The fine print of the AIIB: What is to be scrutinized?
The Asian Infrastructure Investment Bank (AIIB) has taken the world by storm, much to the chagrin of the United States. Most of America’s allies, excluding Japan, have applied to join China’s latest multilateral foray, indicating that an ever-increasing number of advanced economies are willing to cooperate with the world’s second largest economy despite U.S. objections.
For the United States, China’s ambitions in Asia are the latest reminder that its influence in the region is at the very least being challenged economically. While the White House National Security Council stated that “the international community has a stake in seeing the AIIB complement the existing architecture, and to work effectively alongside the World Bank and Asian Development Bank (ADB),” even Western diplomats are viewing the U.S. attitude toward China as sour grapes. As Japan and the U.S. have the greatest influence over the investment decisions of the ADB, China’s in- tentions seem logical for a country trying to exert greater influence in its neighborhood.
Under Xi Jinping’s initiative after the Boao Forum last week, China is proactively pushing the “Belt and Road Initiative,” a demonstration of the country’s status as a regional power able to shoulder greater international responsibilities. How Taiwan fits into China’s multilateral vision is surprisingly not the focus of debate on the island regarding the AIIB.
Late Tuesday evening, Taiwan forwarded its application via the Mainland Affairs Council to China’s Taiwan Affairs Office to meet the membership entry deadline set by Beijing, drawing a torrent of criticism. Protests from students, along with opposition political parties, accused the government of a “black box operation” that has diminished the island’s sovereignty and “sold out Taiwan.”
Indeed, scrutiny of the AIIB is necessary, not solely because it represents a large-scale and longterm institutionalization of economic power in the region with potential political impacts, but also since the nature of the investment projects and the future functioning of the organization are still rela- tively unknown. However, as the political mainstream has framed Taiwan’s participation in the AIIB as the ticket for raising Taiwan’s international profile on the one hand, or the loss of political sovereignty due to the condition of Taiwan’s designation on the other, what actual participation in the bank entails has been relegated to an afterthought.
As a country that has transitioned from the destination of foreign direct investment to a sender of capital elsewhere, the real issue at hand is not the moniker behind Taiwan’s participation, but the nature of that participation should membership be accepted. How much power will shareholders have? How will the evaluation and measurement of investment projects be vetted? Will investment be accountable to international norms regarding social and environmental factors?
Broader scrutiny requires extending the lens beyond the trade, investment and service agreements that involve China, but also to examine those agreements under negotiation with other countries and multilateral forums (such as the WTO, ABD, APEC, among others) that the country participates in.