ADB’s piecemeal strategy in India

The Asian Development Bank has endorsed a multilateral development plan for India in spite of Chinese concerns about projects in the disputed territory of Arunachal Pradesh.

However, in proceeding with its country strategy to 2012, the ADB will address projects within the development plan “one by one” in an effort to prevent a territorial dispute with China disrupting one of its biggest lending programmes.
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Rajat Nag, ADB managing director-general, told the Financial Times that the bank’s board had approved the lender’s country partnership strategy in India and was now seeking ways to implement its projects after Beijing raised concerns this year.

The go-ahead was given in spite of a rare postponement of the loan package, triggered by China in protest against proposed lending to projects in India’s north-eastern region of Arunachal Pradesh. China and India fought a war in 1962 over the disputed territory, and China has in the past year become more strident about its claims to a border territory it considers to be South Tibet.

Mr Nag said: “[The objection] referred to a particular element of the country strategy we had presented to the board which has [now] been endorsed by the board. It was not a specific loan which went to the board which was considered or rejected.

“We will now come to the specific projects. [We will] do the due diligence and discuss with the authorities and take it to the board on a one-by-one basis.”

A senior Indian finance ministry official said next year’s ADB lending package to India was worth $1.6bn (€1.1bn, £969m).

The friction has irked India’s leaders. During a state visit to Washington, Manmohan Singh, India’s prime minister, told the US Council for Foreign Relations that China’s posture in the region had become more “assertive” but said he could not explain why.

“We ... recognise that we have a long-standing border problem with China. We are trying to resolve it through dialogue. In the meanwhile both our countries have agreed that pending the resolution of the border problem, peace and tranquillity should be maintained in the border line,” he said.

China’s sensitivity has also surprised officials within the ADB. Mr Nag said it was normal for Beijing and New Delhi to co-operate “very extensively” on economic matters at the ADB and in other international forums.

In Arunachal Pradesh, civil society leaders are tiring of the tug-of-war over the territory. They say lending has been inadequate and has ignored pressing needs. Bamang Tago, of the Arunachal Citizens’ Rights organisation, said: “Arunachal has become a pawn for India and China. It’s a dumping ground for these big Asian nations’ tensions. It’s considered to be a geopolitical and strategic state.”

He was critical of multilateral lenders such as the ADB and World Bank, saying they were insensitive to the needs of local tribal communities. “There’s too narrow a focus. Agriculture, health and education should get more attention,” he said.