/articles/2022-07-05/sri-lanka-aims-to-stop-money-printing-as-inflation-nears-60">running above 50%</a>.</p>
<p>The tipping point came when people found that they could no longer pay for cooking gas and fuel. A few weeks ago, the government announced that it would <a href="https://www.cnn.com/2022/06/27/asia/sri-lanka-fuel-non-essential-services-intl-hnk/index.html">provide fuel for essential services only</a>, shuttering schools and ordering workers to stay at home.</p>
<h2>So this was a purely economic crisis?</h2>
<p>Not quite. While the spark was a balance of payments crisis, I believe that underpinning the mess is a <a href="https://www.colombotelegraph.com/index.php/cleansing-sri-lanka-of-ethnonationalism/">deep-rooted ethnonationalism</a> that has allowed and encouraged <a href="https://asia.nikkei.com/Spotlight/Sri-Lanka-crisis/Nepotism-bad-policy-push-Sri-Lanka-to-brink-of-economic-ruin">corruption, nepotism and short-termism</a>.</p>
<p>Since at least the 1950s, Sri Lanka has been in the grips of <a href="https://www.cambridge.org/core/books/abs/when-politics-are-sacralized/genesis-consolidation-and-consequences-of-sinhalese-buddhist-nationalism/D4627144C3A7090A32F13E1DC4288E63">Sinhalese Buddhist nationalism</a>. The Sinhalese make up around 75% of the population, with Tamils at around 15% and Muslims at 10%. </p>
<p>Sinhalese Sri Lankans have <a href="https://www.eastwestcenter.org/publications/sinhalese-buddhist-nationalist-ideology-implications-politics-and-conflict-resolution-s">long been favored when it comes to access to universities and government positions</a>. This has been to the detriment of not only the country’s minorities but also its governance. It has <a href="https://theconversation.com/sri-lankas-crisis-is-not-just-about-the-economy-but-a-long-history-of-discrimination-against-minority-groups-186747">led to a decay in how the state functions</a>. Sri Lanka has ended up with a system that disregards merit and is instead rooted in enthnocracy – rule by one dominant group. And that has <a href="https://foreignpolicy.com/2022/07/12/sri-lanka-crisis-politics-economics-rajapaksa-protest/">helped spread nepotism and corruption</a>.</p>
<p>The fact that the Rajapaksa brothers helped <a href="https://www.theguardian.com/world/2019/nov/17/the-terminator-how-gotabaya-rajapaksas-ruthless-streak-led-him-to-power-sri-lanka">brutally suppressed and defeated</a> a three-decade Tamil insurgency bolstered their credentials among Sinhalese Buddhist nationalists and consolidated their grip on power.</p>
<p>That <a href="https://hir.harvard.edu/sri-lankan-civil-war/">civil war</a>, which ended in 2009, also contributed to the current crisis. Through the conflict, the Sri Lankan government ran national deficits to finance the counterinsurgency.</p>
<p>After the war, the Rajapaksas looked to develop the country by <a href="https://www.deccanherald.com/opinion/china-s-infrastructure-projects-have-worsened-sri-lanka-s-economic-woes-992445.html">building up its infrastructure</a>. What the country instead got was “blingfrastructure” – vanity projects, often financed by China, that were <a href="https://srilankabrief.org/sri-lanka-massive-kickbacks-in-unsolicited-projects-with-china/">dogged by corruption and graft</a>. One such project is an airport that sees <a href="https://www.forbes.com/sites/wadeshepard/2016/05/28/the-story-behind-the-worlds-emptiest-international-airport-sri-lankas-mattala-rajapaksa/">very few planes land or take off</a>. I visited the Mattala Rajapaksa International Airport in 2015, and the only other people there were a coachload of students from a school on a field trip. Nothing has changed since then.</p>
<p>Other such wasteful projects include a conference center and cricket ground – called the <a href="https://www.espncricinfo.com/srilanka/content/ground/434210.html">Mahinda Rajapaksa International Cricket Stadium</a> – not far from the Mattala airport that hosts next to nothing. And then there is the Lotus Tower, the tallest communications tower in South Asia, which was supposed to contain other facilities and was ceremonially opened in 2019 but <a href="https://www.reuters.com/article/us-sri-lanka-tower/opening-of-sri-lankas-tallest-tower-marred-by-corruption-allegation-idUSKBN1W123I">remains out of operation</a>.</p>
<p>The construction of such projects has been <a href="https://srilankabrief.org/sri-lanka-massive-kickbacks-in-unsolicited-projects-with-china/">dogged by suggestions of corruption</a>. Such projects largely <a href="https://www.npr.org/2019/12/13/784084567/in-sri-lanka-chinas-building-spree-is-raising-questions-about-sovereignty">involved Chinese construction firms</a>, often using Chinese laborers – <a href="https://www.sundaytimes.lk/091206/BusinessTimes/bt18.html">including the reported use of Chinese prisoners</a>, in the case of <a href="https://www.nytimes.com/2018/06/25/world/asia/china-sri-lanka-port.html">the Hambantota Port</a>, now leased to China for 99 years because Sri Lanka could not pay its debts. Sri Lankans themselves have benefited only little.</p>
<p>On paper it looked like the <a href="https://opecfund.org/news/accelerating-economic-growth-in-post-conflict-sri-lanka">country was developing and GDP was rising</a>. But the growth was from external money rather than goods and services generated in Sri Lanka.</p>
<p>Chinese loans with short terms and high interest played no small role in quickening Sri Lanka’s debt problem. As a result, the country currently owes <a href="https://www.reuters.com/world/asia-pacific/yellen-says-its-chinas-interest-restructure-sri-lankas-debt-2022-07-14/">between $5 billion and $10 billion to China</a>, and its overall debt stands at <a href="https://gulfnews.com/business/sri-lanka-defaults-on-entire-51-billion-external-debt-1.1649748538720">$51 billion dollars</a>.</p>
<h2>What happen next?</h2>
<p>The most important thing that Sri Lanka needs going forward is political stability. Without that, you will not get the help required from the international community.</p>
<p>And Sri Lanka is not going to get out of its economic mess without help from international actors, such as the <a href="https://fortune.com/2022/07/15/sri-lanka-imf-bailout-protest-gotabaya-rajapaksa-flee-singapore/">International Monetary Fund</a>, the <a href="https://www.adb.org/countries/sri-lanka/main">Asian Development Bank</a> and <a href="https://www.worldbank.org/en/country/srilanka">the World Bank</a>. It also needs help from partners like India, Japan, China and the U.S.</p>
<p>As it is, Wickremesinghe, the interim president, has said the country will <a href="https://www.business-standard.com/article/international/sri-lanka-admits-bankruptcy-crisis-to-drag-through-2023-wickremesinghe-122070600054_1.html">suffer shortages in goods until the end of 2023</a>.</p>
<p>Sri Lanka needs large-scale, long-term economic restructuring. And for that to happen, the government will have to restructure its bilateral debt – the IMF will not give Sri Lanka money simply so that it can pay off its debt to China or any other entity.</p>
