Focus on Trade #63
Number 63, May 2001Will the ADB pass the Reality Test?
by Joy Chavez * (with information from the Bank Information Centre and the International River's Network)
The few ADB Executive Directors who responded to the invitation of the People's Forum in Chiang Mai last year issued a challenge to NGOs and peoples affected by ADB projects: there are existing ADB processes of accountability, use them. Not known to shun confrontation, NGOs and affected communities have taken the ADB up on that challenge. Unfortunately, the experience of civil society engaging with the ADB leaves so much to be desired. The ADB has been less than forthcoming and less than prepared for the offensive.
In Honolulu, some of the same EDs again met with the NGOs on basically the same issues raised last year, and more. Some key ADB staff also faced NGO critics in panel debates on ADB policies and projects. For NGOs all this was part of engagement. But the ADB should do more to erase a bad image of being patronizing, and give more substantial indications that it is taking its own challenge seriously.
On April 5 this year, the ADB received its first-ever formal Inspection Request. The request came from the affected communities of Khlongdan subdistrict in Metropolitan Bangkok, Thailand. While the ADB's exposure in the Samut Prakarn Wastewater Treatment Project stands at only 34% (US$240 million) of the total cost, the project has become its biggest (PR and otherwise) headache since last year.
Originally intended as two mid-sized wastewater plants in the Bangpu and Bangplakod subdistricts, the project was eventually moved 20 kilometers from the original site to Khlongdan. This resulted in the new design of a single and much bigger plant double the original cost, but without a new EIA. Apart from the lack of transparency and consultation of the whole process, the project also threatens the surrounding environment and the livelihoods of nearby villages. The relocation of the project alone violated more than a dozen ADB policies. Still, villagers even allege that the project was also mired in corruption.
For three years, affected communities struggled to air their concerns and receive just response. It was only in Chiang Mai in May 2000 where they displayed an impressive show of protest that the Khlongdan people finally got the attention they deserved, both nationally and internationally.
Since then they have patiently followed ADB accountability procedures to the letter. They sent complaint letters, forwarded allegation complaints, received investigation teams, etc. But pro forma responses from the Bank did little to assuage the villagers' greatest fear: the project still continued. When the Khlongdan people brought the Samut Prakarn case to international attention last year the project was 30% complete. Now it is 65%!
The villagers of Khlongdan sent Darwan Chatarahassadee to be their voice in Honolulu. Darwan laid out three very basic, very clear demands to the ADB: (1) freeze the project - stop further loan disbursements until the Inspection issue is resolved; (2) affected villagers should have full involvement in the Inspection process; and (3) make the decision now - the Board should recommend that the Inspection process start soon.
Again Darwan patiently received explanations from Bank staff and EDs. They cannot freeze a project unilaterally, it has to be the client Government's decision. Knowing full well how very subtle the ADB can be when it comes to unilateral freezing of projects (she after all heard the case of the Philippine power sector loan) if it chooses to be so, Darwan stayed polite and offered to work on the Thai Government on the matter. She did ask however if the ADB would waive or at least momentarily suspend the mandatory commitment fees that the Thai Government will have to pay, just in case they agree on a temporary suspension - an idea that nearly choked the EDs.
The Khlongdan people and other Thai advocates were not being unreasonable. They were quick to stress that they appreciate the need for wastewater treatment, but that smaller decentralized systems should work better and imply less negative environmental impact.
The concept of the ADB Board having no power to do anything on a project, in this case a project where it has committed one-third of total financing cost, simply confused Darwan, and indeed most of the other NGO representatives present during the meetings. The confusion turned into frustration when the EDs present could not even guarantee that the Samut Prakarn case would be discussed on the Board during the 34th AGM.
If anything, the Samut Prakarn case demonstrates that it is not just the ADB who is capable of issuing a challenge. On behalf of the affected villagers Darwan might have vowed to carry the fight against the project "till the end". But the promise did not end there. Upon sensing the apparent doubt on the part of the ADB, Darwan stressed, "if you don't believe us, we'll see".
The issue of accountability begs a myriad of questions. When does accountability start? When does it end? For the ADB, the issue of whether accountability ends with the closure of the final formal transaction will hound it for as long as it gives loans to problematic projects.
For over three years the Theun-Hinboun Hydropower Project in the Lao PDR, a project brokered and supported by the ADB, has been causing harm to the livelihoods of over 3000 households living in 55 villages. This is the same project that, when it opened in April 1998, the ADB hailed as a "model project" with "little for the environmental lobby to criticize." The Theun-Hinboun Hydro is a build-own-operate-transfer project owned by the Theun-Hinboun Power Company (THPC) in which the Lao Government has 60% equity.
