Bei­jing should be care­ful what it wishes for in the AIIB

The China Post - - COMMENTARY -

Play­ers in in­ter­na­tional af­fairs can count on two things to be true. First, noth­ing is ever truly un­think­able given time. A decade ago, any­one who would have sug­gested the pos­si­bil­ity of a rapid warm­ing of ties be­tween long-time foes such as Tai­wan and main­land China or the U.S. and Cuba would have been con­sid­ered wildly imag­i­na­tive.

The ini­tial suc­cess of the Asian In­fra­struc­ture In­vest­ment Bank is a sur­prise to many, not the least Bei­jing when it started to float the idea of es­tab­lish­ing the in­ter­na­tional in­sti­tu­tion in 2013. Born out of the frus­tra­tion felt by main­land China (and other emerg­ing economies) at the fail­ure of the World Bank and the In­ter­na­tional Mon­e­tary Fund (IMF) to re­form to ad­dress their grow­ing eco­nomic in­flu­ence, the AIIB was con­sid­ered more of a protest state­ment than a true ri­val to the World Bank and the IMF. The U.S. ini­tially ex­pressed its wari­ness on the found­ing of the AIIB, cit­ing pos­si­ble lack of clar­ity of the fu­ture in­sti­tu­tion’s gov­er­nance. Wash­ing­ton (and prob­a­bly even Bei­jing) ex­pected its West­ern al­lies to stay away from the or­ga­ni­za­tion, ren­der­ing it a small club for China and other like-minded na­tions.

In­stead, the UK sur­prised the world in early March by agree­ing to join the AIIB as a found­ing mem­ber on the grounds that it can bet­ter en­sure the bank’s trans­parency and ro­bust­ness from the in­side. Other West­ern na­tions — in­clud­ing Ger­many, France and Italy — soon fol­lowed the UK’s lead. In per­haps the big­gest sur­prise of all, Tai­wan ap­plied for AIIB found­ing membership on March 31, the last day of ap­pli­ca­tion. In the end, the U.S. was able to only keep Ja­pan from ap­ply­ing as a found­ing AIIB mem­ber. Wash­ing­ton made a late about-face and ex­pressed will­ing­ness to work with the AIIB (via or­ga­ni­za­tions such as the IMF and World Bank). Non-in­cum­bent U.S. diplo­mats, how­ever, were more hon­est in their as­sess­ment of the sit­u­a­tion. For­mer Sec­re­tary of State Madeleine Al­bright said frankly that “I think maybe the bot­tom line is we screwed it up” when talk­ing about Wash­ing­ton’s han­dling of the AIIB.

All of a sud­den, the AIIB gained world­wide sup­port and earned Bei­jing one of its big­gest diplo­matic vic­to­ries, which brings us to the sec­ond tru­ism: be care­ful what you wish for. For now Bei­jing seems to have got­ten a seat at the grown-ups’ ta­ble, but with that seat come the chal­lenges of be­ing a big player. While the UK may have used its high­minded “in­sider in­flu­ence” ra­tio­nale for join­ing the AIIB to cover for its other mo­tive of hedg­ing on the pos­si­ble decline of the U.S. as the world’s sole su­per­power, de­vel­oped na­tions would in­deed be an­gling for in­flu­ence and over­sight in the AIIB. In­stead of be­ing the big guy in a small club and us­ing it to do as it sees fit, China is now tasked with the hard work of han­dling a truly in­ter­na­tional in­sti­tu­tion, some­thing it has yet to get ac­quainted with. It had made some ini­tial good de­ci­sions to gain cred­itabil­ity, in­clud­ing re­ject­ing North Korea’s ap­pli­ca­tion as a found­ing mem­ber due to its lack of fi­nan­cial trans­parency and hint­ing that it will give up veto power in the AIIB (The Wall Street Jour­nal re­ported last month that Chi­nese ne­go­tia­tors per­suaded key Euro­pean coun­tries to join the AIIB with a prom­ise to do so, Bei­jing, how­ever, de­nied such re­ports and said it is “pre­ma­ture” to dis­cuss the mat­ter).

Bei­jing, how­ever, made a mis­take yes­ter­day by for­mally re­ject­ing Tai­wan’s ap­pli­ca­tion as a found­ing mem­ber. Hav­ing Tai­wan as a found­ing AIIB mem­ber would help bring le­git­i­macy to the in­sti­tu­tion as a non-po­lit­i­cal devel­op­ment bank and help show Bei­jing as be­ing able to work pro­fes­sion­ally with an AIIB mem­ber it has a com­pli­cated re­la­tion­ship with. At the same time, in­creas­ing co­op­er­a­tion with Taipei gives Bei­jing an ad­van­tage in its tug-of-war with the U.S. in gain­ing in­flu­ence in Tai­wan. China should have rec­og­nized a pos­si­ble ground for mu­tual con­ces­sions in the R.O.C. gov­ern­ment’s agree­ment to join un­der the name Chi­nese Taipei (the name Tai­wan uses in the in­ter­na­tional ac­tiv­i­ties such as the Olympics, the FIFA World Cup and Miss Uni­verse). De­cid­ing to re­ject Tai­wan’s found­ing membership due to cross-strait po­lit­i­cal is­sues — which is the only rea­son since Tai­wan is well-qual­i­fied in terms of fi­nan­cial and eco­nomic trans­parency and ca­pa­bil­ity — shows China’s lack of diplo­matic imag­i­na­tion.

The true chal­lenges for Bei­jing lie ahead. China is al­ready fac­ing strong diplo­matic bat­tles as prospec­tive found­ing mem­bers are now en­gag­ing in ne­go­ti­a­tions in draft­ing the AIIB statutes. It has to prove it­self a trust­wor­thy and ma­ture mem­ber of the in­ter­na­tional com­mu­nity or else the AIIB could serve as a win­dow for the world to see China’s in­com­pe­tence first-hand.

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