October 13, 2017 8:17 pm JST

World Bank eyes redirecting Myanmar funds for Rohingya crisis

Bank to consider $270m for Rakhine response in wake of refugee exodus

GWEN ROBINSON, Chief editor and YUICHI NITTA, Nikkei staff writer

Hundreds of Rohingya people cross Bangladesh's border as they flee from ​Rakhine state after crossing the Naf River in Bangladesh. (Getty Images)

YANGON -- Governors of the World Bank Group will consider proposals to allocate at least $270 million worth of funds to address the crisis in Myanmar's Rakhine state, where more than 600,000 Rohingya Muslim refugees have fled into neighboring Bangladesh since late 2016. The decision would entail redirecting some $200 million of existing World Bank assistance for Myanmar and adding a fresh contribution of at least $70 million.

As part of their annual meetings in Washington on Oct. 13-15, the governors will consider a plan to redirect a $200 million credit for budget support to Myanmar's government, agreed in August, into programs for Rakhine.

The credit, the first direct financial support by an international financial institution for Myanmar's national budget, is part of a longer-term plan for direct budgetary support to be provided in annual tranches. But international condemnation of widely reported military atrocities against Rohingya Muslims in Rakhine have fuelled calls to suspend assistance, not just at multilateral institutions but also among donor countries.
 
A top Myanmar economic official told the Nikkei Asian Review on Friday that redirecting existing budget support into new Rakhine programs would be a way to address critics' calls for some form of censure by likely including a stipulation that none of the funds should go toward military-related expenditure. The funds would be used for humanitarian and development activities, including infrastructure such as roads, healthcare, rural electrification and reconstruction of some facilities destroyed during the latest military crackdown.

Separately, the Bank is considering up to about $400 million worth of funding in the form of loans and grants for Bangladesh, which is struggling to accommodate more than 800,000 Rohingya refugees, some from earlier waves of Rakhine violence.

In the largest exodus in Asia's recent history, the refugees have been driven out of the country by the ferocious military response to two waves of attacks by Muslim militants on police and army facilities near the Bangladesh border. The attacks, carried out last October and on Aug. 26 by a group called the Arakan Rohingya Salvation Army, killed a total of 21 police.

Reports of ensuing abuses by security forces and paramilitaries, most recently detailed in a report issued on Wednesday by the Office of the United Nations High Commissioner on Human Rights, have shocked the world and prompted other governments and international organizations to consider censure of Myanmar's government -- specifically, the military commanders behind the ferocious "clearance" campaign. At least 288 villages were destroyed and hundreds were killed, tortured and raped in military-backed operations, according to the U.N. report, which was based on 65 interviews with Rohingya who had arrived in Bangladesh.

The World Bank's deliberations come as both the U.S. and EU consider official action to protest the military abuses that led to the refugee exodus. Less than a year after removing nearly all sanctions imposed against previous military regimes, the U.S. is considering targeted sanctions against individuals, mainly military figures.

The moves are likely to come from the U.S. Congress, with indications in recent weeks that senior lawmakers including Republican Senator John McCain are likely to support measures such as travel bans and asset freezes against key Myanmar military figures. In a letter to U.S. Secretary of State Rex Tillerson in late September, 21 Republicans and Democrats in the 100-member Senate requested the Trump administration consider sanctions against individuals responsible for the atrocities in Rakhine.

Similarly, EU foreign ministers are set to discuss possible measures against Myanmar's military leaders in a meeting on Oct. 16. Several EU diplomats on Friday told the Nikkei Asian Review that the bloc is likely to suspend invitations to Myanmar's commander in chief Senior General Min Aung Hlaing and other senior military officers. While such a voluntary curb would be the mildest form of sanction, a draft statement for the ministerial meeting cited by Reuters said the EU may consider further measures depending on developments in Myanmar, but would "respond accordingly to positive developments."

The tempered response of by both the EU and U.S. highlights concerns among Western countries as well as Japan about China's grip on Myanmar in the fields of investment, trade and security. In recent moves, Beijing has signed deals to develop a large port and industrial zone in southern Rakhine state and has extensive infrastructure investments including in hydropower.

