World Bank mulls new loans

A Boeung Kak lake community activist holds a letter addressing their concerns at the US Embassy in Phnom Penh earlier this month. Eli Meixler

World Bank mulls new loans

Phnom Penh Post | 15 September 2014

The World Bank is considering granting $25 million in fresh loans to Cambodia to fund social land concessions. If the project is approved, it could mark the bank’s first loans since it suspended lending in 2011 when it pledged no new funding until a resolution to the Boeung Kak lake dispute had been reached.

The project proposal, posted to the bank’s website in late August, came eight months after the US House of Representatives passed a spending bill in which it asked the bank not to “re-engage” with Cambodia until the political deadlock following the July 2013 election had been resolved.

The five-year Land Allocation for Social and Economic Development II project (LASED II) would see $25 million in loans from the bank’s International Development Association – along with $2 million from the Cambodian government – fund 15 social land concessions in Kratie, Kampong Cham, Kampong Chhnang, Kampong Thom, Kampong Speu and Battambang provinces.

Fourteen of the sites have already been allocated $11.5 million from the bank and $1.2 million from a German fund under the first phase of the project, which began in 2008, while a new concession in Kampong Thom is due to be added under the second phase.

Dr Sareth Boramy, LASED II project director with the Ministry of Land Management, Urban Planning and Construction, confirmed that the project was up for discussion in early October.

“We are not sure yet about [the details of] this project. It’s in the steps of preparation only.… This is a new phase so we’re not sure [how it will proceed] yet,” he said.

The proposal gives the estimated date of approval by the bank’s board of directors as December 11.

The bank announced the suspension of all new loans to Cambodia in August 2011, with then-country director Annette Dixon saying at the time that “until an agreement is reached with the residents of Boeung Kak … we do not expect to provide any new lending to Cambodia”.

The suspension came on the heels of an 18-month investigation by the bank’s internal auditor, which in 2011 found that its land-titling project unfairly denied Boeung Kak families their rights after politically connected developer Shukaku Inc was leased the land in 2007 and families were forcibly evicted.

The families have sought compensation from the bank in line with its resettlement policy, but the bank has responded by saying it is unable to process their requests because the Cambodian government is unwilling to co-operate.

Since the announcement of the suspension of loans, the bank has “disbursed” more than $7.15 million to the original LASED project, according to its website, which lists 11 “active” projects in Cambodia.

A World Bank spokesman said via email that it had not formally re-engaged with Cambodia.

“No new project has been presented to our Board. In the meantime, we continue to do analytical and other technical work on Cambodia,” he said.

But in an interview with the Post in December, World Bank country director Ulrich Zachau said the lender had “begun a process of engagement” and would “continue talking [to] and consulting” the Boeung Kak community.

Tep Vanny, a prominent representative of the Boeung Kak families, said that the community would be “very upset” if new loans were made without a resolution to their dispute.

“We have not had a response from the US Embassy related to our petition submitted last week calling on US senators to pressure the World Bank not to restart lending,” she said.

Eang Vuthy, executive director of Equitable Cambodia, said any proposed new loans would have to go through a process of consultation with communities displaced by the Boeung Kak development.

“The [Boeung Kak lake] case is still outstanding, and if there is agreement, the conditions should be included in the [proposal],” he said. “There should be prior consultation with the affected communities. The [Boeung Kak] community strongly … stated that the BKL issue needs to be addressed. And [until] now it has not been fully addressed.”

Sia Phearum, director of the Housing Rights Task Force, said that while he did not oppose new loans in general, they needed to be tied to a resolution of the Boeung Kak dispute.

“I would not reject the new loans, but the World Bank needs to seek a resolution for Boeung Kak. Especially for the … farmers, more than 3,000 [of whom] are affected by the World Bank’s projects,” he said.

Cheam Pe A, the LASED II project coordinator from the Ministry of Interior, and the World Bank’s team leader for the project, Mudita Chamroeun, could not be reached for comment.

Sophal Ear, associate professor of diplomacy and world affairs at Occidental College in Los Angeles, yesterday criticised the plans to offer new loans to Cambodia.

“The Bank has wanted to resume new lending (nevermind the fact that it was fine funneling new money into old loans all along) for a long time in Cambodia,” he said in an email. “The Bank has never been able to exact much if any reform from Cambodia in the past whether it be forestry or governance. I don’t imagine it will be different now.”

Vanny of the Boeung Kak community said she had met personally with a group of US senators and World Bank President Jim Yong Kim twice in the past two years.

“The bank president recognised its mistake in not monitoring their fund.… They promised to postpone their fund until the Cambodian government resolved the problem for our community,” she said.

“If the bank provides the new loans to Cambodia to fund social land concessions it means that they are joining with the corrupt government of Cambodia to grab land from the poor.”