What Should the US Do In Response To China’s AIIB Initiative?

It looks like the Chinese just received a major diplomatic win with the United Kingdom deciding to join their Asian Infrastructure Investment Bank (AIIB) which will be a competitor to other international financial institutions such as the World Bank:

It is time for Washington to take a step back and regroup. Its Asian Infrastructure Investment Bank (AIIB) strategy, ill-considered from the get-go, has now taken a major hit with the announcement this past week by the United Kingdom that it plans to join the Chinese-led AIIB. Washington’s concerns over the AIIB are well-established: the competition the AIIB poses to pre-existing development institutions such as the World Bank and Asian Development Bank; concern over the potential for weak environmental standards and social safeguards within the AIIB; and the opportunity for China to use AIIB-financed infrastructure for greater leverage in the region. From all accounts, the Obama administration has expended serious energy trying to dissuade its allies from joining the bank at least until greater clarity is offered as to the decision-making structure of the institution. With the defection of the U.K., however, it appears likely that Washington’s carefully constructed coalition will gradually unravel—both Australia and South Korea are apparently reconsidering their earlier reluctance to join the bank and could well use the U.K.’s decision as political cover for deciding to join the bank.

At this point, therefore, Washington has three choices:

1)      Continue to press its allies not to join the AIIB until governance procedures for the bank are assured;

2)      Join the AIIB itself; or

3)      Drop the issue.

You can read what option the author thinks the US should go with at the link.