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The AIIB's Road of Disillusionment: from the ESF to the Transport Sector Strategy. Notes on Early Relationships between the Asian Infrastructure Investment Bank and Civil Society. АБИИ и НКО взаимное избавление от иллюзий.

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  • Daursky Biosphere Reserve and School of Humanities & Social Sciences at UNSW Canberra
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Abstract and Figures

This paper tracks development of AIIB's dialogue with civil society organizations (using RwB's experience as example) in first three years of the Bank's existence. It starts from the moment there was hope that the AIIB is genuinely seeking new unbeaten path to green development (mixed with fears it is a part of conspiracy for destruction of the existing safeguards in international finance) and traces the dialogue to the final boring revelation that it is just seeking to be "like other MDBs". Paper describes only episodes in which the RwB Coalition took part and may omit certain other lines of action, where the RwB was not active. The paper describes process and outcomes of AIIB\CSO interaction and questions viability and effectiveness of currently existing relationship.
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Eugene Simonov, Coordinator, Rivers without Boundaries International Coalition (RwB).
The AIIB's Road of Disillusionment: from the ESF to the
Transport Sector Strategy.
Notes on Early Relationships between the Asian Infrastructure
Investment Bank and Civil Society12
AIIB's President Jin. Historic "resettlement speech". Beijing, June 2016
Contents
Introduction .................................................................................................................................................. 2
Is the AIIB a part of the Belt and Road Initiative? ......................................................................................... 3
AIIB Compliance, Effectiveness, and Integrity Unit (CEIU) ............................................................................ 4
First Encounter: Environmental and Social Framework (ESF) ....................................................................... 6
Long Battle: Energy Sector Strategy .............................................................................................................. 8
Civil Society Self - Organizing ....................................................................................................................... 9
Little Progress in Ongoing Consultations .................................................................................................... 11
Long discussions about ever evolving Complaints Handling Mechanism ........................................... 11
Draft Policy on Public Information (PPI) .............................................................................................. 14
AIIB Transport Sector Strategy and Study ........................................................................................... 15
Conclusion ................................................................................................................................................... 18
1 Special thanks to Adina Matisoff, Researcher from Department of Geography, University of California, Los Angeles, who
provided valuable comments and edits to initial draft.
2 This overview of AIIB relations with CSOs was first written by Eugene Simonov (RwB) on request of WWF Russia to facilitate
preparation for a teleconference with AIIB on Sept 12,2017. It is partly based on notes taken by other members of CSO AIIB
Working Group.
1
Introduction
The Asian Infrastructure Investment Bank (AIIB), created in 2015 following China’s initiative, has become
the most frequently discussed finance tool in implementing the Belt and Road Initiative (BRI). Fifty-seven
countries joined in as founding members (and 80+ are members by mid-2018), but almost one third of
the initial capital of $100 billion will come from China. This bank's web-site specifically presents it as a
motor driving the construction of "sustainable" infrastructure in Eurasia, with stated preference to
cross-border and PPP projects. The AIIB founders also include more than a dozen European countries
(such as France, Germany, the UK, and Italy), as well as Australia, which as many observers naively hope
politically CANNOT afford to lower the bar of the environmental and social requirements compared to
the existing international financial institutions. It was expected that under pressure from those
members and civil society, the AIIB will be forced to adopt high standards in comparison to those
developed by the World Bank and other Bretton-Woods institutions. (As the public learned later it opted
for "comparable standards"). Emergence of the BRI and its multiple finance mechanisms affects
conditions for operations of other multilateral development banks and bi-lateral finance institutions.
Dozens of existing International Finance Organizations (IFIs) have already signed co-financing
agreements with the AIIB and New Development Bank (BRICS-NDB).
Being the most advanced China-led multilateral finance institution related to Belt and Road Initiative
(BRI) the AIIB naturally attracts much attention from civil society organizations (CSO) community. CSOs
participated in commenting on AIIB's Environmental and Social Framework, Energy Sector Strategy,
some projects and attended two AIIB Annual Meetings in 2016-17. Consultations on Draft Complaints
Handling Mechanism3 (CHM) have been started in early 2017 with invitation for the public to submit any
considerations upfront in absence of any draft document4 and only in early 2018 public meetings were
held on the CHM and Public Information Policy. Finally in May 2018 the draft Transport Strategy was
posted for public comment...
This paper tracks development of AIIB's dialogue with civil society organizations (using RwB's
experience as example) in first three years of its existence. It starts from the moment there was hope
that the AIIB is genuinely seeking new unbeaten path to green development (mixed with fears it is a
part of conspiracy for destruction of the existing safeguards in international finance) and traces the
dialogue to the final boring revelation that it is just seeking to be "like other MDBs". Paper describes
only episodes in which the RwB Coalition took part and may omit certain other lines of action, where the
RwB was not active.
3 https://www.aiib.org/en/policies-strategies/operational-policies/complaint-mechanism.html
4 This author would argue it is a bizarre approach because it limits circle of potential participants of the first round to the most
prepared CSOs and later may provide Bank with an excuse not to subject "Second Draft", incorporating\reflecting Bank's
responses to comments from the first round, to the second round of consultations (as was duly done in case of the AIIB Energy
Sector Strategy and in general is recognized as "good practice")
2
Author at the AIIB II AGM in Jeju, Korea,2017. Photo by Mark Grimsditch.
Source: AIIB 2018 Presentation (Symbolic picture - look what they have done with the mountain)
Is the AIIB a part of the Belt and Road Initiative?
In many public meetings in 2016-17 the AIIB officials assured various audiences that they are "not driven
by China's Belt-and-Road Initiative" but by their own policies, which are "just at formation stage". They
do it so insistently and passionately, that it is easy to believe, however, objective analysis shows that the
AIIB is also one of most successful elements of overall BRI policy of China5.
Finally by the beginning of the 2018 the AIIB started to acknowledge its direct interconnection with the
B&R, listing it as the largest of 3-4 regional economic integration initiatives it supports (e.g., Greater
Mekong Subregion Economic Co-operation Program, Central Asia Regional Economic Cooperation, Belt
and Road Initiative, ASEAN, etc.)6 .Omission of the Eurasian Economic Union championed by Russia (as
well as absence of projects on territory of that major AIIB stakeholder) is also a very telling detail,
reflecting both Western international sanctions and rivalry with China over influence in Central Asia.
The BRI is "building community of common destiny" but "with distinct Chinese characteristics". From all
corridors and alliances set up to promote that, the AIIB so far has achieved widest acceptance among
many countries, while it continues to promote core objectives and most important themes of the BRI.
Examples include:
-Promoting large-scale infrastructure in Asia along "Belt and Road" economic corridors;
-Preference for cross-border energy high-voltage transmission options, which are one of core "advanced
technologies" to be shared by China with the rest of the world (see Global Energy Interconnection7 and
compare with the wording in the Energy Sector Strategy (AIIB ESS));
-Keeping India in the loop of "common destiny" despite the fact it opposes all other elements of BRI;
-Retaining transportation of hydrocarbons and development of large hydropower as key priorities;
-Not accepting need for free, prior and informed CONCENT of indigenous people as precondition for
any project affecting them(try to find mentioning indigenous rights in declared BRI policies);
5 Standard mantra on the subject http://www.xinhuanet.com/english/2018-01/17/c_136901984.htm
6 https://www.aiib.org/en/policies-strategies/_download/transport/2018_May_AIIB-Transport-Strategy.pdf
7 http://www.geidco.org/html/qqnycoen/col2015100724/column_2015100724_1.html
3
Finally Chinese government itself openly recognizes AIIB as key China-led IFI intended for the Belt and
Road development. It is explicitly stated in the "Vision for the Belt and Road" and several other
documents. For example, "Guidance to Promote Green BRI"(NDRC\MEP, April 20178) states: "We will
push China’s financial institutions, multilateral development agencies initiated and participated by
China and relevant enterprises to adopt the principle of voluntary environment risk management so as to
support green ‘Belt and Road’ Initiative."
