The participation of Germany, Britain, France and Italy in the Asian Infrastructure Investment Bank (AIIB) gives added weight to the latter’s annual general meeting and forum, which will be held in Luxembourg on July 12-13.
The four biggest economic powers in Europe openly defied U.S. requests to refrain from affiliation to the AIIB and became its founding members in 2016.
China established the Beijing-based multilateral bank in order to promote investment in economic and social infrastructure along a mainland belt that stretches from Southeast Asia, across northern China and Central Asia and into eastern Europe. This is complemented by a maritime road that spans the eastern Mediterranean, through the Suez Canal, across the Arabian Sea, the Bay of Bengal, the China Seas and into the Asia-Pacific region.
These routes broadly follow the ancient Silk Road and its maritime equivalent, which date back to the Han Dynasty around 206 AD, and which hugely accelerated closer economic and political relations between a vast number of peoples and nations.
Strengthening those links in ways intended to benefit humanity in the 21st century is the vision which inspires modern China’s Belt and Road Initiative (BRI) and its associated bank. This, too, was the essence of President Xi Jinping’s historic address at Nazarbayev University in Kazakhstan in September 2013.
“Throughout the millennia, the people of various countries along the ancient Silk Road have jointly written a chapter of friendship that has been passed on to this very day,” he reminded his audience. “More than 2,000 years of exchanges demonstrate that on the basis of solidarity, mutual trust, equality, inclusiveness, mutual learning and win-win cooperation, countries of different races, beliefs and cultural backgrounds are fully capable of sharing peace and development. This is the valuable inspiration we have drawn from the ancient Silk Road.”
It is indeed a lesson from history – sovereign countries with close, strong and mutually beneficial trading links rarely, if ever, go to war with one another.
One month after his Kazakhstan speech, President Xi formally launched the proposed AIIB. Now it has 93 countries which have signed up to its articles of association, and its authorized capital stock is US$100 billion. China itself provides just under one-third of the funding, entitling it to a proportional vote in the bank’s proceedings.
So what’s really in it for China? Peaceful relations, plenty of goodwill, more prosperous neighbors and markets, more efficient transcontinental transport routes, enhanced experience in key aspects of development and, possibly, a bigger stock of economic and financial assets abroad.
It’s important to note that every country is represented equally on the AIIB’s board of governors. The bank’s Chinese president works with vice presidents from Britain, France, India, Germany and Indonesia alongside an equally multinational board of directors.
This inclusive and power-sharing structure contrasts favorably with U.S. and Western domination of long-established agencies such as the World Bank and the International Monetary Fund.
So what’s in it for the AIIB’s funding recipients? The list is exhaustive. Projects approved so far include schemes for urban water supply, rural roads and metro-rail (India), landslide prevention and urban regeneration (Sri Lanka), road improvements (Laos), power transmission (Bangladesh), solar power and rural sanitation (Egypt), gas storage and renewable energy funding (Turkey), irrigation and dam safety (Indonesia), air quality and coal replacement (China), flood management (Philippines), hydropower (Pakistan and Tajikistan) and gas pipeline construction (Azerbaijan).
AIIB-led packages usually comprise a low-fee or interest-free loan with or without additional finance from international aid agencies, international development banks (including the World Bank itself), commercial sources and the host country’s national or provincial government.
Projects are assessed for their impact on society, the environment as well as on ethnic minority groups. Inevitably, some schemes have provoked opposition from local people or from organizations with vested interests. Often, these projects are seized upon in the West by politicians and media commentators who misrepresent the AIIB and BRI programs as examples of aggressive Chinese “expansionism.” Genuine concerns are considered by the AIIB’s Project-affected People’s Mechanism and its disputes resolution procedure.
Meanwhile, hostile circles – notably in the USA and Japan – continue to question the motives and viability of China’s potentially epoch-making initiative. They resent China’s growing prestige and cannot conceive of a developmental model that does not, first and foremost, serve the interests of the imperialist powers and their transnational corporations.
AIIB projects have no austerity, marketization or privatization strings attached. This sets them apart from the World Bank and IMF funding programs and the EU-IMF “Troika” bail-out facility.
Not surprisingly, therefore, the emergence of an alternative leading provider of finance and related services for infrastructure development has alarmed successive U.S. governments as well as the EU Commission.
At the same time, 20 European governments have joined the AIIB – the eastern and Mediterranean ones in search of finance and the Western ones which hope to win contracts and exercise influence on the bank’s future direction.
Whether or how the four big capitalist powers of Europe can shift the basis and focus of the AIIB may become clearer in Luxembourg this summer.
Robert Griffiths is a former Senior Lecturer in Political Economy and History at the University of Wales and currently the General Secretary of the Communist Party of Britain.