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ADB in Bangladesh: More Than Four Decades of Pillage & Devastation
by Hasan Mehdi
8 May 2017

The ADB was established in 1966 at the initiative of UN’s Economic and Social Commission for Asia and Pacific (ESCAP). Two years after the great liberation war of 1971, it started working in Bangladesh.

Since then (till 2016) Asian Development Bank (ADB) has contracted 259 loans, 411 technical assistance programmes and 45 grant based projects. It has invested around 1459 billion takas (BDT) equivalent to 18.230 billion US$. 94% of the investments are loans. ADB has 67 member countries including Bangladesh of which 19 are from outside the Asia-Pacific region. With 1.12% of vote share Bangladesh stands at the 20th position in ADB’s power hierarchy. On the other hand, the EU has a vote share of 15.72%, Japan 12.84%, US 12.75%, China 5.48 % & India 5.39%. The top five nations, according to vote share control 52.18% of ADB’s shares. Which implies that the other 62 countries, even unitedly, have no capacity to impact on the ADB’s decisions.

International Financial Organisations Order, 1972 of Bangladesh stipulates that the Government of Bangladesh or any other contracting agency would not be able to sue the International Financial Institutions viz. World Bank, IMF, etc. However, a special privilege was granted to the ADB. The Asian Development Bank Order, 1973 (President’s Order No. 3 of 1973), as granted blanket immunity to this institution. Under this act, no citizen can file a case against the devastating projects, initiatives, programme or activities of the ADB or any of its employees or the management. Whereas the other International Financial Institutions operating in Bangladesh viz. the World Bank and its affiliates, IMF, Islamic Development Bank (IDB), International Fund for Agricultural Development (IFAD), AIIB or any other IFIs do not enjoy this special immunity. The ADB is specially privileged compared to the other IFIs.

The ADB has always promoted polluting, devastating and privatisation projects in Bangladesh. This is clear from its investment trends. Till date it has mostly invested in two sectors - energy and power (BDT 333.6 billion US$ 4.09 billion, 22.9%). The other priority sectors are: transport (BDT 324.8 billion US$ 3.98 billion, 22.3%), agriculture, natural resources and community development (BDT 185.6 billion US$ 2.28 billion, 12.8%) and education (BDT 182.4 billion US$ 2.24 billion, 12.5%). On the other hand it has scantly invested in: industrialisation (BDT 41.28 billion US$ 510 million, 2.8%) and health (BDT 22.48 billion US$ 280 million, 1.5%).

The ADB policies have weakened the public sector, promoted liberal markets & the private sector and created markets for the investing countries. The ADB and other IFIs since 1980s have advocated the retrenchment of public sector workers and the reduction of public services under the guise of Structural Adjustment Programmes (SAP). As a result, a large number of public sector industries closed down and essential services by the state was withdrawn. With the Bangladesh Agricultural Development Corporation (BADC) being defunct, small and marginal farmers are forced to totally depend on the MNCs and their local agents for seeds. The use of high-yielding and sterile seeds were introduced and expanded which resulted in farmer’s loss of ownership over seeds. In order to ensure the supply of essential commodities and to keep the market under control the Bangladesh government had earlier implemented the rationing system and established the Trading Corporation of Bangladesh (TCB). While these were made redundant, private enterprises started playing a major role resulting in sudden price rise of essential commodities. It heavily impacted the lower middle class and the poorer sections of the society. While the poor lost everything, the rich continued to be richer earning unregulated profits.

The 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. For example, the ADB funded Asia Energy Corporation a subsidiary of GCM Resources Plc. to implement the Phoolbari coal mining project. This endangered the environment and the lives & livelihood of the local population. A massive struggle emerged against the project resulting in police atrocities forcing the company to beat a retreat. However, the company has not given up its plans for open cast mining projects.

Under the pretext of lending assistances to ensure a healthy balance of trade, the ADB and the World Bank started lending for prawn cultivation in the brackish waters. As this was heavily subsidised, huge agricultural areas of the coastal areas were forcibly converted for prawn cultivation. Small & marginal farmers and fisher-folks were forcefully evicted from their traditional land using strong-arm tactics, violence and even murders and rapes. The prawn cultivation destroyed the local environment and the social structure fell apart with the disappearance of local agriculture, livestocks and other local production. The ingress of saline water weakened the infrastructure for fighting natural calamities and the lives of the coastal population was highly imperilled.