Therefore the AIIB is a multilateral development bank established to support the Belt and Road
Initiative and broaden its reach. At the same time, in two years of its existence the AIIB has not yet
significantly deviated from the mainstream pattern of lending of other multilateral development banks
(MDBs) and by no means introduced any new models of lending and project design. Nevertheless, its
emerging policies, as discussed further, do contain a risk to undermine global MDB standards for good
governance and environmental protection. There has been a widespread hope that the AIIB dialogue
with civil society organizations (CSOs) is helping to reveal such risk and confront them before there are
fully legitimized and institutionalized.
All that said about AIIB and BRI we must note that most of Chinese overseas investment along the BRI
economic corridors obviously is channeled and will be channeled in future through other finance
institutions , such as policy banks and specialized funds. In this respect hyper-attention to AIIB as the
"focus" of the BRI is misleading, as Hameiri and Jones argued recently. 9
AIIB Compliance, Effectiveness, and Integrity Unit (CEIU)
The AIIB has structure quite generic for all MBDs, so we skip its description available on-line from the
Bank. It has only one rather unique department - the Compliance, Effectiveness, and Integrity Unit (CEIU)
- owes its broad mandate to perceived necessity to strengthen capacities of the non-resident Board.
Hamid Sharif who served as Country Director for the People’s Republic of China at the Asian
Development Bank (ADB) was appointed as Director of CEIU in April 2017 10.
February 2018 Organizational Structure of the AIIB
8
关于推进绿色一带一路建设的指导意见
https://eng.yidaiyilu.gov.cn/zchj/qwfb/12479.htm
http://www.mep.gov.cn/gkml/hbb/bwj/201705/t20170505_413602.htm
9Hameiri and Jones 2018. China challenges global governance? International Affairs 94: 3 (2018) 573593; doi: 10.1093/ia/iiy026 https://academic.oup.com/ia/article-
abstract/94/3/573/4992402
10 https://www.aiib.org/en/news-events/news/2016/20160414_001.html
4
According to published AIIB Structure 11 the Compliance, Effectiveness, and Integrity Unit (CEIU) is the
only department answerable directly to the Board of Directors. The CEI Unit's mandate includes
monitoring and evaluating the Bank’s portfolio, ensuring policy compliance12, and overseeing internal
and external grievance procedures. Some NGOs claim that not all those functions are compatible with
each other.
We have not found did any mentioning of CEIU in publicly available statutory documents of the AIIB,
neither any terms of reference for its work. According to the Bank's own writing "the primary
responsibility of the CEIU is for the Bank’s effectiveness assessment, including through evaluation". But
in 2017, CEIU commissioned a small consultant study to start exploring what evaluation in AIIB might
entail and can draw information from that document 13. it is also known from Hamid Sharif that CEIU
team visited some of accountability mechanisms at other MDBs14 and came to conclusion that "They all
act too late", "they spend too much", and "we will be different".
The abovementioned Consultant ToR stresses that it also has to develop links between evaluation and
the Unit’s accountability and learning functions, and to deepen its approach to effectiveness. From AIIB
web-site we know that:
-Complaints Handling Mechanism (CHM) should aim to proactively support compliance to prevent
problems during project design and implementation, and respond rapidly to solve the problems of
people who believe they have been or will be adversely affected by AIIB projects. The mechanism should
also help AIIB to continuously learn from its experiences and strengthen its development practice. They
also want complaints handling mechanism to play a role in dealing with systemic issues such as…, and
generally helping AIIB to be a learning organization. By early 2018 the CHM was also called Project
Affected Peoples Mechanism (PPM).
Beyond CHM\PPM the CEIU seeks to:
- Develop a definition of effectiveness/success for AIIB and to propose quantitative and qualitative
indicators;
- Develop guidance on constructing a results framework for projects.
Beyond that by definition they also manage CORRUPTION, which is essential aspect of any project. AIIB
recognizes the considerable work done by other multilateral development banks and unilaterally adopts
the list of sanctioned firms and individuals put out by the five banks that are parties to AMEDD ,
provided they also meet the additional criteria set out in AIIB’s Policy on Prohibited Practices . These
banks are the African Development Bank , the Asian Development Bank , the European Bank for
Reconstruction and Development , the Inter-American Development Bank , and the World Bank
Group .15 Beyond that little is known about advance of anti-corruption activities at the AIIB.
What else is AIIB CEIU planning on fighting? Optimistically thinking, the anti-corruption mechanism
would also prevent megalomania in infrastructure project design, where costs (env. costs included) are
routinely underestimated, while social and economic development outcomes are grossly overestimated.
Brilliant precautionary approaches are developed and tested by Bent Flyvbjerg and his team at Oxford
University16.
All that listed, the CSOs learned that by July 2017 the CEIU had hired only 3 workers...
So far it is difficult for outsiders to judge effectiveness of the CEIU work, since it is being done without
publicizing the process and outcomes. CEUI Head reports to the Board, but there is extremely little
11 https://www.aiib.org/en/about-aiib/governance/_common/_download/AIIB_organizational_structure.pdf
12 https://www.aiib.org/en/policies-strategies/_download/policy-on-prohibited-practices/policy_on_prohibited_practices.pdf
13 https://www.aiib.org/en/opportunities/career/job-vacancies/consultant/job-details/job-consultant-c16009.html
14 http://independentaccountabilitymechanism.net/
15 https://www.aiib.org/en/ news-events/news/2017/20170307_001.html
16 https://www.researchgate.net/profile/Bent_Flyvbjerg
5
information on its substantive activities and achievements in the public space. It is even unclear whether
AIIB Policy on Public Information applies to the CEIU's work. As long as public information aspect is
unresolved CSOs concerns regarding appropriateness of the Unit's setup remain fully justified.
First Encounter: Environmental and Social Framework (ESF)
The ESF was the first document to be discussed with CSOs.
In the Asian Infrastructure Investment Bank environmental safeguards function should be fulfilled by
use of the Environmental and Social Framework (ESF) document written in aspirational language
without specific measurable requirements. This policy guidelines, yet to be tested, in 2015 has been
subject of heated discussion between the AIIB Interim Secretariat and international civil society. In the
second half of 2015 AIIB Organizing Secretariat announced very short "public consultation period" for
Draft Environmental and Social Framework17 (ESF) of the future Bank. The Secretariat denied requests
for face-to-face consultations with CSOs and refused to translate drafts to languages other than English.
