The United States has unsuccessfully opposed some of its key allies’ decisions to join China’s new Asian Infrastructure Investment Bank.
China initiated and has put $50 billion in capital behind its effort to build a new development bank in Asia. It has recruited so far as founding members 36 countries, including France, Germany, Italy, Saudi Arabia, Turkey and the United Kingdom as well as most Asian countries, in spite of American pressure on these countries to stay out. Chinese President Xi Jinping launched the idea of the bank in 2013, drawing on China’s $3 trillion in foreign exchange reserves and desire to expand its activities in Asian development.
The United States has opposed the new Chinese undertaking, in spite of President Barack Obama’s highly publicized 2012 “pivot to Asia.” It has done so in an effort to preserve the U.S. and Western European catbird seat in international economic and financial affairs gained in the 1944 Bretton Woods creation of the International Bank for Reconstruction and Development and the International Monetary Fund. The U.S. preserves for itself the presidency of the International Bank; a European — frequently French — heads the IMF.
U.S. opposition to the Asia bank is unrealistic and out of touch. China currently is considered the world’s second-largest economy and is expected to rise to first, ahead of the United States, this year. If American firms and banks are to play a role in the development of as yet relatively undeveloped parts of Asia, Washington needs to get America in on the ground floor of this enterprise, not fight history.
America’s inability to influence European powers such as France, Germany, Italy and the United Kingdom not to accept China’s invitation to become founding members of the new venture goes hand-in-hand with the decline of U.S.-led NATO as Europe’s primary security organ.
The United States, consistent with its concentration on Asia, should be another founding member of the Asia bank. How, otherwise, can it expect to be part of the new development bank’s governance and activities?