<p>But China knows that <a href="https://www.bloomberg.com/news/articles/2022-07-15/china-will-agree-to-aid-at-some-point-sri-lanka-envoy-says">cutting any debt deal with Sri Lanka</a> will mean that other countries that hold large Chinese debt – like Pakistan and some African countries – will expect the same. And Beijing doesn’t want to set that precedent. On the other hand, China will most likely have to work with Sri Lanka and other bilateral donors, especially now that the Rajapaksas are out of power. It needs to cultivate goodwill to maintain influence in the island and will not want to be seen as exacerbating Sri Lanka’s woes. </p>
<p>The IMF will also likely expect painful measures to tamp down costs if it is to come to Sri Lanka’s aid. It will most likely insist that Sri Lanka free float its currency rather than peg it to the dollar, since right now Sri Lankans abroad are <a href="https://www.themorning.lk/the-war-against-the-undial-system/">using unofficial channels</a> – and not the banking system – to remit foreign currency. So it will likely have to <a href="https://www.reuters.com/markets/rates-bonds/sri-lanka-allow-rupee-weaken-230-per-dollar-2022-03-07/">devalue its currency beyond what it already has</a>. The IMF will also likely expect that the government cut back on the number of state employees – which <a href="https://island.lk/only-traitors-wont-accept-urgent-economic-reform-agenda-acceptable-to-imf/">currently stands at around 1.5 million people</a>.</p>
<p>This will be a very painful process, and it will take some time. And it will likely worsen the country’s turmoil in the days ahead.</p><img src="https://counter.theconversation.com/content/187137/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Neil DeVotta does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Protests over shortages forced the ouster of Sri Lanka’s president, but the crisis has deep-set roots in ethnonationalism, which has encouraged corruption, argues an expert on the country’s politics.Neil DeVotta, Professor of Politics and International Affairs, Wake Forest UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/570372016-04-05T20:07:24Z2016-04-05T20:07:24ZDevelopment banks threaten to unleash an infrastructure tsunami on the environment<figure><img src="https://images.theconversation.com/files/117134/original/image-20160401-6801-ctee53.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Major development banks are funding logging, mining and infrastructure projects that are having enormous impacts on nature. Here, forests are being razed along a newly constructed road in central Amazonia.</span> <span class="attribution"><span class="source">William Laurance</span>, <span class="license">Author provided</span></span></figcaption></figure><p>We are living in the most explosive era of infrastructure expansion in human history. The G20 nations, when they met in Australia in 2014, argued for <a href="http://us.boell.org/sites/default/files/alexander_multi-polar_world_order_1.pdf">between US$60 trillion and US$70 trillion</a> in new infrastructure investments by 2030, which would more than double the global total value of infrastructure.</p>
<p>Some of the key players in this worldwide infrastructure boom are huge investors such as the World Bank. The past few years and decades have seen the rise of major new investment banks, such as the recently founded <a href="http://euweb.aiib.org/html/aboutus/AIIB/?show=0">Asian Infrastructure Investment Bank</a> (AIIB), and the dramatic growth of funds such as the <a href="https://en.wikipedia.org/wiki/Brazilian_Development_Bank">Brazilian Development Bank</a> (BNDES). </p>
<p>The new banks, along with traditional big lenders such as the World Bank, the International Monetary Fund, and the Asian, African, and Inter-American Development Banks, are very fond of funding big infrastructure such as roads, dams, gas lines, mining projects, and so on. </p>
<p>Some people had hoped that these banks would promote sustainable and socially equitable development, but it now seems that they could end up doing precisely the opposite.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/117128/original/image-20160401-6825-xwpmwq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/117128/original/image-20160401-6825-xwpmwq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=699&fit=crop&dpr=1 600w, https://images.theconversation.com/files/117128/original/image-20160401-6825-xwpmwq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=699&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/117128/original/image-20160401-6825-xwpmwq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=699&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/117128/original/image-20160401-6825-xwpmwq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=878&fit=crop&dpr=1 754w, https://images.theconversation.com/files/117128/original/image-20160401-6825-xwpmwq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=878&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/117128/original/image-20160401-6825-xwpmwq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=878&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The world’s rivers are imperilled by thousands of planned hydroelectric dams. Shown here is the Tapajós River in Brazil, for which a dozen mega-dams are currently planned.</span>
<span class="attribution"><span class="source">William Laurance</span></span>
</figcaption>
</figure>
<h2>The infrastructure tsunami</h2>
<p>The next few decades are expected to see some 25 million km of <a href="http://www.nature.com/nature/journal/v513/n7517/abs/nature13717.html">new paved roads</a>, thousands more <a href="http://link.springer.com/article/10.1007%2Fs00027-014-0377-0#/page-1">hydroelectric dams</a>, and hundreds of thousands of new <a href="http://www.theecologist.org/News/news_analysis/2449005/africas_ecosystems_imperilled_by_mining_frenzy.html">mining, oil and gas projects</a>. </p>
<p>The environmental impacts of the modern infrastructure tsunami could easily dwarf climate change and many other human pressures, as thousands of projects penetrate into the world’s last surviving wild areas. Roughly <a href="http://www.iea.org/publications/freepublications/publication/transportinfrastructureinsights_final_web.pdf">90%</a> of the new projects are in developing nations, often in the tropics or subtropics which harbour the planet’s biologically richest and environmentally most critical ecosystems. </p>
<p>In these contexts, new infrastructures such as roads can open a <a href="http://www.nytimes.com/2015/04/13/opinion/roads-to-ruin.html?_r=1">Pandora’s box</a> of environmental problems, by promoting widespread deforestation, habitat fragmentation, poaching, fires, illegal mining and land speculation. </p>
<p>For instance, <a href="http://eventos.gvces.com.br/arquivos/Barber-et-al-2014-Amazon-roads.pdf">our research</a> in the Brazilian Amazon has shown that 95% of all deforestation occurs within 5.5 km of a legal or illegal road.</p>
<p>In Brazil, 12 new dams planned for the Tapajós River (and their associated road networks) are expected to increase Amazon deforestation by <a href="https://theconversation.com/the-worlds-forests-will-collapse-if-we-dont-learn-to-say-no-53979">nearly a million hectares</a>. Across the Amazon, more than 330 dams are now planned or under construction.</p>
