Business Times Singapore The United States should not oppose but support and

Business times singapore the united states should not

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(Business Times Singapore; The United States should not oppose, but support and even join, the AIIB; 3-31-15; :Lexis; JLW) THE United States risks being isolated following the decision of several of its allies to sign up to the Asian Infrastructure Investment Bank (AIIB). Britain, France, Germany and Italy reportedly ignored direct pleas from the Obama administration in order to become "founding" members of the China-led institution which is seen as a rival to the pre-eminence of the World Bank and the International Monetary Fund (IMF). Washington fears that the Bretton Wood institutions, which set up the world's financial system 70 years ago, will be diminished both in stature and reach. Indeed, Washington even finds objectionable that Beijing set March 31 as the deadline to join up. Any change to the status quo is always something of a jolt to those who have thrived in it. The American reaction to the new development bank is entirely predictable since Washington tends to see much of what Beijing does these days as attempt to rewrite the rules of an international order that has served it so well. However, the financial order in East Asia has been undergoing change for a considerable time . The 1997/98 East Asian financial crisis was the turning point. Afer the admitted failure of IMF policy prescriptions, especially in Indonesia, it was proposed that there should be an Asian Monetary Fund to manage temporary balance of payments difficulties among members. The idea was shot down by then US treasury secretary Lawrence Summers. But Asian nations were determined not to be caught out again and created a system of bilateral support - later multilateralised - known as the Chiang Mai Initiative. It has been the bulwark against speculative attacks on regional currencies for more than a decade. Now the AIIB is coming to pass. It would be a mistake, however, to see it entirely as an attempt to break the grip of the US on world financial institutions and to set up a rival Sino-centric system. While Beijing is certainly playing a central role in the founding of this lending institution, it should really be seen as an attempt to supplement the work of the World Bank and other infrastructure leading organisations. Afer all, Asia's infrastructure needs in the coming decades have been variously estimated at between US$2 trillion and US$8 trillion . There is enough potential business for everyone. Besides, China has been severely criticised about its lending practices for infrastructure projects in Africa which benefit Chinese firms. Beijing seems to have taken on board the criticism and is now working in a multilateral setting. The bank has been welcomed by Christine Lagarde of the IMF, as well as the managing director of the World Bank, Mulyani Indrawati. Asian Development Bank (ADB) president Takehiko Nakao and China's Finance Minister Lou Jiwei said that they had held discussions on possible cooperation. More importantly, the Chinese have emphasised that, unlike the World Bank and the ADB where Washington (and Japan, in the case of the ADB) can exercise a veto, the AIIB will not have any veto-wielding member. As a commentary in Xinhua, the official Beijing news agency, put it: "
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