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Development & Aid

World Bank Returns to Myanmar, Pledging 245 Million Dollars

WASHINGTON, Nov 2 2012 (IPS) - The World Bank has approved a major new development package for Myanmar, marking the first time the Washington-based development institution has lent to the country in a quarter century.

The move was announced following a vote on Thursday by the World Bank Group’s board of directors, which formally approved a new interim strategy that will now guide the bank’s actions in Myanmar, formerly known as Burma, for the next year and a half.

According to the strategy’s priorities, the bank’s work over that period will focus primarily on strengthening Myanmar’s public financial management, overhauling its regulatory regime and bolstering the country’s anaemic private sector.

“In the next 18 months, we’ll be building up a great knowledge base of the key development challenges facing the country,” the bank’s country manager for Myanmar, Kanthan Shankar, said in a statement on Friday.

“We’re also aiming to help the government develop not only a stable, well-functioning financial system, but also considering work in other areas like helping to improve infrastructure and electricity generation, so the people of Myanmar see results on the ground.”

Under the new agreement, grants worth 80 million dollars will be made available immediately, aimed at local infrastructure and development projects. Meant to offer “quick benefits to the poor and vulnerable”, the bank says the programme will “empower rural communities to choose investments they need most, such as roads, bridges, irrigation systems, schools, health clinics or rural markets”.

Initial project sites will operate in 15 areas throughout the country, with poverty levels used as the primary criteria. According to the initial project design, each community will be tasked with first electing a council that, in turn, will identify local needs, come up with project plans and be responsible for contracting out materials and labour.

In addition, the World Bank and other bilateral and multilateral donors are slated to meet in January to work towards clearing the country’s estimated 11 billion dollars in foreign debt and arrears. These figures have mounted over decades of mismanagement by the military government that ran Myanmar until late 2010, when a new quasi-civilian, reform-minded government took over.

Once the roughly 400 million dollars Myanmar owes the World Bank is addressed, bank officials say additional lending of 165 million dollars will be made available. The January meeting will also pave the way for the restarting of a full country programme.

Rose-tinted strategy

Civil society observers in and out of Myanmar have increasingly been warning donors against being overeager in re-engaging with the country. A primary worry here is that offering significant concessions would weaken the international community’s ability to react punitively should the Myanmar government begin to renege on the current reforms process.

Many thus see the World Bank’s interim strategy as an important test case.

“The World Bank’s re-engagement plan for Burma looks naive on human rights,” Jessica Evans, a researcher with the Washington office of Human Rights Watch, a watchdog, told IPS. “The strategy celebrates Burma’s steps toward reform while closing its eyes to the ongoing repression.”

Indeed, recent weeks have publicly underlined the Myanmar government’s still problematic relationship with the country’s many ethnic communities. Most notably, sectarian violence has again flared up in the western state of Rakhine (Arakan) involving the Muslim minority Rohingya, a long oppressed group that has been systematically denied citizenship since the early 1980s.

In addition, there are ongoing allegations of the arrest and prosecution of peaceful protestors, alongside flagrant abuses in conflict zones where government forces have battled armed ethnic minorities for decades.

In a detailed set of recommendations sent to the World Bank in September, Human Rights Watch called on the institution to “require that proposed projects in Burma go forward only after specific human rights safeguards have been rigorously implemented”.

The recommendations also noted that the bank “does not have non-discrimination safeguards, but considering the recent inter-ethnic violence in Arakan State and history of ethnic conflict and discrimination generally, this is of crucial importance for all projects in Burma”.

Evans noted, “A principled donor should offer a frank, honest assessment of the climate for development, and identify the urgent changes that are still needed, but the World Bank instead suffers from a rose-tinted view on human rights in Burma.”

After sanctions

Preliminary assessments to buttress the World Bank’s new work have followed the institution’s reopening of its country offices in August. That event marked a first since 1987, when Myanmar’s military government significantly stepped up a vicious campaign against opposition to its rule.

Most other multilateral and bilateral donors subsequently halted nearly all assistance to Myanmar, with the exception of Japan, long the country’s largest donor, which cut its assistance by more than two thirds. (Notably, though, Chinese aid expanded exponentially during this period of Western opprobrium.)

Over the coming years, several Western governments, most notably those of the United States and the European Union, instituted severe economic sanctions that successfully isolated the junta on the international stage, while also nearly halting the Myanmar economy.

But over the past two years, and accelerating in recent months, most governments have withdrawn these punitive measures and instead begun ramping up foreign assistance efforts, partially in an attempt to reward the complicated reforms process overseen by President Thein Sein.

Ahead of the president’s attendance at the General Assembly in September, the United States government lifted its final remaining sanctions on Myanmar. And in mid-October, U.S. Secretary of State Hillary Clinton reversed longstanding policy that allowed Washington to support international assistance to Myanmar through international financial institutions such as the World Bank.

The move was significant, as the United States is the world’s largest donor, funding a significant chunk of the World Bank and International Monetary Fund (IMF) budgets. The IMF will reportedly be sending a team to Myanmar early this month.

On Friday, State Department spokesperson Victoria Nuland noted that the United States is “very pleased to see [the World Bank lending] go forward”.

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