<p>In the Congo Basin, an avalanche of new logging roads has opened up vast areas of rainforest to poachers armed with rifles and cable snares. As a result, the past decade has seen <a href="http://www.theguardian.com/environment/2013/mar/05/two-thirds-forest-elephants-killed">two-thirds</a> of all Forest Elephants slaughtered for their valuable ivory tusks.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/117135/original/image-20160401-6809-112abt9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/117135/original/image-20160401-6809-112abt9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/117135/original/image-20160401-6809-112abt9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/117135/original/image-20160401-6809-112abt9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/117135/original/image-20160401-6809-112abt9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/117135/original/image-20160401-6809-112abt9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/117135/original/image-20160401-6809-112abt9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/117135/original/image-20160401-6809-112abt9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Because of massive road expansion, there has been an epic slaughter of Forest Elephants in the Congo Basin.</span>
<span class="attribution"><span class="source">Ralph Buij</span></span>
</figcaption>
</figure>
<h2>Fears of fast-tracking</h2>
<p>Brazil’s BNDES has been heavily criticised for funding scores of environmentally and socially harmful projects, such as <a href="http://news.mongabay.com/2016/03/bndes-a-bank-loans-billions-to-tame-south-americas-wild-waters/">mega-dams in the Amazon</a>. Fears were raised that China’s AIIB would <a href="http://bankwatch.org/bwmail/63/new-beijing-backed-asian-infrastructure-investment-bank-struggles-convince-environment">behave similarly</a>, especially when it announced that it would be using <a href="http://news.xinhuanet.com/english/2015-05/22/c_134262848.htm">“streamlined” procedures</a> for evaluating its projects. </p>
<p>Such fast-tracked procedures would differ from those used by other major lenders such as the World Bank, which after years of criticism have gradually implemented measures designed to limit the environmental and social impacts of its projects. Even these safeguards are often inadequate, as I and others argued in a <a href="http://www.cell.com/current-biology/abstract/S0960-9822%2815%2900219-5">recent article</a>, but at least they are a big improvement over past practices.</p>
<p>When China opened up its AIIB to other countries, 30 nations initially joined as founding members. Many of these are western economies, including the United Kingdom, Germany, France, Italy, Norway, Australia and New Zealand.</p>
<p>At the time, many observers hoped that the bank’s broader membership would encourage the AIIB to moderate its <a href="http://europe.chinadaily.com.cn/epaper/2016-01/22/content_23193634.htm">hard-charging stance</a> — perhaps fostering environmental and social safeguards more akin to those of the existing major lenders.</p>
<h2>Race to the bottom?</h2>
<p>But in fact the exact opposite appears to be happening. Rather than the AIIB raising its game, the World Bank recently concluded <a href="http://consultations.worldbank.org/consultation/review-and-update-world-bank-safeguard-policies">a review of its environmental standards</a> — a move that has been criticised as <a href="https://www.devex.com/news/the-controversy-over-safeguard-policies-87679">weakening its environmental and social safeguards</a>. </p>
<p>It is doing so, it says, in order to keep up with “<a href="http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/EXTPOLICIES/EXTSAFEPOL/0,,menuPK:584441%7EpagePK:64168427%7EpiPK:64168435%7EtheSitePK:584435,00.html">new and varied development demands</a>”. This is widely seen as a <a href="http://www.a-id.org/en/news/how-the-world-bank-is-relaxing-its-human-rights-standards/">response to increasing competition</a> with other investors such as the AIIB. </p>
<p>What will this mean? The global economy has slowed for the moment, giving environmental planners a tiny window of breathing space. But make no mistake, the infrastructure tsunami is <a href="https://theconversation.com/massive-road-and-rail-projects-could-be-africas-greatest-environmental-challenge-51188">still happening</a>. If the global economy rebounds to a degree, the feeding frenzy of projects seen in recent years could easily return. </p>
<p>This could be bad news for the global environment and <a href="http://www.forestpeoples.org/topics/safeguard-accountablility-issues/news/2014/07/press-release-world-bank-moves-undermine-rights">socially disempowered peoples</a>. For instance, a 2009 analysis found that many developing nations had become “pollution havens” for projects funded by <a href="http://elibrary.worldbank.org/doi/abs/10.1596/1813-9450-3505">China or Chinese investors</a>, who were attracted to nations with weak environmental controls. Notably, other advanced (<a href="https://en.wikipedia.org/wiki/Organisation_for_Economic_Co-operation_and_Development">OECD</a>) economies showed no such tendency.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/117129/original/image-20160401-6816-9cu6jt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/117129/original/image-20160401-6816-9cu6jt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/117129/original/image-20160401-6816-9cu6jt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=598&fit=crop&dpr=1 600w, https://images.theconversation.com/files/117129/original/image-20160401-6816-9cu6jt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=598&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/117129/original/image-20160401-6816-9cu6jt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=598&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/117129/original/image-20160401-6816-9cu6jt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=752&fit=crop&dpr=1 754w, https://images.theconversation.com/files/117129/original/image-20160401-6816-9cu6jt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=752&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/117129/original/image-20160401-6816-9cu6jt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=752&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">How badly will the global avalanche of new infrastructure affect nature? With development pressures rapidly escalating in the tropics, species such as this Golden Dove, found only in Fiji, could be especially vulnerable.</span>
<span class="attribution"><span class="source">William Laurance</span></span>
</figcaption>
</figure>
<p>Will other major lenders follow suit? Will there simply be a “race to the bottom” among big lenders in order to remain competitive? Only time will tell. </p>
<p>The other key question revolves around the role of western nations that are parties to the AIIB, such as the EU members and Australia. Do they have enough influence and determination to make a difference? With China, India and Russia holding the biggest shares of the bank’s capitalisation, it’ll be an uphill battle.</p>
<p>Right now, for the environment and human rights, the signs are all pointing in the wrong direction.</p><img src="https://counter.theconversation.com/content/57037/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bill Laurance receives funding from the Australian Research Council and other scientific and philanthropic organisations. He is the director of the Centre for Tropical Environmental and Sustainability Science at James Cook University and founder and director of ALERT--the Alliance of Leading Environmental Researchers & Thinkers.
