The dirty side of development finance
This week, all the public development banks in the world are gathering to make post-Covid plans. But guess who doesn't have a seat at the table?
This article is part of ourEconomy's 'Decolonising the economy' series.
The question is simple: “Development for whom?”
Juan*, a community leader from the micro-region of Ixquisis, in Western Guatemala, has been raising this question for years.
When the Inter-American Development bank and other financiers began talking about building three hydroelectric dams along the Pojom and Negro rivers, the word ‘development’ became the smokescreen for giving freeway to corporations. The pristine hills of Ixquisis, where local indigenous communities of Mayan descent had been living for centuries, were plundered, polluted and militarized.
“The bank violated our rights”, says Juan. “It did not carry out any consultation here. It lent money to exploit our land, to destroy our hills, the mountains and the rivers. The army came here, the police intoxicated people with tear gas. We have been arrested and criminalized. You can’t call this development. This type of development only benefits the company, not us”.
Human rights abuses and lack of meaningful consultation are a common feature of many of the so-called “development projects”. Human rights defenders, civil society and local communities all over the world have been denouncing the inherent, structural problems of the current development model for years. Yet, banks keep burying their head under the sand, failing to recognise these problems and to address them.
On 9-12 November, for the first time ever, all public development banks in the world will gather together at the Finance in Common Summit. A high-level event, with heads of governments and representatives from around 450 finance institutions, who will meet to discuss their Covid-19 recovery plans and the future of “sustainable development”.
In their talks, though, there will be no space for human rights. Despite calls from UN experts and civil society, communities directly impacted by development projects will not have a seat at the table. With the same top-down approach that characterizes most development finance activities, all decisions at the Summit will be taken without listening to affected communities, ignoring their concerns, their needs and their priorities.
“In the name of development, these banks spread destruction in our communities”, says Vidya Dinker, social activist and president at the Indian Social Action Forum (INSAF). “They do this in our name, especially in the Global South, but not because we’re important to them. They only care about pushing out their loans. I don’t think we should be surprised that matters important to us – environmental, social and human rights – are not important for them. The signal is loud and clear: there will be a big summit, 450 banks will be there, but they don’t need us there. They’ll just continue to spread inequality and debt across the world”.
Public development banks control $11.2 trillion in assets in total. The amount they invest annually is equivalent to the economies of 110 countries combined. Since the pandemic started, they have committed around US$97.2 billion for over 700 COVID-19 related projects. But these funds are rarely bringing benefits for the most vulnerable. Instead, development finance often exacerbates inequality, corruption, poverty, debt, and human rights abuses.
In Armenia, for the past two years, local residents have been protesting against the development of the Amulsar gold mine. Built near the touristic spa town of Jermuk by the international mining company Lidyan, the mine would pose a threat to the environment and livelihoods of the local people. As the company plans to use cyanide to leach gold concentrate, the precious water sources in the area are in danger.
“We have a successful, 70-year-old spa business here, and farmers who provide the resort with their agricultural products. We are just struggling to have a peaceful corner to live our lives. But the development banks have come here to tell us we did not develop well, that they need to bring development. But that means to poison us”, says local activist Tehmine Yenoqyan.
In 2017 the International Finance Corporation withdrew from the project and in August 2020 the European Bank for Reconstruction and Development terminated its funding, but the construction is still going ahead. This summer, tensions rose again when local activists – who have been peacefully blocking access to the mine for the past two years – were forcibly removed by the mine’s newly-hired security firm.
As it emerges in the report “Uncalculated Risks”, published by the Coalition for Human Rights in Development, threats and attacks against human rights defenders and local communities who protest against the imposition of development projects in their territory are widespread all over the world.
In Kenya, for example, the Sengwer indigenous communities in the Embobut forest have been facing forced evictions, loss of livelihood and violent attacks because of a conservation project approved in the name of “sustainable development”.
Between 2007 and 2013, the World Bank gave US$57 million to carry out a Natural Resources Management Project. To secure the funding, the government approved an indigenous peoples plan and promised it would no longer displace members of the Sengwer community from their ancestral lands.
"But they immediately broke their promises. When the project started, the Kenya Forest Service burned down hundreds of houses, properties were demolished, even school uniforms and children's textbooks were burned, everything was destroyed”, says Y, a Sengwer community leader.
In 2014, an investigation by the Inspection Panel, the World Bank’s independent accountability mechanism, found that the bank should have anticipated the risk of violent evictions. Yet, in 2016, the European Union’s European Development Fund (EDF) approved further funding for the Water Tower Protection and Climate Change Programme.
Violent evictions continued. In 2017, human rights defender Elias Kimaiyo was attacked, while he was taking photos of Kenyan Forest Service (KFS) officers burning homes in the forests. Less than a year later, forest guards started shooting at a group of Sengwer people who were tending their cattle. Robert Kirotich was killed and two other men were severely injured. The day after, EU officials finally announced the suspension of funding.
The situation, however, did not get any better: “We, the Sengwer people, are still living in fear. Even as we speak now, we cannot even build houses, because the KFS will come and burn them down. We’re living in makeshift houses or in caves. And we are not aware of what the government is planning. Anything can happen, any time”, says Y.
In Nepal, the European Investment Bank (EIB) is funding a 220 kV transmission line project in the Lamjung district, failing to respect the right of the local indigenous communities to free, prior and informed consent. Project documents were primarily provided in English and, even in those rare cases where consultations took place, communities could not participate meaningfully and negotiate compensation rates.
“We were not involved in the decision making process”, says a local community member. “The project is going to impact our sacred sites, our land, our natural resources and livelihoods. We were not compensated and we are concerned about the health and environmental impact, and we have been constantly protesting against the project for the past four years. Because of this, local authorities and project officers have threatened to jail us, accusing us of misleading our community and mobilizing people against the development project”.
At Finance in Common, hundreds of representatives of public development banks, regional finance associations, private companies, and governments will all have a chance to present their ideas for the future of development. But the voices of those who bear the brunt of the so-called development projects, once again, will be completely ignored.
“What communities and people on the ground know and what they experience is shoved aside; the juggernaut of development is rolling over our communities”, says Vidya Dinker. “People have no space to make decisions. But now we should take all possible spaces, to consolidate networks among ourselves, and to push back. Solidarity among communities around the world during Covid-19 has been exceptional, and there’s a feeling of shared loss and challenges that brings us together. If we can hold space, that bodes well for the future”.
*some names have been anonymized for security reasons.
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