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With Uncertainties and Variables
By Hemantha Withanage, NGO Forum on ADB

The Asian Development Bank’s Draft Policy Statement on the Safeguard Policies[1] seems to be depending on many uncertainties and variables. The proposed policy is a consolidation of the three existing Safeguard Policies, namely: Environment Policy, Indigenous Peoples (IP) Policy and the Involuntary Resettlement (IR) Policy. As an alternative to providing social and environmental safeguards in its funded development projects, the draft policy proposes to shift the responsibility of implementing the Safeguards to national, regional and local governments, through its proposed Country Safeguards Systems.

Experience shows that violation of social and environmental rights on the ground is not a problem of the policy itself, but due to poor implementation. Although the ADB could not excuse itself for the lack of implementation of its own policies, such violations and problems are more rooted with the national governments and their respective implementing agencies. Giving safeguard control to the same agencies is somewhat close to “consulting the rogue’s mother for soothsaying,” as the Sri Lankan proverb says.

While the World Bank has ten safeguard policies, the ADB has only adopted three. Withal, the three Safeguards will be consolidated into one as suggested in the draft policy statement. And although the Bank has existing Forest Policy, Water Policy, Social Protection Strategy and Core Labor Standards, to name a few, the draft policy statement is silent in said issues, except for some provisions in the Forest Policy which are slightly mentioned in the draft.

The draft policy also completely removes the 120-day disclosure period for environmental impact assessments (EIAs) and other documentary requirements prior to the ADB Board’s approval. This clearly undermines people’s right to information to effectively engage with the ADB when they are adversely affected by the latter’s funded projects. The motivation of the Bank for such a move is no other than reducing the time period of the project cycle, enabling itself from disbursing more funds at a shorter time, without giving due respect to people’s rights.

On private sector participation, the ADB continuously covers up private sector or financial intermediary (FI)-led projects by allowing FIs not to disclose pertinent data such as EIAs, Involuntary Resettlement Plans and Indigenous Peoples Plans, among others, before their appraisal. These documents are essential to ensure participation of stakeholders who are deemed to be negatively impacted by said projects. Also, the draft is completely silent about public-private partnership which is ADB’s new way of doing business.

In the draft policy, free prior informed consent is downgraded to free prior informed consultation when it comes to social and environmental rights. However, it should go beyond free prior informed consultation when it comes to asserting social and environmental rights. The UN General Assembly has already adopted the UN Declaration on the Rights of Indigenous People that includes free prior informed consent. And yet, the ADB has decided to do otherwise. In reality, sincerity is missing in most consultations. Completely relying and empowering national agencies for this purpose will not solve the problem, nor provide project-affected people adequate bargaining power to preserve and protect their rights.

Also, the only parameter considered in the draft policy is the physical relocation of people, whether it might be the IPs or other marginalized groups. Yet on the other hand, development projects could still be indirectly inimical to people’s welfare, livelihood and culture, that is, going beyond physical relocation. Hence, in the determination of the negative externalities caused by the Bank’s funded development projects, indirect impacts to project affected people should also be considered.

Most infrastructure projects in the past have left the affected people landless, losing their livelihood in the process. Their home gardens and cultivated lands have been destroyed to give way to these so-called development projects. They have been relocated in areas unsuitable to their way of living, and at times lacking in basic social services, leaving them with no alternative other than becoming dependent on the market. Although the draft policy, specifically under the sections on IR and IP, has mentioned the restoration of the livelihood of the affected people, it has failed to mention the latter in the main objective.

While there are a lot of criticisms on the draft policy statement, it includes a few good principles and provisions:

- Inclusion of a Prohibited Investments List;
- Recognition of the absence of formal legal title to land by affected person as not a hindrance to compensation;
- Payment of compensation and provision of entitlements before physical or economic displacement;
- Disclosure of draft resettlement plans and monitoring reports;
- Consideration of direct and indirect project impacts on people’s human rights, dignity, and livelihood of indigenous communities.

Uncertainties and variables

Instead of ensuring that it remains accountable for the social and environmental harm that may have been caused by its funded projects, the ADB is shifting the responsibility for such to its borrowing countries. With the proposed policy, the Bank will be dependent on the borrowing countries’ political will, good governance, judiciary mechanisms, zero corruption, good faith, domestic expertise and capacity of their respective agencies, and genuine implementation of the policies and guidelines. The Bank will rely on its borrowing countries’ efficient preparation of their respective country safeguards and regulations, and disclosure policies, both matching ADB’s standards.

The ADB is completely ignorant about national politics and how systems are running in the diverse nations in Asia and the Pacific. There are governments that do not respect the basic rights of the people in terms of access to information and access to justice. There are also governments that do not provide venues for public participation in decision making. For example in some countries, EIA and related documentary requirements are not open for public comments. While in some, stakeholders are given very short time to comment on EIA documents.

