Arunachal project “a mistake”, ADB told China despite board's support

India had believed ADB would go ahead with the project in spite of Chinese concerns

Although the Asian Development Bank's (ADB) member countries had backed a document which included a flood-management project in Arunachal Pradesh, pressure from China forced the bank to withdraw the project in 2009 and acknowledge it was “a mistake,” according to newly released cables from the United States Embassy in Beijing by WikiLeaks.

ADB China's country director Robert Wihtol told U.S. officials in September 2009 that the project in Arunachal which China had objected to, had “caused problems for the ADB in China.” And, even as Indian diplomats in Beijing told U.S. officials the same month they believed the project was “still alive” with “modalities” being worked out by the ADB, bank officials in Manila had assured Beijing the project “would not materialise,” Mr. Wihtol was quoted as saying.

China had raised objections in June 2009 after the ADB's board of directors and member countries had endorsed a Country Partnership Strategy (CPS) for 2009-12, which included the Arunachal project.

Mr. Wihtol told the U.S. officials the ADB had acknowledged to Chinese officials that the cause of the dispute was “a mistake” stemming from the ADB's lack of a policy on disputed territories, according to the September 2009 cable (Reference ID: 09BEIJING2615), part of the last batch of Embassy cables released on August 30.

His comments also show the ADB was concerned that the Arunachal project would derail a visit by bank president Haruhiko Kuroda to Beijing in October that year, with the bank's China director quoted as saying the bank “hoped to garner positive publicity” for the visit “without touching sensitive nerves” in China.

India, however, had believed the ADB would go ahead with the project in spite of Chinese concerns, in keeping with the bank's non-political charter.

External Affairs Minister S.M. Krishna had told the Rajya Sabha in a statement in July 2009 that he believed the ADB “had gone with India's point of view” that the CPS was not a political document, and Chinese objections were in violation of the ADB's charter which bars the bank from evaluating a project on non-economic criteria.

India's position had appeared to have been supported by the U.S., Japan and other member-countries which had endorsed the CPS, Mr. Krishna had said.

Explaining the ADB's decision, Mr. Wihtol said the Arunachal project's inclusion in the CPS was only “illustrative of possible ADB activities,” and the board's approval of the CPS “does not mean that it endorses the individual prospective projects.”

Policy

He said: “This was the first time the ADB had looked at doing work in Arunachal Pradesh and that, unlike the World Bank, the ADB did not use map disclaimers.” The ADB had also assured China that “mistakes” that led to the dispute would not be repeated, with the bank establishing a policy to deal with “disputed territories.”

While China claims parts of Arunachal Pradesh and says the territory is disputed, India's position is that the State is an integral part of the country.

The cable also quoted a diplomat in the Indian Embassy in Beijing, Abhishek Singh, criticising China's reaction to the project. He had told U.S. officials that a mechanism to address the border dispute was already in place, and that “the ADB was not the proper place for China to raise the issue.”

He said China had “felt obligated to draw from standard talking points and react in line with its broader approach to the border dispute” at the ADB, but expressed confidence that the project “was still alive” and “modalities” were being worked out in Manila.

Last year, however, the Indian government said it would fund projects in sensitive areas with its own resources, and indicated it would not apply for funding from international agencies such as the ADB and the World Bank.