Wednesday, 29 October 2014
AIIB: Yet another symbol of the changing balance of global power
The birth of the Asian Infrastructure Investment Bank (AIIB) in Beijing’s Great Hall of the People last Friday is yet another reminder that the global balance of economic and political power is shifting. The United States is still a superpower but US-inspired regional institutions can no longer expect to have the field to themselves.
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AIIB: Yet another symbol of the changing balance of global power
29 October 2014
The birth of the Asian Infrastructure Investment Bank (AIIB) in Beijing’s Great Hall of the People last Friday is yet another reminder that the global balance of economic and political power is shifting. The United States is still a superpower but US-inspired regional institutions can no longer expect to have the field to themselves.
The AIIB, like the BRICS Bank, is one of a growing family of multilateral institutions dedicated to the task of financing infrastructure needs. But the Beijing-based bank is also a symbol of the desire by emerging economies to escape the restraints of post-war, US-dominated institutions such as the World Bank, Asian Development Bank (ADB) and others. It so happened that, on the same day that representatives of 21 Asian and Middle Eastern nations were gathered in Beijing to endorse the China-led AIIB initiative, Russian President Vladimir Putin was accusing the US in a speech in Moscow of trying to “reshape the world to suit (its) own needs and interests”.
The context of the two events was admittedly different. The AIIB’s principal architects are challenging Anglo-Saxon economic development priorities, whereas Mr Putin was attacking US-led military interventions in various countries. But both events underscore the desire for a multi-polar rather than a unipolar balance of power in the world. “Think of this as a basketball game in which the US wants to set the duration of the game, the size of the court, the height of the basket and everything else to suit itself,” former China commerce minister Wei Jianguo commented to the Financial Times in a reference to frustrations over the way in which the global agenda is seen as being set in Washington.
At the same time, China Finance Minister Lou Jiwei launched what appeared to be a broadside against existing multilateral development institutions, saying, according to Xinhua news agency, that the AIIB would set high standards and safeguards in its lending while avoiding “bureaucratic, unrealistic and irrelevant policies”. Mr Lou’s comment goes to the heart of what has become a matter of ideology versus pragmatism in the approach to economic and social development by multilateral development institutions founded after World War II. There is no doubt that, over the years, some of these institutions, including the ADB, have served as a kind of conduit for transmitting US or Anglo-Saxon values to the developing world. There is nothing wrong with such values - poverty reduction, governance and gender issues or health and education objectives, for example - but to what extent they are suitable objectives for development banks that are supposed to finance hard infrastructure is debatable. In some of the Washington-influenced regional development banks, such “top down” impositions can clash with local priorities. This helps explain the genesis of the AIIB, which has been espoused principally by China but with India and a score of others also signing on.
It was only a matter of time before a “homegrown” Asian development institution such as the AIIB came into being - a development that has already taken place in Europe. Long-established regional development banks need to work alongside newcomers such as the AIIB (as indeed ADB president Takehiko Nakao has pledged to do) and, over time, each can learn from the other as a more genuinely regional consensus on development emerges.
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