</span></em></p>Big new investors such as the Asian Infrastructure Development Bank are key players in a worldwide infrastructure, and that could be bad news for the environment.Bill Laurance, Distinguished Research Professor and Australian Laureate, James Cook UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/405182015-04-21T10:25:54Z2015-04-21T10:25:54ZChina’s AIIB helps resolve Asia’s soaring infrastructure needs<p>Less than two years after reports first appeared in October 2013 about the formation of a new specialized development bank focused on Asia, China’s Asian Infrastructure Investment Bank (AIIB) has become a reality.</p>
<p>While its birth has given rise to <a href="https://theconversation.com/us-should-stop-blocking-chinas-aiib-and-join-allies-in-new-club-39406">international tensions</a>, it has also offered hope to developing countries that need an enormous amount of infrastructure investment in coming years. </p>
<p>The tensions – the US has fiercely opposed China’s bank and lobbied its allies not to join it – have been well reported and discussed. Overlooked by these <a href="https://theconversation.com/chinas-new-investment-bank-challenges-us-influence-on-global-economics-39978">critics</a> is that the region’s investment needs are far too great to be met by the West’s development banks alone. China’s willingness to shoulder more of the burden should be welcomed, and the decision of US allies like the UK and Germany to become <a href="https://theconversation.com/why-everyones-joining-the-asian-infrastructure-investment-bank-39256">founding members</a> gives the AIIB a significant credibility boost that will make it more likely to succeed. </p>
<h2>Top priority: financing infrastructure</h2>
<p>A few years ago the Asian Development Bank Institute, where I have been an adviser, contributed to a <a href="http://www.adb.org/sites/default/files/publication/29823/infrastructure-supporting-inclusive-growth.pdf">report</a> pointing out correctly that Asia will require at least US$8 trillion to invest in infrastructure from 2010 to 2020 for the region to continue economic development at a reasonable pace. </p>
<p>The kinds of infrastructure needed range from the high-tech such as telecommunications services and high-speed railroads to the most basic and essential. About 1.8 billion are not connected to basic sanitation services, 800 million lack electricity and 600 million do not have access to potable water, according to the report. </p>
<p>For those of us who have been involved in strategy debates over Asian development since the 1980s, Japan, Korea, Taiwan and now China itself are all existing examples of the extent to which infrastructure investment is instrumental in economic development. </p>
<p>In my many visits to East Asia – most recently China – I have seen how national and international linkages can be constructed through infrastructure investment. China itself exemplifies how investing in roads and education can make a dramatic impact on a country’s long-term growth and lifting millions of people out of poverty. </p>
<p>Financing such investment is, therefore, a top strategic priority. The International Monetary Fund, the Asia Development Bank and the World Bank have all played pivotal roles helping finance such investment in these now prosperous countries. </p>
<p>The availability of transport, electricity, schools and hospitals has a “tremendous impact on improving the quality of life,” while businesses need more reliable infrastructure to spur growth, which boosts incomes and reduces poverty, according to the ADB report. </p>
<p>The addition of the AIIB to the fold would bring many benefits especially to those parts of Asia in the Southeast and South Asian regions that lag behind in infrastructure investment. Indonesia has the greatest needs, with the ADB <a href="http://www.adb.org/sites/default/files/publication/29823/infrastructure-supporting-inclusive-growth.pdf">estimating</a> $450 billion will be required through 2020, mostly on transport. China needs just a little less, primarily due to electricity troubles, while another seven countries require at least $100 billion a piece. </p>
<p>In addition, the problem of a global lack of demand for goods and services due to the slowing economy will be mitigated by the hundreds of billions of dollars in extra infrastructure spending in Asia. Thus there are both local and global benefits that can be reaped from appropriate infrastructure investment projects financed by the AIIB.</p>
<h2>AIIB’s rapid growth</h2>
<p>In pushing the AIIB against the wishes of the US, the Chinese capitalized on a growing impatience among many Asian policy makers over the unwillingness of global institutions like the IMF and World Bank to allow greater input into its operations. </p>
<p>Last April Chinese Premier Li Keqiang said China was ready to intensify consultations with those interested in joining the AIIB. By June China proposed doubling the registered capital of the bank from $50 billion to $100 billion and invited India to participate in its founding. Just four months later, a signing ceremony held in Beijing formally <a href="http://news.xinhuanet.com/english/business/2014-10/24/c_133740149.htm">established</a> the bank, with 21 initial signatories, including Thailand, Singapore and Vietnam. </p>
<p>Since then the number of countries agreeing to sign on as <a href="http://www.upi.com/Top_News/World-News/2015/04/15/China-accepts-57-founding-members-for-new-Asian-Infrastructure-Investment-Bank/6071429103735/">founders</a> has soared, such as Hong Kong in February, to 57. </p>
<p>But the AIIB’s credibility was particularly enhanced when in early March UK Chancellor of the Exchequer George Osborne announced that Britain had agreed to lend money to the Bank, becoming the first major Western country to do so in spite of US opposition. Soon on the heels of UK, three other European nations – Germany, France and Italy – followed suit. </p>
<p>Clearly, the concept of AIIB has become institutionally viable. It has also established the credibility of China’s economic diplomacy. </p>
<h2>Competitive pluralism</h2>
<p>Thoughtful economists should welcome this multilateral initiative led by China. In line with other southern initiatives such as the launch of the New Development Bank last July by the so-called BRICs (Brazil, Russia, India and China), the AIIB will ease emerging countries’ strategic financing problems for development. It will also lead to a healthy competitive pluralism in this area that the Asian Development Bank itself has defended in the past.</p>
<p>The time has come for the experts to offer serious analyses of specific projects and their costs and benefits for the region. Here in addition to growth and employment aspects, social and environmental issues can also be analyzed in a multilateral context.</p>
<p>The AIIB offers a great opportunity to craft new strategies and foster fresh frameworks for making serious investments in infrastructure in Asia. Indeed, this is the key challenge that development strategists must address as the AIIB takes shape and aims to make a meaningful contribution the region’s growth.</p><img src="https://counter.theconversation.com/content/40518/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Haider Khan does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Asia needs trillions of dollars in coming years to finance roads, sanitation plants and other key infrastructure. The IMF and World Bank can’t do it alone.Haider Khan, Professor of Economics, University of DenverLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/394062015-04-06T10:16:50Z2015-04-06T10:16:50ZUS should stop blocking China’s AIIB and join allies in new club<figure><img src="https://images.theconversation.com/files/77049/original/image-20150403-9328-emy6c5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">China's made it clear, all nations allowed. </span> <span class="attribution"><span class="source">Clubhouse from www.shutterstock.com</span></span></figcaption></figure><p>China’s growing economic clout is complicating US efforts to maintain its grip on the world’s leading multilateral economic institutions – as it’s done since the end of World War II. </p>
