IFI Re-Engagement and Aid Coordination in Burma Panel at the World Bank

Here’s our recap of the IFI Re-Engagement and Aid Coordination in Burma panel held at the World Bank last Thursday, April 18th. We’ve posted a synopsis and many of the speakers’ thoughts and suggestions for those who were unable to attend but want to know about the challenges facing the re-engagement of the World Bank, International Monetary Fund, and the Asian Development Bank in Burma.

Sponsors:

IFI Watch Myanmar, Burma Environmental Working Group, BIC, World Bank, IFC

The Panel:

Jelson Garcia, Bank Information Center (Moderator)

The Burma reps:

Maw Htun Aung, Cornell University

Liz Hlaing, Community Resource Group and IFI Watch

Paul Sein Twa, Karen Environmental and Social Action Network

The international financial institutions (IFI) reps:

Kanthan Shankar, World Bank Myanmar Country Manager

Alessandro Pio, Asian Development Bank (ADB) North America Regional Director

Yu Ching Wong, International Monetary Fund (IMF) Resident Representative of Myanmar

Sergio Pimenta, International Finance Corporation (IFC) East Asia and Pacific Director

The Conversation – Short version:

The panel consisted of the IFI representatives speaking in broad terms about their future loans and projects, emphasizing infrastructure, microfinancing, fiscal policy support, and telecommunications. There were no strong efforts to develop projects that assist civil society organizations, promote revenue transparency, or strategize about agricultural policy. In fact, the IFI representatives all confessed to knowing very little about the agricultural sector on which 3/4s of the population depend. Instead, aid efforts focused on urban microfinance and technical support to the government. When asked during the Q&A if they had plans to think about land rights, policies that could enhance rural economies, revenue transparency, and non-government technical support, the IFI representatives all said they hadn’t yet grappled with these issues. These issues, however, are foundational to future financial stability and effective private investment in Burma.

The reps from civil society organizations in Burma asked for IFIs to develop a greater understanding of the real economic needs in Burma (and recognize that most of the population will sink or swim based on rural, agricultural, revenue transparency, and land rights policies), and greater engagement with Burmese civil society when crafting future projects. It’s all well and good to have “community driven development” projects, like the World Bank’s newest effort, but in order for those to truly meet people where they’re at, these projects must indeed be community driven, drawing strategies from local advice and feedback.

The civil society reps also asked IFIs to avoid impropriety in investing in the extractive sector, which fuels the military and causes a huge number of agricultural, compensation, and livelihood problems for rural populations. The IFIs must take a breath and prioritize financial and budgetary transparency in the government before implementing further loans. Otherwise, monies from foreign investment will exacerbate the power dynamics in Burma that disenfranchise local communities while lining the pockets of the military and the already powerful.

IFI engagement shouldn’t disenfranchise ethnic groups through unfair distribution of project revenue and benefits. IFIs should prioritize support to agriculture and champion land tenure security and communal rights.

Notably, the Asian Development Bank (ADB) does plan on displacing ethnic communities for its upcoming power project, and has few risk mitigation strategies for local people. When questioned about this, the regional director of the ADB at the panel merely said, “Of course there will be a bit of harm for some people with our project, but we shouldn’t focus on the details. We should look at the big picture of what IFIs will do in Burma.”

But if the big picture is made of poorly ordered and poorly designed smaller strokes, it won’t be a pretty picture at all.

The Conversation – What did they all say?:

“Auntie” Liz Hlaing of the Community Resource Group and IFI Watch opened the panel with a call for the World Bank to actively engage with civil society organizations. Her presentation mainly addressed outreach issues concerning the World Bank’s $80 million National Community Driven Development Project (CDD). In order for a “Community Driven” project to be genuinely successful, it obviously must take feedback from – and reach out to – local communities.

Liz noted that while the World Bank has held project “consultations” in Burma, these consultations were merely powerpoint-type presentations of the World Bank’s upcoming development plans, not forums for World Bank officials to engage with and learn from the local communities. She pointed out that local communities don’t yet know what type of development initiatives will be sponsored in their regions, nor do they have the internet access needed to follow the actions of the World Bank and other international financial institutions (IFIs).

