World Bank withholds Myanmar funding, but some call for sanctions

WASHINGTON — The World Bank announced Wednesday that in response to the “violence, destruction and forced displacement of the Rohingya,” it will delay the release of a $200 million loan planned for Myanmar.

The money was part of a credit deal reached with the fledgling democracy in August and represented the first instance of direct financial support from the World Bank to Myanmar’s government.

The World Bank is still delivering support to Myanmar and has “strengthened” its engagement in “education, health services, electricity, rural roads and inclusion of all ethnic groups and religions, particularly in Rakhine state,” the statement reads. This loan, specifically designed to support the government on issues of financial and public administration, however, will be withheld for an unspecified period of time.

“We … assessed the conditions of our recently approved development policy loan and concluded that further progress is needed for the loan to be made effective,” the statement reads. It does not specify what “further progress” would entail, or how much of it the government will have to demonstrate for the money to be released.

The bank and its shareholders have seen some criticism in recent weeks for not using the institution more proactively as leverage against the Myanmar government’s persecution of the Rohingya ethnic minority. After Rohingya militants attacked security posts in late August, the military responded with a brutal campaign against the civilian population. Since then, a humanitarian crisis has unfolded with more than half a million Rohingya fleeing to neighboring Bangladesh.

“Given the scale of the humanitarian crisis there, the culpability of the government, it meets the test, in my mind, of a case where the owners of the World Bank ought to be looking at the World Bank as a potential sanctions tool,” Scott Morris, senior fellow at the Center for Global Development, told Devex prior to the bank’s announcement Thursday.

One month ago the World Bank issued a statement on the situation in Myanmar’s Rakhine State, where the military has perpetrated its violent repression of the Rohingya. “Along with the international community, we call on the authorities to ensure the protection of all people residing in Myanmar, and work with all actors to mount an immediate humanitarian response to the crisis in Rakhine State,” it read.

In Morris’s view, the World Bank’s assurances at that time that it would support humanitarian relief operations for people displaced by the conflict ignored the culpability of the government in committing violence against an ethnic minority, treating the situation, “as if it were a natural disaster.”

Even with its decision to withhold the $200 million loan until conditions improve, the bank’s shareholders are not doing enough to put pressure on Myanmar’s government, Morris said.

“The bank continues to pull its punches on a direct sanction of the government,” he wrote to Devex in response to the bank’s statement on Thursday. “The language on the development policy loan is ambiguous in the extreme.”

Read more international development news online, and subscribe to The Development Newswire to receive the latest from the world’s leading donors and decision-makers — emailed to you free every business day.