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China blocks India’s $60-m project for Arunachal
Indian Express[Tuesday, April 14, 2009 10:56]
Pranab Dhal Samanta

New Delhi: Days after it objected to President Pratibha Patil’s visit to Arunachal Pradesh, Beijing has stunned New Delhi at the Asian Development Bank (ADB) by blocking India’s development plan because it contained a $60 million project for Arunachal Pradesh.

China is learnt to have held back its approval at the ADB Board saying it could not clear a plan containing a programme in a “disputed territory”. Thus, Beijing has, for the first time, escalated the bilateral Arunachal Pradesh issue to a level involving multilateral institutions.

New Delhi’s made it clear to the ADB that there’s no question of removing the Arunachal project from the plan. It has argued that ADB cannot allow its forum for bilateral issues and link these to its lending policies.

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 China in the IMF and the World Bank.

Matters came to a head when India’s strategy paper for 2012 came up at the board meeting on March 26-27. Among the largest recipients of ADB loans, India had drawn up a $2.9-billion programme in consultation with the Bank and this included a watershed development project in Arunachal Pradesh.

China has used its right to postpone a matter in the board. Given that Beijing’s the largest donor after US and Japan to ADB, it’s clearly using its clout. India is next only to China and is leaning heavily on board members to not let Beijing get its way on this issue.

The World Bank has a policy on funding projects in disputed areas that only requires making a note of it before granting approval. India feels ADB could consider such a policy.

India and China had agreed in the two high-profile visits of former PMs Rajiv Gandhi and Atal Behari Vajpayee that they would not allow contentious issues like the boundary dispute to impact progress on other fronts, particularly economic relations. In 2005, the two countries reached an understanding which included safeguarding “due interests” of settled populations.

All of this unraveled when Chinese Foreign Minister Yang Jiechi told Indian counterpart Pranab Mukherjee that “mere presence” of populated areas would not affect Beijing’s claims. Since then, China has hardened its position.
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