In a two-day people’s opinion tribunal held in Bali, Indonesia on May 2 and 3, 2009, the Asian Development Bank (ADB) was charged by civil society groups and grassroots sectors from the Asia Pacific region for human rights violations.

Organized by non-government organizations (NGOs) led by the Asia Pacific Research Network (APRN), International NGO Forum on Indonesian Development (INFID), and Institute for National and Democratic Studies (INDIES) together with peoples’ organizations in the region, the Asia Pacific Peoples’ Tribunal on ADB raised the voices of grassroots and marginalized sectors and exposed how the ADB has played a significant role in worsening poverty through debt entrapment, unsound governance policies and environmental degradation.

Testimonies and evidence from experts and victims from affected communities on the negative impact of ADB policies and projects were presented.

According to the groups, the ADB since its establishment in 1966 has largely focused on creating business opportunities on the flawed premise that market forces will lead to development. This has contributed to turning vital health, education, power and water services into luxury goods inaccessible to poor majorities. The underdeveloped countries of the region have also been made to suffer high and mounting debt burdens.

Increased commerce, widened disparities

The ADB is the region’s main international development finance institution and its third largest source of such funding after Japan and the World Bank. It has 67 member countries, 44 of which are categorized as “developing countries” while 19 are developed country members from outside the region including North America and Europe.

The region has supposedly seen rapid growth and great structural transformation in the last three to four decades. Yet the rapid economic growth recorded merely reflects greatly increased commerce and other economic activity whose benefits have accrued to a few. Of the 3.5 billion people living in the region, 550 million are reported hungry and 1.7 billion poor. Also, two-thirds of the world’s poor and half its undernourished people are said to be in the Asia and the Pacific. The region also accounts for 40% of children who die before age five, 60% of those without safe water and 70% of those without access to improved sanitation.

Moreover, the last decades have seen widening disparities within and between countries in the region. These are not accidental. To a large extent they are the result of the distorted economic model pushed by the ADB, among others, through its loans. In this model, the economy, labor and natural resources exist to be exploited for profit rather than to improve the welfare of people.

Harmful to people and environment

Over four decades of ADB lending has resulted in vast amounts of debt used for projects harmful to people and communities as well as harmful to the environment. Loans have been used to leverage policy conditionalities which have made public utilities inaccessible, undermined social services of health and education, and destroyed local agriculture and industry.

The ADB’s lending has, in short, not gone towards development. The people of the underdeveloped countries of Asia and the Pacific region remain deeply indebted, endure intensifying poverty, and suffer economic backwardness. The underdeveloped ADB member countries’ combined foreign debt stock of US$344.2 billion in 1988 (39 countries) has even increased five-fold to US$1,635.2 billion by 2006 (44 countries).

Overall, the ADB has used its lending as leverage to compel retrogressive “free market” economic policies on the underdeveloped countries of the region. These policies sustain and deepen domestic conditions of underdevelopment: trade and investment liberalization has undermined domestic agriculture and industry; privatization has turned social and public services into opportunities for profit; and deregulation has unleashed unbridled profit-seeking.

A drain on capital and finance

The ADB’s conditionality-heavy loans have recently taken the form of Development Policy Support Programs (DPSPs). DPSP loans are worth hundreds of millions of dollars and identify specific policy outcomes and results as conditions for loan release which, in the absence of genuine democratic grassroots participation, are violations of peoples’ sovereignty over national policy-setting and prioritization.

The debt owed to the ADB and other profit-seeking creditors is also a direct and severe drain on the scarce capital and finance of economies in Asia and the Pacific. The most evident loss is how national governments spend large chunks of their limited budgets on debt servicing at the expense of vital social services such as education, health and housing. This is made worse by the privatization of public utilities and other services, as well as regressive taxation.

Moreover, ADB loans have been used to push the privatization of power, water and health. The bank has imposed policy changes and financed specific projects whose main beneficiaries have been foreign capitalist monopolies in the energy and water industry and their domestic counterparts.

The ADB’s debt program also creates significant commercial opportunities for companies with about US$5 billion dollars worth of contracts awarded annually for civil works, goods and services, aside from about US$175 million being spent annually on various consulting needs.

In the 2003-2007 period the US had the largest value of procurement contracts among donor members at US$1.13 billion followed by Japan (US$1.10 billion), Australia (US$484 million), Germany (US$427 million) and the United Kingdom (US$372 million).

Meanwhile, the ADB has profited and continued to grow. The ADB’s net income, for instance, has been rapidly increasing despite the global crisis from US$570 million in 2006, to US$765 million in 2007 (34% increase), and US$1,126 million in 2008 (47% increase).

Accountability

People’s organizations have called the ADB a bank for profit and not for development, as its programs are designed to support private sector profits, especially of big foreign capitalist interests and the ADB itself.

According to the tribunal’s organizers, holding the ADB accountable for its past debt misdeeds is a first step towards justice and putting a stop to their destructive and anti-people operations. There must also be a return of payments on these debts as partial rectification of the long-standing injustice of their unremitting servicing. Holding the bank responsible would hopefully pave the way for the repudiation of all illegitimate ADB debts and their absolute and unconditional cancellation. IBON Features