AIIB - What's this all about?

StrangeCaptain

Jedi Council Member
Hello all,

I was curious what you all might be thinking about this AIIB institution being created and having so many western nations jumping on it's bandwagon. I wish I had something to offer, but my question is exactly as I pose it because I honestly have no idea. Please speculate if you wish... What is going on with this story of the AIIB getting so many European nations expressing interest in it and then the US waffling in its resistance against this institution. Thanks.
 
What's interesting is also that the international lenders also seem very keen on cooperation with AIIB;

_http://uk.reuters.com/article/2015/03/25/uk-japan-aiib-adb-idUKKBN0ML0IK20150325 said:
The head of the Asian Development Bank said on Wednesday that it could cooperate with the China-backed Asian Infrastructure Investment Bank through co-financing if the ADB's standards for loans were met.

ADB, IMF, World Bank To Cooperate With China-Led Asian Infrastructure Investment Bank, Leaders Say

It's curious that they jumped into this AIIB almost right after it's announcement. Aren't these institutions, especially IMF, related to the world banking cartel and a bunch of thieves?
 
For years China has pleaded with the World Bank to use its development funds to actually build things on the Eurasian landmass, rather than invest money in order to pave the way for Western multinational corporations to get the greatest return on their investments - milking profits at little cost, in other words.

The AIIB is a proposal - well, pretty much a reality now - to set up a parallel 'World Bank' institution run by and for Eurasian countries. It seems to us Westerners like it's a sudden development, but actually it's been long discussed in the East. The West ignored it until now because it didn't feature in the 'reality' as narrated by the US-led West.

China gave a deadline of the end of March (this month) for countries to sign up as founding members, hence the late rush to "get in on the ground floor", as the British government put it. The US-based 'reality-creators', in the meantime, have spent a few years trying to establish a TransAtlantic Trade Partnership and a TransPacific Trade Partnership that places the US (and its dollar) at the center (and pinnacle) of the global economy, thus 'locking in' the status quo.

But the pull of European countries towards a China/Asian-based economic restructuring of the global economy points to the new center of economic power being in/on the Eurasian landmass. China has been talking for some time about 'new Silk Roads' of economic development and trade that would link China to Europe via Central Asia and Southwest Asia (aka the 'Middle East').

Where once it was dismissed as fantasy, Europeans are watching Russia and China put in place energy pipelines that could totally transform the vast landmass within a generation. They're realising 'this is where the action - and the money - is going to be', and don't want to let Eurasia develop while their economies stagnate. They realize that 'China is coming to us, one way or another' when they see how serious the Chinese are about bullet trains taking people from Shanghai to Berlin in a matter of hours.

The US is "waffling" in response to this development because it has absolutely no answer to it... other than the one we discussed on our last radio show: the financial nuclear option - deliberately crashing the dollar too soon for the global economy to restructure itself in time, thus 'wiping the slate clean'.
 
Thanks for that Niall, it's a bit clearer to me now. From what I read just now, it seems that proposals to prospective countries to join AIIB were sent some six months ago; this article below details the Australian version of events. No surprise that Tony Abbott was against the thing from the start. I'm curious to see how it pans out -- especially the part about IMF co-operating with AIIB.

http://www.smh.com.au/comment/aiib-australia-does-the-smart-thing-finally-20150323-1m5gpr.html said:
On Monday, the federal cabinet approved Australia's membership of the Asian Infrastructure Investment Bank. We were invited to join more than six months ago. Treasurer Joe Hockey and Trade Minister Andrew Robb supported the idea, Tony Abbott and Julie Bishop, heavily influenced by United States opposition, were against it. The expressed reason for their opposition was that without proper governance procedures in place the bank could be used by China as a tool of foreign policy. Of course it will - precisely as the World Bank has been used as a tool of US policy.

The Washington consensus promoted by the World Bank and Asian Development Bank has had a patchy record in promoting development in recipient countries, and a much stronger record in supporting the interests of US multinational corporations. Why would anyone expect anything different? The World Bank has always been headed by an American and the International Monetary Fund by a European, and the location of these two institutions in Washington, DC, has meant a great deal of informal influence of the staff as a result of where they live and a considerable amount of formal influence from the US Treasury, located just down the street.

The US opposes the AIIB precisely because its being headquartered in China will afford China some of the same opportunities. However, this is absolutely no reason for us not to join. More investment in infrastructure in East Asia is wonderful news for Australian engineers, architects, investment bankers and lawyers. We still tend to think about commodities exports but our future lies in services exports. Opportunities on AIIB projects will go to its member nations, as is the way of these things.

We should strongly support any move by China to establish multilateral institutions. To date, China has not engaged strongly with the institutions of international finance. In part this is due to China not being given voting rights even remotely approaching its economic significance. In part this is due to China's unwillingness to accept the premises of the current system. And why should they? Why would China accept a financial system predicated on the US dollar as the global reserve currency, with all the exorbitant privileges that brings? Why would it accept a system in which the two most significant institutions of governance are headed by an American and a European and located in Washington, DC? Why would China accept a system it never would have participated in designing?

It is more sensible for China to begin to construct a parallel system, centred in China, serving China's interests. Last year, along with the AIIB, China led the establishment of the BRICS Development Bank, of which the five members are Brazil, Russia, India, China and South Africa, and which is also based in China. These two new banks are part of this new architecture, together with China's many bilateral agreements to begin to denominate trade between China and its principal trading partners in the currencies of either Chinese or the trading partner (but not US dollars).

Throughout history, great powers have acted in their own interests. The new great power is doing the same. Certainly neither the Americans, nor the British before them, acted otherwise. So, given these developments are inevitable, our participation in them becomes all the more important as it gives us an opportunity to influence and shape their future direction.

While it is better to join now than not, we have lost something by procrastinating for six months on this issue. Our decision was prompted by the recent decisions of Britain, Germany, France, Italy and New Zealand to join. It would have been far better for us to accept the initial invitation some six months ago and be seen as a leader in this regard rather than a somewhat embarrassed follower. Such symbolism matters more in China than it does here. It matters enormously to Beijing to be treated as a leading power and be respected, and has throughout China's history.

Australia tends to think of itself as relatively unimportant. We don't really expect to be listened to or followed. These traits are not shared by the giant to our north. Early participation in this initiative would have garnered us greater respect and capacity to influence. The idea that we should have held out until China improved the governance standards, using the prospect of our membership as some sort of leverage, is not the way things are best done in Asia.

At the individual level Australia does well in our region. The willingness of individual Australians to listen, rather than lecture, and not take ourselves so seriously, tends to go down well. Collectively, at the governmental level, we behave rather less effectively, but in the end, the decision to join the AIIB is better late than never.
 
Iron said:
In other words, this is the parallel world bank that the BRICS were after?
BRICS have plans to start their own bank, the New Development Bank:

http://en.wikipedia.org/wiki/New_Development_Bank said:
The New Development Bank (NDB), formerly referred to as the BRICS Development Bank,[1] is a multilateral development bank operated by the BRICS states (Brazil, Russia, India, China and South Africa) as an alternative to the existing US-dominated World Bank and International Monetary Fund.[2] The bank is set up to foster greater financial and development cooperation among the five emerging markets. Together, the four original BRIC countries comprise in 2014 more than 3 billion people or 41.4 percent of the world’s population, cover more than a quarter of the world’s land area over three continents, and account for more than 25 percent of global GDP. The bank will be headquartered in Shanghai, China.[3] Unlike the World Bank, which assigns votes based on capital share, in the New Development Bank each participant country will be assigned one vote, and none of the countries will have veto power.[4]
 
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