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China escalates Arunachal dispute with India, blocking an ADB loan

April 17, 2009

Tibetan Review
April 16, 2009

China has blocked an Indian application for loan
from the Asian Development Bank (ADB) because it
contained a $60 million project for Arunachal
Pradesh, which it claims is a disputed territory,
reported The Indian Express newspaper Apr 14. It
said China held back its approval at the ADB
Board, saying it could not clear a plan
containing a programme in a “disputed territory”.

This is the first time China has escalated the
bilateral Arunachal Pradesh issue to a level
involving multilateral institutions. The report
said the Chinese move is also seen as a
disturbing pointer to what could lie ahead given
that the world is bracing for a more "expanded
involvement" of cash-rich China in the IMF and the World Bank.

India was reported to have made it clear to the
ADB that there s no question of removing the
Arunachal project from the plan, arguing that the
ADB could not allow its forum for bilateral
issues and link these to its lending policies.

The development took place when India’s strategy
paper for 2012 came up at the board meeting on
Mar 26-27. India, the largest recipients of ADB
loans last year at $3 billion, had drawn up a
$2.9-billion programme in consultation with the
Bank and this included a watershed development
project in Arunachal Pradesh. China, the largest
donor after US and Japan to ADB, has used its
right to postpone a matter in the board. India is
leaning heavily on the other members to ensure
that Beijing does not get away with it.

The report said the World Bank has a policy on
funding projects in disputed areas that only
requires making a note of it before granting
approval. India is reported to feel that the ADB could consider such a policy.

India wants to use the ADB loan to deal with
water management and ecological problems caused
by deforestation on the Tibetan side and
impacting on Arunachal Pradesh, noted a 2point6billion.com report Apr 14.

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