World Bank Freezes Loans to Cambodia

In this photo taken on March, 17, 2011, a woman stands by a window of her house on the edge of Boeung Kak, Phnom Penh's largest lake. She and other residents of the area are being evicted from their homes to make way for upscale villas and  buildings. The dispute over Boeung Kak lake has embarrassed the World Bank and led to an unusually tense standoff with Cambodia's government. The bank issued an ultimatum in March demanding a halt to evictions and higher compensation for landowners. A May 8 deadline has been pushed back to next Monday.



The World Bank said Tuesday it will stop loaning money to Cambodia until the government reaches a deal with thousands of residents who are under threat of eviction in a huge development project.

Country director Annette Dixon says the World Bank has not made any loans since December and will not approve any more until Phnom Penh agrees on compensation with lakeside residents.

Dixon says the bank continues to encourage the Cambodia government to reach an agreement to provide on-site housing for the remaining residents of Boeung Kak Lake.

Nobody at the bank was available for further comment.

Two years ago, the Boeung Kak lake area in central Phnom Penh was home to 4,000 families. Now just 1,000 are left and workers have nearly finished filling the lake with sand.

Rights groups say the development has proceeded illegally from the start. They say people have been evicted without proper compensation and the threat of violence by the authorities has seldom been far away.

For years, lakeside residents tried to get land title documents from the local authorities in a program funded by the World Bank. While hundreds of thousands of other Cambodians obtained land titles, residents at the lake did not.

Earlier this year the bank admitted it had let down the residents and quietly informed Phnom Penh to resolve the issue. If not, the bank said it would reconsider its programs in Cambodia.

Today’s statement indicates the bank has stuck by that pledge.

Sia Phearum, secretariat director of the Housing Rights Task Force a local organization that advises lakeside residents of their rights, says local officials started meeting with residents, earlier this year, and the sides have made some progress.

“We found that some parts, some points are moving forward and some parts are not moving forward," Phearnum says. "It seems to be like slowly and people still fear concern about the forced eviction, because during the land survey also the company, they trying to lobby or threaten people to move out with the small compensation. This is the way that some part is a good result and some part is not a good result. But the community they have strong solidarity.”

Cambodia is developing fast and land prices have sharply risen in recent years. Critics say that has caused a wave of land grabbing, driving tens of thousands from their homes.

The capital has changed fast, too. In the past decade, slums have been cleared and their residents relocated outside the city limits. High-rises and apartment blocks are now common.

The companies behind the Boeung Kak development are very well-connected. One is owned by a senator from the ruling Cambodian People's Party; the other is a firm from China, a nation that has pumped billions into Cambodia in recent years.

Cambodian officials say they are not concerned by the bank’s position. Spokesman Phay Siphan says the World Bank has exceeded its mandate in insisting that Phnom Penh abide by such conditions.

Phay Siphan says the government’s only responsibility to the World Bank is to repay monies it has borrowed, and that conditions on one loan should not affect any others.

Sia Phearum, of the Human Rights Task Force, stresses that lakeside residents want the bank to resume lending, once a solution is found.

“I think if everyone talks about the Boeung Kak issue. I think the government at least they will reconsider and work more (for) improving for solving the problem of the people, of their own voters,” Phearum says.

The coming weeks and months will clarify whether the bank’s ultimatum will help with finding a solution.