Government Not Ready for World Bank Loans: US

The U.S. accused the Cambodian government of scaling back the space for free speech and the World Bank of failing to learn from its mistakes in justifying its decision to abstain from a recent Bank vote that approved a sheaf of new loans to Cambodia.

The Bank’s board of executive directors approved four projects for Cambodia and $130 million in new loans to support them on May 20 at its headquarters in Washington. Perhaps as important as the money itself, the decision marked the end of a funding freeze the Bank imposed on Cambodia in 2011 in protest over the forced evictions of thousands of families from Phnom Penh’s Boeng Kak neighborhood.

Anti-eviction activists and rights groups had said leading up to the vote that lifting the freeze would be premature because many families displaced from Boeng Kak—to make way for a CPP senator’s high-end real estate project—had yet to be fairly compensated. The new loans, along with a Country Engagement Note (CEN) outlining the Bank’s plans in Cambodia for the near future, also come amid a particularly intense crackdown on dissent by the ruling CPP through the courts.

The U.S. decision to abstain from the May 20 vote did nothing to stop it. But a pointed statement explaining the move from the U.S. Treasury Department, the Bank’s largest shareholder, had harsh words for the Cambodian government.

Despite impressive economic growth and gains against poverty, the U.S. said corruption, transparency and land reform remained key challenges in Cambodia.

“Regrettably, the United States questions the Government of Cambodia’s commitment to these priorities and therefore cannot support new lending to Cambodia at this point,” it said.

“Unfortunately, the Government of Cambodia appears to be reducing its openness to feedback from its citizens and civil society groups. The Unites States hears consistent complaints that the Cambodian government, at all levels, is growing less responsive to citizen feedback,” it said.

“Recent events also call into question the independence of Cambodia’s judiciary and its ability to play a key role in ensuring the equitable and transparent implementation of development projects.”

The U.S. raised particular concerns with the government’s pace at securing land rights, the same concerns that prompted the funding freeze.

“The reticence of the government to provide appropriate compensation for citizens evicted from their land under previous projects does not provide the United States with confidence that the authorities will deal with its citizens equitably in the future,” it said.

The government claims the families evicted from Boeng Kak were well taken care of with the choice of free new housing on the outskirts of Phnom Penh or an $8,500 cash payout. But the evictees say neither came close to matching their losses.

The U.S. also questioned the World Bank’s ability—even its willingness—to learn from its own mistakes.

Among the new loans approved by the board was $25 million for the second phase of project that hands out small farms to poor families with little or no land. The Bank has given itself unfailingly positive marks for the project, though separate reviews by rights group Licadho and Germany, which helped fund it, found major problems with the project and questioned the wisdom of a phase two.

“It is unfortunate that the…project appraisal document neither notes nor addresses these criticisms,” the U.S. said.

The World Bank’s country team did not reply to a request for comment about the statement. It has consistently ignored questions about its preparations to resume lending to Cambodia.

Government spokesman Phay Siphan accused the U.S. of applying double standards to Cambodia, an apparent reference to Washington’s warming ties with Hanoi despite concerns about Vietnam’s own rights record.

“How did Vietnam satisfy…its principle on human rights and democracy?” Mr. Siphan said, commending the Bank for approving loans to Cambodia.

“Cambodia [is] expected [to] use this loan for developing and reform for [the] Cambodian interest,” he said.

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