Mar 02, 2021

Mar 02, 2021 by members

Too little, too late: World Bank rents military land despite partial loans freeze, and MFI inaction risks legitimizing the junta

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Myanmar’s nationwide civil disobedience movement (CDM), based on “no recognition, no participation,” is key to stopping the military from consolidating power after its 1 February 2021 coup d’état. Multilateral finance institutions (MFIs) must support the CDM, stating they will not deal with the junta. Until today, they remain silent, proffering vague concerns or, despite freezing some payments, legitimizing the junta. Delay and half-measures undermine the CDM, buying time for the junta, which killed at least 18 protesters on 28 February and continues waging war in ethnic areas, displacing many communities in recent days.

218 civil society organizations (CSOs) globally, led by 120 Myanmar CSOs, called for a coordinated response from MFIs in an open letter dated 17 February 2021, asking for them to condemn the coup and to immediately halt lending obligations, suspend disbursements, pending grants and loans across all sovereign and non-sovereign operations, until conclusive confirmation that these do not legitimize military rule. These funds amount to an estimated US$11 billion that could be used to fund the junta’s assault on democracy and atrocity crimes against ethnic minorities.

Silence was the main response from the International Monetary Fund and Asian Infrastructure Investment Bank. The Asian Development Bank said it was “deeply concerned about the current situation” and will “continue consultations.” This inaction is complicity.

The World Bank informed the junta that it will not process payments requested after 1 February. This is a small step forward, but only temporarily suspends payments to the junta; it does not freeze loans to private enterprises to assess whether they support or legitimize military rule. The fact that the World Bank’s own Yangon offices are on land directly owned by the military junta raises doubts about its human rights due diligence on loans in Myanmar.

Further, the World Bank’s letter to the junta meekly referred to “recent events,” and addressed the junta appointee as the “Union Minister” of the Ministry of Planning, Finance and Industry. It even asked the junta to spend funds only on “eligible expenditures.” This is in stark contrast to the CDM’s calls on the streets of cities across Myanmar; of Kyaw Moe Tu, Myanmar ambassador to the UN, not to recognise the junta; and the care taken by the Indonesian Foreign Ministry not to refer to the junta appointee as “the Foreign Minister of Myanmar.”  The World Bank must clarify that it is not the first international body to recognize the regime. MFIs must together condemn the coup and state unequivocally that: they support the CDM; will not work with the junta; and will cut off its access to IFI funds.

Full demands of Myanmar CSOs:

  • Stand in solidarity with Myanmar people
  • Immediately halt lending obligations, suspend disbursements, pending grants and loans across all sovereign and non-sovereign operations, until conclusive confirmation that these do not legitimize military rule
  • Recall loans linked to the military junta, its businesses, military-linked crony companies, and companies linked to individuals who have been internationally sanctioned
  • Reassess efficacy of loans to ensure they safeguard the rights of communities and their environment, and protect civil space
  • Respect calls to the international community to condemn the coup and military violence, and align with strong targeted sanctions against the military and its cronies
  • Work together to issue a joint IFI statement that says unequivocally: IFIs will not compromise development support in Myanmar by working with the junta, including on COVID-19 response
  • Closely monitor private clients and public projects to ensure respect for labor standards
  • Arrange a conference call between involved IFIs, Myanmar Civil Society Organizations, the Committee Representing Pyidaungsu Hluttaw (CRPH), ethnic political parties, and ethnic leaders

 

Outstanding loans

As of February 2021, the following project finance (combined amount of current and pipeline projects with IFI commitments via loans, grants, guarantees, financial intermediaries, and other financing modalities), support to COVID-19 response, and other financial transactions, totaling slightly more than US$ 11 billion, have been noted:

  • International Monetary Fund (IMF): US$689.24 million for outstanding loans and purchases
  • Consolidated COVID-19 response support from World Bank($818.53M), ADB ($394M) and IMF ($356.5): roughly US$1.6 billion
  • World Bank:

o   (IDA): 41 projects, roughly US$4 billion

o   International Finance Corporation (IFC): 38 projects, roughly US$850 million

o   Multilateral Investment Guarantee Agency (MIGA): 9 projects, roughly US$1.22 billion

  • Asian Development Bank (ADB): 97 projects, roughly US$2.7 billion
  • Asian Infrastructure Investment Bank (AIIB): 1 project, US$20 million

 

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