This evoke fierce reaction from many civil society networks. Many NGOs from 20 countries of Eurasia
claimed that ESF has not been designed with sufficient detail and was not subjected to due public
consultation process conducted in national languages in AIIB member-countries. Still many organizations
submitted written comments and participated in video-conferences with AIIB consultants collecting
public comments. Although consultation process was clearly insufficient, ESF has been slightly modified
in the course of this discussion, approved and now undergoes its first trials. The RwB18 did analyze which
of its comments were adopted\rejected, but such analysis across the full collection of CSO requests is
not available to us.
Some NGO experts believe that ESF has been improved in certain details, while others hold opposite
views. Bank Information Centre (US NGO) keeps track of many CSO submissions1920. Some major points
discussed in relation to ESF include such examples as:
a. Denying indigenous lands and rights. AIIB denied UN standard for FPIC (free-prior -informed-consent)
on project from indigenous peoples and instead declared "FPICon" (free prior informed consultation),
which is akin to abovementioned official's statement "there’s broad agreement that the consultations
we had were meaningful" where AIIB bureaucrat himself defines whether or not any agreement has
been reached. At the first Annual Meeting in Beijing in 2016 the AIIB President gave passionate, sincere
and completely arrogant speech on the topic of resettlement21: “Of course, in resettlement in some of
the countries, there might be some problems to deal with, but that’s no excuse for any family to refuse to
move … it would probably create a little bit of a problem for them because they would be moved to a
new neighborhood, but that’s a sacrifice perhaps everybody has to make in order for everybody to
benefit from this process. So we think we have to take care of these issues, but I think it is ultimately
important for the host government to look at all these aspects...” This sets threatening perspectives for
vast wild lands of Eurasia preserved as traditional use of their land by indigenous peoples.
b. Recognizing value of ecosystem services. On request of conservation NGOs the AIIB openly recognized
the importance of "green infrastructure": The Environmental and Social Framework says " The Bank
recognizes the value of natural infrastructure, such as wetlands, and the importance of enhancing or
restoring ecosystem services where appropriate." (AIIB ESF 2016).
c. The AIIB ESF has a very liberal " Exclusion list" that does not exclude projects with most likely heavy
negative impacts, such as large dams. In our opinion it would be wise to remove such classes of projects
from consideration at project identification phase, which would greatly help AIIB and other
17 http://www.aiib.org/uploa dfile/2016/0226/20160226043633542.pdf
18 https://www.researchgate.net/publication/325103059
19 http://www.bankinformationcenter.org/our-work/aiib/
20 http://www.safeguardcomments.org/aiib-esf--ngo-comments.html
21 Workshop -Financing Green Infrastructure https://www.aiib.org/en/news-events/events/2016-annual-meeting/index.html
6
unexperienced, poorly staffed new finance institutions (at least until they demonstrate development of
mature implementation mechanism for ESG safeguards and public accountability procedures).
Source: AIIB 2018 Presentation
d. The greatest of all problems is absence of true strategic planning and consideration of sustainability,
potential alternatives, environmental and social risks at very late stages of project identification and
approval process (which is very vaguely defined). Public participation in this process is also constrained.
Any public information on project identification appears on the AIIB website at stage 3 out of 4 stages
shown on AIIB's own slide above. Judging from AIIB's "strategies" and other publicly available
documents until project concept is being produced there is. likely, no systemic application of
environmental and social criteria (beyond simplistic GHG considerations), it is very much a process
driven by financial and political considerations. Our appeals to AIIB Management to develop and reveal
formal "Project screening and identification policy" yielded little no result so far.
The RwB 's main comment during consultations went unanswered till nowadays: "The AIIB is about to
fall into a trap common for all pre-existing MDB's - too narrow focus on specific "Projects" without
profound evaluation of broader context, available options and policy environment in advance of project
identification. For example the Draft AIIB ESF does not contain provisions for formal assessment
procedures (and public consultations) even for AIIB own policies, which is exemplified by haphazard,
non-transparent and inadequate evaluation\consultation procedure for Draft ESF itself. Unless AIIB itself
implements serious strategic assessments of sectors\regions and screening of available alternatives, the
idea of relegating major responsibility for due diligence and safeguards to the client becomes truly
dangerous due to limited capacity and incentives for potential clients to identify sustainable low-impact
projects. Besides as we explain elsewhere such viable projects are simply not available in most countries.
We recommend AIIB to make mandatory use of SEAs and other means to proactively pre-select (and
design) projects and work priorities, including assessments\comparison of available alternatives. ..."22
The operational policies that should guide implementation of the ESF have been under preparation for
two years. In December 2017 without any prior notice and public consultations the Bank approved
Directive for ESF Implementation23. This largely logistical\procedural document should be followed by
Administrative Guidance describing operational policies for the ESF implementation. At February 2018
hearings on Information Policy in February 2018 the RwB requested from AIIB to subject this
Administrative Guidance to public consultations.
22 RwB submission at ESF Consultations, October 21, 2015
23 https://www.aiib.org/en/policies-strategies/_download/environment-framework/environmental-and-social-directive.pdf
7
Long Battle: Energy Sector Strategy
So far the Energy Sector Strategy (ESS) was subject to longest and most elaborate public consultations
from among all AIIB documents adopted to date (May 2018).The AIIB web-site24 reflects sequence of
Strategy drafts (two of them were subject to consultations). However the AIIB uses very inappropriate
general format to display opinions expressed during consultations. It uses generalized "statistics of
opinions" despite multiple requests to employ standard response matrices to answer one by one
questions raised by consultation participants25. So CSOs on their own web-sites disclosed available
submissions to consultations 26. And the AIIB consistently refused to subject the "Strategy" to face-to-
face consultations with potentially affected communities in countries of operation.
The WWF Russia, BCC and Greenpeace Russia also helped the RwB in developing second batch of
comments in early 201727 28. In addition to general comments to the full Draft Strategy29, The RwB
Coalition was also asked by the AIIB Russian ED to develop special review on hydropower development
issues. This Review30 has been extensively used by CSOs, AIIB staff and BoD, experts, etc. Resulting
Strategy has slightly improved according to those suggestions in many places, for example, it
recommends basin-wide strategic assessments before any particular greenfield hydropower projects are
considered. RwB advice (as expected) did not succeed in taking large hydro out of the strategy, but it
helped to introduce many additional conditions and alternative solutions.
Another problem CSOs addressed is that the Strategy promotes "connectivity" as one of its key
principles, on which some NGOs expressed their concern, emphasizing that "financing high-voltage
transmission lines across borders and regions may mean putting massive investments into the outdated
energy systems that will freeze development of sustainable energy sources and more active involvement
of citizens in energy production at a small scale......31". Instead, they advocated for advancing “state-of-
the-art small scale renewable technologies, combined with the development of smarter grid
management” that can transform visions of energy systems. NGOs were also worried that export-
oriented transboundary energy networks for electricity and gas may make resource-rich countries
further focus on the development of the extraction of the natural resources and development of the
infrastructure to ensure its export. . Finally we urged AIIB to pay attention "to extremely high
environmental and social risks as well as geopolitical tensions created by over-emphasizing export-
oriented hydropower by such countries in Asia as Tajikistan, Myanmar and Lao DPR".32 The AIIB slightly
changed its tone on "connectivity" in the final text of the Strategy, emphasizing the need to pay
attention to potential social impacts and risks of ecosystem fragmentation". So far the AIIB approved
only one high-voltage long distance transmission project in India that connects southern energy-thirsty
provinces to northern energy sources. Likelihood that the AIIB finances transboundary transmission in
near future is low due not so much to environmental or social risks, but to uncertainties of economic
returns u and transboundary political tensions causing delay to such projects. Thus CASA-1000 Project
initiated by the Word Bank 33a decade ago to connect hydropower in Tajikistan and Kyrgyz Republic with
consumers in Afghanistan and Pakistan. The project is still struggling to hire contractors for erecting
transmission lines and protect them from Taliban guerillas.
