France, Germany and Italy have all agreed to follow Britain’s lead and join a China-led international development bank, according to European officials, delivering a blow to US efforts to keep leading western countries out of the new institution. The decision by the three European governments comes after Britain announced last week that it would join the $50bn Asian Infrastructure Investment Bank, a potential rival to the Washington-based World Bank.
Australia, a key US ally in the Asia-Pacific region which had come under pressure from Washington to stay out of the new bank, has also said that it will now rethink that position.
The European decisions represent a significant setback for the Obama administration, which has argued that western countries could have more influence over the workings of the new bank if they stayed together on the outside and pushed for higher lending standards.
The AIIB, which was formally launched by Chinese President Xi Jinping last year, is one element of a broader Chinese push to create new financial and economic institutions that will increase its international influence. It has become a central issue in the growing contest between China and the US over who will define the economic and trade rules in Asia over the coming decades.
When Britain announced its decision to join the AIIB last week, the Obama administration told the Financial Times that it was part of a broader trend of “constant accommodation” by London of China. British officials were relatively restrained in their criticism of China over its handling of pro- democracy protests in Hong Kong last year.
Britain tried to gain “first mover advantage” last week by signing up to the fledgling Chinese-led bank before other G7 members. The UK government claimed it had to move quickly because of the impending May 7 general election. The move by George Osborne, the UK chancellor of the exchequer, won plaudits in Beijing.
Britain hopes to establish itself as the number one destination for Chinese investment and UK officials were unrepentant. One suggested that the White House criticism of Britain was a case of sour grapes: “They couldn’t have got congressional approval to join the AIIB, even if they wanted to.”
The US Treasury has voiced concerns about governance at the new bank, especially the environmental and social standards it attaches to its loans. It said it was worried that the AIIB could become a “low-quality” institution.
Privately, US and Australian officials have suggested that the British decision to break ranks and join the bank was driven by commercial considerations and that London was blind to the broader geopolitical implications in the Asia-Pacific region.
South Korean media have reported that Seoul will also now rethink its decision not to join the AIIB. Japan, the US ally in the region that is most worried by China’s growing influence, is not expected to become a member.
Poster Comment:
...London was blind to the broader geopolitical implications in the Asia- Pacific region.
Britain is not an Asia-Pacific nation. An America First government would be similarly caviler regarding the security of Europe. This is yet another excuse for the US to withdraw from NATO, let Europe fend for themselves and we can look after America. I would guess that when we do withdraw Europe and China will end up aligning against Russia anyways.
