Challenging ADB’s immunity

The Asian Development Bank (ADB) marks its 50th year as a financial institution with over $250 billion worth of loan projects in the Asia-Pacific, mainly for large-scale infrastructure and energy-related projects. The Philippines has outstanding debts to ADB of $5.6 billion, or 13 percent of the government’s foreign debt.

Significantly, the Philippines’ General Appropriations Act of 2017 added a special provision directing the congressional oversight committee on overseas development assistance “to conduct a debt audit to determine the legitimacy” of 20 foreign loans that have been reported as illegitimate by the Freedom from Debt Coalition. Of the 20 debts, five are owed to ADB, either as sole financier or cofinancier.

These are the Power Sector Development Program, Sixth Road Project, Agrarian Reform Communities Project, Southern Philippines Irrigation Sector Project, and Irrigation Systems Improvement (PH-1049). The total for these ADB loans is $637 million. These projects were deemed illegitimate for either of these reasons: absence of environmental and health safeguards, lack of thorough study, long delays in implementation, unmet targets, questionable “bailout” of corporate debts, and labor rights violations, wrong feasibility assumptions and faulty project design, lack of social preparation, bloated budgets, misuse of equipment, transfer of management cost to farmer-beneficiaries, no protection for beneficiaries from unjust corporate practices, and no proper consultation with farmers.

ADB’s power-related loans often rely on dirty energy that result in negative social and environmental impacts. It granted nearly $4 billion in loans to 21 coal projects in 1994-2012, making it a major global financier of coal power. The notorious ones are the $120-million Naga Coal Power Plant (Cebu, Philippines), the $900-million Jamshoro Coal Power Plant (Sindh, Pakistan), and the $450-million Tata Mundra Ultra Mega Coal Plant (Gujarat, India).

Worse, ADB financed the retrofitting of old coal plants in Mongolia and China. Typically, it has not drawn up a clear plan on transitioning from fossil fuels to renewable energy. Its support for coal power clearly subverts the 2015 Paris Agreement on reducing harmful gas emissions. Ironically, since 2005, it has hosted the annual Asia Clean Energy Forum.

Civil society groups also charge that ADB backs authoritarian regimes, ignores corruption issues, and disregards the rights of workers, indigenous peoples and farmers. In 1996, a major mining disaster in the ADB-funded Marcopper Mining Corp., in the province of Marinduque decimated agricultural and marine life, affected 20 villages, displaced 20,000 people, and caused toxic health problems that persist until today.

ADB policies bankroll private capital takeover of public goods under the mantra of deregulation, liberalization and privatization — weakening governments and local communities, violating consumers’ rights, and further marginalizing the poor. Oxfam says that “many [ADB] projects have damaged the environment and undermined communities’ rights to determine their own needs and participate in decisions relating to development, leaving them worse off.”

Regrettably, the ADB Charter grants it “immunity from every form of legal process” related to its loan projects. The NGO Forum on the ADB has thus launched a campaign to challenge this immunity, arguing that, for 50 years, the bank financed projects that caused “loss of livelihood” and “irreparable damage to vulnerable and marginalized sectors.”

For 50 years ADB has acted more like a commercial bank than the development agency it claims to be. It has also long relied on a faulty internal grievance procedure and inadequate social and environmental safeguards mechanisms. It’s time it was held accountable under both national and international laws for its ruinous policies and projects.

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Eduardo C. Tadem, PhD, is with the International Committee of the NGO Forum on the ADB. He is president of the Freedom from Debt Coalition and professorial lecturer in Asian Studies at UP Diliman.