The Asian Development Bank held its 54th Annual Meeting of Governors online. President Masatsugu Asakawa (called by his colleagues as “Masa Asa”) came up with a bold theme for the Meeting: “Re-imagining Asia and the Pacific in a Post-Pandemic World.” The Meeting was accompanied by a three-day conference/webinar (May 3-5) which dwelt on the topics of Covid-19 pandemic, climate change challenges, and views of civil society organizations on the role of the ADB in a pandemic world. This writer served as a panel discussant in the session on “CSOs’ Reflections on ADB’s Covid-19 Operations.”
The ADB conference/webinar organizers should be commended for the courage to involve the CSOs in a sweeping and open review of the Bank’s operations related to Covid-19 and climate change. Hopefully, the Philippine Central Bank and the Department of Finance can have the same courage to hold an open, transparent and sustained dialogue with Philippine CSOs on how to address the different pandemics afflicting the country—Covid, climate, debt and inequality.
In the webinar with the ADB, this writer raised two puzzles related to ADB’s actions or inactions on climate change and Covid-19. These are related to the image that the ADB has been cultivating in the region, that is, as a bank “committed to achieving a prosperous, inclusive, resilient and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty.” This is a noble commitment, obviously inspired by the two historic agreements adopted by the UN family in 2015—the Paris Agreement limiting the rise of global temperature to 1.5 degrees Celsius above the pre-industrial era and the 17 Sustainable Development Goals (SDGs), the successor program for the Millenium Development Goals (MDGs).
Now puzzle No. 1: Why is ADB, a proponent and funder of renewable energy projects, unable to make a decisive stand on the phasing out of fossil fuels?
One has to raise this question because ADB has been a major supporter of renewables, and yet, at the same time, it is a heavy investor and facilitator of fossil-based power plants. Moreover, ADB has been producing good documents explaining the existential threats posed by global warming and the critical importance for the region and individual Asian countries to meet their GHG-emission reduction targets under the Paris Agreement.
So where does ADB really stand? ADB announced that it has stopped funding coal plant projects since 2013. However, it is silent on whether it is pushing for the phasing out of existing coal projects. Moreover, CSOs tracking ADB funding for power projects have come up with studies showing that ADB is heavily investing on oil and natural gas projects. This is why the CSOs are asking—which way ADB? Phasing out of fossil fuels—coal, oil and gas —or phasing in of the renewables—wind, solar, hydro, geothermal and so on? Why can’t ADB make a stand similar to that taken by the European Investment Bank (EIB): no more coal, no more oil, and no more natural gas?
Obviously, it is difficult for the Japanese leadership of the Bank to make a blanket and sweeping declaration ala-EIB by withdrawing all support to fossil fuels—coal, oil and gas. In the last five decades, the ADB played a major role in building a galaxy of fossil-based power projects around the region with the help of big Japanese banks, Japanese engineering firms and corporate partners from Japan and other countries. These co-financiers are naturally interested in keeping the status quo. But given the existential threat posed by climate change to Asia and the rest of the world, the challenge to the ADB leadership is how to make a decisive and resolute decision in support of what the world is demanding through the Paris Agreement, that is, push Asia towards zero GHG emissions by crafting and implementing an energy transition program.
Making the energy transition is not easy. But things can be made easier if the ADB can mobilize resources in support of accelerated energy transformation and transition programs, in close consultation with the civil society movement. It is in these transformation-transition areas where ADB materials and programs are clearly wanting.
Now on puzzle No. 2: Why is ADB unable to provide leadership and guidance to the borrowing countries in relation to the latter’s response to the Covid pandemic? Specifically, why has ADB, a proponent of SDGs, failed to calibrate or align the terms and conditions of Covid loans with the SDGs?
