Terra Nullius: The ADB involuntary resettlement policy: Fifteen years on, the poorest still bear the brunt of development

Posted on February 23, 2012 on the Terra Nullius blog.
By Natalie Bugalski

It has been more than 15 years since the Asian Development Bank (ADB) adopted a policy on involuntary resettlement with the objective of ensuring that “displaced people are at least as well-off as they would have been in the absence of the [ADB-financed] project.” The rationale behind the policy was a shift away from the perception that development-induced displacement and attendant harms suffered by those physically and economically displaced is a “sacrifice” some people have to make for the larger good. It is apparent, however, that despite the adoption of increasingly progressive and rights-oriented policies, the utilitarian view of development-induced displacement continues to dominate the culture and individual staff views of the ADB and many other aid and development institutions.

The report Derailed released by Bridges Across Borders Cambodia (BABC) this month (which I co-authored with Jocelyn Medallo) describes the policy and international human rights law obligations meant to protect the rights of resettled families and provides evidence of how these obligations continue to be flouted in practice. The Rehabilitation of the Railway in Cambodia Project, principally financed by an ADB concessional loan and an ADB-administered grant from the Australian Government, is affecting over 4,000 households that are being involuntarily resettled or must move back out of the railway’s “corridor of impact” (COI) into the residual right of way (ROW).

Despite decades of global evidence of the necessity of injecting sufficient financial and technical resources into resettlement planning and processes as an integral part of the infrastructure project itself, resettlement under the railways project has been treated as peripheral and has been left almost entirely in the hands of the Cambodian Government. Rather than internalizing the costs of resettlement into the project’s budgets from the start and ensuring that the full costs of policy and legal compliance are covered including though ADB and AusAID contributions, the Cambodian Government is responsible for footing the bill.

Given the well-known poor track record of the Government on forced evictions coupled with the incentive to reduce costs, the alarming result – as recorded in the BABC report – was blatantly foreseeable at the time of the project’s inception. Competent planning and sufficient resourcing from the beginning could have avoided and mitigated the hardships resettled families are now experiencing. Key findings of the report include the following (a fuller list of the findings is appended to the end of this post):

– Meaningful consultation was precluded by an air of threats and intimidation, infecting the entire resettlement process.
– In the vast majority of cases compensation received by resettled families was well below the cost of constructing a minimum adequate house in Cambodia.
– Inadequate compensation, coupled with reduced incomes at resettlement sites and the increased expenses associated with resettlement has resulted in crippling debt for many households.
– Unmanageable indebtedness has led to anxiety among resettled families that they will lose their plots of land at resettlement sites since they used their land certificates as collateral for loans.
– In 3 of 5 cases, resettlement sites are too far away from livelihood opportunities (especially Phnom Penh’s site, which is 20 to 25 kilometers away from former residences on the outskirts of the city), hampering income-earning opportunities.
– Income restoration programs were significantly delayed and have been piecemeal and ineffective.
– None of the five resettlement sites were properly prepared with basic services and facilities at the time of relocation. Due diligence measures were not taken to ensure that condition at the sites and access to services and facilities would not put residents at risk. (See my earlier post about two children drowning at the Battambang site at a deep pond residents used as a water source because water was not supplied at the site. Tragically a 11-year old boy died in November last year when was returning to the resettlement site from school, which now required him to cross a busy road and walk about 4 kilometers each way (the school is close to his old pre-resettlement home). He was hit by a truck and later died from his injuries.)

In light of ADB’s central policy objective, BABC’s research team asked interview respondents whether they felt that their lives have been or would be improved, maintained or made worse as a result of the Project. Of the 200 households interviewed over 60 percent thought their living conditions had been or would be made worse. Almost 20 percent felt that their lives would improve and the rest thought that resettlement would not make any material difference to their living standards.

The report concludes that there is significant non-compliance with ADB Policy in all aspects researched, as well as violations of international human rights law obligations, in particular under the International Covenant on Economic, Social and Cultural Rights. The duty to bring the project back into compliance with policy and legal obligations and remedy harms suffered rests not only on the Cambodian Government but also the ADB and AusAID, which has extra-territorial human rights obligations.

ADB’s operational policy states that:

ADB will not finance projects that do not comply with its [Safeguard Policy], nor will it finance projects that do not comply with the host country’s social and environmental laws and regulations, including those laws implementing host country obligations under international law.

It further states:

If any of the safeguard requirements that are covenanted in the legal agreements are found not to be satisfactorily met, ADB requires the borrower/client to develop and implement an appropriate corrective action plan (CAP) agreed upon with ADB to rectify unsatisfactory safeguard compliance. ADB may also consider exercising its legal remedies, including suspension, cancellation, or acceleration of maturity, specified in the legal agreements. (Operations Manual Bank Policies (BP), OM Section F1/BP, paras 6 and 28)

At the forefront of the international development community’s collective mind in Cambodia is the Government’s response in 2009 to the World Bank’s efforts to act in an accountable manner with respect to non-compliance with its own safeguard policies. Rather than accepting the Bank’s offers of assistance to remedy breaches of the resettlement policy linked to the Bank-financed Land Management and Administration Project (LMAP), the Government terminated the project agreement with the Bank and rejected the remaining funds.

