Opinion

Time for Asian Development Bank to Rethink Displacing the Poor

Every year millions of people around the world are forcibly displaced from their land, homes and livelihoods to make way for large-scale development projects. Most often those who are forced to sacrifice their place on Earth for both public and private interests are amongst the poorest and most vulnerable people in society. They are thus the least equipped to cope with the challenges of physical, economic and social displacement and are as a result most often thrust into even deeper poverty and social exclusion. For development institutions such as the Asian Development Bank (ADB), which finance many displacement-causing projects in the name of fighting poverty, this problem poses an uneasy contradiction.

In order to address this contradiction, ADB and other multilateral development banks have established safeguard policies that promise to avoid or minimize displacement, and to ensure that when there are no other viable options, displaced persons are resettled in a manner that leaves them no worse off than they were before the project. ADB’s safeguard requirements on involuntary resettlement go even further and aim to improve the standard of living of the displaced poor and other vulnerable groups. This policy reflects the consensus of 30 years of scholarly research that when resettlement for public development projects is unavoidable, it should be seen as an opportunity to directly lift affected people out of poverty and ensure that they are among the prime beneficiaries of the development project.

Yet, in spite of ADB’s resettlement policy and its accumulated experience resettling millions of people to make way for “development” over the past half century, ADB’s record remains a shameful one of insufficient financing, poor planning and inadequate implementation. Lessons that should have been learned and internalized hundreds of times have instead breezed in and out of the institution’s halls like the wind. This sad truth could not be more apparent in the case of the Rehabilitation of the Railway in Cambodia Project.

Since 2006, when it approved a plan and budget to resettle more than 4,000 families living along Cambodia’s dilapidated railway tracks, ADB has thoroughly mismanaged the process, causing grave harm to those affected. First the bank ignored repeated warnings by its own resettlement consultant and NGOs of impending problems before the relocations began. Then as evidence mounted that the warnings of harm had materialized—including in the deaths of three resettled children—it failed to take robust corrective action. It even ignored the recommendations of renowned resettlement specialist professor Michael Cernea, after commissioning him to investigate the situation, and refused to publicly disclose his unfavorable report.

After a 17-month investigation of a complaint that my organization submitted on behalf of affected households, ADB’s internal watchdog, the Compliance Review Panel (CRP), found that the regional bank failed to comply with its policies and procedures, causing “significant yet avoidable adverse social impact on mostly poor and vulnerable people.” The panel found that families affected by the Railway project “suffered loss of property, livelihoods, and incomes, and as a result have borne a disproportionate cost and burden of the development efforts funded by ADB.”

In a clear expression of frustration, the panel wrote that ADB staff must undergo “a mind shift” in the way they treats people impacted by its projects. According to the panel, this case, and past cases reviewed by the CRP showed “a recurrent pattern of inadequate attention by ADB to addressing the resettlement, public communications and disclosure requirements of its policies in a timely, adequate and responsive manner.” The panel emphasized “the need for an urgent, firm, and clear message to ADB management that these issues should be taken seriously and accorded the priority consideration they deserve” and not “treated as mere add-ons.”

Yet ADB still hasn’t gotten the memo. Its management mounted a vociferous defense to the panel’s report, objecting to many of its findings and recommendations, including the recommendation that ADB take responsibility for the harms caused by its own non-compliance by establishing a $3 to $4 million fund for remedial compensation payments. On January 31, the board of directors approved a modified version of the CRP’s recommendations, placing the onus on the Cambodian government to finance reparations. It ordered management to work with the government to develop a remedial action plan within 60 days to implement the board’s directive. Following a chorus of demands from affected people and civil society organizations from around the world, ADB finally disclosed an action plan to the public on April 25. The plan falls far short of the recommendations approved by the board and would be certain to leave displaced railway families worse off, in violation of ADB policies.

The bank says that it needs the government’s agreement to implement remedial actions and has only been able to secure agreement on some areas of the CRP’s recommendations, while key recommendations regarding compensation, income restoration, debt relief and basic service delivery have apparently been rejected by the Cambodian government. Yet, the government agreed to comply with ADB’s resettlement policy when it took out $84 million in concessional loans from ADB for this project. For the past four years, the government has systematically violated every significant requirement in the book, and ADB has looked the other way rather than risk offending a good client. With one of the world’s worst records on forced evictions, the Cambodian government has shown time and again that it is neither capable of nor willing to respect the rights of people who are displaced by development projects. There was no reason to believe that this time would be any different. This begs the question why ADB went ahead with such a high-risk project without guaranteeing that adequately resourced resettlement plans were put in place—not just to avoid another development disaster, but to ensure that the affected households were in fact beneficiaries of the project by enhancing their livelihoods and improving their socio-economic situations.

At ADB’s annual general meeting in Astana, Kazakstan this weekend, the spotlight will be on the regional bank’s approach to supporting the development of the Asia-Pacific region. It can use this opportunity to offer a mea culpa for the Cambodian railway debacle, make it clear that it will provide the resources to ensure full restitution for affected families, and use its legal remedies, if necessary, to compel the government to live up to its contractual obligations. Or it can carry on with its deeply unethical business model, giving a wink and a nod to its borrowers that ADB is satisfied for the “development’”projects it finances to come at the expense of Asia’s most vulnerable citizens.

David Pred is the co-founder and managing director of Inclusive Development International.

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