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CAMBODIA: World Bank Faces Kleptocracy Test

Marwaan Macan-Markar

BANGKOK, Aug 6 2007 (IPS) - For all its talk of good governance, the World Bank continues to choose its words carefully when reprimanding errant states it has big stakes in. What is happening in Cambodia is typical.

Over the weekend, the Bank’s new president, Robert Zoellick, uttered the customary warnings that his predecessors have done regarding rampant graft in the South-east Asian country. Phnom Penh should ‘’counter the challenge of corruption,’’ Zoellick told reporters Sunday at the end of his two-day visit.

His talks with Cambodian Prime Minister Hun Sen had touched on the widespread illegal logging networks that have come to symbolise the web of corruption across the impoverished nation. Hun Sen had admitted that there was ‘’a need to stop the logging operations,’’ Zoellick said at the press conference.

This visit was the first to a developing country since Zoellick, a former U.S. deputy secretary of state and a former U.S. trade representative, became the chief of the Washington D.C.-based international financial institution (IFI). He replaced Paul Wolfowitz, who stepped down on Jun. 30.

That mild tone against corruption in Cambodia was also mirrored in the formal press statement issued by the Bank at the end of Zoellick’s visit. The need to fight corruption received passing mention in a three-page Phnom Penh-datelined statement that touched, for the most part, on the other major interests of the Bank. The list includes the Bank’s role in supporting microfinance schemes, help in issuing land titles, coordinating aid and shaping the country’s development agenda.

‘’The World Bank wants to assist the (Cambodian) Government to enact reforms to reduce rural poverty, encourage social development, improve the business and investment climate, and strengthen the rule of law,’’ Zoellick said. ‘’These next, essential steps would help the Government earn the respect of entrepreneurs and investors and, more importantly, the appreciation of Cambodians, who have suffered much and seek the full benefits of peace, growth and opportunity.’’

These words help to gloss over a prospect looming in the distance that could be damaging to senior government officials with hands soiled by corrupt deals. In early July, the U.S. Senate urged the administration of President George W. Bush in a draft bill to impose travel bans on Cambodian officials named in a recent report on the country’s illegal logging network.

‘’If implemented, the proposed U.S. ban would (prohibit) senior Cambodian ministers, top-ranking generals and others’’ from entering the US, states Global Witness, the London-based environmental lobby, which produced the report, ‘Cambodia’s Family Trees – Illegal logging and the stripping of public assets by Cambodia’s elite’. ‘’It also wants other western and Asian countries to impose similar restrictions.’’

The Senate is acting on the 2006 Kleptocracy Initiative that was launched by Bush to combat high-level corruption, says Simon Taylor, a director at Global Witness. ‘’The initiative aims to shut out high-level corrupt officials from the global financial system, deny them a safe haven and recover and return proceeds of their crimes.’’

‘’Our report presents strong evidence that corruption and nepotism by high-ranking officials in the Cambodian government has facilitated extensive illegal logging in Cambodia; and that their involvement has undermined the rule of law, democracy and sustainable development,’’ Taylor revealed in an e-mail interview. ‘’The activities of these officials fall within the remit of the Kleptocracy Initiative, and they can be denied safe haven in the United States.’’

On the eve of Zoellick’s visit to Cambodia, Global Witness urged the Bank’s new chief to use his days in Phnom Penh to ‘’set the tone for his presidency and lay the foundations for the Bank’s approach to kleptocratic governments.’’ That would be a shift from ‘’the Bank and most other international donors (having) so far made little effort to call the (Cambodian) government to account on the issue (of illegal logging).

‘’(The) inaction by the donor community is symptomatic of its long-standing failure to ensure that aid strengthens governance,’ says Taylor. ‘’The donor-Cambodian government relationship has descended into a farcical exchange of money for empty promises, which confers legitimacy on those same officials who are looting the country.’’

It is a view echoed by Transparency International. In its 2006 corruption survey for the Asia-Pacific region, the Berlin-based global anti-graft watchdog described Cambodia as being among those with ‘’the highest perception of corruption.’’ The country stands out for ‘’the lack of political will to strengthen anti-corruption institutions,’’ consequently perpetuating ‘’rampant corruption’’ and ‘’undermining improvements in quality of life for the poorest citizens.’’

That year, the non-governmental Transparency ranked Cambodia 151 among 163 countries surveyed for corruption, where the country that topped the list was the least corrupt.

The Global Witness report, released in early June, revealed that the dominant logging syndicates in Cambodia were ‘’controlled by individuals related to Prime Minister Hun Sen, Minister for Agriculture Forestry and Fisheries Chan Sarun and Director General of the Forest Administration Ty Sokhun.’’

The annual timber haul from illegal logging was estimated to be over 13 million US dollars, the report, ‘Cambodia’s Family Tree,’ noted. Consequently, 30 percent of the country’s forest cover has been wiped off over a five-year period, it added. ‘’Illegal logging in Cambodia not only fills the pockets of the political elite; it also funds the activities of a 6,000-strong private army controlled by Hun Sen.’’

Over 35 percent of Cambodia’s 13.3 million people live in poverty, on less than one dollar a day. The World Bank is among a group of aid donors who help the country, pumping in financial assistance that accounts for close to half of the country’s national budget. In June, the donors pledges 689 million dollars.

It was only last year that the Bank responded to corruption, freezing 7.6 million dollars for three projects it was funding, including a water supply and sanitation scheme.

But that was a departure from the norm since the Bank stepped in to shape Cambodia’s development agenda following a peace accord in the early 1990s, bringing to an end decades a bloody conflict. ‘’The World Bank cannot afford to crack the whip on corruption in Cambodia, because it has too much to lose,’’ says Shalmali Guttal, a senior researcher at Focus on the Global South, a Bangkok-based regional think tank.

‘’Corruption is deeply entrenched in Cambodia and so is it within the development system and the aid industry,’’ she told IPS. ‘’The World Bank has been in charge of this development model. It has held it up as a post-conflict reconstruction country.’’