Certainly, the ADB SDG specialists are well informed about the weak performance of Asia when it comes to SDGs. In 2019, the UN Economic and Social Commission for Asia and the Pacific (ESCAP) reported that all of Asia, without any exception, was on track not to meet the SDG targets. All of Asia failing to meet SDG targets! Under the SDG system, UN member-countries are supposed to achieve by 2030 zero hunger, zero poverty, healthy lives for all, inclusive and quality education for all, gender equality, secure water and sanitation for all, affordable and sustainable energy for all, sustainable industrialization and innovation, decent work for all, reduced inequality, resilient and sustainable habitat, sustainable consumption and production, affirmative action on climate change, sustainable use of oceans and marine resources, sustainable forest management and use of terrestrial ecosystems, peaceful societies and justice for all, and partnership for sustainable development. These 17 SDGs are interrelated and require a holistic and coherent program of implementation.
In Asia, the failure of many countries to meet SDG targets is due to the obsession of governments to achieve higher GDP numbers without paying attention to the issues affecting the general population, especially those at the grassroots, such as access to health, education and basic services as well as the challenge of making socio-economic development inclusive and equitable, with “no one left behind,” as the UNDP keeps repeating. With the Covid pandemic, the need to align policies on economic recovery and strengthening of the health system in response to the Covid virus spread has become clearly and doubly important.
It is in this issue of policy aligning, that is aligning terms of borrowing in the name of national recovery and resiliency building with the SDG framework that the ADB is failing.
A brief backgrounder: In response to the pandemic, the ADB quickly packaged a program dubbed as CARES or Covid-19 Active Response and Expenditure Support. Originally given a seed fund of $6.5 billion, CARES immediately grew to a huge $20 billion health armament. And yet, when Asian countries began trooping to ADB for loans, there were no indications that the SDG framework was adopted as a guide. Unlike the hesitation ADB demonstrated during the 1997-1998 Asian financial crisis (when the International Monetary Fund was foolishly insisting on a policy of austerity for all), the ADB this time willingly facilitated the approval and releasing of CARES loans to different countries in record time.
But there are no indications in the loan agreements, at least in the case of the Philippines, that a system of rigorous monitoring on the uses of the so-called ADB “budgetary support” for national recovery. Thus, in the Philippines, the ADB simply accepted and adopted the rationale given by the government for the four pillars for national recovery, namely: a) re-building the health sector, b) amelioration assistance to the vulnerables, c) relief to small and medium businesses, and d) liquidity support to the financial system.
As it turned out, per monitoring by the CSOs (e.g., Social Watch, Ibon, FDC) and academe (Ateneo, UP), the implementation of the foregoing four-pillar program for the entire year of 2020 failed to meet the recovery goals of the nation and the salvation of the masses. The program was littered with weaknesses. These include, among others, the following: the broken health system was bogged down by corruption in expenditures, lack of transparent health governance and incoherent health/medical response to the Covid threat; the distribution of amelioration assistance for the poor excluded many vulnerables such as the migrant workers and those with no permanent addresses; the amelioration package, given once or twice, was not even enough to sustain the needs of a family of five for a week or two; the number of beneficiaries for the relief given to the displaced businesses and workers was way too small compared to the targets; and there was no clear and transparent reporting on how funds were used in providing liquidity to the financial system.
Now what has ADB got to do with all of this? A lot even if it is undeniable that it is the responsibility of every country to manage its economic and political affairs. First, as a financial institution, ADB is in a position to influence the directions of change, especially on projects necessitating financing. Secondly, as a development institution, ADB is also in a position to persuade a borrowing country on the guideposts that should be used in the crafting and implementation of development projects. Thirdly, the loans being contracted by the government are not ordinary loans; they are loans meant for the recovery of the whole economy.
What then is missing in the ADB’s CARES loan to the Philippines (and probably to other Asian borrowers)? It is the failure of ADB to link spending of Covid loans to the realization of the SDG targets as part of the overall development framework. In the Philippine loan agreements, no such linkage was mentioned—except for one bland statement that the CARES loans are consistent with the ADB’s SDG program. In fact, the focus of the government was simply to go back to the old normal, as if this is the only way forward.
The truth is that Covid times are an opportune time to re-think development plans in support of more inclusion, more people participation, more environmentalism. The SDG framework can be a good guide for ADB and its partner governments in Asia in this much-needed re-thinking process.
Dr. Rene E. Ofreneo is a Professor Emeritus of University of the Philippines.
For comments, please write to reneofreneo@gmail.com.