<p>The creation of the Asian Infrastructure Investment Bank (AIIB), established last year by China and many other Asian countries, has brought this challenge and how to address it front and center. </p>
<p>The AIIB is similar to the Asian Development Bank (ADB) and the World Bank – in that it’s intended to finance infrastructure investments – except that it will serve more as an instrument of Chinese rather than Western influence.</p>
<p>Thus far, the US has reacted by trying to marginalize the bank’s impact, urging other Western powers to follow its lead and steer clear. As we’ve seen in recent weeks, that strategy has failed miserably, with Australia, the United Kingdom, France, Germany and even Taiwan now <a href="http://www.theguardian.com/business/2015/mar/29/australia-confirms-it-will-join-chinas-asian-infrastructure-investment-bank">interested</a> in becoming founding members. Of the major powers, only Japan has continued to follow its ally’s lead. </p>
<p>This represents a serious setback for the White House’s ability to lead the international economic order on its own terms. While the narrative of the day is that of a <a href="http://www.vox.com/2015/4/1/8311921/asian-infrastructure-investment-bank">policy</a> <a href="http://www.washingtonpost.com/posteverything/wp/2015/03/27/anatomy-of-a-whole-of-government-foreign-policy-failure/">defeat</a> for the Obama administration, some larger points are worth noting. </p>
<h2>Manage multilateralism, don’t block it</h2>
<p>First, the very existence of the AIIB is a self-inflicted problem for the US. It could have been avoided had the US been willing to cede some power at the IMF and ADB. </p>
<p>Second, objections to European and other Western countries joining it are shortsighted because the best way to influence its actions is by being on the inside. </p>
<p>Finally, the AIIB is a good thing for both China and the US over the long term as it shows the rising power’s interest in taking on more global responsibilities – exactly what the White House has sought – so arguments against it are counterproductive.</p>
<h2>Hoisted on its own petard</h2>
<p>The AIIB is intended to solve a problem by providing money to support the <a href="http://www.asifma.org/uploadedFiles/Events/2014/Annual_Conference/Closed%20Door%20Regulator%20Meeting%201%20-%20Infrastructure%20Financing%20-%20Michael%20Cooper%20HSBC.pdf">trillions of dollars</a> of infrastructure investment that emerging markets will need in coming years. </p>
<p>With a veritable ocean of foreign exchange at its disposal, creating a regional development bank right now makes perfect sense for China. It is a vehicle for the Chinese government to help aid regional development as well as a signpost to demonstrate its international prestige. </p>
<p>But China would not have been so willing to create its own international bank had it felt appropriately valued in the ones that already exist. What is frequently omitted in the discussion of the AIIB is the extent to which this problem was created by dysfunction between Washington and Tokyo over reforming the Asian Development Bank, as well as within Washington around International Monetary Fund reform. </p>
<p>The Asian Development Bank has been dominated by the US and Japan since its creation in 1966. China is the largest economy in Asia, while only the <a href="http://www.adb.org/site/investors/credit-fundamentals/shareholders">third-largest</a> shareholder in the Asian Development Bank. As it has been custom that the president of the ADB is Japanese, Chinese attempts to gain influence within the bank commensurate with its economy’s size have been blocked. </p>
<p>Similarly, IMF reform was proposed in 2010 by the G20. <a href="https://www.imf.org/external/np/sec/pr/2011/pdfs/quota_tbl.pdf">Under the proposed reforms</a>, China’s voting power was to double, making it the third-largest shareholder at the IMF behind only the US and Japan. Brazil and India would both become top-ten “quota-holders” as well, displacing Saudi Arabia and the Netherlands. In this manner, global economic governance would be reinvigorated, as these emerging economies would receive a voice at the IMF equivalent to their influence. </p>
<p>Though IMF reform has been approved by more than 150 countries, including many that would lose influence under the proposals, the US Congress has refused to budge. </p>
<p>Despite <a href="http://www.reuters.com/article/2014/04/11/us-g20-economy-idUSBREA3A1FC20140411">warnings from the rest of the G20</a> underscoring the urgency of passing the reforms, Congress has sought to squeeze <a href="http://www.politico.com/story/2014/01/international-monetary-fund-internal-revenue-service-spending-bill-102347.html">compromises on the IRS and healthcare</a> from the White House in exchange for its support. </p>
<p>While the Obama Administration wants the reforms, it has refused to sacrifice its signature health care law or link it to other measures. So at this point, IMF reform simply won’t happen in the current Congress. Given China’s inability to produce reforms of the existing development banks that would address China’s concerns, its move to create its own development bank was its only way forward. </p>
<h2>US objections are shortsighted</h2>
<p>Washington has been on the wrong side of this issue by dismissing the AIIB rather than celebrating it. </p>
<p>For the past year, the White House has <a href="http://www.nytimes.com/2014/10/10/world/asia/chinas-plan-for-regional-development-bank-runs-into-us-opposition.html">raised concerns</a> about how the new bank would operate, suggesting that the AIIB would have insufficient safeguards. </p>
<p>The AIIB might undercut the World Bank and the Asian Development Bank, the argument goes, as countries might prefer the promise of cheap money from Beijing without the strings the other lenders attach. But questioning Chinese governance of the bank not only reminds our allies of our shortcomings in IMF reform, it also overlooks the surest route to reforming the AIIB. </p>
<p>Cooperation is always more difficult in large groups with divergent preferences than smaller ones. The growing list of AIIB members (including South Korea, Norway and Denmark) means that the Chinese will have to accommodate those countries concerned about safeguards. </p>
<p>Rather than push back on AIIB, the US should welcome the participation of many countries. It will fall to China to figure out how to reconcile this diverse membership. This will ensure that fighting climate change and improving environmental standards will not be sacrificed in favor of growth at any cost. </p>
<h2>Chinese engagement should be welcomed</h2>
<p>For years, Washington has sought to encourage China to be a “<a href="http://2001-2009.state.gov/s/d/former/zoellick/rem/53682.htm">responsible stakeholder</a>” in the global economy. The AIIB demonstrates that China seeks to embrace this challenge, and the fact that it is doing so <em>multilaterally</em> rather than <em>bilaterally</em> should not be overlooked. </p>
<p>The US has helped to support regional development banks in Africa and Europe, so a new one in Asia should not be the threat that it is made out to be. The need for infrastructure in emerging Asian economies is so acute that the two banks need not be in competition. </p>
<p>Embracing AIIB will help keep US-Chinese relations moving forward by moving beyond the sharp rhetoric of recent weeks. It will also give us a means to smooth over relations with European allies. More importantly, joining the AIIB gives the US a seat at the table, and a way to work with allies to moderate Chinese behavior. </p>
