On Saturday, June 25, the Asian Infrastructure Investment Bank (AIIB) held its first annual meeting in Beijing. One of its goals in doing so was to demonstrate its position as an autonomous player in global economic development. The AIIB would not like to be seen as a “pawn” of China and is trying to shake off any suspicions coming from Washington that its banking practices do not satisfy “international standards of governance and transparency.”
Also, reacting “with shock” to Great Britain’s decision to leave the EU, AIIB Board of Governors member and South Korean Finance Minister Yoo II-ho explained that AIIB has made “remarkable strides” over the last six months addressing Asia’s economic concerns and “can help with the new situation” in Europe.
By holding its first annual meeting this weekend, AIIB establishes itself as a fellow multinational development bank. At present, the bank has 57 founding members comprised of nations around the globe and an initial $100 billion in operating capital. Approximately 30 percent of this initial start-up capital has been invested by China, 7.5 percent has been invested by India, and 5.9 percent by Russia. Other big contributors include Germany and South Korea.
It has been reported that the Obama administration expressed concerns about AIIB’s governance and levels of transparency and even “lobbied allies” against partnering with the development bank. There also appeared to be a belief that the bank was part of a larger plan by China to further its influence throughout Asia through its One Belt, One Road initiative. In April, U.S. President Barrack Obama made a statement in which he explained that the reports of his opposition to the bank were “simply not true.” The U.S. is not one of the 57 members.
While the concerns may or may not have come from Obama’s administration, they were among the issues discussed at the meeting on Saturday. Danny Alexander, vice president of the AIIB, in an effort to mitigate these looming concerns, commented that “China, as much as other shareholders, has been very supportive of the governance standards that we are setting and of the transparency around the bank’s operations.” Alexander emphasized the need for the bank to focus on infrastructure in Asia; a challenge he says “dwarfs the capacity of all the existing institutions together.”
On Friday, a day before the general meeting, AIIB’s board discussed and identified four projects the bank would like to move forward on, totalling $509 million of the $1.2 billion the bank plans to spend this year. These plans include renovating an impoverished area of Indonesia, highway construction in Pakistan and Tajikistan, and improving a power grid in Bangladesh. Three of these projects will be co-financed with the World Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, and the United Kingdom Department for International Development.
Director of the Carnegie-Tsingua Center in Beijing Paul Haenle explains that the bank is working towards becoming more aligned in practice with other multinational development banks and seeks a collaborative approach to its banking practices. Haenle says that through cooperation with experts from non-member countries like the U.S., additional concerns about environmental standards and quality of projects can be better addressed.
At AIIB’s first annual meeting held in Beijing, there was much to discuss. It has been reported that many of the economists at the meeting could not help but discuss Brexit and its potential global economic implications. Britain and several European countries are member nations of the development bank. However, for the young bank, much of its energies are currently focused on building capital and retaining talent with diverse backgrounds. AIIB plans to hire 20 more professionals to its 39-member staff in July.
By Joel Wickwire
Reuters: China-Backed AIIB Seeks Cooperation and New Members
South China Morning Post: China-backed AIIB Can Work with Other Development Banks to Overcome Regional Uncertainty after Britain’s Brexit Decision: Bank Governor
The Washington Post: Asia’s New Infrastructure Bank Is out to Prove It’s Not China’s Pawn
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