Too small to be

Opinion

Too small to be successful

SMALL is beautiful, argued American E F Schumacher in his 1973 book of that title.

But it seems it’s not so beautiful in the eyes of the Asian Development Bank and that’s bad news for its 12 Pacific Island members.

The 55-member bank, which held its annual meeting in Auckland last month, is the leading development finance insti tution in the Asia-Pacific nations.

Its principal purpose is to lend money, donated by the wealthy states, to the region’s under-developed members to help them progress economically and socially.

The bank’s charter requires it to pay special attention to the needs of the smaller and least-developed countries among the 39 members states in the region. These get virtually interest-free loans from the ABD’s highly concessional Asian Development Fund.

Now, they don’t come much smaller and less developed than the dozen Pacific Island states on the membership list. But the bank’s own figures show they haven’t done very well out of the SUSSI.S billion the ADB has lent for around 1,240 projects in more than 30 countries since it started operations.

The reason; they are too small.

Because of their tiny populations and economies, their needs are insignificant compared with those of the ADB’s major borrowing members like Indonesia, China and India.

To put it bluntly, a bank whose systems are geared to lending hundreds of mil lions of dollars a year to half the world’s population can’t be bothered with micro states like Tuvalu, Kiribati and the Cook Islands.

The bank’s latest annual report notes, for instance, that Kiribati has borrowed just SUS 4.9 million for five projects since joining the ADB in 1974. The Cook Islands took eight loans worth only SUSIS.7 million since it joined in 1976.

Vanuatu, a member since 1981, has bor rowed $U519.25 million for six projects.

Bank officials admit they would not process a single loan of that size to Indonesia, which normally borrows something like SUSI. 2 billion every year.

Even the biggest Pacific Island member, Papua New Guinea, has borrowed less than half that figure in a total of 42 sepa rate loans over 23 years. Fiji has received SUSI2I million in 12 loans since 1970.

The other Pacific Island member states are: The Marshall Islands, Federated States of Micronesia, Nauru, the Solomon Islands, Tonga and Western Samoa. Niue has applied for membership.

Now no-one denies the development needs of the Pacific countries are every bit as great as Asia’s poorest nations like Nepal, Bhutan, Laos and Myanmar.

But, says Colin Pratt, New Zealand’s alternate director at the ADB’s Manila headquarters, who also has responsibility for the Cooks, Fiji, Tonga and Western Samoa, they have been neglected.

Bank procedures need to be scaled down to cater for the needs of the island states, he says. But unfortunately, there is only half-hearted support for the Pacific among the big donor countries who are more interested in Asia, which remains the world’s fastest-growing region.

The burgeoning Chinese economy and the potential of newly-developing coun tries like Vietnam, now heading for 9per cent annual growth according to the ADB, are much more attractive to the developed world’s big business sector than the isolated micro states of the Pacific with their tiny domestic markets and poor growth rates.

The fact remains that the 12 Pacific Island members make up one-third of the

ADB’s borrowing countries and the bank’s charter says its has a special responsibility to them - a responsibility it has clearly not honoured to date.

The bank revamped its Pacific opera tions as part of a major internal reorganisation on January 1, but New Zealand is not yet convinced the change will improve the situation.

The revamp was controversial because it saw the bank’s South Pacific Regional Office in Vanuatu downgraded and its staff numbers reduced.

But bank officials say the island states should be better off under the reorgani sation, which has created a separate Office of Pacific Operations (OPO) at

Manila headquarters.

The bank says the island nations will have a staff and budget dedicated to their requirements for the first time, but New Zealand officials fear separation could lead to further isolation of the Pacific members from the mainstream of bank business.

Geert Van Der Linden, chief of OPO, said under the previous system, the Vanuatu office suggested programmes for the Pacific states, but depended on head quarters staff to prepare projects.

Those staff had other responsibilities, including countries like big borrower Indonesia, and the Pacific continually lost out.

The Pacific was short-changed, he said, and should now get a better deal with 26 fulltime dedicated staff - half in Vanuatu and the remainder with OPO in Manila.

Whether that number, out of the 645 professional staff on the bank’s books, is enough to give the Pacific more promi nence on the ADB map, remains to be seen.

Van Der Linden says OPO’s first priori ty is to produce a strategy paper defining the ADB’s role in the Pacific and assess ing what it can do to improve economic growth rates which have been among the lowest in the world in recent years.

Pratt says he for one will not let the bank forget its responsibilities to the region. “What is needed is a long-term commitment to the Pacific and we have not seen that from the ADB yet.” ■

From

David Barber

in Wellington