The fine print of the AIIB: What is to be scru­ti­nized?

The China Post - - LOCAL - BY YUAN-MING CHIAO

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.

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