Tag: AIIB

South Korea Announces Intention to Join Chinese Led Asian Infrastructure Investment Bank

| March 28, 2015

This is another example of the rise of China where they are continuing to get nations to join AIIB which is a competitor to the western led World Bank:

korea china flags image

South Korea on Thursday became the latest American ally to announce its intention to join the Asian Infrastructure Investment Bank despite Washington’s qualms about the Chinese-led regional development bank.

The South Korean Ministry of Strategy and Finance said in a statement that Asia needed a new regional source of development money like the Asian Infrastructure Investment Bank because the existing multilateral lenders, like the World Bank and the Asian Development Bank, could not meet the demand for infrastructure investment funds in the region.

The United States has expressed misgivings about the proposed regional lender, which it sees as a threat to the Washington-led World Bank. American officials have also worried that the new bank would lack governance and transparency in enforcing lending, environmental and labor standards.

But in its statement, the South Korean ministry said a founding membership in the regional bank would help expand the country’s influence in the international banking sector. It also said membership would help its companies win deals in large-scale construction, telecommunications, transportation and other development projects in the region.

“Our government, together with its allies, has been urging China to improve its plans for the bank so that its governing structure and safeguards will meet international standards,” the ministry said. “We have seen significant progress in that regard.”  [New York Times via the Marmot’s Hole]

You can read the rest at the link, but this is also another example of how South Korea’s balances their relationship with China and the US. They prioritize economic issues with the Chinese and security issues with the US.

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

| March 23, 2015

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.