Monday, October 1, 2012

Padma Bridge Loan revival: Need for caution

As I see it column
The Independent, September 29,2012
M. Serajul Islam

The nation was relieved and happy when the Finance Minister gave the welcome news that the World Bank was near to making the positive announcement about financing the Padma Bridge based on negotiations in which “they have given to some of our demands and we have given to some of theirs.” When the WB statement was finally released, there was little in it to suggest that they gave to any of our demands while we agreed to all of theirs and more. In fact, the Bank agreed to re-engage only after the government fulfilled the three remaining conditions following the removal of the Minister, the Adviser and the senior bureaucrats. 

Nevertheless, the revival, even though conditional, is great news for Bangladesh. It ended a long period of uncertainty and senseless exchanges by the leaders of this government against the WB. In her anger, the Prime Minister accused the WB of corruption; her Ministers carried out a tirade against it in the media after it cancelled the loan. The government threatened to let Malaysia finance the project at costs that would have been considerably higher where those who came forward to build the bridge did not have any experience in bridge building! The Prime Minister also promised to build the bridge from domestic resources. She appealed to people’s national spirit to show the WB what Bangladesh is capable of doing. One senior leader of the party asked the Chatra League to engage in collecting money for the bridge, some Taka 2300 crores in all. As a consequence, a student was killed in Rajshahi. 

In fact, even a day or two before the WB revived the loan; the Prime Minister was insisting that her government would build the bridge for road transport and exclude the railway line to save costs leaving no one in doubt that she would not accept the WB if offered again. Her Adviser Dr. Mashiur Rahman while appealing to the media for his life and holding out on resigning said a day before the WB revived the loan that from what he has seen of the demands of the WB, he saw no reason for the loan agreement to be activated. His words hinted strongly at the difficult and humiliating nature of the WB’s demands. 

Dr. Mashiur Rahman was both right and wrong. He was right in assuming that the loan would not be revived because from the exchanges he read between the Government and the WB, he saw no reason for the Bangladesh government  to succumb to the demands of the WB. He was of course wrong to assume that the Prime Minister and the Government would not accept the conditions. In what can only be called a somersault, the Government removed the Minister; the Adviser and the 2 bureaucrats to meet the first of the 4 tough conditions set by the WB for its re-engagement; a first time that the WB dared to demand a sovereign country to remove a Minister (an Adviser of Ministerial rank and senior bureaucrats) for a loan and succeed with such an outrageous demand. 

The government then  also agreed to meet the WB’s remaining  demands, namely,  “(ii) appointing a special inquiry and prosecution team within the Bangladeshi Anti-Corruption Commission to handle the investigation; (iii) agreeing to provide full access to all investigative information to an external panel of internationally recognized experts so that they can give guidance to the Bank and co-financiers on the progress, adequacy, and fairness of the investigation, and; iv) agreeing on new implementation arrangements that gives the Bank and co-financiers greater oversight of project procurement processes; “ to reactivate the loan. Thus the agreement reached in Washington between WB and the Government is dependent on the   satisfactory implementation of the three remaining conditions as stated in the pen-ultimate paragraph of the statement: “The Bank has agreed that, upon satisfactory implementation of the agreed measures by the Government and with the support of the Bank’s governing bodies the Bank will engage anew in the Padma Multipurpose Bridge.” 

The Finance Minister and others congratulating themselves for the loan revival should therefore spare few moments and read the WB statement carefully. The Bank has not only made its re-engagement conditional, it has flagged its seriousness on the allegations of corruption that has already delayed the project by 10 months. That seriousness has been scribed in the final paragraph of the statement: “The World Bank remains vigilant to any signs of corruption in the Padma Bridge project, and our determination to take a strong line against wrongdoing will never waver.”  

The second and third conditions in the Bank’s statement are significant. It has taken away the independence of the ACC and with it a little of the country’s sovereignty. The international panel of experts will now have full access to the progress of the ACC’s investigation and report to the WB that will decide on its “progress, adequacy and fairness.” The Bank did not waste any time to stamp its authority over the ACC on the issue of corruption.  It has already expressed its intention to sit with the ACC team when it questions those accused of corruption that will include former Minister Abul Hossain and Dr. Mashiur Rahman. The fourth condition will give the Bank and its co financiers control over procurement process leading some analysts to conclude that the Padma Bridge will be a turnkey project based upon the Bank’s authority and control over it.  

The decision of the Bank to re-engage will now mean that their allegations of corruption will  be resolved either way.   What if the allegations turn out to be correct? A pro-AL guest said in a recent TV talk show that one of the areas where the WB relented was to accept the demand that the Prime Minister made; that once the new agreement was signed, the WB would not again withdraw funding. It was a poor defense against those who are suggesting that the government accept humiliating conditions to reactivate the loan. If the allegations of corruption  are found incorrect, then the question of the WB withdrawing the loan would be irrelevant, what the Prime Minister demanded and the WB accepted notwithstanding. If however the allegations are correct, then the issue would not be whether the WB would withdraw from the project or not; the issue would be whether the Prime Minister would have the moral right to remain in her position. 

Therefore the government and the ruling party should tread with caution in complementing themselves at this stage for there are hurdles ahead that would need to be crossed before claiming credit. The government must now, first, cooperate with the WB for a fair and transparent inquiry to the corruption allegations to prove it is correct and the Bank wrong, and second, demand a formal apology from the WB after proving its stand. Even though the past cannot be written off and the humiliation that Bangladesh suffered regained; it would be a moral victory for Bangladesh. The government now owes to itself to clear the allegations of corruption because if it cannot prove the WB wrong, its own credibility to the people would be gone given the fact that it has now accepted a number of humiliating conditions to reactivate the loan.

At the time of filing this report, the signals out of Washington are disconcerting. A WB statement from Washington said: "Media reports have quoted senior Bangladeshi government officials misrepresenting the World Bank’s position concerning the Padma Multipurpose bridge project.” The WB reminded the Bangladesh Government that the loan will be activated only after the agreed conditions for revival were implemented, particularly the Bank’s concerns on issues of corruption that remains paramount. Unfortunately, the ruling party leaders and government officials are more concerned with playing to the gallery and are not focused upon the seriousness of the WB’s concerns or the conditional nature of the loan that could jeopardize it again.  

The writer is a former Ambassador to Japan.




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