The 1998 International Rivers Network report, Trouble on the Theun-Hinboun, outlined the adverse impacts (including loss of fisheries and drinking water supply especially in downstream communities, impaired boat and pedestrian access to surrounding areas, inundation of agricultural lands, bank erosion, etc.) suffered by communities around the Theun-Hinboun project. Both the THPC and the ADB initially refused to acknowledge these impacts and tried to discredit the report. When the THPC finally hired an independent fisheries expert (Terry Warren), it was found that the impacts indeed were happening. Both the THPC and the ADB to this day refuse to officially release Warren's report.
The ADB was compelled to publicly acknowledge the negative impacts of the Theun-Hinboun project in late 1998 after an ADB mission confirmed the earlier IRN report and even admitted that the impact area was much larger than earlier reported. In September 2000, the THPC released its Mitigation and Compensation Program (MCP) Report.
To date villagers have yet to receive direct compensation for fisheries and other losses, in clear violation of the ADB/THPC commitment to provide timely assistance to those affected. This despite continued pressure from international groups for the ADB to honor its commitments.
In behalf of affected communities international advocates who have closely worked on the Theun-Hinboun project presented four basic demands to the ADB. These are: full direct compensation for livelihood losses; a neutral and independent resolution of the minimum downstream release requirement; improved standards for information sharing and provision of input; and the establishment of independent monitoring mechanism. As proof of their resolve to pursue engagement with the ADB, the advocates note and appreciate even the slightest improvement on the side of the ADB, e.g. an indication of openness from Bank staff and small assurances that they are working on the compensation package. Promises and assurances, however, need to be implemented and monitored, and it is up to the ADB to pick up the pace and be true to its word.
The least the ADB can do now is to refrain from dodging responsibility and share the accountability with the Lao Government and the THPC for the consequences of the Theun-Hinbuon hydro. For the ADB's accountability - for its ideas, projects and policies - does not end when some client DMC finally takes them up. Not even when the loan has officially been "closed".
When NGOs brace themselves for face-to-face discussions with routinely aloof Bank officials, the least they expect is to be answered on the solidly researched issues that they raise. It was therefore a big disappointment to everyone when the ADB chose to send somebody who was barely two weeks on the job to a high-level debate with NGOs. True, the person was the newly appointed Chief Economist of the Bank, but the high rank did very little to build the confidence of NGOs in the ADB's approach towards engagement.
However, the series of panel debates with NGOs sponsored by the University of Hawaii Center for Globalization Studies was not the first time that ADB staff tried to evade the issues by citing (feigning?) constraint to respond due to insufficient information. Ironic, yes, but maybe even instructive that Bank staff came short of admitting they usually do not know whereof they speak.
Most irksome is the Bank staff's insistence on false choices, a tactic that was repeatedly used during the UH debates. Let's follow their logic for the moment: just because NGOs are very critical of the privatization policy of the ADB, the NGOs are anti-private sector? Is it globalization versus protectionism? And yes, will it (say, environmental standards) be better with or without the ADB?
During the debates, the ADB highlighted: their pitch for big multinational corporations ("they're not in it for the money"); their blind faith on supposed win-win solutions ("the lifeline tariff always works to the advantage of poor consumers"); and their breast-thumping ("the ADB is part of the solution, and not the problem").
In a particularly heated part of the debate, the Head of ADB's Private Sector Group mumbled something about accountability resting heavily on governments, not the ADB. To this one member of the audience remarked, "We know our governments are corrupt and inefficient, we will deal with them. But the question is, who will deal with the ADB?"
Perhaps the ADB needs reminding that the "antis" are not an unreasonable, miseducated, autarkic subculture. But what we are sure to give them is a greater dose of reality. The two biggest campaigns now ongoing, the Samut Prakarn and the Theun-Hinbuon cases, should be enough reason to keep them on their toes. Civil society is ready to face the ADB even on its own terms, but is the ADB ready for this? If the ADB genuinely believes in engagement, they need to rethink the way they do it.
*Joy Chavez, Research Associate at Focus, is based in Manila. J.Chavez@focusweb.org
(1) For more information on the Samut Prakarn case, visit the Bank Information Center (www.bicusa.org) website.
(2) This section takes from materials provided by the International Rivers Network (www.irn.org).