SYDNEY: Australia on Wednesday (Nov 5) said it was keen to join an Asian infrastructure lender seen as a counterweight to Western-backed international development banks, but said changes to its set-up were needed.
China and 20 other countries last month put their names to a memorandum of understanding to establish the Chinese-driven Asian Infrastructure Investment Bank (AIIB) at a ceremony in Beijing. The institution, reportedly to be based in Beijing, is expected to have initial capital of US$50 billion to address the region’s burgeoning demand for transportation, dams, ports and other facilities, officials say.
But precise details about the bank, including governance and transparency issues, remain elusive and big economies such as the United States and Japan, as well as Australia, turned down an initial request to join.
Australian Prime Minister Tony Abbott told The Australian newspaper he would encourage other nations to back the bank once it was clear it was a “genuine bank” rather than an arm of just one country’s foreign policy.
“We haven’t decided not to join. We would like to join but we want to join a multilateral institution, but not one that is basically owned and operated by China,” he said ahead of the APEC summit in Beijing. “We’ve provided input into the governance. Because the MOU had already been the subject of intensive negotiation it wasn’t possible for them to much revise the MOU prior to that initial date. But we’re certainly hoping to have further discussions.
“If the MOU can be further adjusted, that makes it absolutely crystal clear that this will have the governance and transparency arrangements that other entities such as the World Bank have – well, not only will we be happy to join but we’d expect that others like Japan and Korea and the United States would also join. And we’d certainly be encouraging them to do so.”
China’s rise to become the world’s second-largest economy has been accompanied by a desire to play a greater role in global organisations such as the International Monetary Fund, the World Bank and the Asian Development Bank, which have been dominated by Europe, the United States and Japan. Beijing has maintained it is open to more countries joining the new bank with the MOU signatories expected to negotiate its specifics in the coming months.
World Bank President Jim Yong Kim said in July that estimates for infrastructure needs in developing countries were at least US$1 trillion annually, far beyond the current capacity of his institution and private investment to handle.