“We’d like to ask the World Bank to give civil society space to be involved in decision-making,” Liz said. “The negative impacts of foreign investment projects are huge, and we don’t want to repeat those. Civil society organizations say, ‘No more tears,’ and I repeat it, ‘No more tears.’ We want the government, the World Bank, and civil society organizations to work together. This is our main concern: we haven’t yet had broad, meaningful consultations.”

Kanthan Shankar, Burma’s Country Manager for the World Bank, thanked Liz for her remarks and noted that the World Bank has not operated in Burma for 20 years. “Our office just opened on August 1st in Yangon,” Shankar said. “We are still learning ourselves and we welcome any feedback. Since we’ve been out of Myanmar, we have started our operations with an 18-month interim strategy. We are adhering to 3 pillars:

1)   Supporting government reforms,

2)   Institutional strengthening, and

3)   Preparing for a longer term program.”

Shankar noted that the CDD project is a 6-year program and stressed, “We need a bottoms-up approach. We want to support the government’s reforms through a CDD project, and we’ve done this type of project in other countries before.” He wasn’t able to delineate how that grant would actually inspire community-driven development or where the funds would specifically go.

He also briefly explained how the World Bank helped navigate a $420 million dollar credit for arrears clearance through a bridge loan from the Japanese government. He told the audience that the World Bank’s main upcoming projects in Burma will focus on electricity, public financial management, and telecommunications.

Alessandro Pio, the North America Regional Director of the Asian Development Bank (ADB), began his remarks by lauding the Burmese government for its economic reforms and capacitating foreign investment. He congratulated the country for the ceasefires with the ethnic groups but noted that the government must now have real discussions about the causes of the government-ethnic conflicts.

Pio believes that the lifting of sanctions and international investment will be “a positive influence” on Burma. “A lot of development partners will help strengthen institutions,” Pio argued. “But there’s still a lot of work to be done to engage the government on terms the international community thinks are acceptable.” He didn’t address endemic government corruption, the need for equity in power and revenue distribution, or the very real negative impacts of foreign investment on rural communities.

Pio outlined the 3 phrases of the Asian Development Bank’s activities in Burma:

1)   January-June 2012: ADB reengaged with the Mekong regional program (Thailand, Vietnam, China, Laos, Cambodia, Burma) even during western sanctions.

2)   July-December 2012 – ADB built up knowledge about Burma’s economy through sector examinations (all these documents are on the website). The ADB also started to figure out which ministries they’d like to engage with, and started an interim development strategy guiding involvement in the country. This interim strategy was approved on October 26th 2012.

3)   2013 – ADB resumed loaning operations. ADB did arrears clearance (forgave/refinanced past debts the Burmese government owed) through Japanese bridge financing. Then the ADB started a “policy loan,” which was approved on January 14th and dispersed on January 17th. [Pio doesn’t talk about the details of this loan.]

The ADB opened offices in Rangoon and Napyidaw. The ADB will allocate regular funds to Burma in May. Last year, Burma wasn’t an active borrower with the ADB so no funding was given.

During 2013, ADB is providing $16 million dollars of technical assistance and development grants (rural and community-based), and a power/energy loan toward the end of the year. The interim loaning strategy is built on 1) building human resources and capacities to strengthen government and invest in education, 2) enabling the economic sector, and 3) enhancing “national connectivity” by supporting transportation.

Pio noted that the ADB’s projects are still being designed “so this is a good time to engage. We want this to be a coordinated effort, to be as transparent as possible (keep updates on our website), and put importance on consultation and participation. We haven’t been active in Burma so we need knowledge, and we’ve approved one technical assistance program where the objective is to design a consultation strategy.” What that consultation strategy will consist of, and how it will engage local populations, was not specifically explained.

Sergio Pimenta, the IFC East Asia and Pacific Director, stressed “how important the private sector is in the development agenda. Many jobs are created by small and medium sized companies, and the private sector in general. This is key to the success of the transformation of the country.”