Strategy document would have been much worse without our intervention, but it is still bad enough to
keep pressing for improvements and even full revision. All in all despite concerted CSO effort and
multiple changes of wording no decisive progress has been achieved in transforming this ESS as a whole
24 https://www.aiib.org/en/policies-strategies/strategies/sustainable-energy-asia/index.html
25 https://www.aiib.org/en/policies-strategies/strategies/sustainable-energy-asia/.content/index/_download/Summary-of-Comments-on-Issues.pdf
26 http://www.bankinformationcenter.org/civil-society-submissions-on-aiib-energy-policy/
27 https://www.researchgate.net/publication/322486527
28 https://www.researchgate.net/publication/325102977
29 http://www.bankinformationcenter.org/wp-content/uploads/2015/11/RwB-and-Sosnovka-Comments-on-AIIB-Energy-Strategy-Note.pdf
30 https://www.researchgate.net/publication/322386465_
31 BothEnds and 6 other NGOs. Comments to AIIB’s Energy Strategy: Sustainable Energy for Asia Issues Note for discussion November 8, 2016
32 RwB Coalition and CEE Bankwatch joint submission to AIIB , March 2017
33 https://thediplomat.com/2016/05/world-bank-tries-to-answer-casa-1000-criticisms/
8
into mechanism for green development. Instead the ESS still largely reflects thinking of the past and
fears\aspirations of two mighty hydro-lobbies (hydro-carbon and hydro-power). This discrepancy was
openly admitted and explored at the II Annual Meeting during Energy Workshop, which innovative
contents was completely antithetical to the ESS adopted the same day. At the II Annual AIIB Meeting
many CSOs openly expressed their severe disappointment to the AIIB Board of Governors34.
AIIB at its first meeting proposed to discuss "why does there remain a shortage of bankable
infrastructure projects?". The backwards nature of the ESS is partly due to severe lack of bankable
"green" projects in Asian countries, that have support from their governments. Presently majority of
infrastructure\energy project designs on the governmental tables are 30-70 years old ideas completely
inappropriate for building sustainable future. AIIB competes with ADB 35 and other MDBs for
infrastructure worth investing; many more promising projects are co-financed by several MDBs. In
reality BRI finance institutions should adopt "green credit guidelines" and extensive training\technical
support mechanisms to ensure preparation of greener bankable projects in all Belt and Road countries.
Unfortunately, these needs are not reflected in "Application form" or "Rules and Procedures" for the
AIIB Project Preparation Special Fund, which could serve this purpose36. So far grants for project
preparation have been given to only two non-energy projects in Nepal and Sri-Lanka.
Actual energy project portfolio funded by the AIIB37 before the ESS adoption in June 2017 was much
worse than the reading of ESS makes you expect, for it contains large gas pipeline in Azerbaijan\Turkey,
gas-thermal power plant in Myanmar, gas infrastructure projects Bangladesh, two large hydropower
upgrades in Pakistan and Tajikistan. The only two potentially benign projects in electricity grid
development and upgrades are funded in India and Bangladesh. There were no funded projects
dedicated to wind, solar, energy storage facilities, smart grids or other more advanced alternative
energy options. The only solar plant on the list located in Karaganda Province of Kazakhstan has been
removed from "waiting list", likely, because it got funding from elsewhere. To confront criticism the AIIB
in late 2017 funded a large solar project in Egypt and extremely controversial "Beijing Air Quality
Improvement and coal Replacement Project"38 , but its list of proposed energy projects at the beginning
of 2018 features only gas storage in Turkey, gas-diesel power plant in Bangladesh, power transmission in
Tashkent (Uzbekistan) and the infamous Nenskra Hydro in Georgia39. None of those in waiting could be
characterized as genuinely "green energy".
Civil Society Self - Organizing
In June 2016 the newly formed AIIB ESF Civil Watch Coalition organized a CSO workshop to exchange
views and coordinate actions during the AIIB Annual Meeting in Beijing. In July this was followed by
broader-scope meeting on the "OBOR Energy and Infrastructure Nexus" organized by the NGO Forum on
ADB(s), of which members mostly belong to countries of three southeastern BRI "economic corridors".
Invitations were extended to groups from North Eurasia, the US and Europe, and that allowed for
initiation of broader analysis of CSO opportunities to deal with risks of the BRI. Both 2016 above-
mentioned meetings focused primarily on ways to hold BRI investors accountable.
In November in Moscow 2016 the Russian ED of the AIIB (then it was Timur Maksimov) came to Green
Silk Road Initiative Workshop to discuss venues for cooperation with NGOs. At the same meeting NGOs
raised concerns about AIIB Interim Public Information Policy (PIIP)40.
34 https://www.forum-adb.org/single-post/2017/06/17/Open-Letter-to-the-AIIB-Board-of-Governors
35 https://www.asiasentinel.com/econ-business/like-aiib-adb-struggles-find-quality-borrowers/
36 https://www.aiib.org/en/projects/preparation-special-fund/index.html
37 https://www.aiib.org/en/projects/approved/index.html
38 https://www.aiib.org/en/projects/approved/2017/air-quality-improvement-coal-replacement.html
39 https://ejatlas.org/conflict/ne nskra-hydropower-project-georgia
40 http://www.bankinformationcenter.org/asian-infrastructure-bank-access-to-information-policy-weak/
9
With leading role of the NGO Forum on ADBs41 42(HQ in Manila) an informal coordination group to
influence AIIB was formed in early 2017 and played major role in CSO preparation for the II Annual
Meeting on Jeju Island in June 201743 and in all subsequent consultations on various AIIB documents .
At the II Annual Meeting the AIIB made major effort to develop relationships with NGOs. Besides being
main participants at several key (substance and safeguards oriented) workshops, the NGOs held one
official closed meeting with AIIB management (AIIB President running away from it after listening to first
two CSOs) and more than 10 ad-hoc side meetings on topics requested by NGOs ranging from specific
projects (e.g. Nenskra Hydro in Georgia) to general policies (e.g. meeting on AIIB Strategy and project
identification mechanism with AIIB VP). Special list-serve was established by AIIB PR department to
inform NGOs, but so far it has been active only sporadically in periods immediately preceding
consultations and meetings with NGOS.
With all these signs of good will the CSOs got no assurance that the AIIB is ready to go beyond "business
as usual" mode of operations. The main impression was that it wants to look not worse than other
MDBs, but do business faster without many conventionally used routines and with minimal number of
staff (the AIIB weasel-word is "lean"- which is notably different from the conventional term "efficient"
which relates amount of effort with quality of end result). Seeing little progress NGOs held small
protest manifestation in Jeju and widely expressed their views in press44.
