World Bank stops funds for Cambodia over evictions

Aug 9 (Reuters) - The World Bank said on Tuesday it had stopped providing loans to Cambodia and would not resume lending until the government did something to help hundreds of families facing eviction from land around a lake in the country's capital, Phnom Penh.

"The World Bank's last loan to Cambodia was in December 2010," Country Director Annette Dixon said in a statement.

"Until an agreement is reached with the residents of Boeung Kak Lake, we do not expect to provide any new lending to Cambodia," she said.

In the past few years, the World Bank has lent Cambodia about $50-70 million annually. It has repeatedly asked for the evictions to stop.

Forced evictions are a major problem in Cambodia, with an estimated 30,000 people a year driven from farmland or urban areas to make way for real estate developments or mining and agricultural projects.

The World Bank has made a stand over the Boeung Kak Lake area, where 10,000 people face eviction to make way for a luxury real estate project led by China's Inner Mongolia Erdos Hongjun Investment Corp, an unlisted firm that has pledged to spend $3 billion in Cambodia on real estate, metal processing and power generation.

The bank has offered financing and advice to the government on land management but has not received a response. It wants the developer to provide on-site housing for the remaining residents of Boeung Kak Lake rather than push them out.

Land ownership is a complex subject in the impoverished Southeast Asian country, where legal documents were destroyed and state institutions collapsed under the Khmer Rouge regime of the 1970s and the civil war that followed.

The World Bank had an agreement with the authorities to assist with land management and administration but that fell through in September 2009.

It issued a statement in March acknowledging it had been slow to respond when about 2,000 Boeung Kak Lake residents were evicted in violation of an agreement the Bank had reached with the government regarding resettlement.

A sharp increase in the number of evictions has angered human rights groups and donor countries, several of which have threatened to withdraw aid from one of Asia's poorest countries.

Such threats may not be effective as Cambodian tycoons and their friends in local and central government are profiting by selling or leasing farmland and prime real estate to foreign firms, mostly from China, which is offering more development money than the donors, with fewer strings attached.

China is Cambodia's biggest source of foreign direct investment (FDI) and in the first seven months of this year it pledged $8 billion for 360 projects, the same amount it invested in the whole of Southeast Asia in 2008.

Beijing is also Cambodia's largest source of foreign aid, providing about $600 million in 2007 and $260 million in 2008.

(Reporting by Prak Chan Thul; Editing by Martin Petty)