Pimenta said that the IFC tends to work more with domestic companies. Foreign companies bring in innovation, technology, and expertise, and domestic companies contribute in jobs, local knowledge, and spreading the economic growth across the population. (Or at least in Pimenta’s theory.)

The IFC strategy is to 1) promote inclusive investments that have direct impact on the community so they can have a share in development (e.g. promote projects that allow small companies and entrepreneurs access to finance so they can conduct economic activities), 2) focus on infrastructure to overcome challenges in power and telecommunications (Pimenta vaguely said: “We want to engage in this sector by doing something there”), and 3) work with the government on private sector reforms so companies can more easily conduct business.

Essentially, the IFC’s current work is advising private microfinancing institutions in major cities.

Yu Ching Wong, IMF Resident Representative of Myanmar (appointed this month), spoke a bit about the IMF’s enhanced engagement with Burma. IMF is opening a Yangon office, beginning to provide “technical assistance” (a new, vague favorite phrase in the IFI community), working on exchange rate controls, helping modernize the central bank, working on the modernization of the financial sector together with the World Bank, and trying to change government policy to ultimately create more revenue that can be used for social and infrastructure spending. She made no mention of seeking to limit secretive and extensive military spending.

She noted that on May 22nd, the IMF “will hold a public outreach workshop with the private sector and civil society organizations in Yangon.” When asked about the event, she said details were unavailable.

Maw Htun Aung, a Kachin Fulbright graduate student at Cornell University, stressed that investment in the extractive sector lines the government’s pockets and is channeled into military spending. The IFIs must prioritize financial and budgetary transparency in the government – it is foundational to creating a just state and a stable economic system that doesn’t sink the rural population. All extractive industry activity should be biased toward ethnic reconciliation (as it is currently very much biased against it). Extractive sector spending should be from a long-term, sustainable perspective.

He asked that IFIs slow down and focus on regulatory strengthening and engagement with civil society. He also stressed that IFIs must prioritize the agricultural sector, on which at least 70% of the people depend. The rise in ethnic conflict exactly follows the rise of risky extractive sector foreign investments.

IFI engagement shouldn’t disenfranchise ethnic groups through its policies. Ethnic regions are endowed with resources but are also the poorest and have the lowest levels of literacy. Human rights abuses, land confiscation, forced eviction, and marginalization all stem from unfair distribution of revenue from natural resources. In Kachin State, the Burmese government is earning over $1 billion annually, but the Kachin are impoverished and 100,000 are displaced.

IFIs should prioritize support to agriculture and champion land tenure security and communal rights. Maw Htun stressed that IFIs should also first and foremost prioritize contract and revenue transparency.

Paul Sein Twa, representing the Karen Environmental and Social Action Network, closed the panel by reminding IFI reps,We’re not opposing you, but we want what you’re doing in Burma to help us. We feel a bit like we’re being abandoned. The international groups are engaging with the Burmese government but not the ethnic groups. This is a peace-building time; if we trust the government, we also trust their partners. If you go work with the government, we doubt that you’ll really help us. We witnessed after the ceasefires that ethnic people see lots of other problems associated with development and investment projects.

Can you travel to these areas and listen yourself? So you can see yourself if what I’m saying about ethnic marginalization is true, if the ethnic groups are facing worsening conditions on the ground. Maybe your projects aren’t directly influencing this yet, but indirectly they can and will. We are just in the initial ceasefire time, and we don’t have a concrete ceasefire agreement with the government.

We have issues with landmines, rehabilitating our land and livelihoods, repatriation, etc. This ‘ceasefire’ happened a year ago, but 140,000 Karen still live in Thailand in the camps. The government hasn’t yet backed up its ceasefire agreements with political solutions.

You’re starting development without much needed political solutions. Your focus is on the development projects. But the focus of the ethnic people is on coming together and discussing our political concerns and these development projects. What happened in our history can be repeated. We’re not out of danger.

The government is moving toward regional integration and economic development, but in reality, the government is just in transition and it’ll take some years to catch up to the rest of the region. How can Burma transition realistically? How can Burma develop realistically?

We need investment that promotes jobs, land security, and environmental protection. We don’t yet have confidence in the government’s willingness to reconcile politically with the ethnic groups.”

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