CSO impressions and concerns after II AGM could be summarized as following:
Although the President Jin said the AIIB is committed to working NGOs as "friends and
supporters", who "can help AIIB maximize impact and minimize mistakes", this attitude may be
short lived without firm institutionalization in policies and structures. So far there were many
incidents of ad-hoc SCO communication with the AIIB, but none of mechanisms is enshrined in
AIIB statues or Board Decisions. As soon as AIIB matures and starts daily violation of its own
policies (which is quite common among MDBs), its relations with independent CSOs in absence
of institutionalized cooperation and dispute resolution mechanism may become very
problematic.
So far AIIB has shown clear tendency to be "lean" at the expense of due implementation of
environmental and social safeguards and did not streamline green development in its project
preparation rules. Unless this is fixed the AIIB has a potential to surpass old MDBs in amount of
harm it causes to people and environment per unit investment.
NGOs largely are dissatisfied with adopted Energy Sector Strategy (ESS) and wish to see AIIB
actively promoting new renewable technology as the key part of a broader strategy. AIIBs
Strategy does not reflect recent advances in cleaner energy systems and proportion of
investment in new renewable technologies is substantially less than even in global energy
investments. Preference for cross-border energy transmission options stated upfront at the
expense of distributed local generation\storage solutions is counterproductive socially,
environmentally and in economic sense;
AIIB has to ensure that projects are based on valid regional\country (energy) planning process,
which employs safeguard mechanisms and robust strategic analysis of alternatives;
AIIB has to implement screening and consultation procedures not to allow problematic projects
to enter the pipeline (sieve them out at project identification phase). By selecting safer and
greener projects is a pre-emptive way to avoid problems and remain "lean". Otherwise AIIB will
be in constant need to improve and further operationalize the ESF to remedy harms of badly
selected projects (instead of supporting green development).
NGOs call for in-country consultation in local languages on most key policies (e.g. Public
Information Policy (PIP), Transport Sector Strategy, the Complaints Handling Mechanism, etc).
41 https://www.forum-adb.org/ngo-forum-letter-to-aiib
42 https://www.forum-adb.org/single-post/2017/06/17/NGO-FORUM-ON-ADB-STATEMENT-TO-PRESIDENT-JIN-LIQUN-AND-THE -MANAGEMENT
43 Jeju seminar descriptions https://www.aiib.org/en/news-events/events/2017-annual-meeting/.content/_download/Summary_web_summaries.pdf
44 https://www.business-humanrights.org/en/civil-society-analysis-finds-aiib-access-to-information-policy-needs-improvement#c158594
10
AIIB should make key documents available on-line in Russian, Hindi, Chinese and other widely-
used regional languages.
One of the most important mechanisms at MDBs are procedural policies. These are lacking in
AIIB. The AIIB ESF and ES are not “policies”, how can we draw on them? AIIB management does
not see development of operational policies for them as an immediate priority. and it avoids
having dialogue with CSOs on development of those policies.
The Bank is not demonstrating how AIIB’s own safeguards are triggered in co-financing projects.
Specifically, for projects proposed and financed by the AIIB, the project document sheet should
demonstrate how various safeguards of the ESF are triggered. Even worse are risks of using
financial intermediaries without fully subjecting projects they finance to safeguard review
scrutiny45.
The lack of access to decision making is a serious problem. Not only CSOs but the AIIB own
Board was ambushed by the management with two projects for vote without proper
forewarning. Monitoring of projects and progress reports should be published on the web-site
regularly. The agenda of the Board meeting should be on web at least a month in advance to (as
practiced by other IFIs), including documents on projects and policies to be discussed;
Unlike other MDBs the AIIB has non-resident Board, which has limited power to oversee its
decision-making and react to wrong-doing. In April 2018 the AIIB management was proposing to
give the power to approve some projects to the Bank’s Management, rather than the Bank’s 12-
member Executive Board46. Transferring the right of approval from the Board to Management
undermines this crucial chain of accountability. CSOs believe it threatens the commitments
made by shareholders such as the UK and Germany, as well as other member governments, that
they would ensure the AIIB, as the world’s newest multilateral development bank, would uphold
international standards and best practice47.
Reliance on local (in country) processes and grievance mechanisms is extremely risky, especially
when land acquisition concerned. Corruption and non-transparency is so ingrained in many
countries, that bank oversight is crucial in weak-governance contexts, especially with AIIB’s lean
approach and lack of hands on the ground.
There is a need to ensure that management is encouraged to develop a culture that is sensitive
to human rights. By refusing to adopt FPIC the AIIB has already demonstrated disrespect for
indigenous rights. By refusing to use local languages it already disrespects cultural rights, etc.
Presently the AIIB cannot guarantee security for complainants, so people cannot raise concerns
without fear of backlash. This also links into access to information, because as soon as activists
connect with management their names and emails are recorded and they are exposed.
Little Progress in Ongoing Consultations
Although facing a risk to make inaccurate predictions or highlight concerns which will be consequently
resolved or appear less significant, the author cannot draw a full picture without discussing on-going
consultations on AIIB policies and strategies, which outcomes are yet to be seen.
Long discussions about ever evolving Complaints Handling Mechanism48
In early February 2017, sixteen civil society organizations called on the AIIB’s Director-General for CEIU
to conduct a public consultation process on a future accountability mechanism49. In the letter, civil
society recommended a set of measures to ensure a robust public consultation process focused on
45 http://www.cenfa.org/blog/csos-call-for-accountability-and-disclosure-from-aiib-on-its-fi-investments/
46 http://www.cenfa.org/blog/ csos-oppose-aiibs-proposal-to-allow-banks-management-to-approve-projects/
47 http://www.cenfa.org/statements/statement-from-concerned-civil-society-on-the-aiibs-accountability-framework/
48 https://www.aiib.org/en/policies-strategies/_download/consultation/consultation_aiib.pdf
49 http://www.bankinformationcenter.org/wp-content/uploads/2017/02/3.2.2017-Letter-to-AIIBs-CEIU-3.pdf
11
feedback from the communities and local organizations that will ultimately be the users of the
mechanism.
In April 2017, the AIIB requested public input in the development of a proposed Complaints Handling
Mechanism (CHM), which the AIIB aimed to put in place by the end of 2017. “Great ideas can come from
anywhere and we welcome suggestions from any individual, organization or stakeholder to shape and
inform the development of the Bank’s complaints process.” said Hamid Sharif. 50
In response, a coalition of ten civil society organizations and networks submitted recommendations
based on the best practice from independent accountability mechanisms around the world51. These
recommendations emphasized that urgent adoption of an independent, fair, and effective
accountability mechanism is crucial to the AIIB’s institutional commitment to sustainable development.
On June 9, 2017, the AIIB initiated a Call for Public Consultation for the Proposed AIIB Complaints
Handling Mechanism (CHM) that included only video-conferences52. At the II Annual AIIB Meeting a
group of CSOs met with Mr. Sharif and reiterated their desire to see local consultations on Draft CHM to
be held in local languages in all principal regions of AIIB operations. In particular the RwB Representative
requested consultations to be held in Vladivostok, Russia and got preliminary consent of the CEIU staff.
In a month it became clear that original consultations scheduled for September will be postponed till
November 2017, because Draft CHM Document has not been internally approved by the AIIB. The AIIB
after some hesitation still agreed to general discussion via teleconference with stakeholders in
Vladivostok , but without translation.
