50 years of ADB : Debt, Destitution, Destruction, Disparity, & Displacement

30 May 2017 by Sushovan Dhar , Hasan Mehdi

The ADB President Takehiko Nakao (CC - Flickr - Takehiko Nakao)

The Manila based Asian Development Bank (ADB) celebrated its 50th year at Yokohama from May 3-7, 2017 with a great display of extravagance and grandeur. Japan’s Crown Prince, Naruhito while inaugurating the 50th annual meeting emphasised on ADB’s remarkable ‘achievements’ in the last half a century and credited it for lifting one of the poorest regions in the world (Asia-Pacific) towards “significant progress in economic development and poverty reduction.”

He remained hopeful that the Bank would play a further role in addressing “a range of challenges, such as developing infrastructure including power supply networks and transportation facilities, as well as addressing natural disasters and climate change.” His fellow Japanese, the ADB President Takehiko Nakao, was equally emphatic about the $ 270 billion loans and grants made by the Bank in the last 50 years. Nakao identified 5 future priorities of the Bank: supporting infrastructure development, social sectors like health and education, gender equality, more effective public-private partnerships (PPP), and continued reforms in the ADB. [1]

Riding on the infrastructure highway

It is not strange that the Bank’s road towards achieving the goal of “Building Together the Prosperity of Asia”, its poverty eradication programme, including meeting 17 sustainable development goals (SDGs), solely depends on financing infrastructure only with incremental private sector participation and PPPs. In its report entitled ‘Meeting Asia’s Infrastructure Needs’ the Bank has clearly stated “A growing proportion of ADB finance is now going to private sector infrastructure projects.” [2] This aggressive financing of the private sector and privatisation programmes – covertly or overtly – has not only attracted serious criticism, time and again, it has been amply demonstrated that large infrastructure projects have “benefited international financial institutions (IFIs), construction and power transnational corporations (TNCs), and even government bureaucrats.” [3]

In Bangladesh “ADB advised energy and power sector reforms since 1980s under the guise of ‘decentralisation’ paving way for the entry of private players in this sector - both in production & distribution - in the financial year 1997-98. The private sector is heavily subsidised by the government since their entry to this sector, while the prices of electricity have steadily increased. Slowly but steadily people’s expenditure on energy and electricity has increased and the private companies have increased their profits and have repatriated overseas a part of it. The ADB has financially assisted the foreign companies to enter into the Bangladesh energy sector and has weakened public policies of the country to facilitate the entry of these companies.” [4] In almost all the countries of the Asia-Pacific region the Bank’s policies have been consistently aimed at impairing the public sector, promoting liberal markets and the private sector and creating markets for the investing countries. There can be no doubt that the ADB’s priorities lie in promoting its investors using popular slogans like “poverty reduction” and “sustainable development”.

In another case of infrastructure development, the ADB-funded Tanahu Hydropower project, a storage type hydro-power project with a capacity of 140 MW on the Seti river in Nepal “will submerge land, community forest, communities, public structures and cremation sites etc. The dam will also regulate the river flow downstream.” [5] There are countless instances of devastation, destruction and destitution that the Bank has been promoting for the last 5 decades. The Marcopper Mining Project in Marinduque, Philippines took effect in 1969 but was later closed down due to a fracture in the drainage tunnel of a large pit containing leftover mine tailings that discharged toxic mine waste into the Makulapnit-Boac river system. The disaster also caused heavy floods to communities along its path, displacing over 400 families, and the evacuation of over 20 villages. [6] The Cambodian Railway Rehabilitation project (co-funded by OPEC OPEC
Organization of Petroleum-Exporting Countries
OPEP is a group of 11 DC which produce petroleum: Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, Venezuela. These 11 countries represent 41% of oil-production in the world and own more than 75% of known reserves. Founded in September 1960and based in Vienna (Austria), OPEC is in charge of co-ordinating and unifying the petroleum-related policies of its members, with the aim of guaranteeing them all stable revenues. To this end, production is organized on a quota system. Each country, represented by its Minister of Energy and Petroleum, takes a turn in running the organization. Since 1st July 2002, the Venezuelan Alvaro Silva-Calderon is the Secretary General of OPEC.

