Many in­West back winds of change in world

China Daily (Canada) - - FRONT PAGE -

In­flu­en­tialWestern eco­nomic com­men­ta­tors have sup­ported China’s move to es­tab­lish the Asian In­fra­struc­ture In­vest­ment Bank and saidUS Pres­i­dent Barack Obama made a big mis­take by pres­sur­ingUS al­lies to shun the bank.

What theUS has done by doubt­ing the in­tegrity of the AIIB sounds like the pot call­ing the ket­tle black, be­cause it is the lack of fair gov­er­nance in the In­ter­na­tion­alMone­tary Fund and the­World Bank that prompted China to ini­ti­ate the for­ma­tion of the AIIB and the BRICS coun­tries (Brazil, Rus­sia, In­dia, China and South Africa) to es­tab­lish theNewDevel­op­ment Bank, for­merly re­ferred to as the BRICS Devel­op­ment Bank.

For decades, de­vel­op­ing coun­tries have been com­plain­ing about the de­vel­oped coun­tries main­tain­ing their grip on the vot­ing power in the Bret­tonWoods in­sti­tu­tions, be­cause the quo­tas agreed upon 70 years ago do not re­flect the vastly in­creased shares of the emerg­ing economies in the world econ­omy. Even the mild re­form agreed by all that the quo­tas would be changed slightly in fa­vor of some de­vel­op­ing coun­tries can­not be im­ple­mented be­cause ofUS Congress’ op­po­si­tion.

More­over, the un­jus­ti­fi­able “un­der­stand­ing” that the heads of the­World Bank and the IMF would be an Amer­i­can and a Euro­pean re­mains in place de­spite prom­ises of change.

In re­sponse, BRICS set up the NDB, which will sup­ple­ment or com­pete with the­World Bank, while China pro­posed the AIIB, which will sup­ple­ment the Asian Devel­op­ment Bank, which too has a lop­sided gov­er­nance sys­tem.

The new­banks will fo­cus on fi­nanc­ing in­fra­struc­ture projects, since de­vel­op­ing coun­tries have am­bi­tious in­fra­struc­ture pro­grams and there is gross un­der­fund­ing.

Crit­ics spec­u­late that the new banks will fi­nance projects that the­World Bank or the ADB would re­ject for not meet­ing their en­vi­ron­men­tal and so­cial stan­dards. But that is at­tack­ing some­thing that hasn’t yet hap­pened. True, it would be ter­ri­ble if the new­banks build a port­fo­lio of “bad projects” that would dam­age the en­vi­ron­ment fur­ther, or dis­place mil­lions of peo­ple with­out rec­og­niz­ing their rights.

It is thus im­per­a­tive that the new­banks take on board high so­cial, en­vi­ron­men­tal and fidu­ciary stan­dards, be­sides hav­ing good in­ter­nal gov­er­nance and be­ing fi­nan­cially vi­able. The new banks should be as good as or bet­ter than the ex­ist­ing ones, which have been crit­i­cized for their gov­er­nance, per­for­mance and ef­fects.

There is no cer­tainty that the new­banks will suc­ceed. But they should be given ev­ery chance to do so.

The sig­nif­i­cance of the AIIB is be­ing seen as part of the jostling be­tween theUS and China for in­flu­ence in Asia. A few years ago, theUS an­nounced a “pivot” or re-bal­anc­ing to Asia, which in­cluded en­hanced mil­i­tary pres­ence and new­trade agree­ments es­pe­cially the Trans-Pa­cific Part­ner­ship Agree­ment. It seemed sus­pi­ciously like a pol­icy of con­tain­ment, or par­tial con­tain­ment, of China. TheUS com­bines co­op­er­a­tion with com­pe­ti­tion and con­tain­ment in its China pol­icy, and it re­tains the flex­i­bil­ity of bring­ing into play any or all of th­ese com­po­nents.

China now an­nounced its own ini­tia­tives— the Silk Road Eco­nomic Belt and the 21st Cen­tury Mar­itime Silk Road. The first will in­volve in­fra­struc­ture projects, trade and public-pri­vate part­ner­ships, and de­tails of the sec­ond are be­ing worked out. The AIIB can be seen as a fi­nan­cial arm (though not the only one) of th­ese ini­tia­tives.

Now, promi­nen­tWestern opin­ion mak­ers are urg­ing theUS to change its pol­icy and to ac­com­mo­date China and other de­vel­op­ing coun­tries. The winds of change are blow­ing in the global econ­omy, and many in theWest rec­og­nize and even sup­port this. The au­thor is ex­ec­u­tive direc­tor of South Cen­tre, a think tank of de­vel­op­ing coun­tries, based in Geneva.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.