On September 12, the audience in Vladivostok included people from China, EU, Pakistan, Indonesia,
Russia, mostly WWF staff, but there were also 4 independent NGO leaders from China and Russia.
Connection was not very good. Short general introduction was made by Hamid Sharif and Irene Bain,
CEIU Learning and Knowledge Specialist.
Given limitations of telecommunication technology and absence of any draft CHM document discussion
contents was very basic, without much detail. Participants discussed wider spectrum of functions of
CEIU interesting to participants and relevant to or Greening the BRI:
- approach for prevention of future harm
- soft power mechanisms available to the CEIU
- obstacles in addressing deficient policies
- selection rules at project identification process
- measuring effectiveness
So this interaction largely served introductory purposes and did not influence policy formulation.
Further public consultations were expected in November 2017, but have been postponed till February-
March 2018. Thus formation of the CHM has been repeatedly delayed, in the meantime, AIIB has been
financing 24 projects for a total sum exceeding USD 4 billion, and there is no mechanism for
independent review of complaints in place.
Source: AIIB 2018 Presentation
50 https://www.aiib.org/en/news-events/news/2017/20170427_001.html
51 http://www.bankinformationcenter.org/wp-content/uploads/2017/07/AIIBCHM-joint-CSO-Cover-Letter-and-Submission.pdf
52 https://www.aiib.org/en/news-events/news/2017/20170609_001.html
12
Source: Forbes53
In winter-spring 2018 the Draft PPM (somehow still called CHM54 in the AIIB Board meeting notes) was
discussed together with Draft Policy on Public Information (PPI) at several regional rounds of CSO
consultations in Manila, Dhaka and Bishkek co-organized by the AIIB and NGO Forum on ADB, which
summarized comments and concerns on behalf of many NGOs, including the RwB55.
Almost 30-page draft PPM document proves to be a complex read even for NGOs who are well aware of
IFI policies and mechanisms. The PPM does not ensure at the onset that it will provide remedy to those
who are aggrieved nor those who are potentially to be aggrieved through AIIB’s Operations. The fact
that PPM does not clearly establish that its goal is to provide remedy, this clearly demonstrates the lack
of intent of the PPM to be meaningful to project affected peoples. The procedures for filing a complaint
are too complex, too restrictive, placing undue burden on communities and CSOs seeking to file a
complaint. From CSO point of view the PPM must be in a position to stop financing when there are
violations or non-compliance with AIIB’s standards. This is a best practice at other mechanisms (such as
the UNDP's mechanism). Remedial funds should be established by the bank which should be included in
loan agreement for communities akin to a bond to secure project-affected communities from harms.
The scope of PPM is limited only to the Environmental and Social Policy (ESP) within the broader AIIB
Environmental and Social Framework (ESF). Thus, in cases of AIIB’s Operations causing harm, the current
PPM will only look at it from a project operations social and environmental impacts’ point of view. This
limits the Bank from identifying non-compliance in other Bank Operations such as non-compliance in
management decision-making, non-compliance of following directives, and non-compliance to fulfilling
other AIIB policy requirements.
The RwB was particularly concerned by severe limitations, which make only "potentially affected people
(2 or more individuals)" eligible to apply. We told Sharif Hamid that such approach makes no sense
when it comes to preventing\mitigating damage done to natural systems. We promised, that unless
eligibility criteria are broadened, the NGOs will initiate a compliant from two rivers in India (Ganga and
Jamuna), which in 2017 where officially granted rights of legal persons by national court, to establish a
precedent of complaint on behalf of nature.
We have no information how the AIIB will use results of those consultations, but from very
uninformative reports on the AIIB web-site56 assume that Dr. Sharif reported results of the "CHM
53 https://www.forbes.com/sites/salvatorebabones/2018/01/16/chinas-aiib-expected-to-lend-10-15b-a-year-but-has-only-managed-4-4b-in-2-years/#9d92c2137f1d
54 https://www.aiib.org/en/ about-aiib/governan ce/board-directors/.content/index/_download/Minutes-Meeting-Directors-April-2018.pdf
55 NGO Forum on ADB’s Comments on the DRAFT PROJECT AFFECTED PEOPLES MECHANISM (PPM)
56 https://www.aiib.org/en/ about-aiib/governan ce/board-directors/.content/index/_download/Minutes-Meeting-Directors-April-2018.pdf
13
consultations" in his April 11, 2018 update to the Board of Directors and that the Board considered the
President’s Memorandum on the proposed "Accountability Framework" (unavailable to the public) and
approved it with amendments.
Draft Policy on Public Information (PPI)57
The Policy on Public Information (PPI)58 is the key instrument for the Bank's communication with
stakeholders and for improving its own operation through feedback and accountability. The best feature
of the Draft PPI presented to CSOs in February 2018 was its length confined to 7 pages, which made it
easy to discuss. All other features were more problematic, for the document is full of controversies. As
many other AIIB policies the Draft PPI fails to recognize local communities as legitimate partners that
participate in decision-making on AIIB undertakings.
In principle CSOs valued the boldness and ambition of the Principle 1, which calls to disclose all
information held by the Bank, unless there is a serious reason to make an exception. However achieving
accountability and efficient disclosure would be possible only if there is "information classification
system" open to public comment and containing clear timeframes and procedure for disclosure of each
type of document that AIIB produces. At consultations we were also given an impression that the PPI is
not covering the information processes covered by the ESF, which creates major caveat and discrepancy.
We suggest that the PPI covers all aspects of AIIB information disclosure to ensure sufficient disclosure
by its clients, contractors, financial intermediaries.
Current draft PPI is so focused on non-disclosure that can be more accurately called the "Policy on
Exceptions for Public Disclosure". We understand the legitimate intention to have a detailed definition
of reasons for exceptions, but presented exception classes are vague and excessive, providing effective
tools to conceal practically any information that AIIB staff may not want to disclose. There is a clear
intention to allow exception process to become a dominant mode of information management in the
AIIB and enable the Management to make very arbitrary judgements on use of those exceptions
referring to “multiple legitimate interests” (list of which somehow fails to include affected
communities). This cannot be excused if people and ecology could be negatively affected. CSOs
requested that clear wording is inserted in PPI stating that any information related to environmental
and social issues and impacts should not be exempt from timely disclosure.
The RwB was specifically concerned that the Draft PPI does not even mention public consultations
related to drafting, reviewing and/or updating of any AIIB policy and strategy documents. Consultation
practices used by the AIIB have huge room for improvement and introduction of already tested tools
(e.g. employment of accurate response matrices to stakeholder comments instead of currently used
deceptive generalized narrative mixing comments together). We also strongly believe that policy
directives and administrative guidelines should be subject to public consultation, because they describe
rules and procedures most important for interaction between the AIIB, affected communities and other
stakeholders. The PPI should provide clear standard for disclosure and consultations on policies,
directives and administrative guidelines.