The Bank is overestimating the capacity of both national and local governments to get their local policies at par with international standards. And in most countries in the region, it takes years to legislate or revise existing laws and regulations. A country’s systems could not be easily changed even by providing them with grants and loans for their infrastructure projects, luring them to speed up the process of legislation.

There is no question that sovereign nations should have the right and sole responsibility to decide on which policies and regulations they need for their development. However, relying too much on a nation’s capacity and existing systems could only lead to further violations of the Safeguard Policies. In reality, local communities have already lost faith in their respective countries’ systems, and in both national and local governments’ capacity to implement their policies.

The proposed “Country Safeguard System” is based on glorified pronouncements. The World Bank has initiated its country systems in 2004 but did not yield impressive results due to factors mentioned above. According to the ADB, only a few countries apply for the country systems. This has put into question the reason behind the Bank’s move, spending several years and resources developing such a system which would not be useful after all. The Bank should have tried developing the respective safeguard systems of its developing member countries (DMCs) to meet its standards before opening this avenue.

The ADB-proposed “Country Safeguard System” is completely based on glorified parameters mentioned above. The World Bank-initiated country system in 2004 has not yielded adequate results due to same factors. According to the ADB, not many countries apply for country systems. Given this, why would the ADB spent several years and resources developing such a system which its DMCs may not want to accept completely? Perhaps the ADB is one step behind. It could have at least tried testing its DMCs’ safeguard systems whether they could meet the Bank’s standards before opening this avenue.

Meanwhile, the acceptability and equivalency assessments of the country system seem to be ADB’s and the government’s business. According to the draft policy, transparency would not be a requirement.

The proposed ‘framework approach’ is an alternative to the present “front load approach”. Front load approach requires vital project documents, such as EIA, IP plans, and resettlement plans, to name a few, available as early as the designing stage. However, the ‘framework approach’ allows detailed designs of the projects or sub-projects after the Board approval. Although this is limited to projects under sector lending modality and multi-tranche financial facilities (MFFs), it allows EIAs, environmental management plans, involuntary resettlement plans and indigenous peoples plans to be prepared even as late as the project implementation stage.

The success of the framework approach depends on many variables such as willingness of the borrowing government to submit all documentary requirements and conduct required consultation processes with affected communities prior project implementation. Without being a prerequisite for project approval, I wonder whether if they could genuinely adhere to these requirements after Board approval.

In the case of the infamous Southern Transport Development Project (STDP) in Sri Lanka, it took several years to develop an EIA only to find out that more than 70 percent of the project is out of scope as prescribed in the document. Likewise, it took three years to develop a resettlement implementation plan. Such irregularities had happened even with the use of front load approach. What more if the Bank would use the framework approach? It could give borrowing governments greater flexibility when it comes to compliance to requirements. Worse, governments would be given an opportunity to violate social and environmental safeguards.

Another serious issue would be ADB’s capacity to improve the Country Safeguard Systems of its DMCs. It will require the Bank huge amount of funding to support them improve their own safeguards, build institutional resources, train experts, ensure proper implementation of projects, and establish a strong monitoring and evaluation system. There are only a few cases where countries have already developed expertise and where laws have been deemed adequate. Majority of them have laws and policies that are way below international standards. Likewise, for countries with limited or inexistent democratic space, such as China and Vietnam, the CSS would not succeed.

The draft policy vaguely discusses the resources implication of implementing the CSS and says it will be discussed in the working paper. However, it has been a known fact that the ADB does not have sufficient staff to advise, monitor and evaluate the country systems of its numerous DMCs.

The brand new safeguard policy seems to be “passing the buck” rather than increasing country ownership. CSOs have feared that ADB has been planning to weaken its Safeguards in order to release more funds without giving proper regard to the environment and rights of those that could be adversely affected by it development projects. Perhaps the harmonization and increased country ownership as promoted by the Paris Declaration could be an opening for the ADB to pass the role for greater accountability to its borrowing countries, limiting its role to a bank. Passing its responsibility to a country that dishonors internationally accepted norms, principles and practices will make local communities vulnerable to ad hoc decisions that usually result in human rights violations. The number of uncertainties, assumptions and variables in the policy will not ensure equal rights and sound safeguards for the communities and the environment. It might “boomerang” to the ADB once it fails, forcing it to take responsibility for the havoc that could have been caused by so-called bureaucrats and technocrats in the years to come.

End note
1 Consolidation Review of the ADB Safeguard policy started in July 2005. After many delays, the draft policy is now open for a 90-day public commenting period from 13 October 2007.