Almost 50 applications have been
received to join Beijing-led Asian Infrastructure Investment Bank, a rival to the Asian Development Bank and other
US-led financial institutions.
Some 30 applications have already been approved.
The rush to the AIIB was embarassing for Washington, says the Financial Times, as the country initially tried to dissuade applicants, citing potential governance issues at China's bank. Those seeking founding-member status, however, include traditional US allies the UK, Australia, South Korea, Taiwan, France and Germany.
“The US thought they’d have more people with them in opposition to the AIIB,” the Financial Times referred to one Beijing-based western executive as saying. “They misread the situation.”
So far, only Japan took Washington's objections into consideration. On Tuesday Japan's finance minister Taro Aso said the country will be cautios about joining the bank until the AIIB’s governance standards are secured.
The US remained concerned about
the AIIB’s standards but also acknowledged that there was “enough
infrastructure need for new and existing institutions”, Jack
Lew, US Treasury secretary, said, adding that
the US would be willing to work with the AIIB through existing financial
institutions such as the ADB and the World Bank.
The defections have weighed on the Obama administration to terminate talks for the Trans Pacific Partnership trade agreement, which will not originally include China. Success will depend on Mr Obama’s ability to secure trade promotion authority from the Republican-controlled Congress.
Approval for the TPA would enable an
all-or-nothing vote on the TPP agreement, which US executives are
confident would pass given the potential boost
it could provide to the US economy. Failure would
threaten to further unravel the Obama administration’s much vaunted
“pivot” towards the Asia-Pacific region, says the Financial Times.
The AIIB and its rival banks
Asian Infrastructure Investment Bank
Established: 2014
Headquarters: Beijing
Subscribed capital: $50bn initially, rising to $100bn
Member states: 47 so far
Voting power: By GDP
New Development Bank (“Brics Bank”)
Established: 2014
HQ: Shanghai
Subscribed capital: $50bn initially
Members: 5
Voting power: Equal shares
Asian Development Bank
Established: 1966
HQ: Manila
Subscribed capital: $165bn
Member states: 67
Voting power: Dominated by Japan (15.7%) and US (15.6%); China has 5.5%
World Bank
Established: 1944
HQ: Washington
Subscribed capital: $223bn
Members: 188
Voting power: Dominated by US (16%), followed by Japan (8.9%) and China (5.8%)