Disclosure as discussed in February 2018 draft PPI is not serving the needs of decision-making by
affected communities and stakeholders and is not sufficiently facilitating accountability mechanism. To
fulfill those functions the PPI should explicitly provide:
a. AIIB Standards for meaningful consultation process (unless AIIB intends to have
separate Policy on Public Consultations and other related mechanisms).
b. Translation (or relevant information) into languages that most of local stakeholders
understand (in former USSR Russian language may still be used);
c. Means to deliver information to affected communities (e.g. considering the
situation of the village women, nomadic peoples, etc.);
57 The paragraph on the Draft PPI closely follows RwB submission during consultations on March 16, 2018 . https://www.researchgate.net/publication/325103245_RwB
58 https://www.aiib.org/en/policies-strategies/operational-policies/public-consultation/.content/_download/draft_policy_on_public_information.pdf
14
d. Sufficient time to be understood the documents properly before decisions are made
of commenting deadlines end ( we recommend posting drafts 120 days in advance
of Board considering decision-making);
e. Disclosure and communication environment which is guaranteed from intimidation
or coercion;
f. Binding public disclosure requirements for financial intermediaries and private
sector projects.
The PPI text bluntly shows that authors did not seriously consider the PPI as the core policy central to
the Banks mission, but rather as a nuisance that can decrease "Efficiency of the Bank". With such
"attitude enshrined in the policy the institution will have strong incentive not to devote sufficient
capacity and resources to information disclosure.
As with many other aspects of the AIIB management CSOs are deeply concerned that disclosure
authority is solely in the hands of the President and information disclosure policies are being exempt
from compliance review function of the proposed AIIB’s PPM (Project Affected Peoples Mechanism) or
any other independent compliance review mechanism. We urge AIIB to ensure that the PPI, its
Directives and Guidelines are all subject to compliance review.
AIIB Transport Sector Strategy and Study
Photo: Famous Half-Bridge across the Amur River
On 10 May 2018 the Asian Infrastructure Investment Bank (AIIB) has launched public consultations on
its Draft Transport Sector Strategy59. The AIIB claims that the draft strategy outlines AIIB’s vision to
develop sustainable and integrated transport systems that promote trade and economic growth in Asia.
AIIB’s intended approach will embrace innovative and proven technologies, as well as promote
environmental and social sustainability. While the energy sector presents a larger infrastructure demand
need in Asia, the transport infrastructure sector arguably presents the bigger challenge.
In addition the AIIB presented a AIIB Transport Sector Study60a rather eclectic paper telling how the
Strategy should look like, but which somehow is not fully aligned with the contents of Draft Strategy.
However, unlike the Energy Strategy, which was discussed in two rounds, public consultations are going
to be held just in one shot. The public consultations period will last eight weeks, starting from May 10,
2018 to July 4, 2018. Written comments must be submitted by July 4, 2017.
The draft Strategy says: "It is necessary to develop sustainable transport that is financially and
economically viable, fiscally responsible, environmentally sustainable, and socially acceptable".
59 https://www.aiib.org/en/policies-strategies/_download/transport/2018_May_AIIB-Transport-Strategy.pdf
60 https://www.aiib.org/en/policies-strategies/_download/transport/2018_May_AIIB-Transport-Sector-Study.pdf
15
As we all know development of transportation systems is one of leading causes in environmental
degradation and social tensions with key impacts related to:
1. Penetration of trade and industrial activities in previously unaffected areas which creates demand for
plundering of natural resources in places with poor safeguards in place to confront it.
2. Fragmentation of natural ecosystems resulting in decreasing viability of wilderness areas, species
populations and ecosystem services.
3. Massive displacement of local communities, conflicts related to hardships caused by transportation;
4. Intrusion into indigenous lifestyles, influx of migrant workforce, forced transformation of local
cultures, ruining local productive system by influx of exported products;
5. Political conflicts due to expected shifts in power and influence due to new transportation routes.
6. Huge, usually inefficient, use of resources for development of major infrastructure and inefficient use
of energy for transportation of massive amount of commodities (many of which could be procured
locally) across the globe;
7. Massive pollution from fuels and lubricants used in machinery, additional pollution from waste
generated along the transportation routes;
8. Greenhouse gas emissions generated through full cycle of development, use and maintenance of
transportation systems.
Both the Strategy and the "Study" paper partially address only #8 from this list of key factors that have
to be assessed and framed within such planning document on transportation. This means that AIIB
has practically zero environmental and social responsibility at strategic level of planning.
Meanwhile all factors of negative impact listed above are very evident in Asia, and especially along the
Belt and Road economic corridors from tropics to the Arctic:
Mekong river natural riverbed is planned to be blasted and ecosystems destroyed to give way to
inland water transportation from China to Thailand and beyond;
Myanmar wilderness is being severely dissected by planned transportation corridors with conflicts
bursting out in politically unstable indigenous areas;
In Russian Far East Primorsky Province three corridors connecting China to the Sea of Japan threaten
populations of tigers, leopards and other rare wildlife;
A bridge and road to a pulp mill planned in intact forest ecosystems across transboundary Amur-
Heilong river from Heilongjiang to Zabaikalsky Province in Russia will result in fragmentation and
devastation to last areas of old growth boreal ecosystems and subordinate the area to resource needs
of China, which lacks pulp and timber due to forest bans.
Dredging in Ob River Mouth to facilitate passage of gas-carriers delivering LNG from Port Sabetta -
location of new Russian-Chinese Yamal LNG project threatens large fish stocks on which indigenous
people of the Arctic depend;
list of such examples be continued on several pages.
16
Neither this Strategy addressed key questions of broader sustainable development.
The Strategy has very backward view of "changing demand conditions and technologies". It basically
limits possible innovation to "upper-middle and high-income countries, where basic transport provision
has been met, projects financed by AIIB will come with additional focuses on spreading green transport
technologies and uplifting transport productivity." Does this directly imply that in low-income countries
the AIIB does not plan to promote new green transport technologies?
Little is said in the draft Strategy on what is being transported and how\why it is expected to change in
next few decades. For example, coal makes huge % of past and current shipping (at least in Russia Coal
is the King of railroads), but may go down if cleaner energy systems prevail. In broader developments,
countries like China are reshaping their export capabilities and instead of shipping around bulk products
(like steel or cement) seek to export "overcapacity" to produce steel and cement closer to emerging
markets. Finally, in many sectors it is expected that much of production of everyday goods may be
localized and production facilities scaled down to produce items needed by local clientele (3-D printing
being just one extreme example of the trend).
Future is highly uncertain, but full of revolutionary promises already supported by obvious precedents,
trends and commercialized technologies. Anyone who wants to participate in shaping this future takes
responsibility to choose what trends and needs to support for better overall outcome.
The clearly stated choice of the AIIB is to support destructive mode of business as usual and deliberately
closes its eyes on well-known social and environmental externalities. The Strategy supports
infrastructure for the sake of infrastructure, thus not connecting it to well assessed societal good, but
simply serving those who benefit from large infrastructure development: construction companies,
traders, producers of machinery and construction materials, high officials benefitting from association
with large projects, politicians using such projects to promote themselves. Three indicators suggested
for monitoring\judging success of projects have little to with sustainable development: Passengers
handled per annum \Tons of freight handled per annum\ Private capital mobilized.
The Strategy and "Study" accompanying it do not address properly assessment of alternative options
absolutely key issue in planning of transportation routes. The Strategy has completely inappropriate
section on "promoting environmental and social sustainability", which " requires projects to minimize
environmental and social impacts during project implementation and operation, in line with the
requirements of AIIB’s Environmental and Social Framework and Policy ". Thus it deliberately skips most
important stages of Project Identification and Project Design\Planning at which most decisions regarding
choosing right alternatives and promoting sustainability could be practically made. Later only partial
mitigation is feasible at higher costs.