The World Bank, in an unprecedented counter-move, acted on its Inspection Panel’s findings of serious non-compliance and held true to its commitment to safeguard policies, suspending all new lending to Cambodia until a resolution was found. The suspension remains in place but in light of recent positive developments – also unprecedented – it may be lifted in the not too distant future.

While this unfolding saga will be left for a separate post, the context is an important one for understanding the way the ADB and to a lesser extent AusAID, is likely to handle the situation if there is ongoing non-compliance and a lack of good faith effort by the Cambodian Government to rectify harms suffered by resettled families under the railways project. Maintaining a good relationship with the Cambodian Government, an important client, is the regional bank’s chief concern in this debacle. Prioritizing this relationship above compliance with its supposedly mandatory safeguard policies sends a dangerous message not only to this Government but to others around the region about what they can get away with in practice despite contractual obligations.

So far, the response from the ADB and AusAID to BABC’s report has been refreshingly non-defensive. The ADB has committed to “carefully reviewing the recommendations” and “working closely with the Government of Cambodia to address outstanding issues.” Meaningful strategies for correcting the problems and remedying the harms, however, appear to be in short supply. Much emphasis has been put on an Enhanced Income Restoration Program (EIRP), funded by a new AUD 1 million grant from AusAID, although we are yet too see any terms of reference for the program and the amount allocated may be insufficient to achieve results, especially since a significant proportion is spent on hiring consultants and other costs rather than filtering down as direct support to resettled families. Furthermore, the urgent need of families, as expressed by them, is support with their unmanageable debt burdens and the EIRP is unlikely to restructure or pay down loans.

The report makes 24 concrete recommendations to the Cambodian Government, the ADB and AusAID, including halting any further resettlement of households until comprehensive measures are taken to ensure that international human rights law obligations and the ADB Policy requirements are complied with in full through a corrective action plan supported by the financiers of the project.

BABC also recommends that, rather than relying on the ADB and other partner institutions, AusAID should adopt its own human rights-compliant policy on resettlement and be prepared to monitor and support compliance for this and other relevant projects to which it contributes funds globally. This recommendation and the Derailed report more generally are particularly timely and significant in the context of the Australian Government’s commitment to double its aid budget by 2015. The plan is to deliver increasing amounts of aid through the ADB and the World Bank to meet the challenge of effectively spending its growing budget. If AusAID hopes to successfully achieve its fundamental purpose of “helping people overcome poverty”, it needs to step up its game and put requisite research, resources and expertise into the complex issue of resettlement and not rely on the multilateral “experts” to do things properly.

Interestingly, and probably not coincidentally, given the high profile nature of this case, last week AusAID released on its website its new approach and requirements on displacement and resettlement of people in its development activities. These requirements and the accompanying guidelines, which appear on an initial reading fairly consistent with best practice policies, are welcome and long overdue. However policy adoption itself without well-resourced expert support to developing country recipients of Australia’s aid will undoubtedly prove futile.

Beyond policy adoption and rhetoric, we need to see transformative shifts in institutional cultures and structures at ADB, AusAID and other multilateral and bilateral development agencies towards a human rights approach to their work, including effective implementation of safeguard policies. This requires resettlement specialists to be engaged in the project from inception with equal authority and responsibility as project task team leaders. For projects such as this one, which involve large-scale resettlement, specialists must be on the ground full time to ensure that resettlement planning, budgeting, implementation and supervision are carried out competently and effectively in accordance with policy and legal requirements.

The ADB and other development institutions need to place a much greater emphasis on tackling obstacles to implementation of safeguard policies, including through thorough due diligence, risk assessment and supervision, capacity building of relevant authorities and meaningful informed consultation of families that are directly affected, as well as the internalization of the real costs of resettlement into project budgets.

As for the railways project, while rectifying problems is always a much harder task then avoiding them to start with, if all actors commit now to injecting proper financial and human resources into a comprehensive corrective action plan, it may not be too late to turn resettlement from a development disaster into a genuine development opportunity for some of Cambodia’s poorest families.

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Key findings of the Derailed report for each research component – corresponding to the main policy and human rights requirements – include the following:

1. Access to information and meaningful consultation:

– Displaced families were not given sufficient information in appropriate forms about the project and their particular entitlements. A yellow post-it note with scribbled compensation amounts was the primary form of entitlement documentation provided to households. The vast majority of interview respondents felt that they were not provided with adequate information and were left in the dark about how they would be affected.
– Consultation in general was inadequate or non-existent and no meaningful gender strategy was in place to ensure that women were properly consulted and could participate in resettlement decisions.
– Resettled families were not consulted on the location of resettlement sites.
– Families faced threats and intimidation and felt that they had no choice but to accept compensation packages offered even if they were not satisfied. Over a third of interview respondents reported being intimidated or pressured by local authorities during the resettlement process. For example, one 47-year old woman reported that authorities told her, “if people protested and refused to accept compensation, bulldozers would be used to destroy our homes.”

