UK Chancellor George Osborne declared on March 12 that Britain intends to join the AIIB (Asian Infrastructure Investment Bank), a China-backed monetary institution aimed at funding energy, transport and infrastructure projects in several Asian countries. This decision was taken without consulting the US, which caused a White House official to express his displeasure in the Financial Times. In their Thursday article, the newspaper reported that the government official, who refused to disclose his name, warned about “a trend toward constant accommodation of China”.
Hoping to invest in the world’s most rapidly developing countries, but also hoping to find a solution to last year’s Hong Kong issue (which still breeds tension between former pro-democracy protesters and Chinese authorities), British Prime Minister David Cameron has been intensely working towards establishing new trade deals with China, an effort which culminates with this AIIB membership request. Critics say that economic interests are placed above the necessary criticism of China’s management of human rights issues that the UK used to voice.
The AIIB was founded in 2014 by 21 nations, among which India, Thailand and Singapore are the most prominent. If Britain is accepted, it would be the first important Western economy to be involved in the project. The bank’s plans to expand in the Pacific region were mildly discouraged by the Australian Prime Minister Tony Abbott, whose support was limited by conditions of transparency. South Korea and Japan were also persuaded by the US not to participate.
The US drew attention to a series of questions regarding the AIIB’s observance of international regulations. Last year, when the bank was founded, Obama agreed with Tony Abbott about the transparency conditions, stressing the necessity for this bank to be truly multilateral.
According to financial experts, China has a 67% shareholding in the new bank, because the inaugurating agreement specifies that the capital structure of AIIB is relative gross domestic product. Some experts fear that in these conditions Britain would not have an important vote in taking bank-governing decisions. But UK’s hope is to gain some power within the new Asian bank, rather than exert pressure from outside.
image source: Daily Post