China: New Bank's Projects Should Respect Rights

The China-founded Asian Infrastructure Investment Bank (AIIB) should create a robust, independent accountability body to investigate rights abuses linked to its projects, Human Rights Watch said today. The AIIB, established in June 2015, convenes its first annual general meeting in Beijing on June 25-26, 2016. It is set to approve a new round of projects at the meeting.

The AIIB's Articles of Agreement and Operating Policies note the need to address the bank's environmental and social impacts and to establish an oversight mechanism to ensure "transparency, openness, independence, and accountability." The bank's environmental and social framework emphasizes its aim, through the projects it finances, to encourage respect for human rights. However, the AIIB's safeguard policies do not require the bank to identify and address human rights risks in the projects it finances, which is necessary for the bank to realize this vision, Human Rights Watch said. Nor has the bank publicly addressed whether it will consult with nongovernmental groups, particularly in countries hostile to independent monitors.

"The AIIB has a chance to get right what other development banks have repeatedly gotten wrong by ensuring that its operations won't undermine human rights," said Jessica Evans, senior international financial institutions advocate at Human Rights Watch. "To achieve that, the bank will need to identify and address human rights risks linked to its projects."

The AIIB, whose first loans have already been announced, intends to fund infrastructure development across Asia. China is its founder and largest shareholder. Other members include Australia, France, Germany, India, Indonesia, South Korea, and the United Kingdom. About a dozen of the bank's member countries regularly express concerns about China's human rights record and about abuses linked to economic development projects.

Human Rights Watch research on development banks globally has documented forced evictions, violations of indigenous peoples' rights, reprisals against critics, and discrimination in the distribution of aid.

Human Rights Watch expressed its concerns about transparency, accountability, and engaging civil society in two letters to the bank's leadership in August 2015, noting China's weak track record on transparency and rights-respecting development processes. No replies have been received. Human Rights Watch has repeatedly expressed concerns about the deteriorating human rights environment in China under President Xi Jinping.

"China's poor record on participation of independent groups and on peaceful criticism means that other bank member countries will need to press the bank to address rights concerns," Evans said.

The bank has made a commitment to establish an oversight body in line with principles of transparency, openness, independence, and accountability. The body should be able to investigate, report, and recommend remedies for rights abuses linked to its projects, as well as violations of bank safeguard policies. Bank members should ensure that this body's policies and practices reflects lessons learned by accountability mechanisms at other international financial institutions, including by:

• Ensuring it can function independently of pressure from AIIB management and political influence;
• Including representatives of nongovernmental groups on the selection committee for members of the mechanism;
• Requiring the bank to develop responsive, time-bound plans to respond to rights abuses and findings that it has not complied with its own policies; and
• Providing the mechanism with the mandate to monitor and publicly report on whether rights abuses and policy violations have been remedied.

The AIIB should not approve any more projects until its accountability mechanism is up and running, Human Rights Watch said.

"Without strong commitments to respecting human rights in all AIIB activities and a meaningful mechanism to hold the bank to account, this new lender may do more harm than good," Evans said. "But if all members insist on higher standards, it could raise the bar globally for sustainable, rights-respecting development."