The Asian Infrastructure Investment Bank: who’s excluding whom

Even The Economist, always sharp with its analyses but never unilateral with its judgments, has sidelined prudence in this case. It has judged the isolation of the United States from the new Asian Infrastructure Investment Bank as a “fiasco.” The failure of Washington’s policies seems inexplicable for an administration where experts and think tanks abound. Already last October when the AIIB was launched in Beijing, the refusal to support and participate in it turned out to be weak. The adhesion of 21 countries proved that Asia, in the majority of cases, looks to Beijing with more hope than fear. The same situation prevails in traditionally hostile countries like India and more recently in Vietnam and the Philippines. Evidently, governments still prioritize progress from underdevelopment; constructing infrastructure is crucial, and the availability of capital is essential. That a bank founded and managed by Beijing enables it is secondary. For this reason, Beijing’s move was successful and Washington’s resistance was only heeded in old allied capitals: Tokyo, Seoul, and Canberra (in fact, Wellington’s adherence represents the first crack in the pro-American front). Now, the situation has changed and is becoming a diplomatic triumph for China. First the United Kingdom, then jointly Germany, France, and Italy decided to enter as founders in the new bank. Switzerland and Luxembourg should probably make the same decision, just like South Korea and probably Australia. All of these countries don’t need infrastructure. Their cohesion is important for many reasons: to attract Chinese capital (especially for the City), to put their companies first in line for projects, and answering Beijing’s call. China’s offer has the face of finance but the brain of politics. It’s likely that the US will only be able to count on the friendship of a loyal but weakened ally, Japan. It will be the same pair that has essentially governed the two banks that the AIIB is inevitably competing with: The World Bank and the Asian Development Bank. Preserving the centrality of these two bastions is the price Washington will pay for trying to exclude China. The White House is defending by now indefensible institutions due to inefficiency, bureaucracy, and the inability to act on the dynamism imposed by Asia and globalization. In particular, the World Bank remains a lever against China, in which it only holds 3.8% of voting rights compared to its 16% share of the global GDP. If Beijing decides to create a new multilateral bank, Washington has good reason to fear a blow to its role as superpower. It even has reason to predict a lack of transparency, poor respect for labor laws, and environmental violations. In any case, refusing to participate in the initiative also means avoiding the ability to influence it. By now, the AIIB is a successful reality and perspective. China, at least in this case, was not contained and the US risks excluding itself at the very time the G2 rival takes an important step forward: entering into international consensus with the weight of its results.