The lifting of sanctions against Myanmar was expected to boost Western investment but so far, the rush has not transpired. Approved foreign direct investment from China and Singapore -- the top investors -- totaled $829.1 million and $1.7 billion in the year to March 31, respectively, according to government data. In comparison, combined FDI from France, Germany and the Netherlands in that year was $537 million. Companies from Japan and other countries, which have invested through Singapore subsidiaries, account for a substantial part of Singaporean investment.

While relatively mild, the imposition of curbs on key military figures could hit investor sentiment, as Western companies considering deals, as well as concerned shareholders and nervous investors, may take them as a reason to further delay in investment, reinforcing questions arising from international alarm over the Rakhine crisis.

In remarks that have further angered Western governments, Myanmar's commander in chief earlier this week told the U.S. ambassador to Myanmar that the Rohingya, who he calls "Bengalis" to imply they are interlopers from Bangladesh, did not belong in Myanmar and would be safer in Bangladesh. Blaming "instigation and propaganda" by media, he said the refugee numbers had been "exaggerated" and claimed that those who fled were supporters of the militants who carried out the attacks on security facilities.

Critics including human rights groups said targeted sanctions were a welcome step but did not go nearly far enough to censure Myanmar's government. However, many Western diplomats and analysts warned against putting undue pressure on Suu Kyi's government, which has fragile position in a semi-democratic system where the military still wields immense political power.

Fragile democracy
 
For decades a pariah state ruled by secretive juntas, Myanmar began a democratization process under the quasi-civilian government of former President Thein Sein in 2011. To encourage reforms, the West led by the U.S. lifted nearly all sanctions including curbs on individuals and entities with close ties to the former military regime. The sweeping victory of Aung San Suu Kyi's National League for Democracy party in the 2015 national election further raised hopes in the West that the former political prisoner and Nobel Laureate would accelerate the reform process.
 
Instead, the Rakhine crisis and perceived political backsliding under Suu Kyi has drawn resounding condemnation from the West as well as from Islamic countries.
 

In a fresh effort to reassure both her domestic and international audiences, Suu Kyi, on Thursday announced the creation of a committee to co-ordinate all international and local assistance in Rakhine state and vowed to begin the process of verification and return of refugees from Bangladesh.

In a rare televised speech, her second public statement on the Rakhine crisis, she called for national unity and also promised to implement recommendations of a commission chaired by former U.N. Secretary General Kofi Annan. Among 88 recommendations, the Annan commission called for steps to consider citizenship for eligible Rohingya, freedom of movement and equal access to healthcare and education. Analysts however note that with nearly 60% of the estimated 1.1 million Rohingya population of Rakhine state gone, the outlook has changed. "That shouldn't stop the government from implementing key measures of the report, but the massive challenge of bringing refugees back and dealing with the aftermath of this crisis would have to take precedence over many measures," said one Western diplomat.

In her speech, Suu Kyi said she would personally chair a new body called the Union Enterprise for Humanitarian Assistance, Resettlement and Development in Rakhine. Win Myat Aye, the minister for Social Welfare, Relief and Resettlement, who also chairs an interministerial committee to implement the Annan commission's recommendations, would be vice chair, she noted.

The massive challenge of bringing refugees back and dealing with the aftermath of this crisis would have to take precedence over many measures.
A Western diplomat

Ahead of the announcement of his appointment as vice chair of the new body, Win Myat Aye told the Nikkei Asian Review in an interview that Myanmar would begin the process of bringing back Rohingya Muslim refugees from Bangladesh as early as November. But he admitted that the verification and return process would be slow, possibly at a pace of just 100 to 150 refugees per day, which would mean many years if they were all to return.

But many observers say the military is likely to resist the return process, a view reinforced by the commander in chief's frequent claims that the Rohingya do not have a place in Myanmar. The senior general has also indicated his opposition to some recommendations of the Annan commission, in particular the recommendations for citizenship procedures and freedom of movement for Rohingya. In the interview, Win Myat Aye said that some of the recommendations may be skipped: "We do not have to implement all of them," he said. "They are just suggestions."

Nikkei staff writer Thurein Hla Tway contributed to this report.

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