As of September 2019, the global debt stood at 263 trillion USD, and COVID-19 lockdowns have forced over 128 million people to lose their jobs in Asia. This scenario is being considered much graver than the global financial crisis in 2008, and experts are comparing it to the Great Depression of 1939[i].
As a response to the pandemic, the AIIB has issued over a 10 billion USD loan portfolio as COVID19 emergency loans, but what the region needs are grants and not more debts[ii]. Deeper questions surround these loans, in terms of environmental social safeguards applicability, transparency, and accountability, risk of embedding existing fossil fuel pathways, and bridging public access. Unfortunately, the AIIB management and operations have not presented a track record of openness, especially at the project level, to instill confidence among local communities.
In addition, there is also the lack of time-bound information disclosure and pre-project meaningful consultation around Bhola Independent Power Plant (IPP) in Bangladesh, Myingyan 225 MW Combined Cycle Gas Turbine in Myanmar, National Innovation Foundation (NIF) in India, National Slum Upgrading Project in Indonesia and to name a few. The bank has failed in every project to provide information to the people (inadequate time and method) and failed to explain to them the impacts of the said projects. This has led to direct livelihood loss, displacement of poor and vulnerable people, destruction of environmental systems, and occupational hazards. With its scale of impact, the AIIB MUST change as a practice, rule, and institutional norm.
Sreedhar Ramamurthi from Environics Trust, India explained “the AIIB should ensure that management responds to all critical inputs from civil society on key issues, strategies, and projects, in a time-bound manner as an institutional practice”. He also added that there should be a meaningful consultation of all projects, now more than ever, being considered amid this pandemic prior to board approval”.
Hasan Mehedi of Coastal Livelihood and Environmental Action Network (CLEAN) strongly suggests that “the AIIB should ensure its safeguards operations team and project developers respond appropriately and urgently to project-affected communities on the ground suffering from COVID19”.
Forum on ADB has raised a small fund to provide food, face masks, and basic medicines amid this crisis[iii] and in the course of the distribution it is heartbreaking to hear from the local people, those project developers had never reached out to them, not even once, with any material or financial support during this trying times. The AIIB has completely neglected project-affected communities in their crisis response.
In addition, this year the AIIB has issued an annual meeting agenda with no mention of local communities, and civil society engagement. For the past year, communication linkages with management have slowed down in momentum drastically. Formal letters surrounding Financial Intermediaries, Human Rights Defenders, inputs for Water, Transport, and sectoral strategies submitted from the civil society side had no meaningful responses if any. The AIIB has not been as open and transparent to civil society interaction, communications to the management are not being responded back, and the bank is retreating itself from the space of open dialogue with civil society.
Vidya Dinker of Growthwatch and INSAF (Indian Social Action Forum) stated “the AIIB must ensure that there is space and time for dialogue with affected communities and CSOs at all AGMs, including this virtual Annual Meeting of 2020. This must include dialogue with management, project and strategy meetings, and meetings with senior management to discuss key policy revisions, and in this year's case, the ESF review and corporate strategy”.
The said Corporate Strategy is set to be discussed at this annual meeting as well, but unfortunately, this document has not been open to civil society review or input and is heading straight towards a board approval in September 2020.
Rayyan Hassan, NGO Forum on ADB executive director on behalf of the 250 network members in a letter sent to the AIIB management “calls for immediate debt cancellations payments for borrowing governments, so they can have critical access to public funds to address the pandemic and carve out a meaningful and independent recovery”. He also added that the AIIB should "ensure all COVID19 recovery loans de-link from fossil fuel propagation and follow a Paris 1.5 aligned pathway”.
[i] https://www.economist.com/by-invitation/2020/05/26/abhijit-banerjee-and-esther-duflo-on-how-economies-can-rebound
[ii] https://www.imf.org/en/News/Articles/2020/04/13/pr20151-imf-executive-board-approves-immediate-debt-relief-for-25-countries
[iii] https://www.forum-adb.org/covidfund