<p>What will make the difference in the long term in shaping US relationships with Asia is working with allies to address common challenges. Multilateral diplomacy is not just a means to an end, but an end in itself, and enmeshing China in a network of international organizations, regardless of who created them, provides the best route for deepening cooperation between the US and the People’s Republic of China.</p><img src="https://counter.theconversation.com/content/39406/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Martin Edwards has received funding from the National Science Foundation and Fulbright Foundations.</span></em></p><p class="fine-print"><em><span>Katayon Qahir does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The US has only itself to blame for the growing number of allies that have agreed to join China’s development bank despite American objections.Martin Edwards, Associate Professor of Diplomacy and International Relations, Seton Hall UniversityKatayon Qahir, Diplomacy graduate student , Seton Hall UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/334362014-11-10T10:32:45Z2014-11-10T10:32:45ZChina’s development bank plans test rising power’s strategic shift<p>In an influential speech in 2005, then-US deputy secretary of state Robert Zoellick called on China to become a “responsible stakeholder” in the international community. To optimists, China’s recent efforts in creating high-profile international development banks shows that it is gradually embracing that role. </p>
<p>China signed an agreement in July with the four other BRICS countries – Brazil, Russia, India and South Africa – to create the <a href="http://thediplomat.com/2014/07/the-brics-bank-and-chinas-economic-statecraft/">New Development Bank (NDB)</a> to provide loans and liquidity to member nations. Just three months later, Beijing pioneered the effort to create an Asian Infrastructure Investment Bank (AIIB) to finance development projects in the region. Twenty-one nations as diverse as Qatar, India, Singapore, Thailand and most recently Indonesia signed on as founding members. China plans to provide the majority of the capital required to finance the new bank’s operations, with the headquarters located in Beijing.</p>
<p>The US and its allies view the China-backed AIIB with deep suspicion. It is an <a href="http://www.nytimes.com/2014/10/10/world/asia/chinas-plan-for-regional-development-bank-runs-into-us-opposition.html?_r=0">open secret</a> that Washington has successfully pressured Australia and South Korea to refrain from joining the new development bank. What explains such hostility toward the Chinese effort to take a larger role in regional and global governance? </p>
<h2>The US$8 trillion gap</h2>
<p>After all, there will be an US$8 trillion infrastructure investment gap in Asia and the Pacific in the next 10 years, or <a href="http://www.pwc.com/sg/en/capital-projects-infrastructure/assets/cpi-develop-infrastructure-in-ap-201405.pdf">US$800 billion each year</a>. The Asian Development Bank (ADB), the leading such lender in the region, only grants US$13 billion of new loans each year. The AIIB has the potential to help address this huge investment gap. Officially, skeptics of the AIIB focus on the issue of governance (that is, a concern that AIIB loans will not be tied to improvements in labor and environmental standards) when asked to explain their reservations toward the new mega-bank. </p>
<p>This is not the only reason, however. To understand why the creation of the new China-backed international mega-bank is so disconcerting to many, we need to examine the four international political consequences associated with the creation of the AIIB.</p>
<h2>China’s economic statecraft</h2>
<p>First, the AIIB can strengthen Beijing’s economic influence in Asia, which can then be leveraged to affect the foreign policies of nations in the region. Beijing has a long history of relying on its economic clout to further its international political objectives. In 2012, then-Chinese President Hu Jintao visited Cambodia’s Prime Minister Hun Sen and <a href="http://online.wsj%20.com/news/articles/SB10001424052702303919504577524133983292716">signed a series</a> of bilateral trade and aid agreements right before the ASEAN summit that year. During the summit, the ASEAN nations failed to issue a common communique – which is unprecedented – due to Cambodia’s unwillingness to include any statement that might embarrass China. The list goes on. </p>
<p>That same year, China <a href="http://www.asiasentinel.com/society/the-china-philippine-banana-war/">restricted banana imports</a> from the Philippines in response to the two nations’ naval stand-off over the Scarborough Shoals. In 2011, China stopped shipments of <a href="http://www.nytimes.com/2010/09/24/business/global/24rare.html">rare earth metals</a> to Japan in response to its dispute over the Diaoyu/Senkaku Islands. It’s possible that Beijing would leverage its influence in the AIIB to entice developing member nations to support its foreign policy agenda.</p>
<p>Second, creating the AIIB undermines Japanese and American influence in Asia. Recent studies <a href="http://www.sciencedirect.com/science/article/pii/S0304387808000187">by Dreher et. al (2009)</a> and <a href="http://journals.cambridge.org/repo_A88W1kVC">Lim and Vreeland (2013)</a> suggest that the US and Japan use their influence in the World Bank and ADB to reward their political allies in the region. By setting up the AIIB, Beijing provides an alternative source of loans for developing nations in Asia, thereby reducing the US’s and Japan’s abilities to leverage IMF and ADB loans to entice nations to support their own foreign policy initiatives. Unsurprisingly, Japan was not even invited to sign the memorandum of understanding for the AIIB.</p>
<p>Third, the creation of the AIIB places pressure on the Western powers and Japan to revamp the governance structures of the IMF, the World Bank and the ADB. Despite China’s growing economic clout, it is accorded little influence in these cornerstone international and regional financial institutions. China’s <a href="http://www.imf.org/external/np/sec/memdir/members.aspx">share of the vote</a> in the IMF, for instance, is only one fourth of the US’s. Beijing’s backing of the AIIB sends a strong signal to the Western powers and Japan that China has outside options if existing multilateral arrangements do not evolve to reflect China’s rising economic and political influence.</p>
<p>Lastly, the creation of the AIIB provides an opportunity for Beijing to assess which nations in the region can be co-opted or pressured into supporting its foreign policy agenda (at least on the surface). A nation’s refusal to participate in the AIIB sends a strong signal to the Chinese leadership that: (1) it is a staunch US ally that requires more carrots and sticks to make it susceptible to Chinese influence; (2) it has doubts about China’s growing influence in the region. Of course, subscribing to the AIIB does not mean that a nation is an ally of China (for example, the Philippines and Vietnam), but it does signify at least superficial acceptance of Chinese leadership in Asia.</p>
<h2>From biding time to great power diplomacy</h2>
<p>Will Asia benefit from the creation of the AIIB? Most commentators have focused on explicating how AIIB loans – which are expected to be provided with little or no conditions attached – may initiate a race to the bottom among international financial institutions with regards to loan-making. This, however, is unlikely to happen given the huge infrastructure investment gap in Asia. Developing nations in the region need loans more than the international financial institutions need business. The creation of the AIIB does, however, signal an important shift in Chinese grand strategy that may create a more conflict-ridden Asia in the coming years.</p>