OPEC : http://www.opec.org/opec_web/en/
, Malaysian government & ADB) has left thousands dislocated while the trains equipped with air-conditioning, Wi-Fi and flat screen televisions serve tourists going to Sihanoukville, because of the beaches, tropical islands and the mangrove jungles of Ream National Park. The Gojra-Shorkot-Khanewal 240 kilometres highway project in Pakistan would displace 3,429 households due to the acquisition of 1,616.7 acres of land of which 86% is agricultural land. It would also require the felling of 91,661 trees.

This Bank and other IFIs have a sole intention – to promote an indiscriminate transfer of natural resources and public assets to private entities under the guise of “poverty reduction”. The mechanisms of Loans, Grants & Technical Assistance (TA) in the transportation, energy, urban development, agriculture, water and public finance sectors are all geared up towards this process.

PPP: public money into private pockets

For the last couple of decades, PPP is à la mode for our governments, leaders, policy-makers and others at the helm of affairs. The ADB, like other IFIS is no exception or rather, a protagonist of this cause. It has established “The Office of Public–Private Partnership (OPPP)” in September 2014 with the objective of “Expanding Private Sector Development”. The PPPs are initially projected to meet the investment shortfalls in large infrastructure projects like airports, railways, roads, power plants, etc. It is touted as a great innovation to tap private resources and fill the infrastructure gap that this region needs badly. However contentious it might be, according to the Bank, the public resources fall short by 60% to meet infrastructure needs. Therefore “the private sector to fill the remaining 60% of the gap, or 3% of GDP GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
, it would have to increase investments from about $63 billion today to as high as $250 billion a year over 2016–2020” [7] and to achieve that “Regulatory and institutional reforms are needed to make infrastructure more attractive to private investors and generate a pipeline of bankable projects for public-private partnerships (PPPs). Countries should implement PPP-related reforms such as enacting PPP laws, streamlining PPP procurement and bidding processes, introducing dispute resolution mechanisms, and establishing independent PPP government units. Deepening of capital markets is also needed to help channel the region’s substantial savings into productive infrastructure investment.” [8]

What was initially touted as a solution to bridge investment gaps is slowly extended to all sectors including education and health. Earlier health activists from the Indian state of Maharashtra protested against the privatisation of the healthcare system in the State. According to Dr. Abhay Shukla, coordinator - Support for Advocacy and Training to Health Initiatives (SATHI) “Maharashtra State Government is planning to hand over huge sums of public money to insurance companies and large private hospitals through a flawed Private-Public Partnership (PPP). This involves large scale public finances being given to corporate hospitals without any standardisation or regulation of the services, and no protection of patients’ rights. At the same time, government is planning to privatise its most revenue generating units in public hospitals like radiology services and laboratory services”. [9] Stories are abound about such covert privatisation measures across the world. In Philippines it is observed that “the ambitious plan may not usher in a golden age of infrastructure but instead a golden age of oligarchic and foreign interests in infrastructure while the public bears more onerous financial burden arising from greater debts and taxes.” [10] And in Uganda, “Since PPPs were introduced nearly $1 billion in subsidies and compensation for ‘losses’ has been paid out to the private electricity companies and Ugandan consumers have been forced to pay some of the highest charges in Africa.” [11] It is undeniable that PPP has emerged as one of the poster-boys of neo-liberal reforms but it has nothing to do with poverty reduction. While poverty eradication is an incompatible and inconsistent dream within the neoliberal regime, PPPs in fact contribute to increasing poverty, inequalities and deprivation through increased private accumulation of wealth and resources. Neo-liberalism is predicated upon an accumulation process producing extreme inequalities of income where PPPs serve as potent vehicles to sustain this accumulation process.

