ADB moves to lift `sanctions' against India

CHIANG MAI (Thailand), MAY 8. The Asian Development Bank has begun to engage the Group of Seven industrialised countries in a bid to lift the ``sanctions'' imposed on India in the aftermath of its nuclear tests conducted in May, 1998. This was disclosed by the ADB president. Mr. Tadao Chino, after the conclusion of the bank's 33rd annual meeting of its Board of Governors in this northern Thailand town today.

To a question whether the ADB would take a second look at the loans held up on account of New Delhi's nuclear tests, especially so in the context of signs that the World Bank might soften its attitude in respect of its loans, Mr. Chino said: ``We are now sounding (out) the positions of G-7 and our (own) Board (of Directors) for the possible normalisation of our operations in India.''

The ADB-related ``sanctions'' in focus pertain to the objections from one or more G-7 countries with regard to the clearance and disbursement of project aid for such sectors in India as infrastructure. Credit for the so-called ``basic human needs'' has not been affected. The ADB per se does not penalise India for its nuclear tests but the ``sanctions'' resorted to by the G-7 states have produced a spinoff or secondary effect of the bank's loans being blocked in view of the Group's known position even without the aid proposal going to any member of the exclusive club for a possible veto.

Keeping this in mind, the ADB president said: ``Under the Charter, the ADB's operations should be guided by economic considerations and not by political considerations. Our bank management and staff are continuing other usual preparations of processing projects for India'' under the `human needs' rubric.

However, according to Mr. Chino, ``it has not been possible for us (at the ADB) to bring project (aid) proposals to the Board of Directors.'' Citing ``the G-8 sanctions (by the industrialised countries and Russia)'' as the factor that stopped the bank in its tracks over this issue, he explained that the perceived absence of signs of a positive response from key G-7 countries had actually served as a deterrent.

``We have been doing quite positively (on) basic human needs projects even under sanctions,'' he said and noted that this had set the stage for engaging the G-7 on project aid to India.

While Mr. Chino did not acknowledge that the new context was made possible by the receding international reverberations of the political fallout of New Delhi's nuclear tests, his remarks today were a sequel to his conversation here with India's Finance Minister, Mr. Yashwant Sinha, during the ADB conference.

India has been opposing the political distinction between project-aid and loans for basic human needs. In New Delhi's reckoning, all economic activities including projects in the power and other infrastructure areas are linked to basic human needs in any developing country.

Sub-regional linkages

Asked about the political correctness of the latest initiative by the Association of South East Asian Nations (ASEAN) and its East Asia dialogue partners such as China and Japan besides South Korea for a sub-regional financial arrangement or currency swap as a possible prelude to the creation of an Asian monetary fund, Mr. Chino said there was nothing amiss about it as a factor for regional financial stability.

Mr. Chino said: ``There already exist several cooperative financial frameworks among monetary authorities in the Asian region such as the network of bilateral swap and repurchase agreement facilities among ASEAN countries. I understand the initiative of the ASEAN Plus Three at this time is to strengthen further and expand the existing framework to ensure financial stability in the East Asia region. I understand that the ASEAN Plus Three would further examine and discuss how to materialise the content of the initiative. So we are going to closely monitor the discussions among the Asian countries.''