<p>Just ten years ago, it would be impossible to imagine that Beijing would take the lead in creating high-profile international institutions like the NDB and the AIIB. Under the slogan “conceal one’s strengths and bide one’s time” (<em>taoguang yanghui</em>), which succinctly summarizes Chinese grand strategy since Deng Xiaoping, Chinese diplomacy has been reactive and passive. This is no longer the case. The buzz word in the Chinese foreign policy circle these days is <a href="http://csis.org/files/publication/140603_Johnson_DecodingChinasEmerging_WEB.pdf">“great power diplomacy”</a> (<em>daguo waijiao</em>), a term that highlights China’s growing confidence as the pre-eminent great power, second only to the US. The creation of the AIIB should be understood in the context of a paradigm shift in Chinese grand strategy.</p><img src="https://counter.theconversation.com/content/33436/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Daniel Yew Mao LIM currently works in the Data Science Group at the Infocomm Development Authority of Singapore. All views expressed are his own and do not represent the views of the Government of Singapore.</span></em></p><p class="fine-print"><em><span>George Yin receives funding from the Tobin Project as a National Security Fellow. All views expressed are his own.</span></em></p>In an influential speech in 2005, then-US deputy secretary of state Robert Zoellick called on China to become a “responsible stakeholder” in the international community. To optimists, China’s recent efforts…Daniel Yew Mao Lim, PhD in Government, Harvard UniversityGeorge Yin, Harvard UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/338302014-11-09T19:30:25Z2014-11-09T19:30:25ZAbbott’s awkward APEC moment over Asian infrastructure bank<figure><img src="https://images.theconversation.com/files/63918/original/hx5qzt96-1415323810.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Tony Abbott is meeting Chinese President Xi Jinping in Beijing this week</span> <span class="attribution"><span class="source">Lukas Coch/AAP</span></span></figcaption></figure><p>Forget shirt-fronting Russian President Vladimir Putin. Prime Minister Tony Abbott’s most challenging task this week will be breaking an uncomfortable silence with Chinese President Xi Jinping. And he will have to do it twice: first at the APEC meeting in Beijing and again at the G20 in Brisbane. </p>
<p>After vigorous lobbying by the United States and Japan, Australia’s involvement in the China-led Asia Infrastructure Investment Bank (AIIB) was scuttled by the National Security Committee of federal cabinet on <a href="http://www.theaustralian.com.au/national-affairs/foreign-affairs/strategy-fears-sank-china-deal/story-fn59nm2j-1227107789280">strategic grounds</a>.</p>
<p>This does clarify the matter because trying to make sense of rejecting the proposal on the basis of economic reasoning is nigh on impossible. In 2011 the Asian Development Bank (ADB) estimated Asia required US$750 billion each year through to 2020 to finance infrastructure needs. In 2012 the amount the ADB lent for infrastructure was just <a href="http://www.treasury.gov.au/PublicationsAndMedia/Publications/2014/Economic-Roundup-Issue-1/Economic-Roundup-Issue-1/On-a-highway-to-help">US$7.5 billion</a>. It is no surprise that among the government ministers it was Treasurer Joe Hockey and Trade Minister Andrew Robb who were keen on Australia joining the AIIB. </p>
<p>The decision to rebuff China’s invitation is awkward to say the least. Australia made reducing barriers to infrastructure investment a focal point of the G20 agenda. There is also the small matter of the <a href="http://www.afr.com/rw/2009-2014/AFR/2012/04/10/Photos/35495470-82b6-11e1-882e-4b6185e4a6fc_China%20Infrastructure%20MOU%20final%20text%204%20April.pdf">memorandum of understanding</a> the Australian and Chinese governments signed in 2012 on enhancing cooperation in infrastructure construction. </p>
<p>What then is the strategic test the AIIB failed? </p>
<h2>The reasoning behind Australia’s refusal to join the AIIB</h2>
<p>The reason Abbott has repeated is the AIIB is a <a href="http://www.afr.com/p/special_reports/opportunityasia/australia_offered_top_role_in_china_o7ATw7ydjWD132gTYGSW3H">unilateral institution</a> dominated by just one country. This means its lending decisions might be used by China to peddle its own interests. What we want to join is an AIIB committed to being a multilateral institution along the lines of the ADB or the World Bank. </p>
<p>The AIIB is indeed dominated by China. The 21 founding member countries agree the basic parameter determining the capital structure of the new bank will be relative GDP. Taken at face value, this would give <a href="http://data.worldbank.org/indicator/NY.GDP.MKTP.CD">China</a> a 67.1% shareholding, with the next in line being India at 13.3%. </p>
<p>Of course the complaint the AIIB is a unilateral institution relies on painfully circular logic. If the US, Japan, Korea and Australia refuse to join, then any hopes of the AIIB becoming a multilateral institution are neutered. If these four countries were on board, China’s share would immediately fall to 24.5%. </p>
<p>For its part, China not only invited Australia to participate but also offered the country a senior role in its running. Chinese Finance Minister Lou Jiwei has made it clear he expects China’s shareholding <a href="http://usa.chinadaily.com.cn/business/2014-10/24/content_18799068.htm">will be diluted</a> as other countries come on board.</p>
<p>It is also not hard to guess how China would take to being told that the World Bank and ADB are models of multilateralism. In 2010, after years of trying, the World Bank agreed to <a href="http://blogs.worldbank.org/voices/world-bank-gets-capital-increase-and-reforms-voting-power">raise China’s voting share</a> from 2.8% to 4.2%. This still left it trailing Japan on 6.8% and the US on 15.8%. Yet China’s GDP is already double that of Japan and its population is more than ten times larger. </p>
<h2>Why Abbott’s arguments fall short</h2>
<p>The argument that we should stay away from the AIIB because China may use it to advance its own nefarious purposes falls short on several counts. </p>
<p>China is already more than capable of pushing its own interests through existing institutions such as the China Development Bank. The idea it would sponsor a new institution and then invite countries such as Australia to become partners in crime fails any test of common sense. </p>
<p>Then there is the point made by the former Australian ambassador to China, <a href="http://www.afr.com/p/futureforums/asian_infrastructure_there_snub_VSC8h5e0vChwG33t6lUE4J">Geoff Raby</a>. That is, if transparency in lending decisions is a genuine concern, the most effective way of dealing with it is from the inside. Clearly this was the view taken by Singapore, a country that routinely ranks higher than Australia on international surveys of transparency and governance. </p>
<p>AIIB members all have very different broader strategic interests. Vietnam and the Philippines are engaged in heated territorial disputes with China in the South China Sea. Yet this did not stop them uniting for the common goal of improving regional infrastructure. </p>
<p>The only strategic end being served by not joining the AIIB is that Australia is supporting the US and Japan in their attempt to preserve the status quo in the Asia-Pacific. The problem is the status quo ended in 1979 when China began its reintegration into the global economy.</p><img src="https://counter.theconversation.com/content/33830/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>James Laurenceson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Forget shirt-fronting Russian President Vladimir Putin. Prime Minister Tony Abbott’s most challenging task this week will be breaking an uncomfortable silence with Chinese President Xi Jinping. And he…James Laurenceson, Deputy Director and Professor, Australia-China Relations Institute (ACRI), University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/63962012-05-11T04:48:40Z2012-05-11T04:48:40ZBeyond aid numbers: accountability for human rights abuses<figure><img src="https://images.theconversation.com/files/9970/original/h45vktnw-1335417624.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The rehabilitation of Cambodia's railways has involved the forced relocation of many families that live along the railway line</span> <span class="attribution"><span class="source">Neil Rickards</span></span></figcaption></figure><p>In the lead-up to the federal government’s decision to delay the promised increase in the aid budget, a <a href="http://www.care.org.au/Page.aspx?pid=268">CARE Australia survey</a> found strong public support for Australia’s international aid program.</p>
<p>From the popular <a href="https://twitter.com/#!/search/%23dontcutaid">#dontcutaid</a> Twitter hashtag, to the <a href="http://www.acfid.asn.au/media-room/press-releases/prominent-australians-call-on-pm-to-keep-aid-promise">letter to the Prime Minister</a> from over 100 prominent Australians including Geoffrey Rush, the debate over the delay has focused on the important issue of the quantity of aid spending. </p>
<p>But beyond the headline numbers, the sometimes <a href="http://aidwatch.org.au/publications/publication-in-defence-of-melanesian-customary-land">damaging</a> and <a href="http://www.aidwatch.org.au/news/media-release-no-strings-to-independent-pacific-trade-advice-australian-ngos">self-interested</a> reality of Australia’s aid program looks set to continue in this year’s aid budget. </p>
