Time for an Asian Infrastructure Investment Bank
- By Dan Steinbock
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E-mail China.org.cn, October 23, 2014
U.S. opposition
As Beijing set out to promote the idea of a regional infrastructure bank, Washington not only took an opposing view but began to lobby against the bank. These activities began in low-profile backroom talks with AIIB’s proposed founding partners and then more openly in a forceful campaign to persuade important allies to reject the initiative.
While President Xi is expected to formally announce the AIIB initiative at a summit meeting of Asian leaders in November, Beijing’s mistrust in Washington has deepened. In August, Jin Liqun, the proposed Chinese leader of the AIIB and former head of China’s sovereign wealth fund (CICC), told U.S. Ambassador to China, Max Baucus, to soften opposition to the bank.
The bluntness of the reaction surprised Americans. But it did not surprise Asians. Some applauded it.
Asia desperately needs infrastructure investments. Many fail to understand why that would be against Washington’s interests. American business has long advocated such investments.
Pros and cons
In the past few months, the Obama administration has used three sets of arguments to lobby its allies and friends in Asia to reject the AIIB.
First, U.S. Treasury Department has criticized the bank as a deliberate attempt to rival the World Bank and the Asian Development Bank.
In reality, neither bank has the funds to support real infrastructure progress in Asia. For its part, the ADB estimated in 2009 that the region would need some $8 trillion in investments in physical infrastructure by 2020. It was a de facto plea for greater funding because the huge amount far exceeded what ADB or the World Bank could gather.
Not only could Beijing’s effort attract Asian countries to cooperate on the region’s significant capital needs. It would focus regional allocations to economic development in which existing international financial institutions have proved woefully inadequate.
Second, U.S. officials have portrayed the AIIB as Beijing’s geopolitical instrument to attract countries in Southeast, East and South Asia closer to its sphere of influence. It is a soft-power play, U.S. officials have warned.
This geopolitical argument is reminiscent of the one Stalin used in the late 1940s to insulate Eastern Europe from the Marshall Plan, which proved critical in re-energizing recovery in the devastated postwar Europe. That aid came hand in hand with membership in the North Atlantic Treaty Organization (NATO), which did strengthen the transatlantic axis between Washington and Brussels. In contrast, China is not pushing membership in a security-driven Asian Treaty Organization.
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