2. Compensation:

– There is evidence of widespread inaccuracies in the detailed measurement surveys (DMS) of household assets, including a systematic downgrading of compensation entitlements for structures.
– Compensation rates were indexed at 2006 prices despite a significant rise in costs of construction materials by the time payments were made several years later.
– In the vast majority of cases compensation received by resettled families was well below the cost of constructing a minimum adequate house in Cambodia. The average amount received by households we interviewed was US$757. According to NGO Habitat for Humanity Cambodia, the cost of materials alone of the smallest (4 x 4m) wooden house is $1660. Labour costs are an additional $265 –unavoidable for some households such as those headed by widows with young children.

3. Resettlement Sites:

– As compared to their previous illegal status, tenure security for resettled households is improved; however the threats to their tenure security are posed by (i) the lack of clarity on the legal process for registering their land plots five years after relocation, and (ii) the use of land documentation by households as collateral for unmanageable loans.
– The Phnom Penh resettlement site is 20 to 25 kilometers from many former residences and its distance from the urban center is hampering access to income-earning opportunities and facilities such as schools and health centers. This risk was highly foreseeable in relation to the specific site selected. (In early 2010 BABC warned the ADB and AusAID that if they approved the selection of the relocation site it would be extremely difficult for resettled families to maintain or restore their livelihoods and that closer sites to the city centre should be considered.) Unsurprisingly a high proportion of families that have now been allocated plots at the site continue to live in the city centre and rent at their own expense in order to maintain their jobs. Similarly, due to the location of the site in both Battambang and Sihanoukville, over fifty percent of resettled families do not live at the site and are instead renting near their sources of livelihood.
– None of the five resettlement sites were properly prepared with basic services and facilities at the time of relocation. For example, water was not made available at the Battambang site forcing families, including children, to collect water from a nearby deep pond. This situation put children at foreseeable risk of drowning and tragically, as reported in my earlier post, a brother and sister died there a few days after their family was resettled. In November 2011, a third resettled child died in Poipet. The 11-year old boy was returning home from school, which now required him to cross a busy road and walk about 4 kilometers each way (the school is close to his old pre-resettlement home). He was hit by a truck and later died from his injuries. The children’s deaths underscore the importance of undertaking due diligence measures to ensure a reasonable level of safety at resettlement sites. All residents should be able to access basic services and facilities without putting themselves at risk.

4. Livelihoods and Income

– While BABC’s household interviews were conducted only a few months after resettlement began and the sample size of resettled families was fairly small, short-term impacts on incomes were observable. Almost all households interviewed at resettlement sites reported a drop in income compared to their pre-resettlement situation. The impact of resettlement appears to have been greater on the livelihoods of female household members, who reported a high rate of job loss or change.
– Perhaps the most urgent issue facing resettled families is the high rate of new and unmanageable indebtedness as a result of reduced income, increased expenses and insufficient compensation. This pattern is a repeat of the situation that emerged recently after resettlement of families under the Cambodia National Highway 1 Project, also financed by the ADB. The challenges of addressing indebtedness of resettled families a few years down the track as a remedial measure have been highlighted by ADB staff tasked with dealing with the issue. Nonetheless the flaws in the initial resettlement process have been repeated in the Railways Project.
– The current Project-income restoration plans, centered around one off-skills training and budgeted at $300 per family over a 3 to 6 month period, is highly unlikely to be sufficient to achieve objectives.
– Income restoration programs had not commenced at the time of resettlement or for significant periods after resettlement at most sites. Once they commenced resettled families reported that the program was piecemeal and ineffective. The programs have consisted of skills training workshops, including on raising chickens and mushroom growing, and are reported to be of poor quality and limited usefulness due to, inter alia, low market opportunities, insufficient funds to begin related business initiatives and the small size of land plots at resettlement sites.

5. Access to remedies and accountability

– While some grievances have been appropriately dealt with, for many households that have submitted a complaint, their cases appear to be considered “closed” despite their concerns and requests not being addressed in a manner that they are satisfied with and/or in line with ADB Policy.
– There are significant demand-side barriers to accessing remedies through the grievance process, including limited awareness about rights, entitlements and the grievance process itself, low literacy levels, and a lack of legal aid. In addition affected households are discouraged from using the grievance mechanism due to implicit or explicit threats and intimidation and a general fear of “complaining”, as well as a lack of confidence that the grievance mechanism would effectively resolve their problems and concerns.
– On the supply-side, capacity deficiencies and an apparent unwillingness by the competent authorities to fairly address many people’s concerns and grievances pose additional barriers to accessing remedies for affected households.