Germany, France and Italy follow Britain’s lead in announcing plans to join a new, $50 billion China-led development institution that could rival the World Bank. Despite pressure from Washington, major U.S. allies have agreed to join the Asian Infrastructure Investment Bank, known as AIIB.
Establishment of the China-led bank was announced in 2013 and was intended to spur investment in Asian transportation, energy and infrastructure projects.
China is the world’s second largest economy and so far has attracted dozens of prospective founding members, mostly from Asia and the Middle East.
But big news was made over the past week when Britain, followed by Germany, France and Italy – Europe’s biggest economies – all announced they will join the bank too. And now two more U.S. allies, South Korea and Australia, say they may follow suit.
The Heat first spoke to CCTV’s Richard Bestic in London about the latest developments.
AIIB, IMF & ADB
International Monetary Fund (IMF) welcomes the creation of Asian Infrastructure Investment Bank (AIIB), an IMF spokesman in Washington said on Wednesday.
“We welcome all initiatives that seek to strengthen the network of multilateral lending institutions and increase the available financing for infrastructure and development, including the newly created Asian Infrastructure Investment Bank,” an IMF spokesman in Washington reported by Sputnik.
China and other emerging economies, including BRICS, have long protested against their limited voice at global financial platforms, including the World Bank, International Monetary Fund and Asian Development Bank.
However, the US Congress failed to pass proposed IMF reforms in December 2014.
The AIIB offers an alternative to the Asian Development Bank (ADB). The ADB was established in 1966 and now has 67 members including 48 from Asia and the Pacific, but it is seen by many in the region as overly dominated by Japan and the US, which are by far its biggest shareholders with 15.7 percent and 15.6 percent respectively (compared with China’s 5.5 per cent). The Asian Development Bank Institute published a report in 2010 which said that the region requires $8 trillion to be invested from 2010 to 2020 in infrastructure for the region to continue economic development.
The president of the ADB, Takehiko Nakao, said in a statement that there were “huge infrastructure financing needs” in Asia and said that the establishment of the AIIB is an understandable step. He said that when AIIB is established, ADB will be willing to consider appropriate collaboration and at the same time urged that AIIB adopt international best practices in such areas as procurement and social safeguards on lending arrangements.
The Heat began its discussion with Victor Gao and Scott Morris.
Continuing the discussion, The Heat spoke to John Perkins in Seattle. He served as a chief economist at a major international consulting firm and is the author of the New York Times Bestseller “Confessions of an Economic Hit Man.” As a chief economist for an international consulting firm, John promoted U.S. commercial interests to what he now says was the detriment of underdeveloped countries.
He provided his thoughts about another international investment bank.