<p>For example, AusAID will spend $127 million over the next four years on the <a href="http://www.ausaid.gov.au/aidissues/mining/Pages/home.aspx">‘Mining for Development Initiative’</a>, which is more likely to benefit Australian mining companies than reduce poverty. </p>
<p>Amid talk of “broken promises”, demands for government accountability need to be extended to the quality of Australian aid for those people the public want to help – the global poor. </p>
<h2>The Cambodian railways project</h2>
<p>One troubled program allocated money in the 2012/13 aid budget is the <a href="http://www2.adb.org/Projects/project.asp?id=37269">Cambodia Railway Rehabilitation Project</a>. </p>
<p>It is funded by the Australian government through AusAID, co-funded and managed by the Asian Development Bank, and linked to a public-private partnership between the Cambodian government and a consortium led by Australian-owned Toll Holdings.</p>
<p>The project will see the rehabilitation of 650 kilometres of dilapidated railway lines, which run from the northern town of Poipet on the Thai-Cambodian border, through Phnom Penh, to the southern port town of Sihanoukville. AusAID justifies their $26 million involvement on the basis that it will promote economic growth and reduce poverty by decreasing transport costs and creating jobs. </p>
<p>However, the project has been heavily criticised in reports by local NGO <a href="http://teangtnaut.org/PDF/Rehabilitation%20of%20Cambodias%20Railways_STT%20July%202011.pdf">Sahmakum Teang Tnaut</a>, <a href="http://www.babcambodia.org/railways/">Bridges across Borders Cambodia</a> and <a href="http://www.aidwatch.org.au/news/aidwatch-new-report-off-the-rails-ausaid-and-the-troubled-cambodian-railways-project-0">AID/WATCH</a> for its de facto privatisation of public infrastructure and its negative impact on the 4,000 households that lie on the path of the tracks.</p>
<p>Many people displaced by the project have been relocated to inappropriate sites large distances away from their jobs. They have also been forced into debt by inadequate compensation payments. Some relocation sites lack basic amenities like running water and electricity. <a href="http://www.smh.com.au/world/gone-for-good-to-fetch-a-pail-of-water-20101031-178zr.html">Two children died</a> in 2010 while searching for water near the resettlement site.</p>
<p>The human impact of the forced resettlement is revealed in a <a href="http://teangtnaut.org/wp-content/uploads/2012/04/FF20_Railways-Relocation-in-PP_FINAL1.pdf">collection of testimonials</a> from six widows released by Sahmakum Teang Tnaut. When the organisation publicly complained about the railway project, the Cambodian government <a href="http://cambodiatrainspotter.wordpress.com/2011/09/19/cambodian-ngos-under-the-gun/">responded</a> by suspending it for having “incited people to oppose national development”.</p>
<h2>Donor responsibilities and accountability mechanisms</h2>
<p>When aid permits human rights abuses, what are the responsibilities - legal or otherwise - of donors? What accountability mechanisms are in place?</p>
<p>Toll Holdings <a href="http://www.smh.com.au/world/gone-for-good-to-fetch-a-pail-of-water-20101031-178zr.html">insists</a> that resettlement isn’t part of their commercial agreement with the Cambodian government, but suspended their own involvement in the project for one year in April 2012. </p>
<p>AusAID <a href="http://parlinfo.aph.gov.au/parlInfo/download/committees/estimate/7afd22ed-c48e-4bfa-afdd-f0c6c22a0235/toc_pdf/Foreign%20Affairs,%20Defence%20and%20Trade%20Legislation%20Committee_2012_02_16_800.pdf;fileType=application%2Fpdf#search=%22committees/estimate/7">told</a> the Senate that resettlement wasn’t their responsibility, though it has commenced an income restoration program. AusAID argues that the railways project is covered by the Asian Development Bank’s resettlement policy. However, the processes that have been followed in Cambodia breach the policies of both organisations. </p>
<p>Last year, the Asian Development Bank <a href="http://www.abc.net.au/lateline/content/2011/s3216781.htm">denied allegations</a> of threats and intimidation, and they are still investigating the botched resettlement process. Affected communities have <a href="http://www.phnompenhpost.com/index.php/2012040955504/National-news/railway-evictees-step-up-fight.html">lodged formal complaints</a> over the violence and decrease in living standards that they have suffered. </p>
<p>The bank, which <a href="http://www.adb.org/documents/agreement-establishing-asian-development-bank-adb-charter">operates with immunity</a> from local legal systems, has an “Accountability Mechanism” to deal with such complaints. But it was described in its own independent review as <a href="http://www2.adb.org/Documents/Policies/Accountability-Mechanism-Review/Independent-Review-Accountability-Mechanism.pdf">“less than optimal”</a>, due to problems of accessibility, lack of knowledge of its existence and time-consuming procedures. </p>
<p>Internationally, accountability has been a key part of the elite “aid effectiveness” agenda. “Mutual accountability” is one of the five principles of the 2005 <a href="http://www.oecd.org/document/18/0,3746,en_2649_3236398_35401554_1_1_1_1,00.html">Paris Declaration on Aid Effectiveness</a>, which the Australian government has signed on to.</p>
<p>But the principle restricts accountability relationships to those between donor and recipient governments. </p>
<p>Accordingly, AusAID will fund a number of <a href="http://www.budget.gov.au/2012-13/content/ministerial_statements/ausaid/html/ausaid-08.htm">internal accountability mechanisms</a> in the budget, none of which enable immediate and direct access for people that are negatively impacted by aid. </p>
<h2>More aid, less accountability?</h2>
<p>The 2011 <a href="http://www.aidreview.gov.au/report/index.html">Independent Review of Aid Effectiveness</a> recommended a greater proportion of Australian aid money be channelled through multilateral organisations like the Asian Development Bank. </p>
<p>With Australia’s aid program set to rise to 0.5% of gross national income by 2016-17, and AusAID’s commitment to using aid as a <a href="https://theconversation.com/the-politics-behind-the-cuts-to-foreign-aid-6924">“key tool of foreign policy”</a>, we can expect more privately operated large infrastructure projects like the Cambodian railways project that have little to do with poverty. </p>
<p>Despite deferring the promised aid increase, the budget <a href="http://www.budget.gov.au/2012-13/content/bp2/html/bp2_expense-11.htm">allocated</a> an additional $46.9 million to the Asian Development Bank. </p>
<p>AusAID speaks the <a href="http://www.ausaid.gov.au/keyaid/humanrights.cfm">language of human rights</a>, but has not been serious about its responsibilities when those rights are abused. </p>
<p>AusAID should suspend its involvement with the Cambodian railway project and fully respond to the demands of the affected communities and workers. </p>
<p>To avoid similar incidents in the future, AusAID should abandon the <a href="http://www.ausaid.gov.au/about/pages/our-mission-our-values.aspx">“national interest”</a> paradigm by moving away from economic growth-oriented projects with “<a href="http://www.forum-adb.org/">trusted partners</a>” and instead support strong public and civil society institutions.</p>
<p>This change extends to AusAID itself, which must develop its own institutions for meaningful accountability to the global poor, and to the Australian people, who want an increased aid budget to help - not harm.</p><img src="https://counter.theconversation.com/content/6396/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gareth Bryant is a member of the AID/WATCH Committee of Management.</span></em></p>In the lead-up to the federal government’s decision to delay the promised increase in the aid budget, a CARE Australia survey found strong public support for Australia’s international aid program. From…Gareth Bryant, Ph.D Candidate , University of SydneyLicensed as Creative Commons – attribution, no derivatives.