Since the 2000s ADB like the other IFIs started investing heavily towards the introduction and implementation of PRSP which was actually an extension of the SAP. Under PRSP once again essential public services like health, education, energy, etc. was privatised. Public expenditure was reduced and the markets liberalised. Under this head ADB extended loans to the government to shut down running public sector industries. Since 2009 the current government has scrapped PRSP and resorted to its own long-term development framework and reintroduced 5 year plans. However, the earlier loans and its interests weigh heavily on the government with the debt servicing around one-fifth of the annual state budget.

Since the 1960s the ADB along with USAID & the World Bank financed embankments in the coastal region which from 1980s is the main reason for water-logging and inundation in that area. Then in 1995-96, in order to solve the problems of water-logging, the ADB sanctioned loans to the Bangladesh government under the Khulna-Jessore Drainage Rehabilitation Project (KJDRP). However, the project was a failure due to lack of popular involvement, disregard for local environment and faulty planning. The water-logging has increased after the implementation of the project and since 2000 approximately 1 million people are displaced in the monsoons every year. As a result of this the government has to spend additional money from public coffers to mitigate the distress as well as service the earlier debt. The people in the affected areas are left to face a veritable hell.

Similarly, the Sundarban Bio-diversity Conservation Project (SBCP) project funded by the ADB 1998-99 was a failure and had to be cancelled due to popular protests. Several industries like Khulna Newsprint Mill, Khulna Hardboard Mill & Dada Match Factory were closed as per the recommendations of SBCP resulting in the loss of employment of several thousand workers. Additionally, traditional foraging communities were prohibited to enter the forest resulting in loss of livelihood for three hundred thousand minor forest produce collectors (Bawalis). The project did not yield any benefit to the local population as a major part of the fund was wasted however, the government is still repaying the debt.

In 2005-06, ADB undertook the Integrated Water Resources Planning and Management in the South-Western part of the country. Lack of popular engagement has also turned this project a failure. A lack of understanding and consideration of the water-flow in the rivers and canals of this part of the country has halted navigation in these water channels due to indiscriminate construction of culverts and sluice gates. The livelihood of marginal farmers and fisher-folk including women is under serious threat and the project areas of Narail and Magura are under constant water-logging.

In the meantime, ADB has undertaken a project to make water supplies profitable in the metropolitan cities of Dhaka, Chittagong & Khulna. This would infringe upon the Right to Water of citizens. Also, the lending under the Pilot Program for Climate Resilience (PPCR) project to help Bangladesh mitigate climate change related risks contradicts Bangladesh’s own strategy paper on climate change. Recently the various mechanisms promoted by the ADB like results-based financing (RBF), PPP, and commodification of nature (nature pricing) are not only opening huge spaces for private corporations to earn ruthless profits in important basic sectors like communications, education, railways & energy; it is also stripping people of their rights to natural resources.

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. ADB’s own ‘independent evaluation panel’ reports that 37% of the loans to Bangladesh have resulted in failed projects. On the other hand, the ADB claims a list of safeguards: environment protection, indigenous rights, women’s empowerment, forced displacement, accountability, right to information, etc. These safeguards speaks for adequate popular consultation and effective involvement before the project, during the project and for evaluation. However, these are mostly flouted or at best organised as hogwash.

In spite of assassinations, environmental damage and the destruction of lives and livelihoods the ADB continues to enjoy blanket immunity under the The Asian Development Bank Order, 1973. People do not have any recourse to law against the devastations caused by the ADB. We therefore demand:

  1. Cancel ‘indemnity/immunity’ of ADB through a reform of the law;
  2. ADB should be forced to compensate the affected local population;
  3. ADB’s decisions must be made on the basis of ‘one country-one vote’ principle;
  4. ADB projects must protect local agro-ecological environment, gender, and improvement of life and livelihoods of natural resource dependant people and smallholders;
  5. Loans of odious nature lent to military regimes must be repudiated;
  6. A citizens debt audit needs to commissioned for the ADB projects.
  7. All IFIs including the ADB must be brought under the country’s laws.

Translated from Bengali by Sushovan Dhar

Hasan Mehdi

Member of Bangladesh Working Group on External Debt (BWGED)