All it has to say about the key question of spatial planning is commonsensical phrase "Avoiding excessive
traffic requires better land use planning" with a footnote hinting that the question is NOT going to be
addressed within this strategy. At the same time the AIIB does not condition application for projects by
presence of broader spatial development plans that passed strategic environmental assessments.
From "Developing strategic partnership" section we learn that civil society, local communities or local
self-governments are not among partners to be dealt with when identifying new projects, while
commercial banks, institutional investors, and infrastructure funds are. Absence of local communities on
the list of partners is not just an omission, but sign of continued contempt for local people and their
legitimate concerns, which was openly proclaimed by the AIIB President at a workshop during the 1st
Annual Meeting of the Bank in Beijing in 2016 (see paragraph on the ESF).
Although deprived of any coherent section on environmental and social aspects beyond GHG emissions,
the Study correctly calls for "Clearly defining a set of priorities for the transport infrastructure sector, and
17
adopting a framework to allow effective project selection. The set of priorities should include modal and
cross border connectivity, and environment sustainability… Some assessment of projects’ strategic value,
how well they are integrated with national plans, how important they are in the overall network should
be built into the project selection criteria."
The drat Strategy, however, completely avoids and downplays all those questions on selection process
and criteria, thus showing the AIIB disregards its own "study" let alone all preceding experience of
humankind with assessing and improving sustainability of infrastructure.
In general the AIIB seeks to fund "Projects with significant economic return but without sufficient
financial return that would attract stand-alone private finance" as other MDBs routinely do. Given
obvious absence of conceptual framework on sustainable development, productive ideas and green
daring, the AIIB could simply opt to focus , at least in the beginning, on "upgrading of existing
infrastructure". However, this is listed as the last choice out of 4 and instead " co-financing of "trunk
and strategic infrastructure " (whatever those buzzwords mean) is declared as near term focus without
any clear justification for the choice.
Another interesting feature is the proposed use of the AIIB Special Fund to support the preparation of
cross-border projects, including those in middle-income countries (earlier we thought that fund is
primarily for the International Development Association recipients61). My reading is that by "middle-
income countries" the AIIB means first of all China, whose Belt and Road Initiative is serviced by the
Bank’s operations. Creation of corridors linking China with its neighbors likely priority imbedded into
this strategy.
The document confesses: "While the energy sector presents a larger infrastructure demand need in
Asia, the transport infrastructure sector arguably presents the bigger challenge." (In previous
paragraphs we have shown that the AIIB has already largely failed on setting innovative sustainable and
integrated Energy Sector Strategy in 2017). Now we can see that AIIB failed to develop draft of its
Transportation Strategy, which would worth meaningful public consultations. Similarly to the AAIB
Energy Sector Strategy this is not a strategy, for a "strategy" is a specific type of planning document, it
cannot provide just a framework, but should have clear objectives, indicators, and timelines. Document
lacks essential rigor, key questions, and any criteria and indicators allowing to asses and monitor
sustainability of projects. All it does – legitimizes a channel to spend money on business as usual. In a
sense this draft strategy is a large step backward from its energy twin, which, however crooked, was at
least setting some meaningful objectives related to sustainable development.
Conclusion
So far AIIB has shown clear tendency to be "lean" at the expense of due implementation of
environmental and social safeguards and did not streamline green development in its project
preparation rules. This is the main shortcoming, which may result in serious failures as it speeds up
lending to earlier planned USD 10-15 billion/year. No significant breakthrough has been observed in
lending for "green projects". At the same time the Bank has been extremely cautious not to initiate any
controversial projects on its own. All worst cases it is involved in so far have been co-funded by other
MDBs, who typically take a lead and perform due diligence (e.g. TANAP gas pipeline co-funded by WB,
ADB, EBRD and EIB)).
Pubic consultations on new information disclosure and compliance handling policies have
been significantly delayed, showing lack of genuine interest on the AIIB side. Drafts revealed after
prolonged delays have shown wide gap between the AIIB's and CSO's understanding of key aspects of
accountability. The AIIB "romance with NGOs" that reached its peak at the II AGM in Jeju has
61 https://www.aiib.org/en/projects/preparation-special-fund/index.html
18
significantly subsided since due lack of meaningful engagement processes and mutual disillusionment.
On the other hand the AIIB's "new openness" bears for NGOs a risk of cooptation into the AIIB's
business-as-usual mechanism with many routine activities but not much influence and little positive
outcome.
General expectations expressed by many stakeholders\observers that "standards adopted
for AIIB" will force change onto other Chinese investors so far have NO clear supporting evidence. For
example, while the AIIB funds environmentally benign (but socially controversial) switch from coal to
natural gas in Beijing heating systems, the Silk Road Fund, China EximBank and China Development Bank
cater up to 15 billion USD to Yamal-LNG project in Russian Arctic, that is known for many serious
unmitigated impacts on Ob river ecosystems and indigenous reindeer herders communities62. Both
actions are pieces in the same puzzle of "gasification of Asian megacities", but China's policy banks and
SRF are responsible for much more destructive and risky part of it. Although we clearly see this direct
link it has no institutional, financial of legal dimension, which may incentivize policy banks to use
"advanced AIIB standards" to control project risks. Issuance of "Guidance on Promoting Green Belt and
Road" and new stricter rules for overseas investment by the Government of China may signify that
"greening" of other overseas investment mechanisms could be pursued through different
models\channels. Therefore the RwB also feels that at the moment there is a tendency of paying too
much attention to less threatening and more transparent AIIB at the expense of efforts to be spent on
other more problematic investors such as China's policy banks.
That said, we must note, that there is a value in constantly requesting the AIIB to
implement every aspect of the "Guidance on Promoting Green Belt and Road" Policy, which is now the
only common green development strategy proposed for the BRI space. Since now AIIB recognizes that it
serves BRI objectives it is logical that, first of all, it should focus on "green development objectives".
NGO activities could also be optimized. The fact that by mid- 2017 40+ NGOs have been
already working on "greening" AIIB allows specific CSO actors to limit\focus their involvement without
much loss to overall CSO-advocacy process. For example, future RwB work on AIIB could be limited only
to aspects of core interest that other NGOs are not fully addressing: SEA and basin-wide assessments,
early analysis of project alternatives, safeguard screening at project identification stage, accounting for
ecosystem services, etc. It is advisable that CSOs retain their unity and high level of communication, but
divide leadership and responsibility by thematic or regional niche and coordinate in more structured
manner.
Substandard Draft Transport Sector Strategy published by AIIB in May 2018 presents a new
challenge for CSO community. It is yet to be seen how NGOs react to this document, but its emergence
shows absence of any well-meaning institutional learning on the AIIB side. After much energy has been
spent in discussions on planning standards and objectives and conditions of being "green", the new
"draft strategy" has such a poor quality, that it discourages any counterparts from spending energy to
improve AIIB policies as responsible institution "from inside".
Probably, exactly that was explicit intent of the AIIB Management, when posting this document for
public consultations. As we remember "improvement" of other MDBs has been brought about not by
good will and peaceful consultations, but through fierce struggle of affected peoples and massive
international protests triggered by major flaws in project implementation. Does AIIB want to take the
same path?
Eugene Simonov
May 12, 2018.
62 http://www.transrivers.org/2018/2144/
19
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