Immunity sans precedence

The impact of ADB’s activities has only increased - and would continue in the future - debt, destitution, destruction, disparity, deprivation & displacement. The division of labour among the Bank and peoples of Asia-Pacific region is that the former specialise in winning and the latter in losing. As Peoples Front against IFIs, an umbrella organisation of peoples’ movements, mass organisations, struggle groups, trade unions, community organisations and others from India noted “ADB supported infrastructure projects, Special Economic Zones (SEZs), urban expansion, industrial zones, information technology parks and industrial agriculture are resulting in widespread dispossession of urban poor, farming, pastoral, indigenous and forest communities, and in the capture of farmlands, forests, water and minerals by private corporations.” [12]

In spite of such daylight robbery the ADB walks scot-free primarily due to the immunity it enjoys from countries. This is provided by law in all the countries wherever ADB operates. The Bank has been, since its inception, peddling false solutions for half a century and yet remains accountable since it has been able to deviously hide behind the immunity clause. “Sticking strictly to the nature of IFIs, the Charter of ADB has been prepared and accepted in such a manner that its financial terms and conditions, modalities, and its projects - no matter if it’s a success or a failure - its property and its staffs (2,900 employees from 59 countries working in the Headquarters at Manila, with 27 resident missions and 3 representative offices in Tokyo, Frankfurt, and Washington, DC) can’t be questioned in any national or international jurisdiction. The impunity provided to this Institution and its derivatives Derivatives A family of financial products that includes mainly options, futures, swaps and their combinations, all related to other assets (shares, bonds, raw materials and commodities, interest rates, indices, etc.) from which they are by nature inseparable—options on shares, futures contracts on an index, etc. Their value depends on and is derived from (thus the name) that of these other assets. There are derivatives involving a firm commitment (currency futures, interest-rate or exchange swaps) and derivatives involving a conditional commitment (options, warrants, etc.). is more than that accorded to diplomats and their missions.” [13]

The ADB, like the World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

and other IFIs, operates like a new form of monarchy. They are above all laws – both national and international. Its unholy alliance with the governments and corporate powers creates the most powerful aristocracy of our day. One with an overwhelming control of finance and peoples’ lives, with scant regard for democratic values or republican systems. The heads of the states can be questioned in the respective parliaments but none of the ADB bosses. They are above constitutions or national or even, international laws. Its Accountability Mechanisms are more than a mere hogwash since it is not an independent body but, “controlled by the ADB President and the Board of Directors who are appointed by the largest shareholders.” [14] It is a norm above the law, an establishment above the states and a suzerain above any democratic structure. The “legal privilege of IMMUNITY has allowed the ADB, to act with impunity against the environment, human rights and self-determined development. The rule of law must also apply to a multilateral development bank if we are to fulfil the demands of human rights and sustainable development. The Forum’s long years of experience in engaging the ADB show various wins in policy language but had little influence in ADB’s operations on the ground.” [15]

It is high time that this immunity is ended. It is true for the ADB and for all IFIs including the World Bank. “These immunities are at the roots of the Bank’s belligerent attitude towards anything that acts as an infringement on its profits. It is nowhere accountable, liable and chargeable for the terrible consequences that its projects, policies and actions inflict on human lives or the environment. It is also not interested in scrutinizing its policies against the international legal covenants, many of which are a result of immense socio-political struggles worldwide. It is only accountable to its shareholders.” [16] No civilised society can tolerate such a supra-sovereign body which uses its privileges and immunities to act with impunity against citizens’ right to seek protection under law and the right to justice. It contradicts various international conventions including The Universal Declaration of Human Rights (UDHR). It contravenes the legal framework and justice systems of various countries. It sets up a dictatorship against popular will and no wonder that unelected governments or dictatorships have been the biggest beneficiaries of ADB as this data from Bangladesh amply demonstrates “Between 1973-2016, 40% of the ADB loans were contracted during the military regime. According to international laws all these loans granted to unelected governments are odious. The ADB has also co-operated and legitimised military governments.” [17]

It is high time that we demand an end to immunity to all IFIS including the ADB, World Bank & the IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

. As the American science fiction writer and editor, John W Campbell puts it “Immunity corrupts; absolute immunity corrupts absolutely”.

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Hasan Mehdi

Member of Bangladesh Working Group on External Debt (BWGED)




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