By Shannon Tiezzi
The U.S. needs a better response to Chinese-led initiatives than attempting to lead a boycott.
The floodgates have opened. After the U.K. announced last Thursday that it would seek to join the Chinese-led Asian Infrastructure Investment Bank (AIIB), a trio of other European powers — Germany, France, and Italy — followed suit. With a March 31 deadline looming for countries to gain “founding member” status, expect more states – possibly including Australia and South Korea – to join in as well.
In another context, those decisions might have gone mostly unnoticed. However, the U.S. insured this would be global news by its stark opposition to the AIIB, and by its shocking sharp response to London’s decision to join — effectively accusing the U.K. of appeasing China. It’s been clear from the beginning that Washington was opposed to the creation of the bank and trying to keep its friends and partners from joining. But the stark criticisms leveled at London when it joined underlined just how badly Washington wanted to keep its allies away from the bank – and how powerless it ultimately is to convince them to stay away.
The irony is that the AIIB became a symbol of China-U.S. competition precisely because that is how Washington framed it. Aside from governance issues, the U.S. was worried the AIIB would undermine its own favored financial institutions, the World Bank and the Asian Development Bank. By encouraging allies to stay away from the initiative, the Obama administration turned a regional infrastructure back into a test case for its global influence – a case that the U.S. is now seen as losing. Gideon Rachman, writing for Financial Times, called Washington’s handling of the AIIB issue a “diplomatic debacle” that “will make America look isolated and petulant.”
That’s not to say that the U.S. should have embraced the AIIB with open arms. There are real concerns about the governance structure of the bank, including whether or not China will play an outsized role in determining who gets funding and who doesn’t. Such a set-up would only make it easier for China to wield its economic clout as a carrot (or a stick) to ‘encourage’ desired behaviors in other states. There are also legitimate worries about lax environmental and human rights safeguards for AIIB-funded projects.
Read the full story at The Diplomat