ADB needs to serve 'Asian' interests

ADB needs to serve 'Asian' interests

The Asian Development Bank (ADB) held its 46th annual board of governors’ meeting at Greater Noida from May 2 to 5. The board is the bank’s highest policy-making body, which meets annually. As an Asian bank the least is that it be truly Asian in character. Out of ADB’s 67 members, 19 are non-regional including the United States of America (USA), Canada and several European countries. The US holds 15.57 per cent capital stock and 12.76 per cent voting power as of December 2012. Being an ADB member country makes firms from non-regional countries eligible to bid on ADB-generated business opportunities.

Just as for other non-regional members, the ADB’s project lending and grant activities to its developing member countries generate procurement and consulting opportunities for qualified US firms and individuals. In 2011, reportedly US companies won more than $634 million in procurement contracts. Therefore the US office, in particular through the US foreign commercial service, responds to queries and requests for assistance from US firms and/or their local representatives for business information on bank-funded projects/investments.

As per the ADB Annual Report 2012 most of Asia's development investment needs will have to come from the private sector, and it has expressly stated to have more clearly defined its financing role, seeking to leverage resources with greater efficiency through private sector involvement (PSD), public–private partnerships and co-financing.
Integral part.

And it is because of ADB’s financial and other support, that several governments have chosen the path of PPPs as an integral part of their economic development strategies.
For example, the 100 per cent Reliance-owned Dahanu Solar Power Project (2011) near Dhursar village in Jaisalmer District of Rajasthan was envisaged with financial support from the US Exim Bank and the photovoltaic plants were to be supplied by a US company. While the ADB loan amounted $48 million, the commercial co-financing amount from US firms was to the tune of $65 million.

This is also reflected in the ADB private sector development (PSD) strategy (2000) and its policy document PSD: A revised strategic framework (2006). ADB’s strategy 2020 also prescribes that 50 per cent of the bank’s annual operation support PSD.
Meanwhile, ADB’s own reports released at the Noida AGM point to the fact that the public sector in the region is failing in delivery to peoples in Asia-Pacific. Instead of helping support corrections in the public sector itself, the bank’s now familiar prescription is to pave way for private companies in those sectors. Meanwhile, the small Asian privates – the countless unorganised and informal sector enterprises and individuals, need to be encouraged rather than the big multinational players that have come to crowd the term ‘private sector.’

Set up in 1966, the ADB provides billions of US dollars in loans to its primary borrowers – Developing Member Countries (DMCs). This allows it to have enormous influence over its DMCs’ development objectives. For the Asia-Pacific region, the ADB is the third largest donor after the Japanese government and the World Bank. India is the biggest borrower of ADB, having received $2.4 billion in loans in 2012. While it is governments that borrow, the burden of repayment falls of the the public exchequer and on the people of the country. And at this AGM India has asked for further financial support for its industrial corridors.

Yet ‘development’ in India has long become a dirty word. Not many of us may know the Bank and how it affects our everyday lives and larger landscapes in which we and other Asians exist. But several people's groups, movements and popular campaigns in the region are working to expose the not so benign aspects of the development model promoted by the ADB.

The genuine grievances of people's affected by development projects are yet to be addressed. ADB policies require that people affected by its projects be consulted at every stage. Governments have to insist that this happens. It would not be such a challenge if democracy was truly the working principle. After the consultation phase, a compliance review phase is to follow. This has been made part of the Bank's Accountability Mechanism, which too suffers a trust deficit.

Ironically, the theme of this year's AGM was ‘development through empowerment'. It is not the potential of the economies, but the potential of peoples in this country and region that need to be harnessed and supported. In ADB's own words, an ‘Asian Century’ – one in which Asian culture and politics dominates, is not 'pre-ordained'. Certainly not if the Japanese-led biggest multilateral development bank in the region is neither truly Asian nor shows any indication of change in being pro-Asia's many common peoples.

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